By Suzannah.Brecknell

15 Feb 2011

With civil service compensation reformed, managers must now oversee an orderly exit programme to reduce their workforces while upholding morale and retaining the right skills and people. Suzannah Brecknell reports.

It’s no secret that the civil service workforce will be significantly smaller at the end of the current spending review period. The hope of managers – and the mantra of ministers – is that savings in areas such as marketing and consultancy spend, as well as a pay and recruitment freeze, will minimise the need for job losses. But with savings of a third to be made across administrative budgets, redundancies are inevitable in many departments.

Cabinet secretary Sir Gus O’Donnell, writing in Civil Service Worldlast year, said the key to successfully implementing the reforms facing departments will be to do so as quickly and honestly as possible. “Nobody likes uncertainty,” he said, “and it is better for everyone – those who are staying in the civil service and those who will be moving on – that they are clear about their futures as soon as possible.”

Despite the desire for haste, nobody could move on redundancies until the Cabinet Office secured a reformed Civil Service Compensation Scheme (CSCS). This came into force just before Christmas, but knowing the terms under which staff can leave is just the start of a very difficult task. Departments must now reduce workforces quickly and cost-effectively, while retaining the best staff and the right balance of skills for future challenges, and – perhaps the hardest trick of all – ensuring that retained staff don’t themselves move on when the jobs market opens up.

Keeping the right people

In theory, retaining the right people and skills mix is simple: identify key requirements and challenges for the organisation now and in the future; identify the key roles and functions which will support these, and the capability and skills needed in these functions. Then use these criteria to inform decisions about which jobs will go and, where a choice must be made between individuals (bearing in mind that it is jobs, not people, which are made redundant), base those decisions on a clear appraisal of how far that individual meets the capabilities and skills the organisation requires.

Following this process in an open and honest way should not only mean the organisation is well-placed for the future, but should help to minimise ‘survivor syndrome’: the feelings of guilt, stress and resentment which can hit those who remain after redundancies have been made, affecting retention and engagement in the longer term. Undergoing a systematic appraisal process to make redundancy assessments may be more stressful in the short term, says Dave Milner, a consulting director at HR firm Kenexa, but it is a “a fair and ethical way of doing it”, and should leave those who remain with a more positive and confident attitude to their role and abilities.

If the process of defining organisational goals and needs has been properly communicated (of which more later), then survivors will understand how they fit into an organisation and why they’ve been retained, adds David Cumberbatch, a director at HR consultancy Xancam. “They are more likely to proceed without continually looking over their shoulders and thinking: ‘When’s it going to happen again? Am I going to be next?” he says.

In practice, of course, it’s extremely difficult to get this process right. Both men point out that workforce planning and talent assessment must take into account future as well as current needs – simply choosing today’s high performers does not guarantee that those staff have the skills to flourish in a reformed, smaller civil service (with the ability to collaborate, for example, and to deliver results in new ways with less central direction). And even this assumes that an organisation is able to successfully identify its current high performers, about which Milner is sceptical. Many organisations have views about “high potential and high performers and business critical jobs – that’s fine”, he says, but often this will be based on appraisal data, and “very few organisations do appraisal particularly well”.

It’s for this reason that Milner emphasises the need to base any redundancy assessments on new and systematic capability assessments, rather than historic data such as absence levels, which can have a “subjective, almost random” effect, or even past route appraisal data – which can be of varying quality and may not be relevant to future needs.

It’s your choice

A second complication in reducing workforces is that employers are not always in control of who goes. Compulsory redundancies are the last resort following voluntary redundancy or exit schemes which, by allowing employees an element of control, have less impact on individual and organisational morale. (The difference between a voluntary redundancy and voluntary exit scheme is largely one of compensation: under a redundancy scheme departments must follow the terms set out in the CSCS, while under an exit scheme – which should be carried out before redundancies are made – they have flexibility to offer other terms, subject to Cabinet Office approval.)

