Managed Competition:
Part of a
Successful City’s
Strategy
Teresa Curlin
City 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
Vision
City’s vision statement
Priorities and Focus Areas
Council communicates themes to Leadership
Corporate Scorecard
Response becomes strategic objectives
Organization
Organization implements
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
Community of Choice for Living,
Working, and Leisure
Vision
City Council Focus Areas
Strategic
Themes
Strategic
Principle
Comprehensive Citizen Service
Corporate Scorecard
Serve the
Customer
Run the Business
Manage
Resources
Develop
Employees
Reduce
Crime
Strengthen
Neighborhoods
Increase
Perception of
Safety
Develop Collaborative
Solutions
Maintain AAA
Bond Rating
Provide
Transportation
Choices
Enhance Customer
Service
Deliver Competitive
Services
Achieve
Positive
Employee Climate
Optimize Business
Processes
Expand
Tax Base
& Revenues
Recruit & Retain Skilled,
Diverse Workforce
Safeguard the
Environment
Invest in
Infrastructure
Promote Learning &
Growth
Promote Economic
Opportunity
Linking Employees to City Strategy
Council Strategy
Focus Area: Restructuring Government
Corporate Balanced Scorecard
Enhance Customer Service
KBU Balanced Scorecard
Maximize Fleet Availability
Division Balanced Scorecard
Establish Fleet Availability Rate
Employee Performance Plan
Maintain 90% Fleet Availability
Development Plan
Increase skill or knowledge; get certification
City / County Consolidation
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Building standards
Planning
Purchasing
Utilities
Animal Control
Emergency Mgt
Crime Lab
Action Line
CharlotteMecklenburg 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.
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Organization Task Force
Privatization Task Force
Compensation Task Force
Current Key Business Units (KBU)
Result Of The Organizational Task Force
Service KBU
Support KBU
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Aviation
•Budget & Evaluation
•
Engineering & Property
Management
•Business Support Services
•
Fire
•
Neighborhood Development
•
Planning
•
Police
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Solid Waste
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Transit
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Transportation
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Utilities
•Finance
•Human Resources
Privatization and Competition Advisory Committee
Result 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
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Pay
Raises
Health insurance
Incentive pay
Workers’ comp
Longevity
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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