Centralization vs Decentralization

1. Centralization vs Decentralization County General Services Association April 3, 4 and 5, 2013

2. Agenda Why Me? Look at Decentralized, Centralized and Center Led Models Transition process in Butte County Questions and Answers

3. Agenda Why Me? Some wanted Decentralization Some Didn’t Know Some wanted Centralization . . . . so we changed models . . . . often

4. Why Me? • Budget Cuts of 2008 – 22% reduction in staff • I was a Property Manager and Management above and below departed • Nationwide search for a Director took 7 months • In the end, I was left holding the bag • Finance decided to start allocating costs to departments • Hope my experience through this can help others

5. Decentralization What is it? Each Department responsible for their own purchases P R O C E S S Policies & Procedures Task Processing

6. Decentralization What is it? Each Department responsible for their own purchases

7. Decentralization Why? • Departments demand it • Often speedier process • Increases accountability

8. Decentralization Why Not? • Less leveraged procurement • Costs are typically higher – multiple purchasing agents • Lack of internal control • Lack of consistency

9. Centralization What is it? All procurement functions are centralized in one Department P R O C E S S Policies & Procedures Task Processing

10. Centralization What is it? All procurement functions are centralized in one Department

11. Centralization Why? • Allows for leveraged procurement – better prices and services • Reduced processing costs through economies of scale • Strong base of knowledge and easy to change process • Increased internal control and consistency

12. Centralization Why Not? • Disagreements with other Departments • Slow processing - bottlenecks • Lack of technical nuances known by departments • One size does not always fit all

13. Center Led What is it? A Hybrid – Centralized and Decentralized Components • Center Core Of Excellence: • Strategic Planning • Best Practices / Polices Policies & Procedures P R O C E S S Task Processing Task • Departments: • Tactical Execution • Feedback Task Task Task Task

14. Center Led Why? • Best of both Decentralization and Centralization models • Can implement long range strategic plans when it makes sense • Quick turnaround at the Departmental level • Cost Savings – Recent Aberdeen Group Study • 5% to 20% cost savings • Higher Spend Under Management Rate • Improved working relationships between Departments

15. Center Led Why Not? • It is a lot of work! • Staff must be confident leaders

16. Transition to Center Led Necessary Components • The Teams • Authority • Proper Delegation • Systems

17. Transition to Center Led The Teams Overall Organizational Structure Steering Committee • CAO • County Counsel • Auditor/Controller • HR Director • GSD Director • Sheriff Pilot Team General Services Staff • DESS Director and AD • PH Director and AD • Treasury/Tax Director and AD • GSD Director and C/P Manager • Contracts/Procurement Staff • Supporting Admin Staff

18. Transition to Center Led The Teams • Proper Job Classifications – Training, Auditing, etc • Confident Leaders – Task Transition • Agents of Change • Heavy Administrative Support - Documentation • Added 2 Limited Term Positions • Roles • Administer and coordinate the meetings • Document Control Pilot Team General Services Staff • Contracts/Procurement Staff • Supporting Admin Staff

19. Transition to Center Led The Teams • Diverse in opinions • High volume and Low volume Departments • Buy in from the top • Assurance of success • Roles • Detail review of material • Present alternative concepts • Develop and Test Process • Think of other Departments Pilot Team • DESS Director and AD • PH Director and AD • Treasury/Tax Director and AD • GSD Director and C/P Manager

20. Transition to Center Led The Teams • Internal Control Departments Steering Committee • HR – Job Classifications and Discipline • CAO • County Counsel • Auditor/Controller • HR Director • GSD Director • Sheriff • Sheriff – Represents Departments • Roles: • Dispute resolution • Sets overall direction Pilot Team

21. Transition to Center Led Authority - Informal What is it? • The ability to influence people to do things they don’t have to do • Given by people that WANT to follow • Not bound by traditional lines of communications • Not documented anyplace

22. Transition to Center Led Authority - Informal Why do you need it? • Others outside of your formal authority will have to work for you • Powerful – allows you to get things done • To ease internal control concerns and challenges

23. Transition to Center Led Authority - Informal How do you get it and keep it? • Reach out • Listen, listen, listen, listen • Be positive • Be Confident and allow challenges • Be a good LEADER

24. Transition to Center Led Authority – Formal Ordinance • Sunset in 18 months • Allowed deviation from policy and increased pilot teams spending authority • Oaths for Departments required modification

25. Transition to Center Led Proper Delegation • Documentation (Policy) must be clear • Departments (individuals) shall be trained • Departments (Individuals) shall be certified • Transactions shall be audited • Department Heads are responsible

26. Transition to Center Led Systems • More significant coordination than originally anticipated • Alternative Authorizations Structure • Common access to scanned contracts for auditing • Audit Processing • Training Documentation

27. Transition to Center Led Next Steps • Final recommendation to the Board • Policy • Procedures • Ordinance Update • Role out to all departments • Determine levels of authority • Training • Re-Evaluate Cost Allocation methodology • Become more proficient in completing new tasks: • Strategic planning instead of buying • Speak to the vendor community as a common voice • Solicitation and Negotiation support

28. Transition to Center Led You Survived!!!!! Questions???