PAPER B

Purpose: For Decision

Committee

EMPLOYMENT COMMITTEE

Date

17 AUGUST 2015

Title

APPOINTMENT OF MANAGING DIRECTOR

Report of

HEAD OF RESOURCES

EXECUTIVE SUMMARY
1.

Members of Employment Committee are provided with information that is considered

necessary for them to take into account in determining their preferred arrangements
for appointment to the managing director role. Members are asked to carefully
consider the options presented, decide on a preferred option and if necessary, make
recommendations to Full Council on 2 September 2015.
BACKGROUND INFORMATION

2.

Employment Committee, at its meeting of 23 February 2015, received two reports

relating to proposals for the future senior management structure and appointment of
the managing director (which incorporates the statutory role of head of paid service).
These were specifically aligned to the delivery of the councils vision, priorities and
budget strategy and to be responsive to the changing needs of the council in moving
to a new business operating model, while maintaining sufficient expertise and
stability in leadership through an extremely challenging period of on-going local
government reform. These proposals, subject to a six month mid-way report to
review progress and consider the arrangements for an appointment to the
substantive post of managing director beyond 31 March 2016 were agreed by
Employment Committee and ratified by Full Council at its meeting on 1 April 2015.
These arrangements made provision for the current managing director, Dave
Burbage to enter into a phased reduction in working hours (and pay) to 80 per cent
with effect from 1 July 2015; 60 per cent with effect from 1 October 2015 and 40 per
cent with effect from 1 January 2016 with a new appointment being made with effect
from 1 April 2016. In conjunction with this, the head of economy and tourism, John
Metcalfe, was in addition to his existing duties appointed as deputy managing
director to facilitate the potential for succession planning to take place.

3.

The mid-way report was scheduled to be tabled at the September 2015 meeting of
the Employment Committee with a recommended approach going to Full Council in
October. If there was a decision to have an internal appointment then this timescale
would be appropriate. However if there is an intention to go out to external
recruitment it is felt that if this is the case that this should be undertaken as soon as
possible.
B-1

4.

If it was decided to recruit externally there are a number of factors that will impact on
the councils ability to recruit:
(a)

(b)

The Councils financial position

The council had a projected budget gap of 23 million over the two years
2015/16 and 2016/17 with very significant savings to be made. In the
current financial year we are already forecasting an overspend of some
3.3 million.

The chancellors budget speech determined that the total savings

nationally over the life of the Parliament will be some 37 billion, with
some 20 billion to be announced in the autumn in the comprehensive
spending review which will consider all elements of public spending in
order to create a more efficient public sector, whilst continuing to
prioritise growth-promoting expenditure and spending on public services
for those who need them the most. This 20 billion will fall on the
remaining unprotected budgets meaning the reductions in those areas
will be much more severe. It is likely that local authority services will
again feel the brunt of the savings required. The reduction in government
grants the council receives in 2016/17 could therefore be more than the
3.2 million currently forecast. It is inevitable that there will also be
further grant reductions in 2017/18 and beyond.

These further spending reductions inevitably add significant pressure to

the delivery of the councils already extremely challenging budget
strategy. The budget review paper going to Full Council on 2 September
2015 will highlight the severity of the unstable financial situation the
council faces, despite all the action taken to reduce spending and
implement savings. Adult social care (residential and nursing) needs
continue to increase, which adds to existing budget pressures in this
area and the budget monitoring position already shows a projected net
overspend on the 2015/16 revenue budget by some 3.3 million. It is
likely that further in-year savings will be necessary for the projected
overspend to be addressed. There is an increasingly possibility that,
following the comprehensive spending review that will be published in
November 2015 that further government grant reductions will be made,
that the council will have great difficulty in delivering a balanced budget
for 2016/17.

Devolution /combination

The council is also engaged in discussions with Hampshire, Portsmouth

and Southampton local authorities for a potential devolution deal which
could see the introduction of a combined authority for certain functions.
This is very much at the expression of interest stage and the detail will
take a significant amount of time and effort to work through. Through
these discussions we need to be pushing the case for the Island to get a
better deal through devolution and combination.

