By Winnie Agbonlahor

24 Nov 2014

Austerity has transformed SCS recruitment. Winnie Agbonlahor finds that departments are now looking more in than out, and shaking it all about. Illustration: Matt Kenyon

Ever since the credit crunch called an abrupt halt to the glory years of expanding civil service budgets, government employees have been enduring the Whitehall equivalent of a Biblical famine. The civil service headcount rose from 475,000 in 1997 to 519,000 in 2006, but began falling in 2007 – and by last year, there were just 412,000 ‘full-time equivalents’ in the civil service.

Against this backdrop of sharp overall headcount reductions, CSW has studied how senior civil service recruitment has changed over time. Submitting Freedom of Information requests, we asked every government department to name the source of recruits to SCS jobs between 2011 and 2013: did appointees come from inside that department or agency; from another part of government; or from outside the civil service? Building on two previous special reports, CSW now has a comparable data set – covering DCLG, DCMS, Defra, DfId, DH, MoD, HMT and the Cabinet Office – for the nine years from 2005 to 2013.

Unsurprisingly, SCS recruitment – like overall civil service recruitment – fell sharply after the banking crash. While the number of SCS appointments to these eight departments stood at 275 in 2007, it fell to 116 in 2010 (see pie charts). “There was a big squeeze – a big reduction in resources, and a big fall in the number of civil service jobs”, first civil service commissioner Sir David Normington tells CSW. However, numbers started to rise again thereafter, reaching 163 in 2013. “It’s picked up recently, but we’re nowhere near the levels of the highpoint of recruitment,” Normington comments.

Alongside that sharp fall in overall numbers, in 2010 there was a big hike in the proportion of posts being filled by people moving between government departments. In the years leading up to the election, this proportion averaged 30%; but in 2010 it rose to 52%, and it’s averaged 39% since.

There was also a big fall in external appointments, which remained steady at around a quarter of all senior jobs between 2005 and 2009, then fell to a low point of 12% in 2011 as departments stopped hiring people from the private, voluntary and wider public sectors. Chris Last, head of the government’s HR profession, tells CSW that “it makes sense that we should look to our talented people first when finding people to work at the heart of government. Of course there are other factors which would influence this, including the reduction in NDPBs or the external recruitment restrictions that came into place in 2010.”

At times of workforce reductions, recruiting existing staff into senior posts also saves money, Normington explains: “The first place you look when you’re recruiting is to redeploy your existing people, to avoid redundancies.” And Jill Rutter, programme director at the Institute for Government and a former senior civil servant, points out that all public sector bodies running redundancy schemes are obliged to try to hire internally using the ‘redeployment register’. This means that “you have to look to people who have become available because of restructuring first, before you can go outside to recruit,” she says. “Obviously, from a taxpayer’s point of view, you want to minimise the amount of unnecessary redundancy pay.”

Rutter also tells CSW that, with the pay freeze and subsequent 1% cap on pay rises limiting the opportunities for rising stars to increase their salaries, many have been looking across government for opportunities in other, higher-paying departments. “After your pay has been frozen for a couple of years, you’re looking to move around, see where there are vacancies, and you’re applying for things you might not otherwise have applied for,” she says. Most grade 7 jobs in the Treasury or Cabinet Office, she says, will pay less than those in many other departments.
Another factor contributing to the increase in cross-departmental appointments, as Last suggests, is the ‘bonfire of the quangos’. This resulted in many former quango managers seeking jobs in departments, whilst other quangos were absorbed into their parent bodies – a phenomenon that will often show up in our figures as appointments from another agency. “Whatever churn is happening in a department, I’m sure some of it is the result of bringing in people who were previously in an arm’s-length body, some of whom were previously civil servants and some of whom were not,” comments Normington. “But it will be very variable across departments.” He adds that this is “a secondary part of the story, and what is actually going on is simply a reduction in numbers across the board.”

"there needs to be more flexibility in the package that’s offered, including on pay,” David Normington

Dr Sylvia Horton, a principal lecturer at the University of Portsmouth who has been examining civil service HR since the 1960s, tells CSW that the increase in intra-governmental movement of senior officials also has something to do with efforts by former cabinet secretary Lord O’Donnell to professionalise the service. For many years, she says, there was a clear division between the executive class in the civil service, made up almost exclusively of generalists, and a separate class of specialists. But with O’Donnell working to raise professional, specialist skills, the borders started to become more porous.

