Local Government CEOs: Don't Ignore AI
Get Serious About Fixing Your Persistent Workforce Management Issues
One of the most persistent challenges facing local governments, especially in large capital and regional cities, is the constant struggle to manage staffing levels. Whether it’s replacing staff on leave, responding to increased service demands, or filling temporary positions for grant-funded programs, workforce management is an unrelenting task. As a Director at one of Australia’s capital city councils for four years, I witnessed firsthand how this issue frequently dominated ELT meetings and budget discussions, often stalling progress and consuming leadership’s focus.
Despite AI's proven ability to automate routine tasks and its rapidly expanding capabilities, many local government leaders remain reluctant to fully explore AI as a solution for workforce management. This hesitation, highlighted in the Davidson Australian Local Government CEO Index 20241, is surprising given the ongoing strain of managing staffing issues.
AI has quickly moved beyond simple chatbots into workflow automation and its capabilities only continue to accelerate, offering increasingly sophisticated ways to fill gaps and improve efficiency.
While this reluctance is somewhat expected, given that local government leaders are notorious for approaching new technologies with extreme caution, it overlooks the unquestionable potential AI offers to address pressing workforce challenges.
The Persistent Workforce Gap
In NSW local government, a full-time employee is available for roughly 194 out of 250 possible workdays each year, once weekends, public holidays, annual leave, sick leave, and nine-day fortnights are taken into account. While there may be slight variations due to public holidays and other types of leave like parental, bereavement, and study leave, the situation is similar across most other states.
In the best-case scenario, this means that the current operational model requires approximately 1.25 FTEs per role just to meet basic service delivery and workplace compliance needs, ensuring someone is available at all times.
This calculation doesn’t include the need for coverage beyond the standard 7.5-hour workday. Evolving workplace agreements are continuing to increase this gap, especially as many organisations now operate beyond traditional hours. When unexpected events, new services, and disaster response programs are added to the mix, the strain on staffing becomes even more pronounced.
Multiply this across hundreds or thousands of employees, and the challenge of maintaining adequate staffing, with the appropriate skill levels, in a single council, let alone across the sector, becomes an overwhelming structural problem.
Traditional solutions, like hiring short-term workers or redistributing tasks among existing staff, are ineffective. These methods are slow, place unnecessary strain on current teams, and result in inefficient work practices—particularly problematic in heavily regulated sectors. Additionally, they come with high sunk costs due to increased administrative overhead, making them an unsustainable approach to addressing staffing gaps.
This situation is further exacerbated by new and temporary programs, projects, or services that demand additional staff, often with limited lead time. In many cases, this results in a reactive approach to workforce management, rather than proactive approaches to tackling root-cause issues.
Workforce management is not a HR problem. It is a MOOP.
A multi objective optimisation problem.
This is why staffing discussions at executive leadership team (ELT) and senior management team (SMT) meetings often turn into contentious debates. Departments are forced into making ambit requests for new roles or additional staff, presenting them as urgent or critical needs. These requests frequently lead to arguments over resource allocation. However, the root of these conflicts likely stems from a deeper frustration with the ongoing strain of managing workforce demands without effective long-term solutions.
Managing these requests becomes challenging. Decisions can be delayed for many weeks, eventually forcing leadership into reactive decision-making rather than proactive workforce planning.
This cycle is inefficient and strains organisational resources. But it ultimately makes it difficult to effectively address long-term goals. Something has to give.
The Reluctance to Adopt AI
Anecdotally, a major reason local government leaders have been hesitant to adopt AI, including GenAI agents, is the fear of job displacement. Many worry that AI could create job insecurity, especially in unionised workforces where protecting jobs is a key priority. While job security is an important and valid concern, these fears are often exaggerated, leading to unnecessary resistance to AI adoption.
The "robots will take my job" argument grabs attention and often triggers a “wait-and-see” approach. However, a bigger issue is that many CEOs are simply not fully engaging with or understanding the true potential of AI. They often hide behind the excuse of “I just don’t understand technology,” which, ultimately, is an even more powerful and effective barrier to progress.
GenAI agents are not designed to replace workers, nor are they capable of doing so. Instead, they are meant to address critical service delivery gaps and solve real workforce planning challenges, especially in sectors like local government that are constantly striving for financial sustainability. GenAI can help fill gaps caused by routine absences of full-time employees (FTEs) and reduce the persistent customer and work order backlogs that result from vacant positions and high service demand.