B-2

(c)

Locally, these discussions between the Hampshire region, Southampton,

Portsmouth and the Isle of Wight are in very early stages of
consideration as to the potential benefits this route may bring and in
particular whether it will assist the Isle of Wight in its budget challenges.
It is imperative that the Island gives due consideration to the potential of
this option in seeking to secure future sustainability of the local authority
and the Island as well as to be mindful of how this might affect the future
senior management requirements of the council.

Political environment
Locally, the councils political environment is fragile whilst remaining in a
position of no overall control. At a time when the future sustainability of the
council is at threat due to the ever worsening financial climate and drive by
central government to target local government as the source for achieving
significant savings, there are some serious and very tough decisions to be
made by politicians that may not be in accordance with their own party
manifesto or the wishes of the communities they represent. This places a
significant pressure on the democratic decision making process for both the
current administration and council as a whole. This may well present its own
challenges in securing an attractive employment offer for any potential
candidate.

(d)

Senior management pay

The council has set out its intention to keep its senior management
salaries as low as possible in the current financial climate. In practice
this means that there should be a maximum basic salary of no more than
100,000 which is well below the market rate. Since 1994, the salary
level for the most senior post of the local authority has ranged from
117,186 in 1994; 161,553 in 2006 and 149,997 in 2008

The current salary level for the managing director is 99,606 (which was
voluntary reduced by Dave Burbage as the current postholder from
123,500 with effect from 1 April 2014.) Although this has now increased
to 102,638 as a result of the pay award and job evaluation. In
accordance with the planned reduction in working hours to 80%, with
effect from 1 July 2015, the salary level is 82,110.

To instigate a recruitment campaign, whilst there has been an overall

reduction of around 11 per cent in chief executive/managing director
salaries across the board in recent years, market research indicates that
it would be necessary as a small unitary authority to offer a minimum
salary of around 125,000 plus on costs. A comparison regional authority
salary levels is attached as Appendix A for information. This compared to
larger unitary authorities who are likely to offer a salary in the region of
140,000 to 160,000 plus on costs. With the current instability of the
councils financial and political situation, it may be necessary to offer a
salary that is much more competitive in order to attract potential
candidates. Whilst the housing market has shown signs of improvement
in recent times, it remains that a requirement to move to the Island,
B-3

particularly in such an uncertain environment may not be an option that

potential candidates are willing to consider. Nor is there any guarantee
that the offer of a competitive salary will necessarily attract the right
calibre of candidate. Increasing the salary of the managing director role
will also provide a disproportionate step difference between this and
other chief officer posts within the senior management team and the
councils pay framework as a whole. Should an external candidate be
appointed, there is the possibility of additional costs of up to 8,000 for
relocation expenses.

5.

6.

To undertake a recruitment campaign for the most senior officer position

within the council will require the engagement of an external recruitment
agency to undertake the necessary search and select activities. The
costs associated with such a recruitment campaign will be in the region
of 15,000 to 20,000. There is no current budget provision for this.

There is no provision within the current budget strategy for any increased
costs for the appointment of a managing director at this level and so it
would be necessary to seek Full Council approval to increase the budget
limit. However, given that the current budget strategy seeks to reduce
the councils spending, it will be necessary to determine where any such
increase could be offset by the proposed increase in costs.

In the context of such uncertainty, members will need to consider what is

required of a future managing director and head of paid service and the
councils ability to attract someone into that role. The current job
description is set out at Appendix B for information.

The main options open to members are to:

Option 1:

explore the potential for a combined managing director role with a

neighbouring authority or the NHS Trust and enter into discussions with
these organisations.

Option 2:

appoint an internal candidate on current pay levels in order to provide

continuity and stability.

Option 3:

continue with a like for like replacement to the existing post of

managing director and initiate a recruitment campaign as soon as
possible.

Option 4:

defer making an appointment and review once the financial landscape

and future direction is better understood. This would take the timescale
past 31 March 2016 when the current managing director is scheduled
to retire and therefore at that stage it would be necessary to appoint an
interim managing director and head of paid service.

