Linking Quality to Business Planning and Performance Goals in Local Government

By Robert W. Robertson and Paul Gill, District of Maple Ridge, British Columbia

Introduction

The decade of the 1990’s is one characterised by change, challenge, and uncertainty for local government in Canada (Tindal 1995). The factors driving change are addressed in numerous publications and articles (Kanter 1992, Porter 1990). Briefly, these factors include: an increasingly global economy; significantly expanded use of technology; organisational pressures to do more with less as senior government fiscal transfers are reduced; and, an increased awareness of the concept of customer in service delivery (KPMG 1997).

In response to these factors of change, the public sector, including local government, has moved towards a more output oriented, customer-focused approach to service delivery. In many respects, this movement has followed the principles of “total quality management.” The purpose of this article is two-fold: first, the article presents and discusses data from recent surveys of local governments in Canada, the United Kingdom and the United States. This component of the article will describe the specific challenges that must be addressed in the implementation of TQM at the local government level; and, key components of successful TQM systems. Further, this component will assist in the identification of a series of “best practice” concepts that may be instructive for other local governments or public sector organisations considering TQM. Second, the article describes in some detail the use of business planning and quality initiatives in the District of Maple Ridge, British Columbia. This case study discusses some of the challenges and opportunities related to the use of business planning and quality at an applied level.

“Quality” Defined

The notion of “quality” evokes a broad range of responses that is, in part, due to “…the nature of the service (product) offering; and, the fact that definition of quality may vary from person to person and situation to situation” (Brown, Gummesson, Edvardsson, Gustavsson 1991, 1). The term Total Quality Management is defined by the International Organisation for Standardisation (ISO) as “a management approach of an organisation centred on quality, based on participation by all its members and aiming at long-term success through customer satisfaction and benefits to the members of the organisation and to society” (Bensley, Wortman 1994, II-25).

From a public sector perspective, the Federal Quality Institute in the United States defines TQM as “a comprehensive customer-focused system … to improve the quality of products and services. It is a way of managing the organisation at all levels, top management to front-line to achieve customer satisfaction by involving all employees and continuously improving the work processes of the organisation” (Lewis 1991, 1).

Quality Management and the Public Sector

As discussed, the quality movement emanated from a private sector, primarily manufacturing orientation. As a result, some fundamental concerns about the adaptation of TQM to the public sector are frequently raised and these concerns must be addressed. In particular, principal issues associated with the use of TQM in the public sector include:

i. “The nature of TQM itself inhibits public sector applications;

ii. The nature of the public sector is inimical to the reception of TQM applications;

iii. The work cultures of professional groups that characterise the public sector are inimical to the public sector;

iv. In the public sector, the “customer” is a more problematic concern; and,

v. Public sector provisions (decision-making) are much more complicated than manufacturing” (Morgan, Murgatroyd 1994, 43).

To address these types of concerns it is important to adapt quality principles to fit the unique context of public sector organisations.

At the applied level, there are a number of suggested guidelines (see Figure 1) that provide a useful framework for public sector organisations considering quality initiatives.

Notwithstanding the concerns raised related to the use of TQM within the public sector, there are a number of notable examples of the use of TQM at both the federal and state/provincial levels which are instructive.

In the United States, the National Performance Review (NPR) suggests that “…effective entrepreneurial governments insist on customer satisfaction. They listen carefully to their customers – using surveys and focus groups – and restructure their basic operations to meet customer needs. They use market dynamics such as competition and customer choice to create incentives that drive their employees to put the customer first” (Gore 1996, 6).

At the state level, the National Governor’s Association states that “increased pressure on management and service functions have required governors to look for ways to refocus and re-energise governments. TQM has been viewed as one of the tools to reinvent government and to stimulate service excellence” (National Governor’s Association 1992, 6).

In practice, the American Society for Quality (ASQ) reports (ASQ 1993, 28-29) that fully 82% of all states are implementing some form of TQM program.

