The 4 ‘Ts’ Of Boosting Local Govt Financial Performance
Local government’s growing role in our lives has made it imperative to boost financial performance. But with a global survey showing a lack of clear benefits from reform, how can governments make a difference?
According to a poll of more than 1,000 government and business leaders worldwide by the Chartered Institute of Management Accountants (CIMA) and American Institute of CPAs (AICPA), 90 per cent of city, provincial and other local governments have transformed the way they work or plan to do within 18 months, but 30 per cent cannot quantify the financial benefits.
Meanwhile, 70 per cent of business executives surveyed said such reform efforts had not assisted their operations.
With local governments increasing their responsibility for service delivery and amid greater public-private partnerships, the findings have led to calls for a stronger finance function. According to a new Chartered Global Management Accountant (CGMA) report, the key areas are the “Four Ts,” comprising talent, technology, transformation and transparency.
Attracting talent
Nearly half of the local government leaders polled said they struggled to compete with the private sector for staff, despite most having a talent management strategy. The report said local governments must develop incentives and compensation structures that attract and retain talent, while determining where skills are lacking.
Key attributes required of senior leaders include team building, coaching and mentoring (cited by 35 per cent), followed by foresight and adaptability (29 per cent) and operational knowledge of the broader organisation (28 per cent).
Harnessing technology
Finance leaders have been urged to play a greater role in helping governments with their information technology (IT) strategy, by developing a clear understanding of the costs and outcomes.
According to the survey, 89 per cent of government respondents consider IT core to their transformation efforts, but only 57 per cent have sufficient budget to deliver on their strategy and 40 per cent struggle to manage data and share insights.
Managing transformation
Transformation is ongoing among local governments, but the finance function has a greater role to play in analysing the financial impact, thereby helping to secure the necessary budget.
The top five challenges cited for local government are getting people to adapt, securing funding, determining the cost-benefit, finding the right skills and deciding where to focus their efforts.
Increasing transparency
Local governments see transparency as increasingly important, however it is far more than simply sharing meeting minutes.
According to the report, transparency requires identifying the right sets of data as well as the appropriate indicators demonstrating local government’s effectiveness. An example is the City of Edinburgh Council’s 2015/16 online budget planner, which gave residents the opportunity to make simulated budget allocations and borrowings, making them aware of the trade-offs.
The finance function can future-proof itself by developing strong management accounting capabilities to support better decision-making. With an estimated seven out of 10 people globally living in a city by 2050, enhanced local government performance is vital to the future of our communities and businesses.
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