Small towns don't always have small problems: Ashville case study.

Newton, Stan ; Borstorff, Patricia C.

CASE DESCRIPTION

The essence of this case is the evaluation of the impact of organizational structure on the efficiency of small municipal governments. The methodology used is that of Organizational Analysis (OA), which is a type of internal business appraisal aimed at identifying areas of inefficiency and opportunities for streamlining and reorganization. In this case, it involves the evaluation of policies and procedures that are performed on an ongoing basis in a small southeastern city government. Often not being designed on an efficiency model, but a political one, these organizations atrophy as personnel and requirements change over time. The situation of being subject to political, verses professional, leadership presents a challenge to the gaining of and the continuance of proficiency. Organizational features such as span of control and departmental responsibilities become quite complicated as there is typically a lack of stability in the quality of leadership. With the ebb and flow of demands, due either to exponential growth or substantial decline in population and the tax base, comes the need to realign areas of responsibilities. When this need goes unrealized or neglected appropriate changes in response to new situations are not made in a timely manner. Issues that need addressing may include work flow evaluation, reassessment of assignment of responsibilities, number and quality of personnel, and the adequacy of infrastructure. This case has a difficulty level of three and is suitable for a junior- level organizational behavior or management course. It can be taught in a 90 minute class with two hours of student preparation outside of class. The current trend in our society of expecting more from governments of all level gives this case a practical pertinence.

CASE SYNOPSIS

This case deals with an Organization Analysis (OA) for the city government of a small southern town. OA is an internal evaluation of an organization's strengths and weaknesses that will provide unbiased findings and recommendations to address shortcomings. The design of an organization can impact everything, from proper work flow to the efficient allocation of resources. The characters and situation that come to life in the case are those of a popular but ineffective politician, an under-performing municipal government, and the consultant retained to perform this analysis. In spite of recent economic downturns the city is doing relative well and it is with considerable anticipation that Dr. Russell, the consultant, undertakes this behind the scenes evaluation. Dr. Russell's methodology for deriving the needed information is to interview a total of 26 persons holding leadership positions. While the interviews revealed somewhat diverse opinions, some consistent themes appeared. After analyzing this primary data, Dr. Russell felt he had ascertained the principle problems and makes recommendations to correct them. Students find themselves entwined in the dilemma of striving to attain an acceptable level of city governmental performance while dealing with long standing traditions and pleasing, but ineffective, political operatives. Like the consultant, students are asked to provide solutions.

THE SCENARIO/CHARACTERS

Professor Russell received a very interesting assignment: to perform an organizational analysis study for Ashville. As a management professor, Dr. Russell was well versed in the theoretical solutions to organizational problems, but this was different. This involved practical application of management theory in a real life situation. Having been given a mandate by the contract between the university and the city, Dr. Russell set out to establish a methodology to mine the information needed to make recommendations for better city government.

Starting with investigation of the local economy, Dr. Russell was somewhat surprised to find that even while suffering the loss of its largest employer, the Spydex Corporation, Ashville had maintained a stable population of around 15,000. Due primarily to continued retail growth and with the further development of U.S. Highway 230, tax revenues had kept pace with recent history. While the municipal population remained stable, the peripheral trade area had shown growth, even in light of the Spydex Corporation move. The expansion of residential subdivisions around Lake Wilson, to include upscale vacation homes, represented much of this.

Even though the tax income had remained relatively stable the departure of Spydex left Ashville with an over capacity in the area of community services. This situation had been addressed by downsizing in many departments, primarily through personnel slots lost to attrition being left vacant or abolished. This represented about 10-15 percent of the workforce.

Professor Russell felt the first step was to interview as many leaders as practical. Twentysix individuals in leadership positions, ranging from department heads to the mayor, were selected for interviews over a period of three months. Fully expecting to find the typical infighting that characterizes many organizations, it was a pleasant surprise to discover little of the animosity that is typically present in such situations; instead, a scenario of cooperativeness and intergovernmental support was found.

INTERVIEWS

The Mayor's interview was quite interesting. She was frustrated and felt inept in the execution of her administrative duties due primarily to a lack of time and communication problems. Mrs. Williams spoke of tension that existed between her office and many departments with the main complaint being personnel issues and the allocation of resources, specifically money for pay and department equipment. Her personal frustrations included not being able to spend as much time with each of the department heads as she would like. The Mayor enjoyed the perks of the office and believed in being present at all community functions, meetings, and celebrations. A closer look at the infrastructure revealed that the Mayor had 13 different department heads reporting to her, several requiring guidance on a professional level that she felt unqualified to give. She knew that she personally lacked the technical expertise in their specific areas.