The government slowly started “opening up the civil service in several ways: the internal structures, so that you have more movement between specialist and professional classes into the general positions; but also opening it up so that people outside the civil service can apply,” Horton says. “So you’re trying to move to a principle of the best person for the job – whether that’s from the civil service itself, the public or the private sector.” A drive to bring in more recruits from the private sector, begun under the Thatcher government, also contributed to this trend, Horton adds.
Since 2010, several factors have contributed to a cut in external recruitment. Horton agrees with Normington that departments have sought to minimise redundancies as head counts fell, but believes another reason for the fall “may be that people are not attracted to government.” In the past, she adds, “a sense of public service motivated people” to join the civil service. But now, “government has such a bad image that people are not attracted anymore. The media have an awful lot to account for: it’s always bad news, and when things go wrong the civil service is blamed. And that affects people’s images of the civil service.”

Dr Thomas Elston, postdoctoral research fellow at Oxford University’s Blavatnik School of Government, says there might be other factors at play which have made government less appealing to outsiders over recent years. These, he says, “include perhaps the current management environment of tight central regulation of operations, which isn’t necessarily conducive to entrepreneurialism; and the intensity of public scrutiny and accountability, which can be greater in government than elsewhere.”

However, both Normington and Last reject the idea that the reputation of the government brand has been damaged. “The civil service does not have a general recruitment problem,” says Last. And Normington says he sees no evidence of the problem, pointing to large numbers of applications for many management jobs. However, he does concede that relatively low pay levels may be restricting the number of applicants for technical roles: “I am on record as saying, particularly at senior levels and in the specialist posts, that there needs to be more flexibility in the package that’s offered, including on pay.”

The tight pay constraints – which require Treasury and ministerial approval for salaries above about £150,000 – have led many senior officials to voice concerns over their ability to attract and retain essential skills from outside government. The Highways Agency and the MoD’s Defence Equipment & Support have even undergone major organisational changes, in part to escape civil service pay constraints. Horton says that “there are ways around [the controls], through expenses and all the rest of it”, but adds: “How can you attract people from the outside who are on half a mill a year or more? You can’t bring those people in unless they come in at the latter part of their career and can afford to take a salary cut”.

Normington adds his voice to those concerned about the civil service’s ability to bring in those high-ranking specialists: “There remains an issue with attracting people with particular specialist skills in shortage areas; and it’s not that the jobs are unattractive, but that you’re competing for those specialisms in a very tight market.” He adds that the kind of specialist skills government is looking for nowadays – in areas such as commercial work and project management – “we were not trying to recruit to this degree in 2010.”

Simon McDonald, partner and head of government practice at recruitment specialists Odgers Berndtson – which headhunts for SCS posts – is also sceptical about the idea that external managers are steering clear of government jobs. He does “not get feedback from the candidate market that government is less attractive now than the starting period your report covers.” He does, however, acknowledge that “pay is clearly an issue.”

Generally, McDonald says, it’s important for any large organisation to keep a good balance of internal, cross-unit and external appointments into its senior management tiers. “There are some real strengths in having all three,” he tells CSW. “Internal appointments help keep the organisation’s memory. If you lose too many in too short a period, you lose the ability to remember how things have worked; why things went wrong; why you’re doing things the way you are. But if you have too many, improvement and change can be a little more difficult because people are becoming institutionalised.”

Cross-unit recruits are also advantageous, says Simon McDonald, partner and head of government practice at recruitment specialists Odgers Berndtson

Bringing in people from the outside can counter this risk, he says, because they “enable you to look at other ways of doing things, and challenge what you’re doing – [helping to] refresh the thinking of an organisation.” Where an organisation is about to undergo big, transformational changes, he adds, it can be beneficial to bring in someone from the outside, “particularly if they’ve been through that kind of change.”

Cross-unit recruits are also advantageous, McDonald says, because they are a way of “promoting your talent, expanding people’s thinking, getting the benefit of some new ways of thinking without losing the investment you’ve made in your workforce.”

