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Local governments across Australia were required to navigate many different challenges created by the impacts of COVID-19. Now, as the country is collectively recording very low levels of infections, business and government alike are looking to what a COVID normal future might look like.

KPMG has been conducting workshops and webinars with councils over the past few months to better understand the unique concerns this sector faces and have created a framework that can be used to help tackle these difficulties.

Six focus areas for local government organisational recovery

Our framework offers a way for councils to direct their thinking around recovery plans and suggests a range of activities that should be considered at the resilience, recovery and new reality stages across six dimensions of organisational recovery – customer, workforce, financial, digital and data, operational and policy and regulation.

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1. Customer

COVID-19 has disrupted communities and their day-to-day lives in a way never before experienced, this means councils have had to find new ways to engage with their customers while ensuring there is continuity and compassion at the service delivery level. A majority of councils (66 percent) believe that continuity of service is the key focus area, and nine out of 10 councils selected business continuity as an area of focus. This disruption has meant councils have needed to consider:

  • Digital services: delivering service equitably through digital channels.
  • Continuity of services: identifying and ensuring continuity of the services most critical to the community.
  • Communication: embedding proactive and helpful communication strategies to curate important information required by the community.
  • Prioritisation: understanding the changing demands for services to re-prioritise service provision and investments.
  • Simplification: simplifying services and models of service delivery with the customer at the centre.

For councils, the road to a better future state means that they will need to review the levels of service they are offering, and consider which services are viewed as the most important by the community. Once these services have been identified, consideration will need to be given to the most vulnerable members of the community and how teams can best connect with them, during normal times, and times of crisis. Councils need to refocus on their purpose within the communities that they serve and ensure equitable delivery to all customers.
 

Next steps
Find out more on how Australia’s new normal is impacting both how customers interact with brands and how they’re spending their money.

2. Workforce

The road to recovery for councils’ workforces needs to consider how they can embed the benefits realised during COVID-enforced remote working and create a framework around flexible working arrangements that give staff the options they require, safely. Local governments will need to consider a number of elements to plan for this new way of working.

  • Priority groups: define priority groups of workers who need to return to work onsite and/or are considered essential and ensure processes are put in place to manage work permits.
  • Agility: embed the agility realised while working remotely and sustain streamlined decision making and governance – to do this we need to understand who is making the decisions, and how, and what changes are required to the traditional processes.
  • Health and wellbeing: as we move to a COVID-normal state, the health and wellbeing of the workforce will continue to be a priority, for staff onsite and working remotely.
  • Effective working: establishing what the design of your workforce will look like in the new reality, and what this may mean for the size and configuration of your facilities.
  • Employee engagement: creating a communications strategy that’s focused on employee engagement across office-based and virtual teams while ensuring leadership and management practices and behaviours support the new hybrid working models.

Local governments will need to consider how to maintain engagement with their workforce and provide support for these new ways of working. Leadership teams will need to understand and review how to manage staff in this workforce model – focus will need to shift towards productivity KPIs rather than time at the desk.
 

Next steps: Find out what the new reality will be for the public sector workforce, and how to design better business strategies by changing the way people are led, managed and developed through transformational change programs
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Over half of respondents (58 percent) voted health and wellbeing as a key area of focus, whereas effective working and employee engagement were considered the most difficult to achieve.

  

3. Financial

With reductions in revenue, many councils have needed to ensure that resources were deployed in ways that made the most beneficial impacts to their communities. The areas of focus will need to be on:

  • Revenue growth: analysing opportunities for pursing new sources of revenue and optimising existing ones.
  • Asset optimisation: gaining a complete, accurate picture of asset maintenance and renewal costs over the longer term, develop plans for longer strategic asset investment, placement and management.
  • Cost to serve: ensure the service portfolio is right, and in line with changing community expectations and priorities, with an eye to understanding the total cost to serve for the service portfolio.
  • Financial planning and resilience: ensure financial and operational planning, monitoring, forecasting and reporting capabilities are fit for purpose in an uncertain, dynamic environment. Consider iterative processes in addition to compliance requirements.

Local government needs to undertake strategic financial planning. They will need to focus on refining asset schedules to drive investment in planned works to deliver a reduction in costs. At a time when revenue is down, many councils have been looking for new revenue sources, with little success, so some are revisiting balance sheets and searching for way to commercialise or divest assets. Some are finding they can do more within the same cost envelope through identifying and tapping into skill sets of existing staff and reassigning them within the organisation. Finding this extra capacity can mean less external expenditure.
 

Next steps: Discover our roadmap for local governments to guide long term financial planning.

Having been at Murrindindi post 2009 fires – there was a big line of revenue support from state for recovery funding. Some of the impacts of COVID are similar but I doubt there will be same levels of support available.