Within unionised workforces, this distinction is especially important.
By showing that AI can improve working conditions and enhance job roles without jeopardising employment, leaders can start to explore how to integrate AI in ways that benefit both workers and the organisation. However, if leadership does not actively engage in this conversation, local governments risk missing opportunities to improve key indicators, like satisfaction and trust, in their next cultural survey, or even the prospect of future job cuts due to financial stress.
As the level of government closest to the community, local government operates differently from other tiers, requiring human oversight and empathy, especially in areas like customer service and community engagement. This makes it an ideal environment for AI, which functions best when complementing human effort. GenAI agents can handle routine inquiries, automate approval workflows, and streamline scheduling, allowing human employees to stay focused on critical decision-making and problem-solving tasks.
The hesitation to adopt AI likely stems from not fully understanding the technology and its practical applications. While this is understandable, it should motivate leaders to learn and engage, rather than overlook the most impactful and defining business change of a generation.
Many local government CEOs still see AI as too complex or abstract. However, these concerns are misguided and ignore the substantial benefits AI can offer when strategically integrated into workforce management. By failing to engage with and understand AI's potential, these leaders risk missing the very opportunities that could enhance the financial and operational performance of the councils they lead.
The Alternate Path: Managing Both Human and Digital Staff
The modern workforce is changing and so too the role of a manager or team leader. In many organisations it already has. The 21st century leader will no longer be just responsible for managing a team of people; they will performance manage both people and digital agents. ELT’s role will be to enable them to do it.
Rather than following the traditional process of building a business case, submitting a hiring request, and waiting through the lengthy approval, recruitment, and onboarding steps, managers and team leaders will soon be able to create, train, and scale GenAI agents to handle specific tasks. These AI agents can step in to fill service delivery gaps when human resources are limited, providing faster and more flexible support.
In this process, leadership teams don’t need to have in-depth knowledge of AI. Instead, their role is to support the organisation by leading a strategic review of job roles, service needs, and workplace structure. By empowering managers and staff to implement business improvement and service delivery programs using AI, leadership enables AI to take on tasks that once required human hires, driving efficiency and innovation.
This dramatic shift, once considered science fiction by my parents' generation, is no longer a distant future—it’s happening now. Many of the Big 4 consulting firms are using the platforms provided by Salesforce and ServiceNow and IBM to specialise in the creation of role-specific GenAI agents for clients.
For councils, roles as varied as customer service staff to human resource officers to IT help desk and cyber officers to statutory planners to financial analysts to legal and governance officers are all achievable today. How many business cases have been tabled for these roles in recent months?
The Opportunity for Local Governments
For many councils, maintaining or improving service delivery without increasing staff numbers is not just an efficiency goal—it’s a financial necessity. Yet, the reluctance of local government executive teams to engage with AI overlooks the significant opportunities that GenAI agents can offer.
Integrating AI into workforce management strategies allows local governments to shift from reactive to proactive human resource management. Even a preliminary exploration would reveal GenAI’s substantial potential to positively impact long-term financial plans for every council.
The key takeaway is that AI, particularly GenAI agents, is not about replacing local government jobs. It’s about improving how work is done, empowering staff, and delivering a higher level of service to the community. As demands on local governments continue to grow, those that embrace AI strategically will be far better positioned to sustainably meet both current and future challenges.
Local government CEOs need to move past their discomfort with 20th century “IT” and start seeing AI as a practical solution to one of their biggest 21st century challenges: workforce management. The hesitation around AI, as highlighted in the 2024 Davidson study, must shift by 2025.
In the end, GenAI isn’t a threat to most jobs—it’s only a threat to the leadership member who ignores this critical opportunity to strengthen organisational resilience and create a more efficient, adaptable organisation.
Reach out through the app or on LinkedIn if you’d like to dive deeper into potential solutions or to understand the broader considerations for these solutions in your corporate systems roadmap. Or perhaps you know someone exploring this area. If so, feel free to share this link with them.
[In an upcoming article, I'll provide insights on some of the GenAI agent platforms that can help solve workforce challenges—something that traditional local government ERP software providers currently don't address. Be sure to subscribe so you don't miss it!].
https://www.davidsonwp.com/2024-local-government-ceo-index