The resurgence of interim use in the public sector
In austerity Britain budgets and headcounts are strictly controlled. As a result of staff cuts in the public sector, the use of interim managers is soaring.
In the public sector, the Age of Austerity continues to bite – hard. Unfortunately the squeeze on budgets continues, and with it comes a certainty that the headcount reduction is far from over. As a provider of employment, the state is shrinking.
Yet crucial services must still be delivered and new projects completed. For organisations facing both financial pressures and increasing skills shortages, flexibility is often key in being able to meet objectives. It is no surprise then that the public sector’s share of interim management assignments has risen compared to three years ago (see p55), accounting for four out of every 10 completed assignments.
While this share is still a long way short of the all-time high of 55% in 2009, it’s important to appreciate that at that point the private sector was being hit particularly hard and retrenchment was the order of the day. This year’s statistics, when seen in the context of a growing private sector once again competing hard for talent, undoubtedly point to a heightened use of interims by the public sector.
“I think some public sector organisations are now shifting their mindsets around what the workforce looks like and the approaches they need to adopt,” says Bristol City Council service director of human resources Richard Billingham. “One of the basic problems for local government is dealing with increasing demand for services with fewer people delivering those services. Attention is now switching to removing demand from the system, and focusing more attention on early intervention. I’d characterise this as ‘doing better things’ and it requires a different workforce paradigm.
“Public sector workforces will necessarily have a smaller core but we continue to need specialist skills and knowledge as well as the ability to flex the workforce quickly,” he adds. “This is where I think the increasing use of interims and other temporary labour is coming from.”
Whereas in the past interims were often brought in to plug gaps, now they are increasingly being used to add additional capacity and capability to public sector organisations, to achieve specific outcomes or deliver defined programmes and projects. Billingham emphasises that although Bristol City Council is still engaged in moving to a smaller core it is also using interims and other specialist sources of skills to deliver change.
Caroline Nugent, director of HR & OD at London Boroughs of Havering & Newham, makes the point that introducing someone from outside can be an effective way of challenging staid thinking and getting creative juices flowing.
This can be a means of accessing fresh perspectives, such as senior people with private sector experience who may be happy to work in the public sector for a limited time but don’t want to do it permanently. Or, in local government for example, it may be a way of addressing thorny, politically-charged issues with elected officials.
“It starts the ball rolling,” says Nugent. “It may be that they’ll listen to consultants when they won’t listen to internal staff who are giving a difficult message. There are times when someone’s been brought in to support chief officers [in selling] messages to politicians. You could say that the easy stages of the cuts have been done; the really challenging stuff is now coming up.”
Eve Poole, associate at the Public Sector Leadership Faculty at Ashridge Business School, echoes the sentiment but takes a somewhat more cynical view of why interim appointments can prove desirable. “Interims are particularly useful because you can use them as structural scapegoats to get unpalatable things through,” she says. “They don’t add to the headcount, but are cheaper and easier to manage than consultants, and for the public sector, less susceptible to negative headlines around spending. So no downside: you get your up-to-the-minute highly qualified hired gun, they push forward the agenda for you, then they move on, taking the smell with them.”
The government’s austerity measures have meant a scaling back of senior posts across the public sector, so interim employees can add senior level capacity and know-how to overstretched management teams. Sometimes they even provide knowledge and experience at a leadership level where it no longer exists within organisations.
As Nugent evocatively puts it, not only has the fat been taken out of the system, sometimes it’s the bone too. What then are organisations looking for?
“Change management is still the key theme that runs through most interim assignments, but we’re also seeing a greater number of requirements around the digitisation of the government agenda; the need for senior HR experience to support challenging workforce change and an increased demand for commercial and contract management skills,” says David Weir, director of public sector executive interim at HR services company Penna.
Stephen Moir, chief people officer at NHS England, has worked with and hired a number of interim managers, within a range of public services. So what qualities do they typically need to have?
“The best interims are able to hit the ground running. In part that’s because they have been tried and tested, with a track record of delivery, but equally because they have been clear about working with the organisation concerned to ensure the brief is as specific as possible,” he says.
Other skills that can make public sector interims attractive are stakeholder engagement, the ability to project manage and deliver outcomes, stability at times of change, the nous to work in a political environment and scarce skills that are hard to acquire from other talent pipelines.
One local authority HR head would only speak to HR magazine on the basis of anonymity, as interim appointments are such a “political hot potato” in his council. He says there is “antipathy” among members and trade unions towards interims in terms of cost (at a time when the organisation is making savings) and the fact that they are taking opportunities that could be given to existing staff to develop their skills. This resistance has meant the council has not increased its use of interims.
However, he continues, with his council having to save up to 30% of its current budget – and having already made cutbacks for a number of years – this will mean fundamental changes in what it does and the way it delivers services.
“The changes taking place do require local authorities to be more agile organisations,” says the HR head. “There will be more project work and the need to shift resources on a temporary basis to priority areas and projects. We will want to use our resources in a more flexible way, and this too might encourage greater use of interims with particular skills to take forward key pieces of work.”
Dean Shoesmith, executive head of human resources at London Boroughs of Sutton and Merton, agrees. “Irrespective of political control, most UK economists think the economy is experiencing considerable problems recovering from the 2007/08 financial crisis, and the UK net deficit is projected to be 85% per cent of GDP in 2016/17,” he explains. “This will inevitably see further reductions in public expenditure. Simultaneously, local authorities have to respond to societal challenges, such as an ageing and expanding population. All of these significant factors will require further service changes and are likely to drive the need for effective interim managers.”
Clearly public sector demand for interim managers isn’t going to dry up soon.