Headlines: March 22nd, 2004

Cutting over 40,000 Civil Service jobs and making radical reforms is deliverable, but there are dangers ahead. This warning comes from the Chartered Institute of Personnel and Development with the message to the Chancellor to learn downsizing lessons from the best practice in the private sector.The popular downsizing model of the early 1990s was designed to deliver major efficiency savings, but many doubts now exist over the effectiveness of crude downsizing. Where the process was too rapid, and not strategic enough, companies lost the people who were easiest to get rid of, then often discovered they’d lost the wrong people. Sometimes these people were good enough to be mobile and able to take on other jobs. Older staff were frequently made redundant, but they were some of the most experienced people in the organization. Research by the Institute suggests that continuous change, based on genuine consultation, delivers greater efficiency savings and genuine performance improvements.

The Institute also warns about the importance in major changes of winning the hearts and minds of the remaining workforce. The ‘psychological contract’ between employers and employees is a vital consideration. Motivation of the remaining workforce depends to a large extent on a supportive attitude by the employer. In the public sector, where the pace of change is traditionally slower than in the private sector, this will need particular attention.

The Chancellor’s announcement makes it clear that some of the redundant administration posts are to be redeployed to front-line services. This is being interpreted as ‘bureaucrat bad, front-line good’. The Institute believes that this approach is too simplistic. There is a need for some administrative roles, in order to allow the front-line to operate effectively. While the Chancellor has talked about investment in IT to secure the changes, the Institute argues that investment in human resources is also needed to deliver effective change.

Dr John Philpott said: “There is a trade-off between cost-savings and performance. Too much change, too fast, could undermine the Government’s core objectives and delivery agenda. The big lesson from the past private sector experience is that the ‘people’ element in processes of change is what really matters. If the Government fails to get this right, things could go badly wrong.”

The Sunday Times reports that under a plan by Sir Andrew Turnbull, head of the Civil Service a cut of 25% is feasible. This would amount to 150,000 staff. The plan, with the title, ‘Preparing to be Consumer Driven – an Efficiency Programme’, outlines a re-engineering of the delivery of public services.