Fundamental changes are needed to address civil service frustration

New data about the civil service is starting to reveal a workforce with a morale problem. Longstanding career incentives encourage officials to move too rapidly between jobs to seek promotion. But hiring freezes, limits on promotion and a middle management hiring spree post-Brexit and Covid mean those routes are being blocked. 

The frustration and unhappiness this has caused will hopefully be eased by voluntary exit schemes, but cutting civil service numbers and opening up the job market will also mean people return to responding to badly designed incentives – meaning  yet more staff churn and more grade inflation. 

Rather than passively accepting this cycle, the government should use voluntary exit schemes to reset numbers and expectations and make some fundamental changes to the rules on pay and progression.

Civil servants are encouraged to move around and move up

Civil servants in a new grade typically start at the bottom of a fairly broad pay band, and most have no way for upward movement while in their current job. Civil servants – and especially more senior ones – are also unlikely to see significant real terms increases in pay year on year, with real terms pay remaining below 2021 levels for most who have stayed at the same grade and well below 2010 levels for everyone

If an employee cannot rely on pay rises to keep pace with inflation, and is unable to get paid more for staying in their job longer and doing it better, they will start looking for other options.

One is to seek promotion. The growing pressure to get a promotion has generated substantial grade inflation – with officials being promoted more quickly than they might otherwise have been, and roles being advertised at higher levels than previously. This distorts the workforce, upending consistent expectations about what work is done at each grade, and leaving little space for the most senior civil servants – who have few or no options for promotion – to see their salaries grow. 

The other option is to move departments. That can mean higher pay (different departments have different pay minimums), or more likelihood of promotion, because of the bigger pool of roles to choose from, and a culture where breadth of experience is highly valued.

Routes to higher pay are being choked off

Those incentives have not changed. But the way civil servants can respond has. 

The latest data shows a sharp reduction in moves between departments. Lower staff churn would normally be something to welcome, but in this case the cause is most likely recruitment freezes: as individuals leave their roles those posts are either not filled, or people within the department are given first preference. Only if a job cannot be filled inside the department are other civil servants allowed to apply, and only if that is unsuccessful is the role advertised externally. 

As well as being painfully bureaucratic (often resulting in three recruitment rounds instead of one), this process undermines the ambition for the civil service to be more open to external talent. And for existing civil servants there are not as many roles in other departments to move into. Moves within a department may still be happening and possibly at higher rates (we do not see that data), but the opportunity for officials to get cross-departmental experience and seek promotion in other departments has closed down.

The latest data also showed that a ‘middle management bulge’ continues. The rate of growth of grade 6 and 7 jobs continues to far outstrip that of the senior civil service directly above them, and so that cohort is starting to hit a bottleneck. 

Employees who still face all the incentives to move across and to move up, but are increasingly unable to do either, will get increasingly frustrated.

The civil service needs to reset expectations around promotion and staff churn

Voluntary exit schemes will help. By cutting headcount (in particular grade 6 and 7 roles), recruitment freezes will at some point end, the internal jobs market will open up again, and civil servants should go back to moving jobs more regularly. 

But these are expensive and sub-optimal schemes, and it would be a wasted opportunity if they are used only to return civil servants to the damaging coping mechanism of moving role too often. This should be a reset moment, with the government changing the incentives that encourage churn and grade inflation. 

The Cabinet Office is combining the exit scheme with a welcome plan to rationalise management structures and to ensure that work is done at the right grade. That is good for a reset, but changing incentives requires more action. 

First, there needs to be a better way to shed poor performers year-round. The civil service should not have to rely on painful recruitment freezes or expensive voluntary exit schemes to cut numbers. The government needs to implement compulsory exit rounds as the best means of driving up performance. 

Second, the structural incentives that lead to rapid promotion-seeking and reward shopping need to be tackled. In-grade pay progression for high performers needs to become the norm so people can see their salaries rising without seeking promotion. Permanent secretaries should also set turnover targets and be held to them. Staff churn must fall not because of short term blockers but because people are choosing to develop their skills and knowledge in their existing roles.

The delayed civil service strategic workforce plan must include these changes, with the voluntary exit scheme used to set the groundwork for this overhaul. If the government does not change the rules of the game, then it should not be surprised to find itself back here in a few years’ time.