Auckland has a new Mayor – Wayne Brown. The Mayor campaigned on a platform of change.
On the campaign trail Mr Brown promised to take back control of the Council-Controlled Organisations (CCOs) and cut $100 million of ratepayer funding for Eke Panuku and the council's economic development and events arm Tātaki Auckland Unlimited. He said if they can survive on their own, well and good. If not, they will be closed down.
During the election campaign, Brown also said as Mayor he planned to pass a resolution to cut the salary pool of staff earning more than $300,000 by 30 per cent, middle management by 20 per cent and lower management by 10 per cent.
Auckland Transport Chair Adrienne Young-Cooper has already stepped down after she learned that he wanted the Board to resign.
The Chair and Board of Eke Panuku Development have not heeded Mr Brown’s call for their resignations.
Having acted for numerous Boards and Chief Executives, in my experience means calls for change at the governance level which often leads to change at Chief Executive and executive management level. Change for executive management then often leads to change further down the organisation. Change often means restructuring, dismissals or performance management. All usually come with a hefty cost (in both time and money).
Employment law requires an employer to demonstrate two things; a justifiable reason for terminating an employee’s employment and to follow a fair process. A fair process will involve the employer having no pre-determined position. The Mayor has created a problem with taking such a public stand on the changes he wants made.
Board members are appointments, they are not employees. Assuming that the changes are made at Board level, how does that play out at Chief Executive level if big changes are required? The Chair then has effectively five options; work with the incumbent Chief Executive, request the resignation of the Chief Executive, restructure the Chief Executive role, dismiss the Chief Executive for serious performance matters already raised, or performance manage the Chief Executive.
The Mayor must have some dissatisfaction with the leadership and structure of the CCOs given his public statements. He wants change.
The top job comes with a top salary. The new Board cannot simply dismiss the Chief Executive. The Chief Executive is unlikely to resign unless the terms of the resignation are favourable. The starting point is the notice period – usually a lengthy period for a Chief Executive (usually starting at 6 months). The Board may be able to pay out the notice period. If so, it may elect to do so. If not, the Chief Executive can expect to work out the notice period. There is then a lame duck Chief Executive in the role for a lengthy period while a new Chief Executive is recruited. Read more...