In Canada, similar national initiatives are discussed in the Public Service 2000: The Renewal of the Public Service of Canada (PS2000), which was aimed at “…putting people first…” (Kersill 1991, 25) in the efficient delivery of government programs.Further, to assist in more broadly encouraging the use of quality techniques within Canada, the federal government participated in the formulation of the National Quality Institute (NQI). The NQI is a public/private sector, not-for-profit organisation with a mission to “…stimulate and support quality driven innovation within all Canadian enterprises and institutions; including business, government, education and healthcare. Its vision is to “create a new future for Canada employing the full potential of every Canadian” (NQI 1995, 11). The NQI has produced a number of useful “how to” documents that can be used by organisations in the private and public sectors considering quality initiatives. Also, the NQI sponsors an annual recognition and award program (Canada Awards for Excellence).

Figure 1

Guidelines for Public Sector Quality Improvement

Customer Satisfaction should be the primary goal and ultimate measure of service quality.
Ensure the definition of “customer” includes both internal (employees in other departments); and, external dimensions (vendors, taxpayers, suppliers, service users etc.).
Develop and communicate a common vision of the organisation based on an extended view of the customer.
Reward teamwork, encourage innovation, and work process improvement at all levels.
Provide expanded training and self-improvement opportunities.
Employee involvement at all levels is very important.
Acknowledge and reward success at both individual and team levels.
Eliminate fear in the work place and remove barriers to developing pride in service (empowerment).
Make the necessary changes to successfully implement the preceding goals.

Source: M.E. Milakovich, Improving Service Quality: Achieving High Performance in the Public and Private Sectors, St. Lucie Press, Delray Beach, FL 1995 p. 162.

At a provincial level, a number of provinces have adopted quality initiatives. One notable example is the Province of New Brunswick, which has appointed a Minister of State for Quality and developed a “Service New Brunswick” project. The mandate of Service New Brunswick is to review “all programs, infrastructure, work processes, and organisational structures within the public service and ensure that a more customer-oriented, quality management approach is adopted” (Government of New Brunswick 1993, 3). The Province also assisted in the development of a front-line employee training program – Think Like A Customer (TLC) – that has been made available to public and private sector organisations.

In the United Kingdom, formal programs to improve public service delivery include the Citizen’s Charter introduced in 1991. The Charter was designed “…to see public services through the eyes of those who use them. For too long, the provider has dominated; now it is the time of the user…” (Prior, Stewart, Walsh 1995, 56). One of the mechanisms used to assist in the implementation of the principles of the Citizen Charter is the establishment of Quality Networks. These networks are designed to “share information or development on best practices; compare progress in areas of common interest; help erode boundaries between public sector organisations; and, encourage problem sharing and solving” (Morrison 1997, 1). The networks have been particularly useful in documenting successful quality techniques and sharing this information with other public sector agencies.

Clearly, there are significant public sector quality initiatives and total quality management programs that have been introduced in a variety of jurisdictions.

Quality and Local Government: An International Perspective

At the local government level, there are a number of examples illustrative of the increased use of TQM. One documented case study is the City of Saarbrucken, Germany. Saarbrucken initiated a TQM program in 1993 “…in response to a number of things. The City must deal with cross-border competition in the region between France and Luxembourg. At the same time, at the beginning of the 1990’s, our financial situation worsened” (Hirschfelder 1997, 48). In 1997, the Speyer German Quality Award was presented to Saarbrucken as “…the first city that succeeded in installing a total quality management system. Setting up municipal works of a private (business-like) character, reorganising the departments structures, and modernising services (based on customers) are further pillars of the reform”(Hirschfelder 1997, 50).

On a broader level, the International City/County Management Association (ICMA) conducted a survey of local governments in the United States during the summer of 1993. The survey was designed to “…document the strategies local governments use in implementing TQM” (West, Berman, Milakovich 1995, 51).

The ICMA reports that 11% of local governments surveyed had a formal TQM program and a further 22% had a less formal “developing” program. The majority of these programs were in larger cities; and, for the most part, programs were relatively recent (less than four years). On balance, most respondents cited their programs as successful in the following key areas: quality of service 89%; productivity 85%; increased communication 84%; and, customer satisfaction 83% (West, Berman, Milakovich 1994, 15).

Further, the ICMA survey identified a series of lessons of “best practices” for consideration by other jurisdictions interested in pursuing quality initiatives or TQM. First, it is important to start with a “customer facing” service area that is prepared to adapt new methods to improve service. A successful, internal pilot project can serve as a catalyst for other areas to adopt similar programs.