Liz Peddie
Bayside City Council

Many Regional and Rural councils don't have capacity to raise income from new sources. Asset and service rationalisation may be a new reality. Let’s hope not though. Government initiatives, such as the Victorian Government’s Rural Councils Transformation Program, are now even more important post COVID-19 as a mechanism to mitigate this heightened risk.

David Rae
Corangamite Shire Council

  

4. Digital and data

The case for scalable, robust and secure technology has been highlighted during this time of disruption. Now is the time to examine what possible risk exposure newly embedded tech may have created, what elements should be taken forward in the architecture solution and what changes are required to create an ongoing, safe and reliable technology environment.

Local governments need to consider:

  • Cloud enablement and connectivity: establishing a fit-for-purpose cloud enablement strategy that will deliver the capabilities needed to keep the business running and staff productive. This may require considerable change and investment in existing infrastructure and systems.
  • Data: addressing disparate data sources and quality issues to enable efficient customer engagement and digital service delivery, including establishing a single source of truth. This was noted to be the hardest element to achieve by 60 per cent of respondents.
  • Prioritisation: define prioritisation of key technology initiatives including revisiting or starting IT planning and strategy work to respond to post-COVID needs.
  • Service management: identifying key process and technology changes that will enable straight through processing for core business services and greater ability to meet increasing customer expectations was a key focus area for just over half (53 per cent) of our respondents.
  • Cyber: understanding and securing organisational risk arising from technology and IT environment changes and ensuring appropriate monitoring and responsiveness against external threats.

Data, and its seamless integration and accessibility, continues to be the number one challenge for councils so they need to revisit and prioritise IT strategies and initiatives, and decide what to fund and when. The ability to have a single, reliable source of data is becoming critical, while at the same time the risks that cyber poses are becoming more of a focus. While councils continue to struggle to source the required technical capabilities, more consideration is being given to allowing field services staff access to apps to help them deliver services more efficiently.
 

Next steps: Find out how to embed an Always On business model into your operations, and how we imagine the digital transformation of our cities on the road to recovery from COVID-19.

I think data integration is a long-term problem, but exacerbated by current circumstances.

Liz Peddie
Bayside City Council

Field staff need access to data point 'Y' as do Ops staff and yet often needing to use different methods to get access to it. It's not that we need more storage, it's more seamless accessibility.

Marcus Barber
Special Projects for City of Greater Dandenong

  

5. Operational

During COVID-19, there was a major upheaval in the way local government services were delivered and experienced. Councils now need to consider the positives that can be taken from this to ensure operational resilience and agility into the future. To do this, they should consider:

  • Business continuity: update scenarios and assumptions and ensure lessons learned/feedback loops are in place to further enhance our business continuity framework.
  • Facilities and workplace: redesign the office and depot [RK1] [WE2] space to service remote and face-to-face service delivery simultaneously, while ensuring social distancing.
  • Pace of change: in crisis mode, planned programs of change needed to be scaled back to the things that really matter. Councils should consider how they can permanently refocus the delivery of end-to-end services rather than siloed teams or capabilities.
  • Partnering: operations that are needed as core versus those that could be delivered through partners or shared arrangements.

The future of what services need to be delivered and what shape they need to be delivered in, is being revisited across all sectors and industries. For local government this means a reconsideration of what role facilities and assets will need to play in this new normal. Councils will need to understand what the cost to serve is with a customer lens, and consider shared, or outsourced, services as a means to reduce cost and find efficiencies – aligned with set benchmarks.
 

Next steps: Discover insights from KPMG and the Public Sector Network’s Local Government Transformation event.

...business continuity in crisis mode has delivered a lot. But to really have hard conversations about what is viable, and most needed into the future is hard.

Liz Peddie
Bayside City Council

  

6. Policy and regulation

When situations are changing rapidly, the policy and regulatory environment that local governments work within can be a constraint to the agility required to respond. This recent crisis has indicated a number of ways that change can be enacted or optimised.

  • Collaboration: maintain effective collaboration between all tiers of government and commercial and not-for-profit enterprises.
  • Risk: enhance capabilities for identifying, managing and reporting of all dimensions of risk.
  • Procurement: ensure a more streamlined commercial framework that allows for partnering and co-design of solutions, as well as a more agile response to changing circumstances.
  • Workforce: redesign and ensure alignment of HR and employment policies to the new working practices.

The need for speed in the local government’s response to the impact of COVID-19 highlighted the rigidity of many policies and procedures. There is now an opportunity to drive a more risk-oriented approach which can support greater agility while managing key council exposures. In addition, workforce policies require a review to support the new normal ways of working and embed increased flexibility and mobility in the workforce.

Conclusion

The road to the future for local government involves councils’ learning from and leveraging their COVID-19 responses to improve customer centricity, enhance digital and workforce enablement, re-think services and how they’re supported by assets and infrastructure, and become more agile and responsive as organisations.