While considering each of the options, members will need to be aware that the
current managing director and head of paid service, Dave Burbage has indicated
that it remains his intention to cease employment with the council on 31 March 2016.
He has also expressed a willingness to step down earlier from his position, if this
B-4

provides opportunity to facilitate an early resolution to the issues at hand. However,

in order to do this, it will be necessary for him to formally resign from his employment
and tender three months notice.
7.

Members may also wish to consider whether to continue with the term managing
director as the job title for the most senior officer position within the council or revert
to the term chief executive or some other similar form of job title.

8.

Option 1:
The current chief executive of Hampshire is retiring in October 2015 which may
present an opportunity for members to consider the potential for a joint new post.
Other neighbouring authorities, such as Portsmouth or Southampton may also be in
a position to explore the potential for a joint appointment. In light of the health and
social care integration, there is also the potential for combining a managing director
role with the NHS Trust. The advantages that this brings will be that it will assist the
council in exploring the potential for the sharing of expertise and resilience at a
strategic level. The current arrangements for a joint director of Childrens Services
and chief fire officer have worked extremely well and there is no evidence to suggest
that such an arrangement has done anything other than to underpin the needs of the
Island and its community, its interests and aspirations, securing improvement in
service delivery whilst reducing costs. However, it remains a risk that the perception
is that the Island will lose its sovereignty and independence by any such
arrangement and also whether it is feasible for there to be sufficient capacity to meet
the needs of organisational and political management for two separate organisations
with potentially different political vision, aspirations and policy directions at a time of
significant financial challenge and change. It must also be considered that the
council has many other statutory and functional duties that are distinct from health
and social care provision that will necessitate a wider range of skills and expertise.
While there is potential for there to be a saving to the council by way of a shared
post with a neighbouring authority, the costs associated with travel to and from the
Island given that there will still be a need for some level of senior officer presence on
the Island to undertake the management of the council, this reduces the potential for
saving without a wider integration of a senior management structure and possible
sharing of service management.

9.

Option 2:
In line with the proposals agreed by Full Council on 1 April 2015, the head of
economy and tourism, John Metcalfe (now designated as head of place) was in
addition to his duties appointed as deputy managing director with effect from the
same date. This also took account of the fact that there were no other identified
candidates with the necessary skills, experience and knowledge for this role. It was
intended that this could facilitate succession planning with a view to secure ongoing
stability in senior leadership, particularly during this challenging period of time, where
continuity is considered essential for the delivery of both the councils vision and
priorities and budget strategy. It was considered that this could also provide the
opportunity for an appointment to be made on current salary levels and which would
not incur any additional salary or recruitment campaign costs. There was no
assumption that there would be automatic appointment into the managing director
role, although in order to provide assurance to members of suitability to the post, an
B-5

external recruitment agency could be engaged to test and report to members on

suitability, as well as to determine a programme of on-going support for continuing
professional development, should appointment under this option be considered.
10.

The need for on-going stability in the senior leadership team means that it is
necessary, to look at the skills and expertise that are necessary to retain. We have
robust leadership arrangements in place for the management of our statutory duties
for childrens social care and education and the positive direction of travel for
required improvement remains strong; adult social care due to the Islands
demographics means that there is a higher than average demand for services which
results in significant budget pressures for the council, although the national health
and social care integration programme is seeking to resolve these issues. Locally,
partner organisations are already well underway with their plans to deliver
improvements and a reduction in service costs. A resilient and successful
arrangement is in place with Hampshire Fire and Rescue Service for the provision of
the Islands front line service. The council also has a programme of transformation
activity which is underpinning wholesale organisational change and supporting the
implementation of the savings programme. Economic growth and development, led
by the deputy managing director will continue to play a significant part in securing
future sustainability for the Island. It is considered by the managing director that he
has a strong track record in this field. He has also been actively involved in further
developing external relationships with the councils partners, including representing
the council on the Partnership for Urban South Hampshire (PUSH), the Solent Local
Enterprise Partnership, participating in the Chief Executive meetings of Hampshire
and Isle of Wight and has taken the lead on developments within
devolution/combination agenda as well as supporting the Leader and Executive in all
council business matters. He has also taken the strategic lead in managing the
councils communications and contract management and is currently working with
the managing director on the budget review. It is the managing directors view
therefore that thus far there has been nothing that would question his ability and
aptitude to step up into the role of managing director on a permanent basis.