Second, the importance of gaining the support of key internal stakeholders, particularly senior managers, cannot be overstated. The most important strategies are “…obtaining and maintaining managerial support, identifying customer needs, and involving employees with implementation” (West et al 1995, 51).

Finally, evidence from the survey supports the concept of recognising success by acknowledging employee and work teams that support quality goals/achievement. Although “…it is impossible to say definitively whether TQM will have a lasting effect on municipal government, preliminary indications…suggest TQM can be adopted to a variety of local government settings in response to a mix of internal and external driving forces. In many cities, a broad array of implementation strategies have been used with promising results despite a formidable combination of restraints and barriers” (West, Berman, Milakovich, 1994, 25).

In the United Kingdom, local authorities have had “…an increasing interest in quality and quality management” (Freeman-Bell, Grover 1994, 554). To some extent, the expanded interest in and use of quality techniques in the UK may be attributed to the work of the Audit Commission. This Commission produced a paper entitled Putting Quality on the Map: Measuring and Appraising Quality in the Public Service (1993), which has served as an important document for local authorities.

This paper suggests that “…there are four key areas that together will contribute to a quality service:

Quality of Communication – Does the Council communicate with, listen to, and understand its users?

Quality of Specification – Is this understanding converted into clear standards for service delivery?

Quality of Delivery – Are the standards actually delivered, and is remedial action taken when failure occurs?

Quality of People and Systems – Are staff motivated, trained, well-managed, and supported by good management systems and processes?” (Audit Commission 1993, 2). The relationship of these components is illustrated in Figure 2.

Figure 2

The Quality Map

Source: Audit Commission, Putting Quality on the Map: Measuring and Appraising Quality in the Public Service, Audit Commission, London, UK No. 18 March 1993 p. 3.

In the United Kingdom, there has been a more recent initiative “Best Value” which is designed to encourage local governments to work towards continually “…improving service delivery to customers and citizens. Local authorities would be required to publish performance plans with targets for service improvement. Authorities will be expected to meet the aspirations of local people for services that represent the highest quality and most effective delivery possible within the resources that are available” Tichelar 1997, 32). “Best Value” remains an evolving initiative in the UK; however, Figure 3 provides an overview of how it will impact on local governments.

On a broad basis, the Local Government Management Board has undertaken an annual survey of local government in the UK since 1993 to document the use and evolution of quality. The annual nature of the survey provides trend line data and “…it demonstrates that quality initiatives have been deepening their influence on local authority service on a year-by-year basis” (Local Authority Association Quality Group 1995, 1).

The key findings contained in these survey data for 1995 include:

i. 97% of local authorities are involved in the use of quality initiatives;

ii. 86% report the use of quality initiatives on a corporate-wide basis;

iii. 53% report quality initiatives were successful in achieving their objectives; 32% stated they were partly successful; and,

iv. fully 50% report that they have pursued registration to the ISO 9000 standard for one or more service areas.

The survey identifies “…leadership by senior staff including the Chief Executive Officer; employee involvement; and, commitment to sustaining the quality initiative” (Local Authority Association Quality Group 1995, 8) as the most important factors in the successful implementation of a quality system.

Figure 3

Principles of Best Value

1. The duty of Best Value is one that local authorities will owe to local people, both as taxpayers and the customers of local authority services. Performance plans should support the process of local accountability to the electorate.

2. Achieving Best Value is not just about economy and efficiency, but also about effectiveness and the quality of local services – the setting of targets and performance against these should therefore underpin the new regime.

3. The duty should apply to a wider range of services than those now covered by CCT. Details will be worked up jointly with Departments, the Audit Commission and the LGA.

4. There is no presumption that services must be privatised, and once the regime is in place there will be no general requirements to for councils to put their services out to tender, but there is no reason why services should be delivered directly if other more efficient means are available. What matters is what works.

5. Competition will continue to be an important management tool, a test of best value and an important feature in performance plans. But it will not be the only management tool and is not in itself enough to demonstrate that Best Value is being achieved.

6. Central government will continue to set the basic framework for service provision which will in some areas as now include national standards.

7. Detailed local targets should have regard to any national targets, and to performance indicators and targets set by the Audit Commission in order to support comparative competition between authorities and groups of authorities.

