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Agenda Item No. 6

 

The Vale of Glamorgan Council

 

Council Meeting 17 December 2014

 

Report of the Leader

 

Review of Senior Management Arrangements

 

Purpose of the Report

1.         The purpose of this report is to set out options for the arrangements to be put in place following the retirement of the Managing Director. 

Recommendations

1.         In the event both Bridgend and this Council ratify the submission of the Expression of Interest in a voluntary merger and the Welsh Government give a positive response on progression to the full Merger Proposal, the appointment of a shared Chief Executive be explored, subject to Bridgend Council’s agreement.

2.         A subsequent further report be brought to Council for final agreement to the arrangements for any joint Head of Paid Service post before proceeding.

3.         If for any reason a shared Chief Executive is not possible, Option 3 be approved and the Senior Management Appointment Committee make arrangements for recruitment and selection to the post of Managing Director.

4.         That the role profile included in Appendix A be used as the basis for preparation of the job description and person specification for the post of Managing Director referred to in recommendation 3.

5.         The salary for the post of Managing Director referred to in recommendation 3 be set at £127,133 and subject to Joint National Council for Chief Executives in Local Authorities terms and conditions.

Reasons for the Recommendations

1-2    To investigate the feasibility of a joint Chief Executive with Bridgend

3.      To make arrangements for the selection of the Head of Paid Service (Managing Director)

4.      To set the main responsibilities of the post of Managing Director.

5.      To set the salary and terms and conditions for the post of Managing Director.

Background

2.         A fundamental review of the Council’s senior management structure was implemented on the 16th April 2012. The aim of the review was to reduce the costs and numbers of senior managers across the Council whilst ensuring a sustainable senior management structure going forward.

3.         The main features of the subsequent re-structure were the:

·         Deletion of the role of Chief Executive

·         The creation of a combined Managing Director/Director of Resources role

·         The allocation of Section 151 responsibility to the Head of Finance 

·         The allocation of Monitoring Officer responsibility to the Head of Legal

4.         It was agreed that the effectiveness of the combined role of Managing Director/Director of Resources would be reviewed in July 2015 in the light of experience.  For that reason the arrangement for the Section 151 Officer responsibilities was also on an interim basis until July 2015. The designation of the Head of Legal Services as the Council's Monitoring Officer on a permanent basis was approved by Council on the 26th June 2013.

5.         As members are aware the current Managing Director has made a decision to retire and it is necessary to review the current arrangements for undertaking the Head of Paid Service role. 

Relevant Issues and Options

6.         The Managing Director, in consultation with the Leader, has instigated commissioning arrangements for independent external advice to conduct a review, in line with the resolution of Special Council of the 2nd September. Council resolved that outcomes from the review be referred for decision by Council on 17th December 2014.

7.         As a result of the above HayGroup were appointed to carry out the review of the senior management structure.  The focus of the review was on the arrangements with regard to the Head of Paid Service and any immediate consequence on the Council’s other senior roles. The HayGroup report is attached at Appendix A.

8.         In carrying out the review HayGroup met with a number of stakeholders and a summary of their views is included in the report. The report also identifies the current role of the Managing Director and arrangements elsewhere in the public sector.

9.         HayGroup have identified 5 main options with regard to the Head of Paid Service post going forward:

·         Option 1 – Status Quo, continue with a joint Managing Director/Director of Resources

·         Option 2 – Revert to the previous structure, Chief Executive plus a Director of Resources

·         Option3 – Continue with the Managing Director role, delete the role of Resources Director and rationalise reporting arrangements for Resources Heads of Service

·         Option 4 – Appoint a Joint Chief Executive with no other changes

·         Option 5 – Appoint a Joint Chief Executive and a Director of Transformation/Resources

 

10.      The report considers the benefits of each option and identifies further opportunities for Option 3 following the appointment into the post of Managing Director.

11.      Recommendations are set out in section 5 of the attached report which concludes that should it not prove possible to appoint a Joint Chief Executive in the short term, Option 3 would be the preferred option. If there is agreement on the merger of the Council then HayGroup’s recommendation would be Option 5.

12.      Cabinet on the 28th November 2014 approved the submission to Welsh Government of an Expression of Interest in a voluntary merger of the Vale of Glamorgan Council with Bridgend Council. The final ratification of the Expression of Interest will not be made until Council on the 17th December 2014.  The Welsh Government expect to provide their response to our Expression of Interest by the 5th January 2015. Should the Welsh Government agree, the next stage will be to develop the full Merger Proposal which again will need Welsh Government approval before a merger could proceed. The Council is likely to know whether Welsh Government approve the Merger Proposal by autumn 2015. Legislation and statutory orders would be in place early in 2016 and the vesting day of any new voluntary merged council would be 1st April 2018.

13.      Consequently, it is currently uncertain whether a voluntary merger would eventually proceed, even if agreement is given to proceed to the development of a full Merger Proposal. In light of this, it is suggested that with regard to Options 4 and 5, a potential joint Chief Executive post would initially be limited to a maximum of one year.