11.

The head of finance and section 151 officer is due to retire on 30 September 2015.
While it was anticipated that it would be possible to secure an internal appointment
to this position, it has been considered by the individual that they do not have
sufficient depth of experience to take the council through such a challenging financial
situation. Dave Burbage in stepping down from the managing director role has
indicated that he would be willing to undertake this role to provide the council with
the necessary leadership and support to conclude the budget preparations for
2016/17 and would put in place the necessary arrangements for the longer term
management of the finance function and section 151 officer arrangements. It has
been acknowledged by members that he has been instrumental in taking the council
through local government reform over the last five years, based on his credible and
extensive experience as a director of finance and latterly as managing director. This
would also mean that he could continue to provide mentoring in the early days of full
appointment. However, should an external appointment be made, this offer may not
be open to the council and we may be faced with needing to secure interim
arrangements for both the management of the finance function and budget setting
for 2016/17 and beyond.

B-6

12.

Option 3:
A move to undertake an external recruitment campaign would allow members to test
the market and to fully explore the potential to match candidate suitability to the
Islands needs, particularly if this were to be undertaken by an independent, external
recruitment agency. It will ensure that there are selection activities that test aptitude,
skills and potential performance and would demonstrate that there is an open and
transparent process for an appointment to be made to the role. However, a
recruitment campaign can only test potential and does not bring with it any
guarantee that the right candidate is appointed as performance can only be tested
once in post. This option also means that there would be additional cost pressures
to the council in taking such approach, both in terms of a necessary salary increase
in order to attract potential candidates and in undertaking a recruitment campaign
and associated relocation costs should an external appointment be made. It would
be necessary to establish how savings could be achieved to match any proposed
increase in costs. This option would also require Full Council approval as it is not
within the remit of the Employment Committee to agree. The result of this exercise
may also see the appointment of the current deputy managing director and head of
place, but which comes with significant additional cost to the council over and above
that within the scope of the existing grade and pay for the managing director role.
The council also risks the loss of a competent member of staff whose skills and
expertise are valued should he not be successful in appointment.

13.

Under the terms of reference for Employment Committee, members have delegated
authority to take decisions affecting the remuneration, terms and conditions of
service of the head of paid service and to agree to the recruitment of posts at chief
officer level as well as to establish a politically proportionate sub-committee of five
members for the purposes of the appointment process. However, any proposal for
remuneration and terms and conditions that would serve to increase the councils
budget would need to be referred to Full Council.

14.

If members choose to pursue this option, in order to secure a permanent

appointment to the managing director post in time for the departure of Dave Burbage
on 31 March 2016, it will be necessary to commence a recruitment campaign now to
allow for sufficient time to advertise, undertake selection processes and for the
successful candidate to give notice should an external appointment be made. To
allow this to happen, members of Employment Committee will need to make their
recommendations on the proposed terms and conditions to Full Council on 2
September 2015, establish a politically proportionate appointment sub-committee
and if approval is given, a recruitment campaign could commence immediately after.

15.

Option 4:
Given the extent of instability and uncertainty both financially and politically at the
present time, it is difficult to ascertain what the future direction will be for the council
and ultimately what is required of a managing director. By deciding to defer in
making an appointment, it will provide opportunity to take stock of the financial
situation and to fully understand the impact that will result from the autumn statement
from central government. This would allow for re-assessment to be undertaken of the
future direction that needs to be taken. However, as set out, doing so would take us
beyond the timescale of 31 March 2016 when the current managing director will
B-7

depart and would not provide sufficient time to undertake a formal recruitment
process to secure an appointment into the managing director role from 1 April 2016.
This would therefore necessitate either an internal or external interim arrangement
being put in place also. However, the council may risk the loss of the current deputy
managing director and head of place and his skills and expertise and the option to
appoint internally may disappear. An external interim would most likely need to be
sourced from an agency, given the councils policy not to engage directly with any
individual at such a senior level, which would mean that in addition to a daily rate,
there will be agency fees which will inevitably increase the costs to the council as a
result, as well as potentially destabilising the council at a critical point of time in the
delivery of a major programme of change.
STRATEGIC CONTEXT
16.

