The current intense financial pressures mean that public authorities are looking at what can be done to fundamentally reconfigure and deliver services to achieve the efficiencies required.  This service transformation and innovation means new organisational and cross organisational structures are being created, which require new ways of working, with public authorities changing their employees’ roles or even their employer, and often in the face of union opposition.  

Partnership Working

Partnership working in its many forms is increasingly at the forefront of efforts to reduce costs and transform services. Total Place aims to improve customer services and make efficiency savings through sharing the work and budgets of local public authorities.   Shared services, joint ventures, outsourcing to private sector partners, and the integrated working envisaged by Total Place all have a major impact on the workforce.

Examples of this are:

  • The transfer of staff to a different employer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. This involves consultation with staff and unions in order to avoid protective awards in the Employment Tribunals;
  • the potential headache of staff being on two different sets of terms and conditions and difficulties with achieving harmonisation;
  • different cultures and performance management arrangements;
  • agreement over which organisation should employ which staff in the context of a pooled budget.

Contractual Innovation

Delivering an efficient service in the context of reduced costs needs excellent organisational development and change management.  Processes which add no value need to be stopped, whilst job descriptions and roles may need to be redesigned.   The need to cut resources can drive the redesign of jobs so the authorities make the most of expensive skilled professional staff by utilising more para professionals or skilled administrative jobs.  Flexibility within the workforce will be critical – funding may be flat (or worse) but the workload has not decreased and so working practices will have to change.     This type of restructure of the workforce needs to be subject of consultation with unions and representatives, not just to seek staff engagement but also to avoid employment tribunal liabilities.

Public authorities need to be looking at the flexibilities that may exist within terms and conditions of employment and policies.   One of the biggest issues relates to pay.   Trusts are likely to be more constrained than councils in this area but thought should be given as to the extent to which, under Agenda for Change at this point in time, reward can be more dependent upon performance, rather than simply incremental progression, or recruitment and retention payments can be used more flexibly.    In the local government sector, where there is more flexibility, some councils have signalled a move away from incremental pay increases and are overhauling their pay and rewards structure which will then have the capacity to reward the levels of performance needed to support efficient delivery of services.    A number of councils have indicated concern that the 1% increase agreed for the coming year and the proposed 2 year cap of 1% is not affordable in the current climate, to the extent that they are considering withdrawal from the national pay bargaining framework.    This involves a number of legal considerations around changing terms and conditions of employment, as well as the need to ensure that the council has the skills and resources for setting pay locally.  The impact on industrial relations at a time when the unions are clearly more active will also need to be factored in, but it may be felt to be the best solution to achieve flexibility and an element of control over pay costs. 

Introducing reward based on performance in this way relies on clear performance management tools, appraisals, reviews, and focussed objective setting.  This is not simply an issue for HR; it needs to be management led and maintained in order to be effective.

Clearly, workforce transformation in this way is a leadership issue.  Boards need to be looking at workforce review, ensuring their staff have the skills and flexibility needed, at the same time as actively managing the wage bill.   

Performance and Sickness Absence Management

Historically public authorities have had very high levels of long term and short term sickness absence impacting on efficiency and services.   Although many have been tackling this as a priority, more recently it has become critical to actively implement sickness management policies at an early enough stage. 

Sickness absence in the public sector is at 9.7 days per year per employee which remains consistently higher than the private sector (6.4 days per year per employee), according to the Chartered Institute of Personnel and Development’s Annual Absence Management Survey published in 2009.  The CIPD found that the average days lost per employee per year were 10.7 days in local government and 11 days in the health sector.

Public authorities should be looking at how sickness absence can be more proactively managed, particularly the triggers for short term absence, given that there is likely to be more pressure on fewer to staff to provide services going forward.

Similarly with performance management, public authorities have in the past not been as robust and as proactive as they will need to be in dealing with poor performance and the reasons for it.    There is concern that this can lead to “satellite complaints” by employees who are being actively managed arguing they are being bullied or victimised by their managers, which can give rise to Employment Tribunal litigation.   It can make dealing with this issue like “opening a can of worms”, but careful planning, training and engaging managers together with robust clear procedures can greatly reduce this risk.

Workforce Reductions

The question for many public authorities is the extent to which job cuts will be needed.  Particularly in the health sector the message is to assess numbers and staff headcount but to undertake workforce planning in a way which avoids compulsory redundancies.  

Managing headcount by “natural wastage”, freezing vacant posts, careful retirement planning and offering voluntary redundancy to staff who want to leave is attractive because it is a path of less employment liability risk and employee relations impact.  But it needs to be matched with strong workforce planning to ensure authorities are not left with skill shortages in key areas.   Retraining and redeployment of staff from less utilised services to areas of growing demand should be part of such planning.

However, a recent survey of NHS finance directors shows that 53% are planning staff cuts.  In September the DoH told the NHS that it would have to make 137,000 cuts in the workforce if it is to achieve its planned savings of £20bn by 2014. This is expected to focus on junior managers and administrators, although cuts in clinical staff have not been ruled out.   If these predictions prove true, it will not be possible to achieve this without compulsory redundancies.

In the local government sector, the latest CIPD estimate is that around 300,000 jobs will go in local government by 2012.   Whilst councils may be more used to dealing with redundancy and restructuring than some Trusts, this will be no easy difficult task, particularly in the face of significant Union opposition.

Practical steps

  • Review headcount and your workforce needs now, including roles and job descriptions
  • Quantify, where possible, pockets/trends of absence to allow more proactive management of triggers under your process
  • Identify where you are doubling up on staff, eg agency covering for long term sick and review whether that is necessary
  • Review contractual provisions and policies for flexibility.