Pat McFadden is right: the civil service needs to lose poor performers

With the government’s finances looking ever tighter, Whitehall is expecting civil service efficiencies. Cabinet Office minister Pat McFadden is promising a new approach to managing the performance of civil servants. 

The civil service grew in response to the demands of Brexit and Covid, but it is not immune from cost-cutting. Cuts can be made badly based on random decisions and crude top-slicing. Or they can lead to higher performing and more confident teams. Part of the answer to finding efficiencies while – more importantly – raising performance should be to introduce careful and predictable rounds of compulsory redundancy.

Civil service cuts are unavoidable

Ministers are right to demand budget cuts and efficiencies: even with tax revenues reaching a historic high, the public finances are tight and there is a long list of demands to be met. 

Cuts are difficult to manage for civil service leaders as well as being tough for the people directly affected. But they are an opportunity too. The government can find efficiencies in ways that address the perennial problem of poor performance management, and it can use them to get a grip of the worsening grade inflation that risks hollowing out capacity in the civil service management levels.

Past practice has been to cut through a combination of a hiring freeze, headcount targets, and a voluntary redundancy scheme to make up numbers not delivered by natural wastage. McFadden has rightly resisted distorting headcount targets. Talented, younger, mobile – and cheap – staff leave, while expensive and less mobile people stay. Recruitment freezes are also a mistake as they choke off much-needed new talent. Voluntary early redundancy schemes based on headcount targets are similarly self-defeating, as the most marketable and skilled people exit.

But there is clearly scope for making cuts that need not harm effectiveness. The policy profession has more than doubled in size in the last eight years and is an example of where there is room to trim. Cutting back will help the civil service focus on giving officials clear responsibilities for government priorities, removing duplication, and stopping teams checking or second-guessing others’ work.

Performance management in the civil service is poor

Even its stoutest defenders acknowledge that the civil service is not very good at performance management. When managers have tried loose and flexible systems, poor performance has not really been gripped. But tight requirements to put people in performance ‘boxes’ does not work either. It just antagonises everyone apart from those who get into the top 10%. And all the while it remains near-impossible to actually dismiss anyone, however underwhelming their performance.

Civil servants themselves acknowledge this issue. Two thirds of respondents to one recent survey thought that managers moved poor performers around instead of dealing with the problem, and three quarters of managers thought the process for dealing with poor performance was not straightforward.  ⁴ Markson, T, ‘Civil servants express frustration with performance management in CSW-Reform survey’, Civil Service World, 1 May 2024 https://www.civilserviceworld.com/professions/article/civil-performance-management-frustration-csw-reform-survey  The system works against rather than rewarding strong management, and means that the logical path for managers is to move or side-line people rather than tackle the underlying problem. Performance management will remain unsatisfactory until there is a harder-edged consequence for genuine under-performance.

The civil service should introduce regular compulsory redundancy rounds

It is time to try something new. As McFadden rightly focuses on improving performance management he should take the opportunity to remove underperformers and send a signal that there will be a tougher regime for the future. It will be contentious, and will lead to a big argument with the unions, but the civil service should introduce compulsory, regular, predictable and well-managed redundancy rounds.

This is not some Elon Musk-style sacking frenzy. It is the opposite – a controlled and fair process for shedding a relatively small number of the lowest performing staff and retaining the rest. These rounds could be run every two or three years, and lead to the departure of 2-3% of staff, who are given fair exit packages and leave in a controlled and respectful way. Rounds would continue in times of plenty and austerity because the objective is not to cut headcount, but to lose the poorest performers and to raise overall civil service effectiveness.

This process would drive efficiency in the system and mean that there was a consequence for ineffective performance, as managers at all levels would identify their least valuable performers for compulsory exit packages. It would also be more honest to people who are better suited to different employment – and avoid telling staff they are poor performers and then asking them to turn up to work demotivated and resentful.

There will be rules to work through related to the civil service compensation scheme and contractual rights, so it may take a little time to get going. Ministers and the civil service leadership will also have to engage the trade unions. But this is all worth it to save money and improve performance. It would also be an answer to civil service critics who complain that the institution does not apply the rigours of the commercial world and fails to take its own performance sufficiently seriously.

A mindset shift like this for civil servants would change the culture. With such relatively small numbers at risk of redundancy, it should avoid creating counter-productive persistent anxiety, while providing the opportunity to motivate better performing staff who would no longer be hampered by under-performing colleagues or demotivated by an impression that people are not penalised for poor performance.

The civil service has a team of broadly sympathetic ministers in charge at the moment, who prioritised a relationship reset at the start of their term. But frustration at civil service performance is beginning to show. And civil servants themselves have long been dispirited at the failure to better manage performance. This is the moment, as the government demands efficiencies across the state, for the civil service to show that it means business when improving its own performance.