Centralization vs Decentralization

County General Services AssociationApril 3, 4 and 5, 2013

Agenda

Why Me?

Look at Decentralized, Centralized and Center Led Models

Transition process in Butte County

Questions and Answers

Agenda

Why Me?

Some wanted Decentralization Some wanted CentralizationSome Didn’t Know

. . . . so we changed models . . . . often

Why Me?

• Budget Cuts of 2008 – 22% reduction in staff

• I was a Property Manager and Management above and below departed

• Nationwide search for a Director took 7 months

• In the end, I was left holding the bag

• Finance decided to start allocating costs to departments

• Hope my experience through this can help others

DecentralizationWhat is it?

Each Department responsible for their own purchases

Policies&

Procedures

Task Processing

PROCESS

DecentralizationWhat is it?

Each Department responsible for their own purchases

DecentralizationWhy?

• Departments demand it

• Often speedier process

• Increases accountability

DecentralizationWhy Not?

• Less leveraged procurement

• Costs are typically higher – multiple purchasing agents

• Lack of internal control

• Lack of consistency

Centralization

All procurement functions are centralized in one Department

Policies&

Procedures

Task Processing

PROCESS

What is it?

Centralization

All procurement functions are centralized in one Department

What is it?

CentralizationWhy?

• Allows for leveraged procurement – better prices and services

• Reduced processing costs through economies of scale

• Strong base of knowledge and easy to change process

• Increased internal control and consistency

Why Not?

• Disagreements with other Departments

• Slow processing - bottlenecks

• Lack of technical nuances known by departments

• One size does not always fit all

Centralization

Center LedWhat is it?

A Hybrid – Centralized and Decentralized Components

Policies&

Procedures

Center Core Of Excellence:-Strategic Planning-Best Practices / Polices

Task Processing

Departments:-Tactical Execution-Feedback

TaskTask

TaskTask

Task

PROCESS

Center LedWhy?

• Best of both Decentralization and Centralization models

• Can implement long range strategic plans when it makes sense

• Quick turnaround at the Departmental level

• Cost Savings – Recent Aberdeen Group Study• 5% to 20% cost savings• Higher Spend Under Management Rate

• Improved working relationships between Departments

Center LedWhy Not?

• It is a lot of work!

• Staff must be confident leaders

Transition to Center LedNecessary Components

• The Teams

• Authority

• Proper Delegation

• Systems

Transition to Center LedThe Teams

Overall Organizational Structure

Steering Committee• CAO• County Counsel• Auditor/Controller• HR Director• GSD Director• Sheriff

General Services Staff• Contracts/Procurement Staff• Supporting Admin Staff

Pilot Team• DESS Director and AD• PH Director and AD• Treasury/Tax Director and AD• GSD Director and C/P Manager

Transition to Center LedThe Teams

General Services Staff• Contracts/Procurement Staff• Supporting Admin Staff

Pilot Team

• Proper Job Classifications – Training, Auditing, etc

• Confident Leaders – Task Transition

• Agents of Change

• Heavy Administrative Support - Documentation

• Roles• Administer and coordinate the meetings• Document Control

• Added 2 Limited Term Positions

Transition to Center LedThe Teams

Pilot Team• DESS Director and AD• PH Director and AD• Treasury/Tax Director and AD• GSD Director and C/P Manager

• Diverse in opinions

• High volume and Low volume Departments

• Buy in from the top

• Assurance of success

• Roles• Detail review of material• Present alternative concepts• Develop and Test Process• Think of other Departments

Transition to Center LedThe Teams

Steering Committee• CAO• County Counsel• Auditor/Controller• HR Director• GSD Director• Sheriff

Pilot Team

• Internal Control Departments

• HR – Job Classifications and Discipline

• Sheriff – Represents Departments

• Roles:• Dispute resolution • Sets overall direction

Transition to Center LedAuthority - Informal

What is it?

• Given by people that WANT to follow

• The ability to influence people to do things they don’t have to do

• Not bound by traditional lines of communications

• Not documented anyplace

Transition to Center LedAuthority - Informal

Why do you need it?

• Powerful – allows you to get things done

• Others outside of your formal authority will have to work for you

• To ease internal control concerns and challenges

Transition to Center LedAuthority - Informal

How do you get it and keep it?

• Listen, listen, listen, listen

• Reach out

• Be positive

• Be Confident and allow challenges

• Be a good LEADER

Transition to Center LedAuthority – Formal

Ordinance

• Allowed deviation from policy and increased pilot teams spending authority

• Sunset in 18 months

• Oaths for Departments required modification

Transition to Center LedProper Delegation

• Departments (individuals) shall be trained

• Documentation (Policy) must be clear

• Departments (Individuals) shall be certified

• Transactions shall be audited

• Department Heads are responsible

Transition to Center LedSystems

• Alternative Authorizations Structure

• More significant coordination than originally anticipated

• Common access to scanned contracts for auditing

• Audit Processing

• Training Documentation

Transition to Center LedNext Steps

• Final recommendation to the Board• Policy• Procedures• Ordinance Update

• Role out to all departments• Determine levels of authority• Training

• Become more proficient in completing new tasks:• Strategic planning instead of buying• Speak to the vendor community as a common voice• Solicitation and Negotiation support

• Re-Evaluate Cost Allocation methodology

Transition to Center Led

You Survived!!!!!

Questions???