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Have you ever lived in a mismanaged municipality? Ever felt the urge to grab your public official and, fighting the rise of your voice to panicked falsetto, wanted to gently prod “Wake up! Fix the red tape on building permits?” If so, you may take a sly bit of pleasure in this story. The City of Waterloo, Ontario has lived out your local-government-rehaul fantasy—with inspiring, red tape defying results.

Waterloo is a city of 90,000, with a healthy variety of businesses including high-tech industry, colleges and white-collar firms. The city government is responsible for operations like water, sewage and road infrastructure, plus municipal planning and a number of other services. Waterloo has close to 700 union and non-union employees, who will tell you how proud they are of their award-winning organization. In its current state, the City of Waterloo has achieved a zero percent tax increase over the past year while generating a surplus of over $1 million in 1996 and had a total savings in 1997 of $1.4 million. You don’t hear those kinds of statistics in private industry often, and even less when it comes to government. But it wasn’t always this way.

A Turnaround in Waterloo
“The early 90s were not kind years,” says Rob Deyman, a senior consultant in organizational effectiveness in Waterloo. “Government money was running tight, grant money was all but disappearing and everybody wanted to blame public sector employees, so morale was extremely low. Soon we realized we had to get it together like a private company or we risked losing the right to provide our services to the public. Competition was a real threat.” By 1991 Waterloo had lost $5.7 million in federal support. In Ontario, legislation was drafted to cut all public service salaries, and local citizen groups were withdrawing support of city management. “Needless to say,” Deyman says with a laugh, “raising taxes was not a politically acceptable option.”

At the time, the city of Waterloo was a typical bureaucracy with clear divisions of responsibilities and a hierarchy of authority. Policy decisions were made “from the top down” and communicated to employees. Worker morale was at an all-time low, and the staff functioned like a town caught in political turmoil: bunkered in and vulnerable to no one.

Senior management, aware of the work culture, attempted change but none of their efforts really stuck: So many well-intended programs were introduced to the staff to increase productivity, that each new program took on a superficial quality. “Flavor of the month is what they called it,” says Deyman.

It’s clear that Deyman and his colleague Kathy Durst don’t fault the municipal employees for that attitude. There’s an understanding between the senior administrators and city staff members that wasn’t there seven years ago. “While we realized some major changes needed to happen,” says Deyman, “we also realized that no redirection, no real shift was going to take place without changing the ‘corporate culture.’ Unless we were willing to include staff members from all different areas in a team for change, we weren’t going to earn the dedication we needed to pull this whole thing off.”

Pulling The Whole Thing Off
“This whole thing” is a redesign plan begun in 1995 to “measurably improve” the way the City of Waterloo does business. External pressures like privatization, a reduced staff and tight funding forced the city to react to rapid and continual change without the blink of an eye. The focus of the redesign plan was to change the social and technical systems that drive performance in the organization. Waterloo’s objectives were not modest: Fundamentally changing the government’s structure, culture, work processes and the way performance was measured.

The redesign team included 13 employees from a cross-section of levels and functions within the corporation. Their three-step process consisted of examining:

-What the organization looks like today
-What the organization should look like in the future
-What actions are required to get from point A to point B

Immediately evident to the team was the need to clarify and simplify job functions within the organization. A reduction of hierarchical layers is one of the most noticeable changes, along with improved definitions of accountability and responsibility. “People on the front line have to know they’re just as responsible for producing results,” says Assistant Chief Administrative Officer and Director of Human Resources, Kathy Durst. Four distinct roles determine the responsibilities and expectations in the newly redesigned team-based structure, including team leaders, team members, directors and the chief administrative officer.

Visions and Values
No corporate redesign can hold its head up in the 1990s without a corporate vision and values. And while these things played a major role in Waterloo’s plan, Deyman is quick to point out that without making them accessible, it’s all rhetoric: “Vision and values held independently are important, but organizationally they’re of limited value unless commonly understood. If people can’t integrate them into how they do their job, what’s the point?” The values Waterloo decided upon include leadership, customer responsiveness and participation. The redesign team then went on to place these values firmly within the framework of a new structure.

Today it isn’t easy to recognize Waterloo from seven years ago: Instead of a hierarchical structure, Waterloo’s city government consists of five core business units. And the term business is sincere. “We have to care about everything that a regular business does,” says Deyman. “Our concern is delivering a specific product or service to customers. That means customer satisfaction, business functions and results should be easy to measure and improve.”

Business units each have an internal business consultant, an individual who assists and facilitates the preparation of a business plan for each unit. Assisted by the finance staff and human resources these consultants work with the unit staff to research and learn from success stories in the public and private sectors. Waterloo’s business units now incorporate a balance between focus on the customers, operations, employees and finances. Each unit is made up of a team of 8-12 staff members, financial and business consultants and a team leader. To create a plan, the team asked these questions:

-What are we doing now and why do we do it?
-How much does it cost?
-How can we improve?
-Where do we go from here?

A plan was based on the results from these questions, and includes a long-term business framework, a detailed action plan for the first year and a clearly focused role for the business unit. “The emphasis here is on clarity,” says Deyman. “We’re strident in our pursuit of no fuzzy thinking.” Each of the five core business units is comprised of smaller units which consolidate the functions and processes that deliver services to customers. Customer satisfaction, business functions and results are all accounted for within one unit, so it’s easier to keep track of and improve performance.

Measuring Up
Waterloo’s goal in their redesign program was to have city government function like a series of entrepreneurial businesses. How do they measure up? In five pilot programs begun in 1993-1994, the results were overwhelming. The fleet business unit saved $1.4 million in future replacement costs and $150,000 in annual maintenance costs. The utilities unit introduced a form of trenchless technology to replace water and sewer services—savings to date: $750,000, with anticipated future savings of $10 million. The development unit, which includes residential building permits, streamlined their internal work processes and improved turnaround time from 28 to three days.

Not surprisingly, the City of Waterloo is proud of its success. Deyman and Durst know we’d like to live in their city, that we’re daydreaming of huge cutting shears and streams of red tape falling to the floor. They know a 10 percent reduction in the bottom line over three years is worth some big bragging rights. And they’ve been letting their residents know about it, too. A video and annual publication, “We’re Here for You, Waterloo,” communicate the city’s trials and triumphs, and city officials present an information fair in local malls each year.
Now that the city has spread the word about their redesign, Durst and Deyman are on to the second stage, “doing what you said you would.” It’s critical that the business plans don’t become another report on the shelf,” says Durst. “They must become living, breathing documents which guide the actions of all teams and team members.” And if Waterloo’s past performance is any indication, it won’t be long before those documents come to life.