COVID-19: Civic Legal Client Update – 12 July 2021

Local Government Act 1995 (WA) Amendments: Drafting CEO Performance Criteria

1 Sep 2021

Image:  Lucian BOLCA/Shutterstock.com

Local governments now have greater clarity relating to CEO recruitment, performance and termination. This is because of the recent amendments to the Local Government  Local Government (Administration) Regulations 1996 (WA) (the Regulations).

Division 2 of the Regulations provides that the performance of a local government CEO should be based on contractual performance criteria, as well as any additional performance criteria. Essentially, the performance criteria act as key performance indicators and are vital to conducting annual CEO performance reviews.

The drafting style of performance criteria will have a significant effect of the efficiency and dependability of a CEO performance review. Poorly drafted criteria will be difficult to apply and can have a diluting effect on performance.  On the other hand, well drafted performance criteria can help the council to achieve their goals through their CEO.

In this article, we identify some tips for drafting effective performance criteria.

Align performance criteria with strategic plans

When drafting performance criteria, the council should first identify their priorities for the following review period. These priority actions should be aligned to the local government’s strategic documents such as the Corporate Business Plan.  This will ensure that the final performance criteria have clear strategic support and reflect the agreed ‘roadmap’ of the local government.

Making performance criteria realistic

It does not pay to draft overly ambitious CEO performance criteria. Although it may be tempting to try to enforce the delivery of various projects and goals through such criteria, there is a risk that doing so can make those criteria unrealistic.

If performance criteria are too ambitious, the CEO may be required to approach tasks with a ‘tick box attitude’ rather than ensuring all identified projects are completed in a meaningful manner.

The approach of setting the CEO an ever-increasing number of performance criteria, can have the effect of diluting outcomes. That must be the case where there are more projects (and related criteria) competing for the same and limited resources. It is unlikely that the goals of the council will be achieved in this way.

To avoid drafting unrealistic performance criteria, the council (or independent facilitator) should maintain a line of communication with the CEO. This will allow the CEO to provide feedback in relation to whether or not the local government’s resources can support the proposed combination of projects. The CEO may also be able to provide significant insight into the practicalities of particular projects including financial and staffing restrictions.

It may be helpful to conduct a council workshop to develop and finalise performance criteria, and to consider engaging a facilitator to assist with these discussions.

'Well drafted performance criteria can help the council to achieve their goals through their CEO'

Make performance criteria measurable

When drafting performance criteria, consider how useful they will be when the time comes to conduct the annual CEO performance review. Criteria that are broad and subjective will be difficult to assess as they encourage assessments based on personal opinion.

On the other hand, criteria that are specific and objective can be assessed based on indisputable facts. Performance criteria should therefore identify specific outcomes and clear timeframes. This is more likely to result in clear assessments against the criteria. It may also reduce disagreement among members of the council as to whether the CEO has performed well.

It is worth noting that setting performance criteria should not be seen as an opportunity for the council to stray into operational matters. It is within the strategic role of the council to outline specific desirable outcomes. However, it is not within the role of the council to prescribe how this will be achieved on a day to day basis.

See below a couple of examples of performance criteria drafting.

Performance Criteria: Example 1:

a) “Progress a new Community Strategic Plan.”

The word “progress” is open to a wide range of interpretations. The CEO may consider ‘progress’ to include simply beginning to draft a new Community Strategic Plan. The council however, may expect progress to include a workshop and community consultation.

b) “Deliver a new Strategic Community Plan to council by June 2022.”

Much of the subjectivity seen in a) has been removed in b). This alternative performance criterion has been drafted to include a clear outcome, including a recipient and deadline. When it comes time to review this assessment criterion, there will be little room for dispute as to whether the CEO has achieved what has been set.

Performance Criteria – Example 2:

a) “Facilitate the Local Government’s progression towards becoming a high performing organisation in its operations.”

The above statement has been drafted as a high level aspiration rather than a measurable performance criterion. This statement is particularly broad and provides little guidance to the CEO in relation to specific and measurable outcomes.

b) “Complete a review of all council policies and report the results of that review to council within the 2021/2022 financial year.”

c) “Provide council with updates of actions/projects identified in the Corporate Business Plan (2021/2022 period) via quarterly reports to council.”

When compared against a), it can be seen that b) and c) have identified certain measurable actions that would contribute towards becoming a high performing organisation. By identifying specific outcomes, the CEO’s actions are more likely to align with the vision of the council.

Conclusion

Drafting measurable and realistic performance criteria will provide clear guidance to the CEO that supports the vision of the council. Furthermore, it will assist to reduce disputes and subjective opinions when the CEO’s annual performance review rolls around.

It is worth spending time and care when drafting performance criteria, to achieve a more efficient CEO performance review. Hopefully this will in turn result in greater clarity for both the CEO and the council. One major benefit would be a motivated CEO as well as the achievement of the goals of the organisation.

Contact

Anthony Quahe

Managing Principal

9200 4900

Disclaimer: This article contains references to and general summaries of the relevant law and does not constitute legal advice. The law may change and circumstances may differ from reader to reader. Therefore, you should seek legal advice for your specific circumstances. The law referred to in this publication is understood by Civic Legal as of publication date.

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