Managed Competition:Part of a
Successful City’s Strategy
Teresa CurlinCity of Charlotte
May 2007
City of Charlotte• Population: 664,232
• Council/Manager Government
• 14 Key Business Units 6,300 employees
• $1billion plus budget
• Second largest financial center in U.S.
Context for Strategy
Priorities and Focus AreasCouncil communicates themes to Leadership
Corporate ScorecardResponse becomes strategic objectives
OrganizationOrganization implements
VisionCity’s vision statement
Annual Council Strategy Retreat
Council Committees/Focus Area
Cabinets
16 Corporate Objectives
Key Business Unit (KBU)Scorecards
City Council Focus Areas
Community Safety
Housing & Neighborhood Development
Transportation
Economic Development
Environment
City Strategy
City Council Focus Areas
Community of Choice for Living, Working, and Leisure
Comprehensive Citizen Service
Corporate Scorecard
Develop Collaborative Solutions
Enhance Customer Service
Invest in Infrastructure
Expand Tax Base & Revenues
Deliver Competitive Services
Develop EmployeesDevelop
Employees
Run the BusinessRun the Business
Manage ResourcesManage
Resources
Serve the CustomerServe the Customer
Recruit & Retain Skilled, Diverse Workforce
Achieve Positive Employee Climate
Promote Learning & Growth
Vision
Strategic Themes
Strategic Principle
Optimize Business Processes
Maintain AAA
Bond Rating
Promote Economic Opportunity
Increase Perception of
Safety
Strengthen Neighborhoods
Provide Transportation
Choices
Reduce Crime
Safeguard the Environment
Council StrategyFocus Area: Restructuring Government
Development PlanIncrease skill or knowledge; get certification
KBU Balanced ScorecardMaximize Fleet Availability
Division Balanced ScorecardEstablish Fleet Availability Rate
Corporate Balanced ScorecardEnhance Customer Service
Employee Performance PlanMaintain 90% Fleet Availability
Linking Employees to City Strategy
City / County Consolidation
• Building standards• Planning• Purchasing• Utilities• Animal Control• Emergency Mgt• Crime Lab• Action Line• Charlotte-
Mecklenburg Police
•First Responder
• E-911
• Landfills
• Veterans Services
• Elections Office
• Tax Listings
• Tax Collections
• Parks & Recreation
Mayor’s Task Force
Mayor Richard Vinroot felt that more needed to be done to streamline City costs for services. In 1993 the City established three (3) citizen task forces.
• Organization Task Force• Privatization Task Force• Compensation Task Force
Current Key Business Units (KBU) Result Of The Organizational Task Force
Service KBU
• Aviation
• Engineering & Property Management
• Fire
• Neighborhood Development
• Planning
• Police
• Solid Waste
• Transit
• Transportation
• Utilities
Support KBU
•Budget & Evaluation
•Business Support Services
•Finance
•Human Resources
Privatization and Competition Advisory CommitteeResult Of The Privatization Task Force
• 11 member PCAC committee
• 8 members appointed by City Council, 3 members appointed by the Mayor
• Committee Chairman selected by the Mayor from the body of the committee
• Each member can serve two possible terms of two years each
• Each year a five-year competition plan is presented to the committee
$ Saving Options
• Competition: private sector and City staff submit bids to provide service to citizens, so that City may select the most cost effective solution
• Optimization: City’s efforts to extend lessons learned in competition to similar operating units
• Privatization: service contracted to private sector; employees do not compete
Source: Douglas Bean, City of Charlotte Utilities Key Business Executive
How Do We Choose What To Compete or Privatize
• Outcomes must be measurable• Annual expenditures should be in excess of
$500,000• Private firms must be interested in performing the
services• The “risk of privatization” must be acceptable
– Risk of Default– Loss of Human capital– Loss of Control
The Proper Support
• Internal Audit:– reviews City proposals – reviews private company financials– audits City contracts for possible gain sharing
• Legal:– consultation and review of solicitations and
contracts
• Procurement:– supports KBUs in solicitation development and
contracts negotiation
How We Measure Success
• Continuing competition
• Savings from competitive solicitations
• Savings from on-going contracts resulting in productivity gains and gainsharing
• Change in the corporate culture
Program Accomplishments
• Competition:– 49 won / 10 lost– Annual savings of $6m
• Optimization:– 26 services optimized/reengineered– Annual savings of $4.5m
• Privatization:– 72 services outsourced– Annual savings of $3.1m
Source: Douglas Bean, City of Charlotte Utilities Key Business Executive
The Link:Employees and Competition
• Skilled employees can identify opportunities for operational improvement
• Employee commitment makes competition execution successful
• Employees are the ones that “operationalize” improvements
• Employees commit to a program that recognizes their efforts – gainsharing
Employee Gainsharing
• Employee incentive for exceeding performance and budget targets
• Savings shared between bidding unit and individual employees – Half to unit / half to employees
Source: Douglas Bean, City of Charlotte Utilities Key Business Executive
What About HR?
• Cost of HR KBU factored into bids– Bidding unit’s portion of cost of
centralized HR function included in bid
Do you want to be the reason an operating department loses a bid?
Included Employee Costs
• Pay• Raises• Health insurance• Incentive pay• Workers’ comp• Longevity
• Social Security tax• Medicare• Overtime• 401(k)• Retirement• Temporary pay
Lessons Learned
• Take the time to develop expectations and communicate clearly with the vendors
• Construct a meaningful contract with consequences if the vendor does not perform to specific and measurable outcomes
• Not every service is suitable for competition• Communicate with employees• Follow through with contract monitoring and open
communication with the vendor• Staffing infrastructure is critical to success
More Info
• Meeting the Changing Demands of Your Community with Competitive Services…Human Resource’s Vital Role presentation
– http://www.charmeck.org/Departments/Human+Resources+City/Human+Resources.htm
• City of Charlotte’s Managed Competition Program– http://www.charmeck.org/Departments/Business+Support+Services/Pro
curement/PCAC/PCAC+Main+Page.htm