10 September 2012

Recent departures of high profile senior civil servants for no obvious reason have perplexed those who like a good row or an indiscretion. Perhaps the answer lies elsewhere – in the grinding reality of downsizing, a dwindling sense of personal achievement and the continuous if low-level criticism from ministers, advisors and select committees.

The Public Accounts Committee recently published its report ‘Managing early departures in central government’. The Institute agreed with many of the PAC conclusions – but the report has a solely technocratic view of the reality of managing reductions in staff numbers.

Senior civil servants are people, not just bloodless lightning conductors, punchbags or beasts of burden for downsizing and cuts. They need to feel engaged, supported and valued at a time when more is being asked of them than ever – and their number is being reduced by as much as a third in some departments.

At the moment civil servants don’t have to go far to hear trenchant private and public criticism of them. But as the IfG argued in March 2012:

“Politically inspired civil service bashing is naive, and counterproductive to the process of reform. Ministers and civil servants have got to work together, or else they will fail separately.”

The scale of change civil servants face is unprecedented. Sir Jeremy Heywood summarised the challenge at an IfG civil service reform event in March 2012:

“we’re [at] a starting point [of]... a seven-year programme of fiscal austerity. And that means dramatic reductions in headcount... an enormous programme that is putting huge pressure on every single department in Whitehall... Business as usual is continuous improvement for the foreseeable future... a constant process of driving cost out year by year..."

“[this] Government... has embarked simultaneously on a huge reform of the education system, a fundamental reform of the National Health system, the major change in immigration – wherever you look – the welfare reform system, the police and crime commissioners, the criminal justice system... Pretty much everything’s been thrown up at the same time...”

The last spending review required savings in central administrative costs at a scale that forced departments to downsize at speed before the start of the first year of spending review, in order to get the savings payback by the end of the spending review period. This approach guaranteed unintended consequences – whether losing the wrong staff or having to cut services that people value. There simply wasn’t time to develop new or better ways of working that could mitigate the sharp reduction in headcount.

Downsizing at this scale and pace inevitably takes a toll on the capacity, energy and emotions of managers and senior leaders. The requirements of consultation, selection for redundancy, matching remaining staff to the remaining posts create a huge management burden on line managers. Overstretched HR functions are left with little capacity to do anything else. It is draining to run comprehensive downsizing programmes.

Civil Service managers and their much abused HR colleagues deserve credit for managing big reductions in staff – up to 30% in little more than 15 months. With the support of the better trade unions this has generally been done as fairly and humanely as you could expect given the pace of reductions.

Some who saw this phase through have already seized their voluntary redundancy or even resigned with a sense of relief and sometimes glee – depending on their age, their ability to get another job, or the respective sizes of their redundancy package, savings and pension.

But what about those who have stayed? Do they have the appetite for one or even two more rounds of staff reductions and savings in Sir Jeremy’s seven years of austerity? Do their hearts sink at the thought of having to spend six months getting ambitious reshuffled ministers up to speed on the unpleasant reality of making sustainable savings and cutting services?

Given the inevitability of further 'more challenging' staff reductions ministers and civil service leaders would do well to reflect on the energy and engagement of the senior civil service. As Peter Riddell wrote in his open letter to Sir Jeremy and Sir Bob civil service reform is "about creating a high-quality, high-morale and highly effective Civil Service. All three elements go together. Unless reforms are urgently introduced, there will be the risk of a downward spiral of cuts, inadequate services and a demoralised Civil Service."

We should watch the ranks of director, director general and permanent secretary to judge whether the Civil Service is beginning to see an exodus of too many of its best and brightest to somewhere they feel more valued and better supported to perform – somewhere that allows them to restore their dwindling sense of personal accomplishment.

Such an exodus would be bad for ministers, advisers, parliament and the country.

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A certain absence of politics, Peter? There's evidence (from writings and speeches) that Oliver Letwin and other ministers see virtue not just in diminishing the size of the state but also in destabilizing its denizens - rendering them less resistant. From that perspective, senior depatures from Whitehall are welcome. I've certainly not heard any expressions of regret from ministers; the prime minister and colleagues have not exactly stepped up warmly to embrace the reform project launched by Heywood and Kerslake (realizing which would, as you say, imply some concern about morale). You might argue that a rational Tory minister wants good civil servants to help accomplish his/her ambition, including paradoxically the ambition of downsizing government. But you have to contend with signals from ministers that 'chaos' (Frnacis Maude's word) isn't entirely unwelcome.

