Talent management: thinking beyond pay restraint

Deloitte’s annual State of the State report on what the next government must consider when creating its public sector reform programmes

At just under 5.5million, the public sector headcount is at its lowest level since 1999; there are nearly 900,000 fewer public sector workers now than at the time of the last general election in 2010.

As the next general election looms those public sector workers – and the government which oversees them – are moving towards a time of radical change. Already reeling from dramatic headcount and budget reductions, they will need to find yet more savings while dealing with technological and demographic changes which will revolutionise our public services. Whether this revolution results in transformed, public services and improved outcomes will largely depend on the talent of those workers who must navigate the challenging years ahead.

For that reason, Deloitte’s annual State of the State report recommends that when the next government creates its public sector reform programmes, it should consider them through a talent management lens so that every change supports the public sector’s people.

The challenge, and the opportunities

Public sector fiscal restraint is here to stay, and with it public sector pay restraint; recruitment challenges and possibly further headcount reductions. Yet these three factors – combined with low morale and shoots of growth in the private sector – are making it increasingly hard for the public sector to recruit and retain the right people with the skills it needs to design and run modern public services.

That's not to say there are no talented people in the public sector – the UK's public servants include millions of highly skilled and motivated individuals, but in interviews with public sector executives for the State of the State report, Deloitte found that talent management and other people issues are becoming a key concern for many leaders. These leaders are justifiably proud of the work they have done to reduce the deficit and reform services, but they foresee further challenges and risk of service or organisational failure in years to come. Making sure that the talented people in their organisation are working in the right place, in the right way, will be vital to minimise these risks.

Some interviewees described specific recruitment difficulties for nurses, teachers, social workers and public health analysts. These difficulties were caused both by limited supply and pay restraint tin the public sector. Meanwhile stress, weak career progression and pay and conditions are the most commonly cited factors contributing to poor retention.  Many interviewees also noted particular problems recruiting senior leaders, and a need for training to build better change management skills among middle managers.

There is no magic wand solution here: fiscal and economic necessity means that pay rises and large bonuses are not in the pipeline, and even if they were they would not address the structural challenges which can stifle innovation or collaboration across the public sector. But the Government does have a a crucial opportunity over the next Parliament to build talent management into the many reforms, structural and fiscal, which it will be enacting. 

Take estates and workplace reform. The public sector has already begun to think creatively about the way it uses its estate, with different organisations co-locating to save money and improve services. As more public sector bodies review their workplaces and working practices, they could be designing environments which support flexible working; which encourage collaboration; which help employees to improve productivity. All of this would make that organisation a more rewarding place in which to work, addressing some of the frustrations of its employees and increasing engagement.

Managing government’s talent 

The State of the State recommends that the Government helps everyone in the public sector realise their potential through:

  • Talent management: Exploring the full range of recruitment, reward and recognition activities that the public sector can undertake could help make it as attractive as possible to talented employees.
  • Accountability changes: Devolving accountability so that employees are better able to make decisions, within agreed parameters, is a key element of leaner working that can help staff be more productive.
  • Remote and flexible working: Our interviews with local public sector chief executives outlined in the next chapter suggest that many want to balance flexible working patterns for staff with the need to ensure employees work together as a team.
  • Workplace design: Environments that can support productive working patterns at lower costs help employees improve their productivity and also have a role in making the workplace as productive as possible.
  • Alternative deployment: Exploring alternative deployment models such as matrix working, in which individuals are given flexible, multiple roles that fit their capacity and capability could help make sure that people’s talents are used to best effect.
  • Flexibility on pay: Government could explore using new or existing employment rules to tweak pay where it needs to attract high-cost skills.

More details on making the most of the talent within the public sector can be found in The State of the State report, a unique and in-depth insight into the public sector. A copy of the full report can be downloaded here.

Click here for The State of the State 2014-15: Reforming Government through Talent Management. Managing Public Sector Talent

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