Visiting with Chief Jones of the police department, Dr. Russell was made aware of what was to become a recurring theme: low pay and high employee turnover. As Chief Jones explained, "Our main problem is the retention of qualified personnel. Many times, as soon as we get them trained and certified, we lose them to another municipality." As Chief Jones defined it, this situation was 'killing them.' This problem was mentioned frequently by almost everyone interviewed. He also expressed frustration in his lack of access to the Mayor, his direct supervisor, in a regular and timely manner. Chief Jones knew the Mayor wanted to be 'in the loop' but he could not chase her down to include her.

Chief Kelly of the Fire Department felt he had a unique situation. Ashville's fire department was also responsible for area Emergency Medical Support (EMT), requiring that each Firefighter be trained in both firefighting and EMT certification. Given this dual certification requirement, he was especially distraught concerning the compensation received by the Firefighter/EMT's relative to that paid to policemen. Chief Kelly was also frustrated by the lack of communication and direction received from the Mayor's office. He stated repeatedly, "Her office is just up the street and sometimes I find myself waiting for days to confer with my boss". And even more than the Chief of Police, Chief Kelly was frustrated by employee turnover, as trained firemen and EMT's continued to leave for better pay in surrounding cities. The fire and police chiefs shared two common problems: no access to the Mayor and few trained personnel staying in their jobs. As to the pay issue; Professor Russell's research revealed this lack of remuneration parity between police and fire departments was quite the norm in municipalities. While both professions are in the domain of public safety, policemen are generally higher paid. His inclination was to suggest serious consideration be given to the fire department's dual qualification requirement and the current salary discrepancy be adjusted, if not eliminated. Dr. Russell could see immediately the issue of internal pay equity had to be addressed.

As the City Engineer, Wayne Odum was responsible for a wide array of functions to include street maintenance, facilities upkeep, city motor pool, and the sewer operation. These responsibilities resulted in a total of six department heads working under his guidance and supervision. When Dr. Russell asked about work assignments and specific areas of responsibility, Mr. Odum answered "that he felt there was quite a bit of duplication of responsibility with a resulting lack of awareness as to who was to do what". Mr. Odum further commented that "this causes a significant misallocation of resources and funds that could be used for much better purposes". He was quite happy with his job but expressed concern that the opportunity to be more efficient was often lost due to inaccessibility to the city's chief executive, his direct supervisor.

Mr. Robert West had been the head of the electric department for longer than anyone could remember and was known as a very efficient manager. He described the relationship with other departments as "very cooperative" and spoke of how everyone seemed willing to help across department lines when needed. However he also felt there was significant overlap in the assignment or non-assignment of duties and responsibilities. He had a very interesting story of how he had proposed a joint venture with the main power supplier only to "see the opportunity taken by another municipality due to inaction by city hall". While being most congenial in his opinion of his work associates, both subordinates and his superior, when asked about his most urgent compliant he responded, "lack of communication and guidance from the Mayor's office".

Mike Baugh, director of Parks and Recreation, was a relative new employee with Ashville but had 10 years of experience working in the field with other municipalities. He gave his opinions quite candidly without the inherent bias of the other supervisors who generally were 20 year-plus employees. Somewhat surprisingly, his thoughts and observations were much the same as those given by his peers: low pay scale, duplication of responsibilities, and lack of guidance from the Mayor's office

Susan McCarthy, City Clerk, seem to be perceived as the 'second in command' of day-today operations. With her office being in city hall, just a few steps from the Mayor's, she was fully informed as to the most current management problems being addressed by city government. As the city clerk position required close coordination with most other departments, Dr. Russell deduced from these interviews that the position of city clerk was probably the most influential in the functioning of an efficient city government. In fact, he suspected that the house of cards would come tumbling down without her efficient oversight. Her broad responsibilities ranged from preparing and implementing the municipality's budget, the court administrative function, utility department collections, and administering the human resources department. She was highly respected and Dr. Russell believed that she was doing an exceptional job. She, too, had misgivings concerning her lack of audience with the Mayor. When asked for her suggestion to increase city efficiency, she replied "I am frustrated that issues often lay on my desk for days, and sometimes weeks, because no decision maker can be found to move the issues forward". When pressed by Dr. Russell for a solution, she replied "perhaps better organization in the Mayor's office would be a big help". She knew that the Mayor was elected by the populace and was well liked. After all, shaking all those hands and eating all those dinners with constituents had resulted in a Mayor that was quite popular outside the city government.

THE PROBLEM

With the above interviews being typical of other departments, Dr. Russell started to compile a list of the most common voiced complaints and perceived inefficiencies. Aside of the normal trivial grievances that are present in most organizations, the three main areas of discontent seemed to be; inadequate compensation, work duplication, and lack of accessibility to the Mayor. With thorough in-depth research, Dr. Russell found that city governments, like most organizations, evolve over time and tend to increase in both size and complexity as the nature of their operations become larger and more encompassing.