14.      Whilst an initial appointment could be made on a restricted competition basis, if members wished, under legislation that would be time limited to12 months. On expiry of that period the post would have to be advertised externally. This could increase the period of uncertainty for the Vale regarding officer leadership. Bridgend may not wish to share a Chief Executive during this critical period as it could dilute their management capacity.

15.      Any arrangements for sharing a Chief Executive would need to be clarified. This would include the willingness of parties, selection process, responsibilities of the post, reporting/governance structure, pay, apportionment of costs and contractual employment matters. The proposal would also have to be agreed by both Councils. If this option is chosen, a further report will need to be brought to Council to approve the final arrangements.

16.      Option 1 for a combined Managing Director/Director of Resources is a cost neutral option but is likely to lead to a deficit in leadership and change capacity in what will be increasingly challenging times ahead. The combined current salary for this post is set at a fixed point of £127,133.

17.      The existing job descriptions for the Managing Director/Director of Resources roles are attached at Appendix B and C respectively. Under Option 1, the job description for the combined post of Managing Director/Director of Resources will need to be an amalgam of these separate job descriptions.  Some duties will need to be amended to reflect recent changes, such as the removal of the Returning Officer responsibility (remuneration for this aspect was separate to the substantive salary). However, it needs to be noted that the arrangement for the Head of Legal Services to be designated as the Returning Officer is for a 2 year period to 13 November 2016 and will be reviewed by that date.

18.      The substantive role of the Director of Resources includes the Section 151 responsibilities. As already stated in this report, under the current arrangements the role of Section 151 Officer is being carried out by the Head of Finance, for which a supplement to reflect the additional responsibilities is being paid. This is due to the inadvisability of the Head of Paid Service and Section 151 Officer roles being combined into a single post. If Option 1 is the preferred way forward, permanent arrangements would subsequently need to be made for the Section 151 duties which will have been removed from the Managing Director/Director of Resources role.

19.      To revert back to two full-time separate posts for the Chief Executive and Managing Director as set out in Option 2 would be a costly option although it would increase leadership capacity. The salary scale for the Chief Executive was previously set at £132,468 to £146,412. The HayGroup report mentions that members could consider reducing this. The salary scale for the Director of Resources is £97,581 to £107,855.

20.      The job description of the previous Chief Executive is attached at Appendix D and would form the basis for the new job description, amended to take account of changes. The job description for the Director of Resources would be similar to that in Option 1 above and based on the job description at Appendix C. A variation of this option would be to either maintain the Director of Resources substantive role as the Section 151 Officer or to delete this requirement from the role. The main advantage of the former is that the supplement for additional responsibility would no longer be payable. The disadvantage is that it will significantly limit the potential field of eligible candidates for the Director of Resources due to the legal requirement for the Section 151 Officer to be a fully qualified accountant. In their report at Appendix A, HayGroup recommend that the Section 151 role is retained by the Head of Finance. The Head of Performance and Development currently reports to the Managing Director/Director of Resources. In Option 2 the post would report to the Chief Executive.

21.      With regard to Option 3, it is proposed that the number of Heads of Service reporting directly to the Managing Director is reduced to 3 but that the precise nature of this arrangement is deferred until the new post holder is appointed. This will enable the new Managing Director to have an input into the restructure.

22.      This arrangement would provide additional capacity to the Managing Director role and offer a development opportunity and increased accountability for senior managers. There would be some additional costs due to the increase in responsibility for one of the Head posts but as set out in the HayGroup report, depending on the Managing Director appointment, there could be an opportunity to mitigate these.

23.      As Option 3 represents a new role, a Profile has been prepared by HayGroup and is included at the end of the Hay Group report at Appendix A.  A draft job description for initial consideration by the Senior Managements Appointment Committee could be based on this Role Profile. The Profile is based on the Managing Director being “freestanding†and not the Section 151 officer. This improves governance arrangements and also widens the field of potential candidates that otherwise would be restricted to qualified accountants. The HayGroup report suggests that the salary for this post is maintained at the current level of the Managing Director at £127,133.

24.      The substantive post of Resources Director includes the Section 151 responsibilities and if this post is deleted arrangements for the Section 151 officer post will need to be made.  It is suggested that this is taken forward once the appointment to Managing Director is made. The Section 151 role is currently being undertaken by the Head of Finance on an interim basis until 31st July 2015.

25.      The recruitment and selection of a replacement for the Head of Paid Service will be undertaken by the Senior Management Appointment Committee. However, in line with the Council’s constitution, any recommended appointment will need to be ratified by full Council.

Resource Implications (Financial and Employment)

26.      The salary for the Head of Paid Service within each of the Options 1 to 3 recommended by HayGroup is set out in this report. Terms and conditions would be in line with the Joint National Committee (JNC) for Chief Executives in Local Authorities.