The senior management structure of the council needs to reflect what is affordable
while securing and retaining the highest possible calibre individuals necessary to
provide strong strategic leadership in the delivery of the councils priorities as well as
the stability necessary for the workforce as we move through a worsening financial
situation and fragile political operating environment, which may necessitate a change
in direction for the future sustainability of the council. The options set out for
member consideration within this report therefore, contribute to the successful
delivery of all stated corporate priorities.
FINANCIAL / BUDGET IMPLICATIONS

17.

The salary level for the current managing director was 99,606 (which was
voluntarily reduced from 123,500 with effect from 1 April 2014) but from 1 July 2015
as a result of the pay award and implementation of the councils new pay framework
as an outcome of the job evaluation project it is 102,638.

18.

Option 1: On the basis that the current base salary (excluding on costs) for the chief
executive of Hampshire County Council is in the region of 212,000 Portsmouth City
Council 148,000 and Southampton 152,000, assuming a 50/50 split (excluding oncosts and travel expenses), it would range from being a minimum cost to the council
of 106,000 or a maximum potential saving of around 76,000 depending upon
which of these authorities were approached.

19.

Option 2: On the basis that the current deputy managing director and head of place
has indicated his willingness to accept the current pay grade and associated salary
for the post of managing director, this would release the potential for further savings
to be made in the senior management structure.

20.

Option 3: As set out within paragraph 4 (d), it will be necessary to set a realistic
salary level for it to be attractive to potential candidates. On the basis of the
suggested minimum of 125,000, should the current deputy managing director and
head of place be successful in appointment, this will incur an additional cost to the
council of 22,362 plus the one off costs of the recruitment campaign which will be in
the region of 15,000 to 20,000 although it still presents the potential to secure
further savings in the senior management structure as a result. The appointment of
an external candidate would increase the costs to the council by 22,362, plus the
recruitment campaign costs of between 15,000 to 20,000 and potential relocation
B-8

costs of up to 8,000 and would not provide the potential to secure any savings at
all.
21.

Option 4: Depending upon the length of any required interim appointment, should an
internal appointment be secured, there will be costs associated with uplift in salary to
the pay grade of the managing director which could, as a minimum be in the region
of 12,989 per annum (plus on-costs). An external appointment through an agency
could be in the region of approximately 290,000 per annum given that daily rates
are likely to be set at a minimum of 900 per day plus agency costs.
LEGAL IMPLICATIONS

22.

The terms of reference of the Employment Committee makes provision for the
following:

Arranging for the appointment of the councils head of paid service and to
make recommendations to the Full Council in this respect.

Making recommendations to Full Council in respect of the appointment of the

head of paid service, the monitoring officer and section 151 officers.

Taking decisions affecting the remuneration, terms and conditions of service of

the head of paid service.

Agreeing the recruitment to all posts at chief officer level or above. In the event
of such agreement being given the committee can establish a politically
proportionate sub-committee of five members, quorum of three, to make
appointments to all such posts. The membership of this sub-committee may be
taken from outside the membership of the Employment Committee.

23.

However, should there be any consideration to increase the councils budget, and
proposed changes to the remuneration of the managing director post will need to be
referred to Full Council by way of recommendation.

24.

Part 1, section 4 of the Local Government and Housing Act 1989 sets out the duty of
the council to designate an officer as the head of paid service and it is usual for the
council to designate this statutory function to the managing director. Under the
councils constitution, this appointment can only be made by Full Council.
EQUALITY AND DIVERSITY

25.