The general fear during a voluntary scheme is that the best people will aim to leave first – “high performers tend to have more choices”, as Cumberbatch puts it. Not all those who apply for voluntary exit or redundancy will leave, of course, but “you’d be surprised how easy it is to let [key people] go when you’re under pressure to reduce numbers”, notes one former senior civil servant, who has worked in leadership and development in a number of organisations.

She advises that departments should be focusing on succession-planning around critical roles and critical pools, identifying the people that will step into key posts if others leave and using these lists to ask, when considering applications, whether they can really afford to let the applicant go. “If you can’t afford to let them go you have a really generous and good conversation with them and you explain why they’re important to your organisation,” she says. However, Milner warns that this isn’t always possible: “If that somebody’s heart and soul has gone [from the organisation] then I think you have to move on and find other talented people,” he says.

Mike Emmott, a senior adviser at the Chartered Institute of Personnel and Development, advises another approach: engage key people before the decision to apply for redundancy is made, talk to them, and present “an offer of something else in the same organisation – a picture of the future that doesn’t involve them leaving”.

Indeed, good staff engagement lies at the core of effective redundancy strategies. David MacLeod, a non-executive director at the Ministry of Justice and co-author of a 2009 report on employee engagement for the Department for Business, Innovation and Skills, says that “how you do your downsizing is very important, because it leads to your people becoming agents or victims of change.” Intelligent downsizing, he says, is open, fair, transparent and supportive.

In part, this means looking after those who are leaving – and this is in the employer’s interests as well as those of departing staff. The CIPD’s Emmott points out that care and support for redundant staff ensures that those who stay on “are not de-motivated and come to think that you are careless of their interests and their wellbeing”. Emmott advocates investment in outplacement services, describing them as “massively important” in helping build confidence and skills such as networking and drawing up CVs. “The civil service has always been good at [providing this],” he says. “There is some very professional support available, and in my book it’s worth the money.”

In fact, good collaboration across the civil service can help avoid some such spending. To support transition of staff at a time of limited budgets, the National Patient Safety Agency (NPSA) – earmarked for closure by April 2012 – has teamed up with another arm’s-length body in the Department of Health family. It asked the Appointments Commission – also destined for closure – to provide a support programme including training in CV writing, social marketing and starting up a new business.

“Staff don’t feel they are being left to their own devices,” says NPSA associate director of corporate services, Jit Patel. Because of this career development support, NPSA staff have been more willing to remain in post despite uncertainty over when the organisation will close and how long their jobs will be needed for.

Building resilience

If you do find you are losing good people, whether through voluntary schemes or because uncertainty and low morale are prompting people to find other work, Emmott has encouraging words. The civil service, he says, with its traditional focus on teams rather than individuals, has “enough depth and enough capability around the HR function to be able to find people to fill gaps and build up the strength of teams”.

But there may be more of a challenge here than Emmott suggests. While the civil service has many talented people and is good at developing some of them – through the fast stream, for example – Milner notes that it has its blind spots in talent management. It is not very good, he says, at identifying and supporting “individuals from a different educational route to become managers of tomorrow” – so if its chosen set of top managers head for the exit, it may struggle to fill their shoes.

Milner also notes that succession planning shouldn’t be restricted to senior management roles. Departments should also consider ‘business critical’ roles, in which a significant number of staff perform a role which is crucial to running a particular service: tax inspectors in HMRC, for example. And HR teams should ensure that talent management is widened and improved – particularly important at a time when recruitment is frozen and posts need to be filled internally where possible.

This point is echoed by our anonymous former senior civil servant, who says the pressures of the spending review present an opportunity to reform the way in which talent management operates within the civil service. The systems and paperwork which accompany talent-development programmes should be simplified, she says, and employees encouraged to take personal ownership of their development programmes. Talent management should no longer be an end in itself, but “what individuals do because they want to get on”, she says, while managers should view developing their teams as “part and parcel” of their job. “The reality is managers don’t do this now, but it’s critical during a recession because not only are you losing people, but you haven’t got any money. You cannot send people on expensive programmes: you’ve got to look internally,” she says.