Governmental organizations typically find that the larger they become, the more difficult it is to effectively administer the services they provide to the public. The organizational structure of the city government, the way departments, agencies and divisions are arranged, is often the result of unrelated decisions made by different officials at different points in time. The result can be a hodge-podge organizational structure that evolves in a fragmented fashion. It is characterized by a lack of unity and coordination among its many parts. Effective administration of government--getting things done--is often difficult and expensive due to duplication of effort, overlapping functions, and lack of coordination and cooperation among departments. Conflicting administrative policies and procedures that become ingrained over time contribute to organizational "calcification" and resistance to change. Problems of "turf" between departments, overstaffing in some departments and understaffing in others, slow moving activities, and high cost are among the most common symptoms of a need for governmental restructuring and rethinking of the way a city carries out its business.

Creating a results-oriented governmental organization involves a process of consciously and deliberatively integrating the separate administrative functions of the city into one cohesive unit. Building a capable government to carry out the work of a city depends largely on developing a good internal organization and selecting competent personnel. These critical elements are the result of strategically designing an organizational structure that has a logical arrangement of the city's work among departments. A capable organizational system consists of many interrelated and interdependent parts that must function together as a whole.

THE SOLUTION

Almost immediately, even before being confirmed by the interviews, Dr. Russell was confident he saw an area of inefficiency in the current organizational configuration. The Mayor was serving as the first line supervisor to 13 different departments. Compounding this extremely large span of control was the fact that many of these were of a specialized technical nature requiring knowledgeable leadership. Further complicating this situation was the Mayor's time consuming political duties, which by all accounts she enjoyed and was quite adept at. Professor Russell was confident this situation was the source of the "lack of access to the Mayor" problem.

Solving a work duplication problem usually requires the management and leadership of a central authority who is responsible for the entire body of work, in this case the Mayor. Dr. Russell had already perceived short comings in the Mayor's capabilities, due in large part to both a huge span of control and a perceived lack of interest in the running of the government. It seemed likely that this was also the root of the work duplication problem. Most likely there was an accumulation of extra employees over the years during the ebb and flow in the size of the city. In the good times, employees were added; in the rough times, these employees remained.

The inadequate compensation issue was a management problem of a different sort; or was it? While not given complete access to the financial condition of the city, Dr. Russell felt that monies were available to address this issue. The problem was how to allocate them in the best service to the city. A through financial analysis requires unbiased evaluation and time for objective review. Neither of these criteria was being met here. The central authority that should have had the grand overview, the Mayor, was overwhelmed with daily tasks and had few resources available to undertake larger management issues. The other decision makers in the compensation dilemma, the department heads, had little vision and no authority beyond their limited areas of responsibility. Hence, Dr. Russell believed this too was an indirect result of over stressed management and the excessive span of control held by the chief executive.

In the business world, some of the most difficult changes to accomplish are proactive ones. These are changes instituted by futuristic management in companies that are currently doing well, in an effort to prepare for tomorrow, versus maintaining the status quo of yesterday. While management may be aware of the need for these changes to meet the coming onslaught, oftentimes customers, citizens, and employees are not. It is possible Ashville may suffer from this syndrome, as the city is not broken; actually it appears to be doing relatively well. With Dr. Russell's review of all he had learned it became clear that the principle question facing Ashville was; "Is now the time to address shortcomings and prepare for the future?" Given the fact that the city had invested considerable time and treasure in getting this study and that the current political atmosphere seemed conducive to the acceptance of logical change, he was unhesitant in answering this question affirmatively.

After considerable research into the form of governments of other municipalities of similar size and into state law stipulating what types of organizational arrangements would meet legal requirements, Dr. Russell made the following summations and recommendations:

1. Stay as you are. As discussed, while the city is not broken, the current arrangement does have some shortcomings. The fact that the mayor has 13 reports to monitor, and make daily decisions concerning operations therein, is in itself, an inhibiting factor to growth and efficiency (See Figure 1). The broadness of this responsibility, along with the technical aspects of much of it, makes this situation professionally untenable at worst, and a cumbersome one at best. The reliance on the intangible asset of the enormous years of experience held by the department heads could result in a false sense of security as these longtime employees start to depart.

2. Consolidate existing departments. This option would be a step in the right direction to reduce the above mentioned unwieldiness of the current situation; but, it would do little to bring professionalism to the affairs of government. The resulting arrangement would still require supervision of technical areas by nonprofessional (political) individuals.

