By Ruth McGowan OAM 

Right now, if you’re a CEO in charge of a Victorian council you’re probably hanging on pretty tightly to your seat with 'CEO churn’ hitting an all-time high.

In fact, in the past three years the Victorian local government sector has seen more than a 50% turnover in CEO placements.

Victorian Municipal Association President Mary Lalios reported last week: “We’ve also seen significant movement among Chief Executive roles at the council level in recent years. I’ve counted more than 40 CEO appointments among Victorian councils since the start of 2016.”

Each week it seems there’s another CEO being advertised, with more expected by the end of the year.  

What’s going on?

Given that there are only 79 councils in Victoria local government, in ‘normal’ times it’s not considered unusual to have up to ten CEO roles advertised in any one year. But when the results are more than double that rate there are likely to be other factors going on.

So, what’s going on? These are some of the factors I have observed:

1. Recently, many of the more senior CEOs have retired after long career in local government and are now enjoying a well-deserved break from what can be a full on (yet rewarding) job.
2. Some of these older CEOs have chosen to retire in the middle of the council electoral term, enabling Councillors sufficient time to recruit a new CEO and settle him/her in prior to the next election in two years time.    
3. In August 2017, a high profile investigation by the Local Government Inspectorate into the conduct of the (then) CEO of Central Goldfields Shire Council, noted “extensive and disturbing” financial and governance failures. The subsequent sacking of the whole council by the Minister for Local government sent a warning to all councillors of the need to be more mindful of operational oversight of their CEO.
4. The election cycle is also critical. Fairly or unfairly, some newly elected Councillors may attribute past council actions (or inaction) to the current CEO and so seek a leadership change more aligned to their vision. Following Victorian council elections in October 2016, some CEOs did not have their contract renewed or were ‘moved on’ after failing to satisfy the elected representatives. At other times, a CEO has seen ‘the writing on the wall’ and chosen to resign in their own time, rather than being ‘pushed’ by a new council.
5. Increasingly, more is expected of councillors in their role as elected officials. In turn, it’s perhaps natural that councillors have higher expectations of their ‘one employee’. This leads them to seek a contemporary, highly skilled CEO that can help them meet the complexities around governance, staff and asset management all within the context of greater government scrutiny and rate freezes.

Does the churn matter?

What are the implications of this level of ‘churn’ in the sector?

While change can be useful in driving a new direction and vision for council, what about the negative flow-on effects for an organisation in transition?

Useful change can occur when a CEO has been in a role for too long. This can happen when he/she becomes complacent or resistant to change and stops listening to councillors. But how long is too long? A Harvard Business Review article suggests seven years, plus or minus two as "probably the period of maximum effectiveness for most people in what can be a very stressful job".

However, there can be negative implications of a change of council leadership at the CEO level. From a financial perspective, councillors may have to budget for severance costs and recruitment expenses. More broadly there are likely to be ramifications throughout the organisation and wider networks. Staff morale can take a hit and senior leadership may be uncertain about commitment to major projects and priorities including asset management plans. If a transition is handled poorly, this can result in reduced confidence by key stakeholders and community in a council’s decision-making.  

Councillors need to skill-up

Councillors come from all walks of life and few have experience in hiring staff at the executive level.

With all this CEO recruitment activity, councillors are suddenly finding they need to build their knowledge and skills around the process of executive recruitment, placement and performance management.

Increasingly, they are recognising the value of independent, expert support to guide them through the CEO recruitment and transition process. Professional support through the recruitment process and beyond, is an important investment by councillors in due diligence. The value of this support has been recognised by the Victorian State Government who have proposed a new Local Government Bill (currently before Parliament) to deliver greater transparency in CEO employment. The Act requires councils to develop and adopt a CEO employment and remuneration policy and to obtain independent professional advice in relation to the matters dealt with the CEO employment.

The high turnover of CEOs in Victorian councils may in fact signal a new normal, not just for this state, but nationally. The ramifications can be significant for councillors, staff and communities. Independent, professional support through the recruitment process can assist councillors through the inevitable transition and reduce the damaging turbulence to council operations and reputation.    

About the author 
Ruth McGowan OAM is a consultant, coach and trainer to local government. She supports councillors as an independent, expert adviser in the recruitment, on-boarding and performance management of their CEO. She is a former mayor, councillor and a member of a number of boards where she has recruited and performance managed CEOs over many years. https://ruthmcgowan.com/