Harvard Business Review Online | The Turning of Atlanta

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The Turning of Atlanta

What does it take to rescue a city from financial catastrophe?

Complete openness, obsessive performance tracking, and

unprecedented access to the woman in charge.

A Conversation with Shirley Franklin

Shirley Franklin and Leigh Buchanan

Shirley Franklin knows how to execute a turnaround. Sworn in as the first female mayor of Atlanta in 2001,

Franklin expected that operations would need improvement. But she believed the city could at least pay its bills.

Instead, her administration uncovered an $82 million budget gap—amounting to 20% of the general fund

operating budget—and a negative balance in the reserve account. Oh yes, and she had just 60 days in which to

balance the budget before incurring more debt.

Franklin responded with tough measures that included laying off approximately 800 people—an eighth of the

city’s government employees—and raising property taxes by nearly 50%. Today, Atlanta still has challenges

(homelessness and a dilapidated sewer system, for instance), but it is at least on the road to financial stability.

Meanwhile, Franklin’s courage, style, and tactics have won acclaim from pundits and the public alike. In this

conversation with Senior Editor Leigh Buchanan, edited here for length, Franklin describes how she’s managing

Atlanta’s recovery.

When you’re leading a turnaround, the problems can look insurmountable. How do you begin to

tackle them?

When I came into office, I didn’t realize how dysfunctional city hall had become. Ten years earlier, I had been

Mayor Maynard Jackson’s chief officer for operations, and when I left, well, things weren’t perfect, but at least

they worked. The hardest thing for me was seeing how bad things had become. The city was flat broke,

employee morale was in the basement, and the public had lost faith.

I’ve worked for two mayors, and they taught me that the time to make the hard decisions is as soon as you

know you have to make them. If you waste time getting worked up about a situation, you run the risk that

people, particularly at senior levels, will start doubting your conviction to change it. You have to set the tone

early. Then you have to focus on the most critical issues relentlessly. For us, the turnaround plan and weekly

progress reviews have been critical.

Who were the key people you needed to get on board to start the turnaround?

We needed everyone: the public—who are our customers, the city council, business leaders, the media. And

there was so much cynicism and disillusionment. So we had to convince them by being open and straightforward

about city finances and operations. I mean, we chased the members of the press more than they chased us. We

called reporters every day to tell them what we were finding. We gave full copies of every report to the media

and the business community, and we invited them to analyze what we were saying and to judge whether we

were making the right decisions.

Who led the turnaround on the inside?

I was very involved with the short-term response as part of a small team of six people. It’s important to keep

the number of participants down when you’re first trying to understand the problems. There’s not a lot of time to

go out and find people you can have confidence in. And since this was a government that had shown no financial

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Harvard Business Review Online | The Turning of Atlanta

restraint, by keeping the team small we were able to maintain accountability and a level of discipline that might

not have been possible with a larger group.

We’ve moved on to medium- and long-term strategies, overhauling every operation from airport expansion to

zoning. To do that, we’ve had to bring on additional budget and organizational expertise. That larger team has

allowed us to address more than one problem at a time. We’ve also kept the core group together, and we have a

senior team dedicated to managing our consultants. Otherwise, we couldn’t have managed both the day-to-day

operations and the turnaround at the same time.

How do you inflict necessary pain, such as layoffs, on an organization that may already be

demoralized, yet still extract strong performance?

First, you have to show there’s no alternative. We did that through rigorous, transparent analysis of the budget

and operations as well as through benchmark comparisons with other cities. It’s also important to lead by

example. I wasn’t going to ask anyone to do anything I wouldn’t do myself, so I cut my own salary and my own

staff. And I’ve tried to make myself as accessible as possible.

One way I do that is through Mayor’s Night In. One night every other month, city employees can come and see

me without an appointment and get five minutes one-on-one. They tell me the things that make their jobs hard

or frustrating. A lot of the complaints are about inadequate training or equipment. Some have reported crimes

or corruption in their departments. We guarantee them absolute confidentiality. I have an assistant in the room

with me, and whatever the problem is, it goes into our case management system and gets resolved. This helps

employees, but it also helps us identify poor supervisors or corruption. And it gives me direct knowledge about

what’s really going on.

We do the same thing for citizens. One night every two months, they can come and talk to me about anything.

It can be a child who wants to do an interview for a class project, or a young entrepreneur who wants an idea on

how to position his company, or someone complaining about a service she hasn’t received. My accessibility and

willingness to listen make people—both employees and the public—more receptive to change.

How do you measure how well you’re succeeding? Do you use the same metrics internally that you

show to the public?

We use several approaches. First, nearly every week, we measure our progress against the objectives of the

turnaround plan. The small, core team meets on Mondays to review the past week and talk about specific

deliverables for the weeks to come. Second, we use a Web-based management dashboard that sets the

standard for our performance in each area of government operation, from tonnage of trash picked up, to the

length of time it takes to get a building permit. It shouldn’t take more than 72 hours to fill a pothole or more

than 12 hours to find shelter for a homeless person. Crime statistics are normally released annually when a city

reports them to the FBI. We do it every 30 days. There are hundreds of categories, and the same information

goes up on the internal system and on our public Web site.

Even as you’re wrangling with the budget, Atlanta still faces enormous challenges. How do you begin

to focus your attention on the long term?

We hold regular cabinet and department-level retreats and encourage people to talk about where they think

Atlanta should go. Obviously, some time needs to be spent on routine, maintenance-type discussions, but

people need to know you value their creativity.

In addition, every quarter, the COO and I hold two- to three-hour meetings with each of the department

managers and key players on important initiatives. We step away from the management dashboard, the

turnaround plan, and the budget process and discuss the things keeping these people up at night. For example,

we worry a lot about drinking water and waste water operations right now, but we talk very little about our

water sources 30 years from now. This administration won’t be here then, but if we don’t start talking about it,

some future administration will wonder why we didn’t.

We strive to find a balance between day-to-day management, dealing with crises, and scheduled open-ended

discussions about strategic issues and plans. The idea is to make people feel comfortable enough to take risks

and think big.

Reprint Number F0312C

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