At BT, which reduced full-time jobs by 14,000 in the two financial years up to March 2010, displaced employees were moved into a central pool – the BT Transition Centre (BTTC) – which provided outplacement support and acted as an in-house temp agency, allowing staff to take on short-term projects while they looked for new work or redeployment.

The communities department is offering something similar. Through the Government Office redundancy swap scheme, employees from the Government Office Network looking for a new posting can ‘swap’ in to fill vacancies created by staff volunteering to leave other participating departments including, for example, the Department for Education.

Flexible options

The need to reduce workforces also presents, according to the former senior civil servant, “an opportunity to re-engineer the way we think about work” and offer flexible working opportunities within or across departments. In many ways, this drive to make work more flexible should be first point of call during a workforce reduction. It not only makes best use of a smaller workforce, but also demonstrates to those being made redundant that the department has fully explored all the alternatives.

The private sector has led the way in finding flexible and innovative ways to minimise job losses while saving money. Under the Flexible Futures scheme at KPMG, for example, 85 per cent of staff agreed to work fewer hours or take sabbaticals, if needed, to avoid job losses.
Flexible working has also had the seal of approval from Gus O’Donnell, because of its potential to improve diversity as well as save money. He told a conference of women leaders in the civil service last year that he was asking all permanent secretaries to promote alternative working patterns as they implement cuts. “If we increase the number of part-time jobs, that has a positive increase on gender diversity,” he said, arguing that the civil service must “use the cuts agenda to improve our diversity – not to make it ‘no worse’, but to improve it”.

Engaging staff

The clear message is that staff engagement is key – both to maintain morale during a downsizing, and to retain the best employees afterwards. MacLeod’s report found four characteristics that were present in organisations with high engagement, including effective line management; a sense that employees are listened to by senior management; and a perception that senior managers’ behaviour is consistent with the values they communicate. These are “true in the good times, and in the tough times” says MacLeod.

The final characteristic of an engaged organisation, says MacLeod, is a clear narrative “about where the organisation has been and where it is going, which everyone can relate their job to in some way”. This must be clearly and regularly communicated, and combined with open information about changes and areas of uncertainty. “Generally,” says Emmott, “survivor syndrome is a function of failure of communication, which is a function of failure of leadership. Leaders don’t know what to say. They may say: ‘I’m a victim of the political process’ – though they may not say that openly.”

This problem seems to be rearing its head at the Ministry of Defence, where unions have recently announced a strike ballot over the refusal of MoD managers to enter pre-redundancy consultations over the loss of 25,000 civil service jobs.

“The problem we’ve got is that the secretary of state has announced he wants to cut 25,000 civil servants and the people we’re engaging with at the top [of the ministry] feel as if that effectively ties their hands,” says Andy Grey, MoD group president at Prospect. “I think in their heart of hearts they would like to engage [with unions to discuss alternative cost-saving measures] but they feel that because of the direction from the top, there is no scope for that.”
Yet there is a degree of inflexibility on both sides. Grey admits that the department is asking unions to work with it on cutting posts in a positive way, but Prospect is saying: “We’re sorry, we don’t accept that you should be cutting the 25,000 jobs”.

The key word for Milner is accountability: while civil servants face political pressures that may make redundancies unavoidable, “there are ways of releasing people with dignity, with respect, and making them still feel valued. It’s important that managers at all levels accept this is happening, and that they will be managing the decisions and supporting the decision-making process and helping people go through this”.

Departments are going to be smaller in 2015, and in many cases natural wastage will not be enough to accomplish that reduction. To ensure that redundancies are made as intelligently as possible, managers must acknowledge how difficult the situation is and communicate regularly and honestly with staff, listening to their needs and concerns; but they must also explain clearly why and how the organisation is making these decisions, or they are simply deflecting people’s natural frustrations from them onto their employer. A flexible, honest approach will ensure that individuals – and organisations – suffer as little damage as possible as redundancies begin to roll out across the civil service.

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