How a US city benefits from a close look at its finances

27 Sep 16

Any organisation can find opportunities for improvement if it looks for them. Redmond adopted CIPFA’s Financial Management Model to test how well it was doing in various areas and plan improvements strategically

The city of Redmond in Washington is small, with 60,000 citizens. Located 16 miles east of Seattle, it is home to several significant technology companies, such as Microsoft and Nintendo. Total employment in our city is about 85,000, with most of those jobs in the technology sector. As a result, we are a technology-focused community and expectations for the management of city finances are high.

When I came in as chief finance officer, I wanted to get a good sense of the financial health of the organisation and assess our ability to manage our community’s resources well. This would enable us to deliver very good value for money to the community and the businesses it supported.

At the same time, we were working on our organisational culture so it would become one that aspires to excellence at all levels. The concept of continuous improvement is part of that cultural shift. We believe that any organisation can find opportunities for improvement if you look for them.

With that in mind, we started a “high performing organisation” initiative. Adopting the CIPFA Financial Management (FM) model made perfect sense in this environment. By design, the model exposes areas of the operations to scrutiny that might otherwise be overlooked.

CIPFA was offering its FM modelling tool to practitioners across North America. Having been involved with the effort to tailor the self-assessment tool to meet the requirements of standard setters in the US, it helped me to understand how well public financial management (PFM) was embedded across all our departments. The FM model
proved to be very comprehensive and allowed us to benchmark internal functions and assesses how well we understood PFM.

I particularly liked the way the self-assessment tool was laid out, with different areas of focus including: securing stewardship; supporting performance; and enabling performance. It meant it would deliver a comprehensive review of our financial state.

The ultimate goal was to transform financial management responsibilities. This called for employees to see their work differently. Rather than focus on the task directly in front of them, the model enables a broader view, where staff can see how they add value to our community through their efforts. More importantly, it also allows them to see how they could add much more value and “enable a transformation” of the function to benefit our stakeholders.

Once the self-assessment tool had been completed by all stakeholders and the reports collated, we shared the results at several levels. We reviewed the results internally to understand where there were opportunities to invest in improvement efforts. The comprehensive nature of the FM model helped us to avoid overlooking some aspects of our operations.

We also shared the results with Redmond City Council’s elected officials. They provided the support necessary to develop a strategic plan to look at the best ways to improve the operational performance of some departments. As a result, focused technology improvements became much more strategic, with a better cost vs benefit value.

One of the benefits of the tool is that the benchmarks it contains allowed
us to see how well we were doing. We were able to identify gaps that needed to be addressed and see how they could be aligned with best practice. This enabled us to be strategic about responding to these and tackle the greatest weaknesses first. The comprehensive nature of the FM model is an unanticipated benefit. While we felt we had a pretty good grasp on our financial management, the model helped us to identify further opportunities.

By identifying gaps in certain aspects of our operations, we were able to develop sub-surveys to drill down into those areas. Through these sub-surveys, we were able to engage with additional audiences and gain different perspectives on what we were doing. This provided a rich combination of input and assessment from a cross-section of our organisation.

The FM model was used not because there were problems but because we wanted to be active in improving our financial management practices. We were involved in this effort just after the global economic crash and the FM model exercise enabled us to future-proof some of the development areas where gaps had appeared. The city of Redmond is AAA rated by the bonding agencies, so we are already a strong organisation, but we still wanted to demonstrate our commitment to continuous improvement.

Redmond works to be a transparent organisation and we share our experiences with other finance professionals in our region and around the country. We are involved in professional associations where we can discuss best practice, opportunities for improvement and the like. We are looking forward to more organisations engaging in this exercise so we can learn from each other.

The FM model identifies best practice and allows you to evaluate your own condition, and we are interested in how others interpreted the various issues it raises. It takes you to a point where there needs to be some interpretation of what those next steps should be. Collaborating between jurisdictions is very common in the US and more interaction with others who were experiencing the same self- evaluation would have helped us better understand our own results.

In conclusion, the CIPFA FM model proved to be a valuable investment and an important part of our continuous improvement initiatives.

  • Michael Bailey

    Michael Bailey is the finance director of the City of Redmond, Washington

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