The council as a public body is required to meet its statutory obligations under the
Equality Act 2010 to have due regard to eliminate unlawful discrimination, promote
equal opportunities between people from different groups and to foster good
relations between people who share a protected characteristic and people who do
not share it. The protected characteristics are: age, disability, gender reassignment,
marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex
and sexual orientation. The options presented within this report therefore are not
considered to present a breach to the statutory duty.

B-9

26.

Both recruitment and promotion are governed by the act and the specific Equality
Duty placed upon public bodies. We are not required by law to advertise vacancies
or opportunities for promotion either inside or outside the Council. A decision to
appoint an internal candidate must establish that there is no other suitable worker
prepared to undertake the duties possessing the necessary skills, experience and
knowledge. Option 2 presented within this report supports a justifiable decision to
appoint the deputy managing director and head of place to the post of managing
director and does not suggest unlawful discrimination as no other suitable
candidates have been identified.
RISK MANAGEMENT

27.

The council is required to appoint a head of paid Service and the current and
proposed options presented to members will make provision for this to be covered by
the post of managing director. The current managing director has sought to put in
place an option for members to secure an internal appointment, subject to
satisfactory progress and with member approval. In the managing directors view,
there is no evidence to suggest that this arrangement has been anything other than
successful to date and it presents an option to the council that allows for succession
planning to take place and stability in leadership through an on-going difficult period
within local government and the Isle of Wight, as well as to provide further potential
savings to be made within the senior management structure.

28.

The risks associated with option 1 are seen as being whether there is any real
potential for savings to be achieved by this route and the perception that there would
be a loss of sovereignty and control for the Island, although this in itself may post a
risk to the future sustainability of the Island given the projected further cuts in local
government which may require the council to change its direction in order to retain its
independence.

29.

The main risk associated with option 2 is the perception of the community that there
has been no transparent process undertaken to secure the appointment of an
internal candidate although this could be addressed through an assessment
processes undertaken by an external recruitment agency to satisfy members of the
suitability. Failure to adopt this option may also give rise to the potential of
destabilising the organisation at such a critical time, as well as the loss of highly
respected members of staff. It should also be recognised that there is no
requirement for the council to advertise vacancies or opportunities either internally or
externally. This approach supports the councils intention to develop its own talent
and apply an effective succession management approach for its strategic leadership
team (which is in accordance with the action plan established as a result of receiving
the recommendations from the peer review facilitated by the Local Government
Association in April 2014) and as such sets a clear precedent and commitment to its
development of leadership skills across the organisation.

30.

Option 3 recognises that members have a desire to test the market in order to
secure the most suitable candidate for the most senior position within the council and
to demonstrate that there has been a credible and robust selection process
undertaken to achieve this. However, the main risk associated with this option is that
it will incur significant additional costs to the council at a time when the financial
B - 10

viability of the council is in question and may not result in a suitable candidate being
selected, despite the process instigated.
31.

Option 4 presents a significant risk to the council both financially and in being able to
secure a suitable candidate by this means. It will also have a significant reputation
impact for the council in the appointment of an external interim candidate, not directly
employed by the council.
EVALUATION

32.

A range of options have been presented to members for consideration in determining

the way forward for the appointment of a future managing director. They will need to
examine the strengths and weaknesses of each option, together with the risks
identified in great detail to ensure that the most appropriate option is determined to
secure the best possible outcome for the council and its future.

RECOMMENDATION
Members are asked to consider the options presented within this report, to decide on
a preferred option and if necessary, make recommendation to Full Council on 2
September 2015.

APPENDICES ATTACHED
Appendix A:
Appendix B:

Regional benchmarking of Chief Executive Salaries

Outline Job Description

BACKGROUND PAPERS
Employment Committee 23 February 2015 - Paper G: Appointment of Head of Paid
Service
https://www.iwight.com/Meetings/committees/Employment%20Committee/23-215/Paper%20G.pdf
Employment Committee 23 February 2015 Minutes of the Meeting
https://www.iwight.com/Meetings/committees/Employment%20Committee/23-215/minutes.pdf
Contact Point: Claire Shand, Head of Resources, 821000
e-mail Claire.shand@iow.gov.uk

CLAIRE SHAND
Head of Resources

B - 11