3. Consider a change in the form of government; namely to one of the three variations of the Council--Manager form. Under these auspices, the options are:

A. Formally adopt the Council-Manager form of government in compliance with the Council-Manager Form of Government Act of 1975/1982, pursuant to sections 1143A-1 through 11-43A-52 of the State Code governing the creation and operation of municipalities. The implementation of this option requires holding an election and other exact specific compliances with the law. The details of this option are not listed here as they are quite lengthy, somewhat confusing; and, in Dr. Russell's opinion, not the best one for the situation in Ashville.

B. Appoint a City Manager under Sections 11-43-20 through 11-43-22 of the State Code: any mayor/council may elect to hire a manager without changing its form of government. While the city manager's duties are not spelled out to the detail as they are in the option listed above, they are still mandated to a significant degree by the stipulations in the referenced code. This inherent inflexibility, along with the ambiguity of the law in its references to the legality of mayor versus city manager authority, makes this option somewhat problematic.

C. Appoint a Municipal Administrator. It is this option that Dr. Russell suggests the strongest consideration be given. As pointed out above, internal conflicts among Code sections have caused some municipalities, which wanted an executive administrator but who did not want to change their form of government, to look more closely at appointing an employee to assist the mayor. The Municipal Administrator, or the administrative assistant to the mayor, as the position is sometimes called, is usually an officer of the municipality, who performs whatever functions are assigned to him or her by the council ordinance creating the position. The Administrator, while given a great deal of discretion in the performance of his or her duties, is subject to the daily supervision of the chief executive officer of the municipality; in this case, the mayor.

The administrator is usually a person with considerable experience or training in the operation of municipal government. He or she should be knowledgeable about the laws and regulations governing the municipality and have a working knowledge of how to interpret and apply them. The reason for hiring an administrator is usually the same in most places; the desire to have a centralized person, who is familiar not only with local needs but with national trends and ideas, to supervise municipal functions. This person's job is not to usurp the mayor's powers, but to make the executive more effective. The administrator can advise the mayor and the council of municipal needs and keep them informed on the implementation of city projects. The administrator can also help de-politicize city hall. The mayor and council are sometimes forced to resolve highly polarizing political conflicts. While the administrator must keep his or her employer happy to stay employed, he or she can help resolve opposing political desires by providing an objective source to which the mayor and council can look to for advice.

When contemplating hiring additional personnel and adding salaries, cost and cost effectiveness always seems to come up. Many of the benefits gained by adding an administrator often lie in intangible areas, making the situation difficult to formally analyze or audit. While there doesn't seem to be any hard data to support a conclusion, there is sizeable evidence and strong perception that hiring a professional administrator most often actually saves money. The administrator should provide a higher competency of supervision in the many technical areas of city operations, more professional coordination, and enhanced probability of seizing initiatives early; be they problems or opportunities. These areas represent increased efficiencies, effectiveness, and inherent savings.

SUMMATION

Should the city elect to follow this recommendation, Dr. Russell suggested that the new administrator be given the title of Director of Utilities; with responsibilities as defined by the council and in keeping with the accompanying organizational chart (See Figure 2). This new position of Director of Utilities would have seven reports: Meter Readers, Lights, Gas, Wastewater Treatment, Sewer, Potable Water Treatment, and Potable Water Distribution. It is thought that these are the areas needing the most technical expertise and coordination. While not necessarily the goal of this suggestion, seven (7) personal supervisory functions are theoretically thought to be approaching the maximum most people can control without slipping into the syndrome of diminishing returns. As is shown in Figure 3, this position reports directly to the mayor and is on a par level with the other shown entities.

This limited reorganization would result in a new city organizational structure. As shown in Figure 3, the mayor also has seven (7) reports to deal with on a daily basis. This is down from the present thirteen (13). This suggested restructuring has the mayor over seeing departments that are all headed by a professional: Utilities, Public Works, Library, Community Development, City Clerk's Office, and Police and Fire Departments. It is thought, while retaining political control of city functions, this arrangement will better allow for a continuity of professionalism at the core level of city operations. Another anticipated result is less disruption and the resulting inefficiency in city government caused by the prevailing political winds every (4) four years. Consequently, this structure should contribute to an increased level of efficiency that can proceed unabated year to year.

After three months of hard work and diligent research Dr. Russell's project was completed with his presentation to the city council at a meeting that was open to all city employees. While no political body ever seems be in complete harmony, he was quite pleased with the reception of his findings and recommendations. Following a quite intense question and answer period the council went into formal session with the Mayor recommending that "Dr. Russell's work be accepted as official guidance for city staffing in the future".

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Stan Newton, Jacksonville State University

Patricia C. Borstorff, Jacksonville State University