8. Both national and local targets should be built on the performance information that is in any case needed by good managers.

9. Auditors should confirm the integrity and comparability of performance information.

10. Auditors will report publicly on whether Best Value has been achieved, and should contribute constructively to plans for remedial action. This will include agreeing to measurable targets for improvement and reporting on progress against an agreed plan.

11. There should be provision for intervention at the direction of the Secretary of State on the advice of the Audit Commission when an authority has failed to take agreed remedial action, or has failed to achieve realistic targets for improvement.

12. The form of intervention should be appropriate to the nature of failure. Where an authority has made limited use of competition, and as an exception to the usual rule, intervention may include a requirement that a service or services should be put to competition. Intervention might also take the form of a requirement that an authority should accept external management support, and may relate either to specific services, or to the core management of the council.

Source: M. Tichelar, Performance Indicators, Local Government Management Board, London, UK 1997 p. 34.

Quality and Local Government in Canada

In Canada, a survey of municipal managers was conducted in the fall of 1996 to assess the level of understanding; degree of use; and, key elements of TQM at the local government level. The survey was conducted with the support of the Canadian Association of Municipal Administrators (CAMA).

The survey itself was loosely based on similar surveys recently undertaken in the United States and the United Kingdom (see Figure 4). Further, the survey used terminology, definitions and categories identified by the National Quality Institute. The survey was circulated to 186 chief administrative officers as identified through the CAMA membership; and, 119 surveys were returned for a response rate of 64%.

Overall, 24% of local governments identified that they used a formal, documented Total Quality Management program; whereas, 56% identified a less formal TQM program. For comparative purposes these data are illustrated in Figure 4 with other, recent survey results from the public and private sectors. The British Institute of Management survey reflects a mixture of public and private sector respondents from organisations in the United Kingdom. The Fortune 500 survey is a private sector survey of American companies. The remaining surveys are of local governments and they are more fully discussed elsewhere in this paper.

It is important to note that each of the surveys identified in Figure 4 use a marginally different definition for the terms “TQM” or “quality” initiative. However, these data confirm there is considerable interest in and of quality initiatives and TQM in both the public and the private sectors. Also, it is of interest to note that all of these surveys conclude that the use of quality initiatives or TQM within respondent private and public sector organisations were generally deemed “successful.”

Figure 4

Recent Surveys of the Use of TQM in Public/Private Organisations

Survey	Total Survey	Response Rate	Use of TQM or Quality Techniques
British Institute of Management	4,000	880 (22%)	71%
Fortune 500‚	500	95 (19%)	92%
ICMA (U.S.) ƒ	1,211	433 (36%)	55%
LGMB (UK) „	447	359 (80%)	97%
CAMA…	186	119 (64%)	80%

Sources: A. Wilkinson, T. Redman, E. Snape, “New Patterns of Quality Management in the United Kingdom,” Quality Management Journal, Winter 1995 Vol. 2 No. 2 ASQ, Milwaukee, WI 1995 pp. 37 – 51.

‚ J.R. Lackritz, “TQM Within Fortune 500 Corporations,” Quality Progress, February 1997 Vol. 30 No. 2 ASQ, Milwaukee, WI 1997 pp. 69-74.

ƒ J.P. West, E. Berman and M. Milakovich, “Total Quality Management in Local Government” The Municipal Year Book 1994, ICMA, Washington, DC 1994 pp. 14 – 25.

„ Quality Initiatives: Report on the Findings from the 1995 Survey of Local Authority Activity, The Local Authority Associations Quality Group, ACC Pub. London, UK 1995.

… CAMA, TQM Survey, Original Data, 1996.

Another example of good practice is the City of Winnipeg’s “Continuous Improvement Initiative,” which received the Manitoba Quality Award in 1993. The Awards Committee noted that “…the effort provides a solid foundation and maintains a comprehensive approach including development of corporate-wide mission and vision statements; preparation of a code of ethics; an emphasis on employee empowerment; and, the increased use of cross-functional, employee improvement teams in key areas such as employee suggestions; building and planning permits; and, customer service (Frost 1993, 3).

