Using Centre-Led Approaches to Drive More Value from Corporate Services

30 September 2022 Kelly Zheng Author avatar

Highlight on our Government Keynote by Josie Scioli, Deputy City Manager, Corporate Services, City of Toronto

A Centre-Led Approach to Corporate Services

Across all tiers of government, there are many ways of conducting business or creating a corporate environment. Especially prior to the pandemic, departments often worked in silos and there was mostly a decentralized approach. At the City of Toronto however, they have enacted a centre-led approach, but to appreciate that, Josie Scioli , the Deputy City Manager of Corporate Services, says that one first needs to understand the pros and cons of both a centralized and a decentralized approach.

The main purpose of a centralized approach is that the “central team directly delivers. There is a standardized strategy with central management of spending, data and information.” This could mean that it could become “very hierarchical, inefficient and costly, with a lack of flexibility and agility.” This could make it hard to “meet the needs of unique business units.” In a decentralized approach, “it is almost the opposite. It’s easier to meet the need of unique business units and results in faster decision-making” but at the same time, there is a “lack of corporate policy standards, higher costs and it is harder to scale.” At the City of Toronto, their centre-led approach is a good “combination of both, and really focuses on the best of the centralized and decentralized models.”

It is about empowering the central team to lead and to deliver “most but not all of the services. It allows for better control and spending, improves risk management and allows the business units to be more involved in the services, than a fully centralized model.” It can be hard to implement and get the culture right, but if successful, “the businesses can focus on their core competencies and then the corporate centre-led approach can actually support the businesses.” In most cases, there are elements of a centralized model and/or a decentralized model still in place, but the goal is to eventually get to a centre-led approach for the whole business or municipality, as in the case of the City of Toronto.

Why This Model is The Best Approach for The City of Toronto

The City of Toronto is a “very big organization.” Overall, there are “over 40,000 employees, over 45 different types of businesses or divisions, and $15 billion in operating costs” for a population of around three million residents. The operating costs continue to increase and over the years there have been “panels and reviews of our long-term financial health.” There was rarely agreement at the end of these, except that it was clear that something needed to change. In fact, “our financial situation was a burning platform for change.” On top of that, there was a “legacy of very decentralized structures, duplicated functions and independent budgets which led to ongoing financial pressures.” However, there was also a culture of “modernization and strong governance,” so the whole organization was looking to change.

In specific areas like “technology, fleet, cyber and real estate, there was an opportunity there,” but each area was also siloed and with a “lack of standardization.” The key was not to centralize everything, because that wasn’t realistic and may be detrimental to some services, but to find another way, which was the centre-led approach. For the City, this could create “standard practices and would allow our business partners to deliver their services, and to get to a point where we could transition from tactical and transactional goals to business outcomes.”

“We came to this by engaging with our colleagues across the organization, understanding their needs and trying to simplify things for the customer or the end user, by making sure we focus on the core of what we do.” - Josie Scioli, Deputy City Manager, Corporate Services, City of Toronto

As mentioned, one of the biggest opportunities for the City of Toronto was in the area of real estate. “In 2016 we had 24 uncoordinated divisions, agencies or corporations delivering real estate.” In total, this meant that the City’s portfolio included “8,000 properties valued at around $26 billion.” The initial goal was to “optimize our municipal assets for city building purposes, and to create efficiencies.” 2016 and 2017 were therefore all about stakeholder engagement, which included discussions with politicians and “third party advisors.” By 2018, this resulted in a “new City-wide real estate delivery model.” It was a centralized model so that all “strategy, portfolio planning, major building project planning, development transactions and facilities management activities were brought into one agency with an independent board. It was a whole-of-government approach.” The point of this was so that “no one could do transactions outside of the new real estate model,” and so that “assets could be managed at a very strategic level.”

Though some elements were centralized, the centre-led approach allowed them to “implement policies, standards, processes, governance, risk management and metrics” in a new and innovative way. None of these elements were visible from a bird's eye view perspective previously, so as a result of this new perspective, outcomes were able to be delivered more efficiently and effectively. For instance, almost immediately they could “re-purpose City land to help deliver 10,000 affordable housing units for families.” On top of that, they “unlocked over $2 billion worth of assets.” This included office space for the city itself. “We are reducing our office footprint from 55 buildings to 15, saving over $30 million per year, and we are co-locating a lot of our divisions.” A further eight properties have been unlocked and will be sold off, “with an estimated land value of $450 million.” Essentially any service areas that work together are now housed together or close to each other “so they can better enable the services that they offer to their clients.”

Once this started, it became clear that it wasn’t only about assets. “We created other great efficiencies by combining our procurement and elevator cleaning across the organization, saving us about 5-10% in cleaning costs.” This showed that the centre-led approach “is not all or nothing.” Whilst some things could not be combined or made more efficient, others could. “It was about doing what made sense and having continuous conversations and the agility to make changes as required.”

Some Lessons Learned

The outcomes that were achieved in the real estate arm of the city were replicated elsewhere, but the real estate gains were the most obvious. They succeeded in part because there were “consistent policies and continuous engagement.” It is very important in this approach to be “very outcome focused and to clearly see what’s working and not working,” and then to change things as necessary. It is also important to have good metrics to measure against, and to have “matrixed teams.” For instance, in the real estate example, most of the teams had members from outside of the real estate division to provide a different perspective and to create clear reporting lines. But like all things, “leadership is critical.” Senior leaders need to be involved and need to “champion the approach. Everyone else needs to understand the why, the what and the how.” Only with that kind of understanding can an organization move on.

With the success of their real estate efficiencies, the City of Toronto is now “looking at other corporate functions like technology, cybersecurity, fleet management, and we’re even working with our treasurer and CFO around some of the finance stuff.” All these areas are ripe for a centre-led approach with the right executive leadership and influence, as well as “clear ownership and accountability.” Someone always needs to drive the change and be responsible for it. Then once that person (or people) is identified, then a matrixed team needs to be created to implement the change. “It is about letting experts do what they do best,” but with the appropriate direction. All the people need to “feel like they are part of a team that is trying to work towards the same end goal.” And if that doesn’t already exist, then it is about creating an “organizational culture and maturity that welcomes change.” That doesn’t mean “being perfect all the time. Failure is okay,” but it does mean “being flexible.”

“It’s a journey and it takes time to get towards centre-led.” But the real benefit of such an approach is that it “delivers key outcomes for our community and also hopefully makes the lives of those people delivering the services a lot easier.”

Featured speaker:

  • Josie Scioli, Deputy City Manager, Corporate Services, City of Toronto
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