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Fairness, Accountability, and Shared Success

 

Moorestown
Approves Incentives
for the Township Manager

Gregory Gallo Michael Testa
By Gregory Gallo
Deputy Mayor
& Michael Testa, Councilman
Moorestown Township

In good times or bad, for any organization to perform successfully there must be alignment of goals and objectives. Measurable performance standards that hold us accountable to our goals are also critical.

Too often, leading by example is used as a cliché, but not here in Moorestown. Several years ago, we began providing a real performance review of our town manager. Recently, we have gone even further. We’ve added a performance-based incentive component to the compensation package of our newly hired township manager. In turn, we are hoping that he will put similar measures in place for the remainder of the township’s management.

Our move was motivated, in part, by the economic pressures of the past few years. Like those in many towns, Moorestown’s staff and elected officials face the challenge of providing a high level of service despite significant budget constraints and reduced revenue.

Our approach to curbing expenses has included direct cuts, sharing services and renegotiating contracts to be more tax friendly. On the revenue side, we have worked hard to avoid one time budget gimmicks, such as the use of deferred school taxes and other non-sustainable revenues, so that our taxpayers understand how their tax dollars are spent. Predictability is as important as sustainability in municipal budgeting.

artisr drawing of 2 men looking a bluprints in from of a futuristic factory

That said, another way we are achieving this goal and reacting to the new financial model championed by Governor Chris Christie, is to restructure the way we compensate and hold accountable the town’s management. While commonplace in the private sector, performance-based compensation is rarely seen in government. But, before you dismiss the idea that it can’t work in the public sector, consider the reasons our town council took this step.

Fairness Taxpayers have been under tremendous pressure during the economic downturn. They have greater expectations and less patience for employees in the public sector who often receive better pay, pensions and healthcare than they do. Public employees have been largely protected from the effects of the recession.

In addition, many technical and supervisory staff members possess professional certifications and expertise and take a visible role in our communities. Objective measurement of their performance is reasonable and fair.

Finally, some members of the staff have expressed frustration that there is no good way to reward outstanding performance. Top achievers are compensated in the same way average or underperforming employees are. This reality may even lead some employees to leave government for the private sector. Some Moorestown staff members expressed strong support for a change.
Accountability In the Council/Manager form of government, the township manager is the “Chief Operating Officer” of a multi-purpose organization. There are many routine and strategic responsibilities that need to be accomplished. While many objectives are short term, others are longer term, or “evergreen.” The challenge in both cases is to insure consistency and focus on agreed upon objectives. By tying compensation incentives into the managers’ pay package, a governing body and the citizens they represent can command a level of accountability not typical in government.

As the “board of directors” of our township manager, we want to provide leadership and ensure the best possible results. Putting compensation incentives into the mix allows us to reward our manager for meeting or exceeding our expectations based on realistic goals that go above and beyond the old government standard. We believe this approach is an improvement on the traditional government practice of pay raises that are preprogrammed, rather than tethered to measurable results.

A Shared Stake Staff should be invested in the success of the township. Some recent initiatives we have implemented include improved citizen communications and expansion of online transactional capabilities.

Incentive compensation is not designed to find ways “not” to pay someone, but rather to tie work focus and results to agreed upon objectives. In the best scenarios, incentive compensation is very much a motivator to those involved.

Implementing the Change The challenge in implementing a plan like this is the same as doing incentive compensation plans in the private sector.

Goals and objectives have to be realistic and encourage management to “stretch” beyond current expectations, but not be impossible. Goals should be set in multiple categories, such as financial, strategic, tactical and operational. For example the manager might be asked to develop a long range capital budget that is actually tied to the town’s balance sheet assets, typically called “funded depreciation.” Further the employee would be required to ensure the appropriate level of capital funding is in the budget annually to support it.

Objectives must be tied to agreed upon strategic goals. In other words, the key activities we want our manager focused on have to align with the major tactical and strategic objectives we give as direction. To the greatest extent possible, they have to be objectively measurable and quantitative. In some cases, the measurement may be more subjective or qualitative.

However, the plan needs to be discussed with the employee before it is finalized. In order to be effective, the employee must participate in and embrace the goals outlined. This allows him or her to have ownership of the plan and its results. Therefore, the plan must be finalized early in each calendar year, to give the manager a full year to work on and hopefully achieve their goals.

The manager will be able to use the objectives to help set the course for his directors and their staffs and in turn more effectively measure their performance. This allows a cascade of clear communication to direct the work of everyone in the organization.

Because this is a new concept for public sector managers, we will have to be patient. This initiative represents a culture change and will take a few cycles to perfect. We will learn a lot as we implement and manage the plan this year. We will modify future plans based on what we learn. Because elected officials change, and the staff doesn’t—future councils, regardless of political party, need to embrace the concept. Unless everyone is on the same page, we will lose an important tool for keeping the council, our citizens and key management staff aligned and committed to top performance. After all, this initiative goes beyond ideological differences and our ultimate boss is the taxpayer.

We are fortunate to have Scott Carew as our township manager and resident. He has enthusiastically embraced the concept and is leading by example. By partnering with both the council and staff members to improve the accountability of our services, we expect the township manager to greatly improve the quality of life in Moorestown.

 

 

 

Originally published in New Jersey Municipalities, Volume 89, Number 4, April 2012

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