The factors cited as “important” in the decision to introduce a TQM system included the need to increase employee productivity; the interest of the city manager; and, increased budget pressures. In part, these factors reflect the continued fiscal and other challenges affecting local governments in Canada.

The specific quality technique found by the survey to be the most prevalent is the use of the customer survey. Fully 93% of respondents cite customer surveys as “important” or “very important” in the identification of customer issues and priorities. Other techniques to assess customer satisfaction included customer comment cards; complaint management systems; and, the use of focus groups.

Many (70%) respondents are aware of the national quality awards program sponsored by the National Quality Institute. The Canada Awards for Excellence process is seen by some municipalities as important as it requires “…we step back and take a critical look at our quality system.”

In addition to award programs, a further 7% of respondents stated they were pursuing ISO 9000 registration; and, fully 63% indicated an interest in considering registration. One example of a community that has pursued ISO 9000 registration on an organisation-wide basis is the Town of Ajax, Ontario. In the case of Ajax, the purpose of pursuing registration was to “…establish a continuous improvement program to help keep costs and taxes down and provide customers with predictable, consistent and ultimately better service” (Skinner 1997, 5).

Performance measurement is a key component of TQM (Ball 1998). In that regard, only 44% of respondents had developed a performance measurement system; and, a further 10% noted that they were in the process of developing performance measures. One example of an applied performance measurement system is evident in the City of Calgary. Calgary has a relatively long history of using quality initiatives. The current initiative is called “Quality Service” and it uses a formal business planning process to establish performance measures. Calgary recently participated in a pilot study conducted by the International City Management Association that developed a best practice handbook on performance measurement.

Another key element in a TQM system is employee involvement. In this area 47% of respondents cited participation and involvement by less than 50% of their staff. Although these data may reflect a less than corporate-wide quality effort, the low reported level of employee involvement may be an area of concern.

Most (88%) respondents noted that their TQM progress had assisted in the identification of specific corporate training requirements. Specifically, these included front-line customer service training (70%); training in the development and use of teams (50%); supervisory and management skills training (45%); business planning (40%); and, continuous improvement training (40%). As an example, the City of St. Albert, Alberta has used a program called “Alberta Best” for all of its employees. This program identifies the concept of “customer” in the service delivery model and develops ways to enhance customer service.

To ensure that the TQM message is consistently applied over time, many (52%) survey respondents note that individual (and team) employee appraisals are tied to the quality system.

Overall, respondents identified a number of factors (see Figure 5) as important in their quality efforts. Fully 86% of respondents suggest that their TQM or quality efforts were seen as successful.

Finally, many respondents noted the important aspect of alignment between quality initiatives and other corporate goals and objectives. In that regard, a number of local governments in Canada have adopted a formal business planning (Robertson 1997, 18) approach to structuring decision-making, program delivery, and resource allocation.

Figure 5

Components of a Successful Quality Program

· Support and leadership from Mayor and Council

· Support and leadership from senior staff

· Focus on customers (internal and external)

· Employee involvement

· Training for employees

· Recognition of success

· Measurable results

Quality and Business Planning Applied: The Case of Maple Ridge, British Columbia

Maple Ridge is a fast-growing community with a population of about 65,000 located 30 miles east of Vancouver. As an organization, Maple Ridge has approximately 500 full-time equivalent employees and a total budget (capital and operating) of about $75 million.

Maple Ridge adopted a formal business planning approach to achieve the following objectives:

i. Ensure that organizational leadership by Council was policy-driven;

ii. Provide program and service delivery designed with a customer focus;

iii. Ensure decisions were resource driven and aligned with other corporate initiatives; and,

iv. Integrate capital with operating budgets on a multi-year basis.

v. Ensure the system is designed to be cyclical with ongoing evaluation and continuous improvement initiatives.

On an applied level, Council adopted a Corporate Strategic Plan with a series of seven focus areas. These focus areas are: Governance; Safety and Protective Services; Community Development; Environment/Natural Resources; Economic Development; Land Use Management/Infrastructure; and, Financial.

The Corporate Strategic Plan represents the framework document that drives other corporate plans and initiatives including the business plans (see Figure 6).