27.      Estimated costs of the Options 1 to 3 are set out below, at the minimum and maximum of the grade. The estimates include salary costs and any supplementary payments for additional responsibilities such as the Section 151 role. The costs include employers’ national insurance and pension contributions.

 

Min of Scale

Max of Scale

 

£’000

£’000

Option 1 – includes costs of Managing Director and supplement for S151 role

183

183

Option 2 – includes costs of Chief Executive, Director Of Resources and supplement for S151 role

321

354

Option 3 – includes costs of Managing Director, supplement for S151 role and supplement for an additional higher level Head of Service

 

196

196

28.      The costs of Option 1 also represent the costs of the current arrangement. With regard to Option 2, should the S151 role be incorporated into the Director of Resources post the supplement would not be payable and costs would reduce by about £12.6k. The Council could also consider reducing the salary for the Chief Executive post. Reducing it to the salary level of the Managing Director post would save between £7k and £26k per annum, including employer oncosts, at the bottom and top of the grade.

29.      With regard to Option 4 and 5, costs would depend on the nature of the arrangements relating to the Head of Paid Service, including salary and apportionment of costs. Assuming a cost to the Vale of 50%, a very provisional estimate is £110k for Option 4 and £250k for Option 5. It should be noted that Option 4 may require additional capacity to be provided and the cost of this is not included.

30.      Depending on the appointment to the role of Head of Paid Service, further savings from a subsequent senior management restructure may be able to be made and some of these are mentioned in the HayGroup report, particularly in respect of Option 3.

Sustainability and Climate Change Implications

31.      There are no sustainability and climate change implications arising from this report.

Legal Implications (to Include Human Rights Implications)

32.      Council has a statutory responsibility to designate one of their officers as the Head of Paid Service and requires Council to ensure that such officer is subject to reasonable terms and conditions as Council sees fit. The recommendations within this report seek to ensure that this statutory responsibility is fulfilled.

33.      The Local Authorities (Standing Orders) (Wales) (Amendment) Regulations 2014 require a Council to publicly advertise posts where it wants to appoint a Chief Officer and pay an annual remuneration of over £100,000 (unless the appointment is for a period of no longer than 12 months).

34.      The Local Government (Democracy) (Wales) Act 2013 inserted a new section 143A into the Local Government (Wales) Measure 2011. The section gives the Independent Remuneration Panel for Wales (IRP) powers to make recommendations in relation to any policy in a Council’s pay policy statement which relates to the salary of the Head of Paid Service, or any proposed change to the Head of Paid Service salary. Any Council which proposes to change the salary of the Head of Paid Service (except one which is commensurate to a change affecting the Council’s other staff more generally) must consult the IRP about the proposed change. The Council must then have regard to the IRP’s recommendations on the proposal.

35.      The IRP have been contacted on the proposal and, although their response has not been received in time for inclusion in this report, it is anticipated to be received by the date of Council. The IRP'S recommendations will be communicated to full Council at its meeting on the 17th December 2014 so that members can take their response into consideration into coming to its decision. It is important to note that the role of the IRP is limited to making a recommendation, Council are not obliged to follow it. However, a decision not to follow such a recommendation would be subject to scrutiny, including by external regulators such as the Wales Audit Office.

36.      The report has also been shared and discussed with officers from the Wales Audit Office who have indicated that they are content with the proposals.

37.      Any decision to appoint to the post of Head of Paid Service by the Senior Management Appointments Committee following the recruitment and selection process needs to be ratified by full Council.

38.      The proposals set out in this report raise a potential conflict of interest for some senior officers. In view of this, external legal advice has been sought and received on the employment law implications and related matters. All aspects of such advice have been taken into account in finalising the report. The advising legal representative will also be in attendance at the Council meeting should there be any questions or points of required clarification. HayGroup will also be present to provide advice.

Crime and Disorder Implications

39.      There are no crime and disorder implications directly arising from this report.

Equal Opportunities Implications (to include Welsh Language issues)

40.      Any recruitment process resulting from proposals in this report would be managed in accordance with the Council's equality proofed recruitment and selection policy and the requirements of the Local Authorities (Standing Orders) (Wales) (Amendment) Regulations 2014.      

Corporate/Service Objectives

41.      The proposals within this report have been designed to ensure a sustainable management structure for the Council.

Policy Framework and Budget

42.      This is a matter for consideration by Council.

Consultation (including Ward Member Consultation)

43.      Consultation has taken place with all Cabinet Members, Group Leaders, Members of the Corporate Management Team, Resources Heads of Service and with the recognised trade unions. Bridgend Council has also been contacted but wish to consider their position following on from the WG response to the Expression of Interest in a voluntary merger.

Relevant Scrutiny Committee

44.      Corporate Resources.

Background Papers

Council Report 2nd September 2014

 

Contact

Leader

 

Officers Consulted

Corporate Management Team, Heads of Service within the Resources Directorate.