Yes, civil service leaders should be supported, valued and encouraged, so that the widest pool of talent is attracted to meet the vital challenges they face.

But if change is necessary, they cannot be immune from challenge and criticism (short of "bashing").

Those whose response is to feel ground down, to lose appetite, or to have a sinking heart are probably best out, however otherwise able. In such interesting times, surely the scope for personal accomplishment is the greater? Indeed where else can comparable challenges be found?

An exodus may be no bad thing, if those going are out of sympathy with reform. Should we not look rather to whether the replacements are sufficiently talented, in order to test whether there is a problem?

Bad for ministers? What if the minister's agenda is personal enrichment, and his route to riches is a discredited department, ready to be dissected by external consultants and carved up for private-sector 'service partners'?

A cursory examination of former ministers' financial interests - consultancy fees, non-executive directorships, and even seats on the Board - at the very same consultancies and service companies makes for interesting reading.

Senior civil servants are not immune to avarice, but the smart ones made their fortunes years ago when the last of the intrinsically-profitable parts of the Civil Service were carved out into agencies and subsequently privatised - some of them in management buyouts, others by sale on a decidedly tilted auction block.

So who's left if the clever, honest ones are going?

The honest mediocrities suit the ministerial agenda all too well; now is the time for the mismanagement of decline. The clever and amoral ones will find themselves promoted because of their flaws, rather than despite them, in a service which would in better days have moved them out into a career that better suits their natural abilities: politics.

As to the inevitable question: 'Where will it all end?' the answer is becoming clear: departments that are run by the minister's (or his sponsors') Special Advisors will be run more openly by these external agents. Or by uncivil servants who have sought to emulate them, and succeeded.

Lord Sugar: Why do you want to join this company, Sir Humphrey?

Sir Humphrey: I need to work somewhere where I am valued, engaged and supported to perform, somewhere where my sense of personal accomplishment will stop dwindling.

Whitehall disposes of an income of about £700 billion a year, bigger than the biggest private sector corporations.

Mr Thomas's directors, directors general and permanent secretaries have staffs of tens of thousands and even hundreds of thousands.

They are permanent, unlike Ministers, they are part of the country's "permanent government", as Sir Patrick Sheehy called it years ago. They have considerable national responsibilities.

The Chairmen of decent-sized Plcs are said to look forward 25 years and more, CEOs and COOs maybe 10 years. They have a vision of where they want the company to be then and they plan how to get there. That's the kind of people only more so that the directors, directors general and permanent secretaries of Whitehall must be.

The kind of people who will have noticed that the national debt is rising and so is the budget deficit and the banking system nearly collapsed and there's a recession. They will have noticed it and formed plans accordingly.

It cannot have come as a surprise to them that the headcount needs to be cut. These aren't event-driven people, one hopes, to whom each instruction comes as a surprise, a commandment from out of the blue that would never have occurred to them. More likely, the better ones will themselves have suggested cutting the headcount, simultaneously putting their plan how to do it on the desk.

The resignation of the Chairman of a Plc standing up in front of the annual presentation to analysts and saying with Mr Thomas that he or she is off to somewhere where they are valued, engaged and supported to perform, somewhere where their sense of personal accomplishment will stop dwindling, would be gratefully accepted and a new Chairman with the right permanent secretary-like qualities appointed in his or her place.

Interesting points - however, the root issue is that the civil service is far too top heavy (some say bloated). Processes and tasks are still labour intensive, duplication, waste and inefficiency remain at staggering levels. I am looking at an org chart above my desk of MOD purchasing - hundreds of staff. Take a look at General Motors or Boeing or GE - procurement is in the dozens or mid scores. I remember huge corporations in the 1990s "right-sizing" to survive - IBM for example lost almost 30% of their people, now a highly successful and profitable sustainable business. The civil service needs to move it's culture from a subservient bureaucracy nurturing career autocrats to a more corporate results oriented one producing innovative and effective executive leaders.