Public-sector faces leadership challenge as budget cuts bite

Not enough capable leaders to deal with change, say HR directors

Claire Churchard         Published: 25 June 2010
Source:  People Management

 

Public-sector leadership needs a boost in capability if it is to manage a workforce demoralised by budget cuts, HR leaders have said.

The government's emergency budget last week announced a pay freeze for all public-sector workers earning over £21,000, a review into public-sector pensions and the news that Whitehall departments will have to find savings of £61 billion by 2014-15 - an average 25 per cent cut in spending.

John Philpott, chief economist at the CIPD, said that the politicians may not have fully considered the "enormous management challenges" that these measures will create in a workforce that will be increasingly demoralised.

"We've warned consistently that while the public sector may be numerically overmanaged, it is qualitatively undermanaged," said Philpott. "To get the best from a workforce cowed by the harsh winds of fiscal restraint will require a step change in management capability in the public sector. Those who lose their jobs are only part of the story - how 'survivors' are managed will determine whether the story has a happy ending for UK public services."

Dean Shoesmith, president of the Public Sector People Managers' Association, agreed that "patchy" leadership capability across the wider public sector would need to be addressed for reform to succeed. "There are some capable leaders but not sufficient to deal with the degree of transformation," said Shoesmith. "So there's a big piece of leadership and organisational development work to be done in most public-sector organisations."

He highlighted commercial acumen and business skills as leadership capabilities that could become crucial as the sector considers outsourcing and partnerships with the private sector to save money.

He said that, in some cases, talent would have to be "hired in" and it might be necessary to "assess or even deselect" people unable to do that.

Graham White, HR director at Westminster Council, said: "We are setting a new expectation for the public-sector manager and they are not completely prepared for that. As a consequence, that does put another challenge onto HR."

He said HR would have to support managers in the short term and look to develop more capability in the long term.

White added that the pay freeze could provide a period of stability during which managers could assess the value of people on the payroll. "In this period we can help them see the real cost of people to an organisation and how to convert that cost to return on investment. If you can't convert it to ROI then you start to get to where to make cuts."

Linda Maughan, HR director at Middlesbrough Council, which employs 43 per cent of the local workforce, said: "Funding cuts plus the pay freeze mean our managers will have a lot to grapple with. The difficulty is keeping managers positive when they could be looking at redundancy themselves."