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Local government compares badly with private sector in maximising use of staff

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Local government is substantially lagging behind the private sector in how efficiently its staff are utilised, indicating the potential for big cost savings without frontline services needing to be cut, new research indicates.

The research from Knox D’Arcy showed more than two-thirds (68%) of the working day of junior staff in local government was ‘lost’ on average – typically through poor supervision.

The research included assessing whether managers were effective in ensuring the employees in their teams were well utilised. It found that while the average private-sector manager had only slightly higher levels of active management than their public-sector counterpart, private businesses typically had more robust systems, which generated more personal accountability for performance, allowing them to achieve better staff utilisation rates (44% utilised compared with 32% in local government).

This means in a 30,000-person county council, if utilisation rates went from 32% to 44%, the same work could be done by approximately 22,000 staff (8,000 fewer), a staff reduction of 27%.

The UK's 410 local authorities spend more than £113 billion on day-to-day services – over a quarter of all public expenditure. They employ more than 2.1 million people and deliver 700 different services.  In theory, if the utilisation rate of all employees went from 32% to 44%, the same services could be provided by 1.53 million staff (more than half a million fewer).

Workers in the private sector were, on average, a third more efficiently used. While average lost time in the private sector was still relatively high, at 56%, Knox D’Arcy’s report calculated that if local government departments were to match the private-sector companies researched they would in theory be able to operate with 27% fewer people.

Managers and supervisors in local government were found to be spending fewer than 15 minutes per day (only 3% of their time on average) engaged in ‘active’ management such as following up work assigned to their team.  But at 25 minutes per day (5% of their time) the average private sector manager was not much better.  

Paul Weekes, the report’s author and principal consultant at Knox D’Arcy, said:  "In the UK private-sector staff are productive on average 44% of the time. While this is pretty low compared with the better performing countries or the best UK businesses, it is still much higher than the 32% we observed in local government. Put simply, by matching average private-sector staff utilisation levels, local government could increase its productivity by roughly a third. This sort of dramatic increase would help significantly offset the cuts that are on the agenda as part of the Government’s austerity package.

"More worryingly, our research indicates that councils and other public-sector bodies lack the skills within their management teams to drive the scale of efficiencies being requested by the Treasury. Unless things change dramatically while the cuts should deliver savings, they are just as likely to deliver chaos and reduced services.

 "Changing the management style in councils is going to be vital to improving performance if cuts to frontline services are to be avoided, given the inevitable redundancies over the coming two years.  This means a significant cultural change, with a much more active management style needed, combined with better management control systems and more individual accountability for performance.

"For instance, during our observations most managers were found to be uncomfortable confronting the poor performance of staff or even establishing with staff what good performance meant. Many seemed more comfortable spending time doing hands-on work in the mistaken belief that they were ‘helping’, rather than managing people and performance levels. Often they were observed busily carrying out administrative tasks, while outside their office their staff were clearly under-utilised; it is crazy to have well-paid managers spending so much time on administration or doing the work of their people when their greatest value would be to spend more time ensuring their staff’s performance is being optimised." 

The report included the detailed shadowing and minute-by-minute recording of the activity of managers in the private and local government sectors.