It is interesting to recall that the notion that municipalities should run more like a business first came to the fore as part of the turn of the century reform movement of the early 20th century. “There is no political way to build a road” was the rallying cry from those who wanted to get rid of politicking and operate on the basis of rational, scientific decisions. While it is true that the engineering required in road construction is not political, the decision on where to build a road most definitely is. So is the decision on whether to build a road at all, or some other form of public transportation.
Nonetheless, the city efficient movement of more than 100 years ago promoted the abolition of election by ward and the creation of small councils elected at large. In some cities, it was even suggested that council be abolished entirely and local affairs managed by appointed executives. In rather similar vein, reforms called for the appointment of boards and commissions to oversee activities, thus removing them from the political arena. The reform movement also favoured the appointment of a chief administrative officer (known as a city manager on the local scene in the U.S) to coordinate municipal operations.
Toward the end of the 20th century, a second wave of reform known as the new public management (NPM) movement again promoted the notion of municipalities running more like a business. As I have written elsewhere (Tindal et al, Local Government in Canada, Chapter 9), its chief features included:
- Distinguishing between the policy and service delivery roles, popularized as the steering versus rowing distinction.
- Shifting responsibilities from departments to separate agencies whose managers could then operate with more freedom and flexibility.
- Establishing performance standards and an increased customer focus as the primary method of ensuring accountability.
- Introducing a competitive atmosphere, in part through considering alternative service delivery options to provide programs traditionally offered by government.
Municipalities are not businesses. They don’t have just occasional and specific contacts with customers; they have ongoing and complex relationships with citizens. Small council elected at large may offer expedited decision making, but how effective are they in representing the diverse needs of larger communities? Hiving off responsibilities to separate boards may allow them greater operating freedom, but how does one ensure coordination of such a fragmented structure? Encouraging separate business units to be more entrepreneurial and operate as close to break-even as possible – while introducing a potentially healthy competitive atmosphere – may also prompt these units to focus on shedding costs and accruing revenues, thereby turning competition into a divisive and destructive force.
Striking a Balance is the Key
There is much to be said for municipalities becoming more business-like. Establishing measurements of efficiency and effectiveness, holding staff accountable for their performance in relation to these standards, and rewarding superior performance are all business techniques that have proven to be beneficial when introduced in the public sector. Providing freedom of operation to “let managers manage” has also been productive. Ultimately, however, one must always remember that a municipality is a government, one elected to represent and make decisions on behalf of its residents and ratepayers. The challenge is to ensure that its operations are not only efficient but focused on addressing the local public interest.