Figure 6

Alignment

An inter-departmental committee comprised of elected officials, senior staff, front-line staff, and union officials coordinates the business plans. The committee was purposefully designed to be inclusive – representing all areas of the organization. The business plan steering committee annually prepares budget guidelines for consideration and approval by Council. Also, this committee provides the framework guidelines and assistance for the preparation of business plans.

Functionally, the business plan process requires a series of questions as part of the preparation phase including:

i. What are the outcomes of expenditures? (Establish what is accomplished in each budget unit area.)

ii. Identify the customers for each service area – internal or external.

iii. How is the service/program consistent with the Council’s goals?

iv. What are the strengths/weaknesses/opportunities/threats impacting your service/program

v. How do you measure results in your service/program?

vi. If you were required to reduce expenditures by ten percent, how would it impact your service/program?

A flowchart of the business plan process that includes a series of steps to be considered as part of the budget cycle is illustrated in Figure 7.

Figure 7

Business Plan Process

There are a number of elements of the Maple Ridge system that require further elaboration including:

Customer Service – This is an important element in Maple Ridge. All business plans now identify the customer (internal or external) for their service. The City has introduced a customer comment card system; and, on a broader level a citizen satisfaction survey designed to be repeated regularly. Other service area user surveys are conducted by individual departments. All survey and customer survey data are reported to Council on a regular basis.

Also, the City introduced a program of extended hours; and, is pursuing e-business solutions to become a seven day per week, twenty-four hour per day operation.

Employee Recognition – The City has developed two programs to identify and acknowledge employee contributions. These programs – “Very Innovative People,” (VIP) and “Going the Extra Mile,” (GEM) are now run by employees and they are seen to be very important in recognizing the element of “customer” in the delivery of municipal services.

Individual Action Plans – Individual Action Plans are required annually for all employees. These plans are linked to corporate initiatives and include the identification of training opportunities.

Merit Pay – The city has implemented a merit-based compensation system. Currently, all exempt employees are eligible for an up-to 5% merit payment annually based on achievement of identified individual or team goals. The plan is to extend this system to all employees.

Performance Measures – A series of key performance indicators have been identified from the business plan work. These are collected quarterly and reports to Council are used to communicate these results both internally and to the public. On an on-going basis, these data assist in the identification of areas for improvement.

Continuous Improvement – A number of key service areas have been identified for specific continuous improvement exercises. For example, the issuance of development permits was reviewed by an interdepartmental committee that recommended a “one-stop, single window approach,” which is now being implemented. Also, municipal advertising was consolidated with the School Board to appear regularly in a common “Community News” location for better customer service at a lower cost.

Achievements

The business planning system in Maple Ridge has yielded a number of achievements. For example, Maple Ridge has won a number of awards from the Government Finance Officer’s Association including:

The Canadian Award for Financial Reporting for the Comprehensive Annual Financial Report
The Distinguished Budget Presentation Award for the Annual Budget Document
The Award for Outstanding Achievement in Popular Annual Financial Reporting for the 1997 Annual Report

Also, Maple Ridge was the first local government in British Columbia to receive the Bronze Level Award from the Quality Council of British Columbia.

Finally, Maple Ridge has been invited to present a case study of their application of business planning and quality initiatives at conferences and workshops in Canada, the United States and the United Kingdom.

Conclusion

In conclusion, challenge and change will continue to impact local governments in the new millennium. There are numerous examples in the US, UK and Canada of local governments using quality initiatives and formal business planning methods to improve service delivery to their citizens and customers.

Maple Ridge, British Columbia provides an example of an applied business planning model which includes a number of quality initiatives that has generated success in a number of areas. Although it is important for individual organizations to craft a solution to reflect the unique circumstances applicable to their jurisdictions, the case of Maple Ridge is a practical, successful model.

Contact Information:

Robert W. Robertson, AICP, CED

Chief Administrative Officer

District of Maple Ridge

11995 Haney Place

Maple Ridge, British Columbia, Canada V2X 6A9

Phone: (604) 463-5221

Email: brobertson@district.maple-ridge.bc.ca

Paul Gill, CGA

General Manager, Corporate and Financial Services

District of Maple Ridge

11995 Haney Place

Maple Ridge, British Columbia, Canada V2X 6A9

Phone: (604) 463-5221

Email: pgill@district.maple-ridge.bc.ca

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