Asked how government is doing on maintaining a healthy balance, McDonald is reluctant to generalise. “You’d need to break it down to a more granular level,” he comments, considering each department’s individual needs. Take HMRC: “You might say in the digital team, for example, we need to bring in people who have achieved a digital transformation of businesses, who are perhaps more likely to be outside [government]. But when it comes to the administration of revenue recovery and dealing with corporate tax, the expertise is likely to be within. So it’s context-sensitive.”

McDonald does believe that there is “probably scope for a few more external appointments”. What has worked really well, he says, is the recruitment of non-executive directors; here, government has “managed to attract some quite senior commercial sector people in advisory roles.” However, he adds, “there does seem to be lot more difficulty once you get to SCS itself.”

The difficulties around recruiting external candidates, says McDonald, go much further than pay constraints. The sheer scale of government can be a daunting prospect to candidates: “The civil service world itself is really very complex. It has DGs who have tens of thousands of staff. The complexity of delivering services to a country like the UK shouldn’t be underestimated, and is often more difficult than will be experienced in the commercial sector.” Then there are the characteristics “of working in a political environment, which a lot of commercial people are just not used to. And coming in at senior level is probably more risky than working your way up from within the service, where you gradually gain more and more exposure to the political environment as you move up.”
However, McDonald believes that there’s work the government can do to mitigate what people perceive as the risks involved in joining the senior civil service. “People have come in from outside and succeeded, so we know it can happen”, he says. To sell the SCS as an attractive workplace, McDonald thinks, “we can set out very clearly the level of support the civil service offers to its talented personnel, and the mentoring arrangements that can be made”. Meanwhile, officials should combat stereotypes of the civil service as a rigid bureaucracy, he says: “It’s very easy for people to stereotype. But of course, there are many roles in the civil service which are all about delivering, all about change and transformation”.

Departments can also reach out to external figures who may not have considered applying to the senior civil service, he says. For many people who’ve “grown up” in the commercial sector, applying to the civil service “isn’t necessarily something they think about until they get a call and hear the benefits of it.”

So how is government doing on retaining its top people? While not all departments submitted comprehensive data on retention from 2011-2013, 12 did so – and 69% of the SCS they appointed in 2011 still remain with that civil service employer. For those hired in 2012, the figure is 83%; and for the 2013 intake, it stands at 91%.

"Nobody wants to stay in a job that is of little value either to themselves or to their employer,” says Simon McDonald

Given the level of movement across departmental lines revealed in our findings, those retention figures look pretty good. Certainly, Last believes that while “in some cases, people coming into the civil service choose to leave after delivering what they came in to do, the civil service does not have a general retention problem.” He adds that “the latest turnover rate for the SCS is 13.1% – the lowest level in recent years. The resignation rate remains low, at 3.8%. Nevertheless, where we need to recruit and retain particular skills and experience, we do ensure the right incentives are provided. For example, 21 major project leaders and highly-skilled staff are currently in receipt of a ‘pivotal role allowance’ to ensure that they remain in post.”

How can civil service employers retain their best managers? “Money is not the single motivator for holding people in jobs,” McDonald comments. “Feeling valued really matters: feeling that you’re making a difference and that the job you’re doing is important. Nobody wants to stay in a job that is of little value either to themselves or to their employer.” A lot of this, he says, is “about communication and recognition; and in the public sector that – generally speaking – is not possible through reward. But people understand that when they come in.”

There’s no doubt that the work of top officials does matter. As Last says, senior civil servants “work on projects and policies that can make a real difference to people’s lives”; he adds that “many of the roles we offer are without parallel in terms of job content, influence and intellectual challenge.”

Civil servants’ political masters do sometimes rub the gleam off these jobs. Former home secretary Charles Clarke recently warned that politicians must take care not to counter-balance the job satisfaction of SCS roles by “slagging off the civil service”. And FDA general secretary Dave Penman has called for senior civil servants’ own managers to “sing their praises more loudly”. Meanwhile, as the private sector economy picks up while the civil service faces more years of falling budgets, there’s a risk that the pay differentials in senior, specialist posts will widen still further.

It’s probably this last challenge that presents the greatest threat to the civil service’s ability to maintain a healthy balance between internal recruitment, cross-government moves, and bringing in new talent. As Normington and many members of the SCS have argued for some years, if government wants to make a success of its drive to develop its specialist skills, a re-think of its approach to senior pay looks unavoidable. Last seems to agree: “There is always more we can do to retain experts in some specialisms and maintain a competitive edge on pay.”

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