Staffing Shambles

According to the Managing Director of Manpower, the recruitment agency:

"We've noticed that a number of public sector organisations have begun recruiting again with renewed vigour... in their efforts to implement budget cuts there has been a degree of over-firing. We've seen the number of people leaving public sector employment slow as they reach the minimum they need to provide services, while some have gone too far and they need to begin re-hiring."

Yes, that's right: the public sector is now trying to replace staff it only just fired. And it's doubtless paying organisations like Manpower a big fat fee along the way, having already doled out who knows how much in redundancy payments.

The big picture is that public sector employment has fallen by about 600,000 from its peak under Labour. That's a headcount reduction of around 10%, and although the cut in full-time equivalents is less (around 400,000), that seems like a pretty impressive response to the fiscal squeeze. Maybe George is going to do it after all. But not if the reductions are now being reversed.

The public sector has a long and sorry history of cutting the wrong jobs, and then having to shell out even more to fill the gaps.

In some cases, that means bringing in temps who are much more costly than directly employed staff, even though they are often the very same people who've previously been employed by the public sector. For example, back in 2006 it emerged that the NHS was spending nearly a billion a year on agency nursing staff to cover for a shortage of permanent nurses (see this blog).

Even worse, we've seen innumerable cases over the years of staff being made expensively redundant only to be rehired back into the very same organisations. Take this story from last year:

"MORE than £3 million was paid out in redundancy packages to 171 council workers – only for them to return to work for the same authority in new jobs. Staffordshire County Council ran up the bill over the past three years, paying off staff who had lost their posts. But the same employees were later rehired to fill new roles at the local authority. 

The details have emerged after The Sentinel revealed neighbouring Stoke-on-Trent City Council had shelled out £330,603 in redundancy payouts to 25 workers, only to re-employ them. One person was taken back on the council's books just 27 days later."

A big problem here is that public sector management fights shy of deciding who specifically is going to lose his job. Making people compulsorily redundant is never pleasant (trust me, I know), and it's much easier to offer voluntary redundancy or early retirement packages. Unfortunately, what then happens is that it's often the people you don't want to lose who take the money and go. The people you would quite like to leave - maybe the ones doing the least productive jobs - tend to stay, sensing perhaps that they'll be lucky to find a comparable job elsewhere. And according to the man from Manpower, that's certainly happened here:

"In central government there has been a reliance on voluntary redundancies. This allows some people in key roles to leave, creating gaps that need to be filled at a later date. Some of the hiring over the next few months will be re-hiring to fill these gaps."

Well, isn't that great. In the private sector, managers cannot afford to wimp out of making tough decisions on who goes and who stays. But public sector managers leave the choice to their staff, with the costly consequence we now see.

What this reflects of course, is a much broader management failing right across the public sector: its chronic inability to connect up resources and delivery. Or as the Public Accounts Committee put it last year:

"Most departments cannot link costs to outputs to identify the consequences of changes in spending. This lack of basic management information is a serious impediment to making sustainable cost reductions that minimise the impact on frontline services. An understanding of how spending relates to key outputs is a necessary prerequisite of good decision-making and is essential if departments are to understand the impact of changes in spending."

Organisations that cut staff and spending without having a clue how that will affect the services they deliver are organisations that need to go out of business. But while the public sector still has a monopoly on our vital services that isn't an option. Break it up, bring choice and competition to bear, and force managers to think about efficient service delivery rather than blind cost cutting.