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The HR reality of public sector cuts

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With the November spending review comes the full picture of further public sector cuts, and how HR will need to respond

A decade or so ago a job in the public sector was an attractive proposition. It offered a great pension, fabulous maternity leave, opportunities to progress and an incremental pay rise every year. It was a job for life.

But then the global downturn happened and in 2010 the government introduced swingeing budget cuts. Hundreds of public sector jobs were lost as organisations desperately tried to find ways to save money while ensuring frontline services were not affected.

The sector emerged leaner and more efficient. But then in the July budget George Osborne announced further cuts, with this November’s spending review expected to ask some public sector departments to find savings of up to 40% of their budget.

With this review comes the full picture of just how much more public sector organisations are being asked to save. The question now is what impact this will have, and how already beleaguered HR teams will be able to rise to the challenge.

Harsh realities

It’s fair to say that the last few years have already been some of the most gruelling for UK public sector workers. “We’ve had a pay freeze for many years, morale is low, and people are really struggling to cope,” explains one senior public sector HR leader, who spoke only on condition of anonymity. “We’ve had to let a number of people go through various restructures, closures of services and redundancy programmes, and that has had an impact on the remaining workforce and their ability to deliver services.”

This is a scenario all too familiar to Shokat Lal, assistant director of HR & workforce services at Coventry City Council: “The government is talking about providing a top-class Rolls Royce service but you’ve actually only got a budget for a Mondeo, so all of the aspirations have got to be aligned with that reality,” he says.

Some organisations have dealt with this reality better than others. “Since 2010 most public sector organisations had already started to make significant changes and cuts and so they’ve got quite used to it and they’re quite good at it now,” says Julie Towers, managing director of recruitment solutions at Penna. “Local government has delivered significant savings already and become more efficient. My clients are telling me that staff engagement is higher post-austerity than it was pre-austerity.”

Towers says people have dealt with this new set of challenges in different ways. One example is Anchor, a not-for-profit housing association providing housing, care and support to people aged 55 and older which, and part-funded by those very local authority budgets being cut. The organisation has in response reduced bureaucracy and streamlined its processes. “Where there has been restructuring the focus has been on reducing head office roles rather than frontline customer-facing roles, which we have been growing as we increase the number of care homes,” says David Roberts, head of colleague engagement at Anchor.

Reinventing the wheel

These restructures form part of what Barry Pirie, president of the Public Sector People Managers’ Association, predicts will be a “fundamental reinvention” of how the public sector operates. “From a strategic perspective, HR has a critical role to play in helping design the organisation of the future, fleshing out the structure that will make it work effectively,” he says.

It’s a major challenge, but one that’s not insurmountable, especially if public sector organisations are prepared to take a more innovative approach, according to Lal. “We’ve got to accept these are very difficult times and we’ve got to look at other incentives and other ways of raising morale, supporting our employees and showing them there is some light at the end of the tunnel,” he says.

One of the key areas many HR departments have already identified is staff retention; particularly ensuring public sector bodies are able to hold on to talent, as these are the people who will need to drive through the necessary changes and help the sector thrive in the future.

“The job for life and the pension have gone,” says Towers. “All the things that held staff in the public sector, even if they had a rubbish manager, don’t work anymore because people can move to another organisation. There are opportunities in the private sector – which is fairly buoyant at the moment – and the good people will vote with their feet if they are not well led.”

That’s why organisations such as Coventry City Council are increasingly looking at areas like terms and conditions, incentives and reward packages.

“In Coventry we’ve introduced a salary sacrifice car leasing scheme over a three-year period that’s really tax efficient,” says Lal. “We’re also looking to offer more training opportunities or qualification support and we’re assessing work/life balance, agile working and allowing more people to work from home.”

Many of these types of benefits are already the norm in the private sector, so it’s not just important to offer them to aid staff retention, but also to help with recruitment – particularly in growing areas such as care.

Investing for the future

A recent report by Anchor highlighted the need for the care sector to recruit a million new people over the next decade. As a result the organisation is investing heavily in training and in pulling together a package of benefits that allow it to compete with the private sector for workers.

“We’re working on enhancing our employee value proposition so that we are seen as one of the employers of choice in the care sector, and we can attract talent into care who have not previously thought of a role in the industry,” says Roberts.

These types of initiatives will no doubt help some public sector organisations improve performance in areas such as staff retention and recruitment. But it’s looking increasingly likely the sector will face a new set of challenges in the coming months and years when the latest round of cuts kicks in. That’s why it’s vitally important organisations are as honest and transparent with their employees as possible about what lies in store.

“The key task for HR is to help managers and leaders communicate effectively and openly about what the future looks like for their organisation and what that could mean for departments and individuals,” says Pirie. “There can be no hiding from the fact there are likely to be fewer jobs. But that needs to be tempered with a message that the changes also bring huge future opportunity.”

So although the public sector may no longer be able to offer the security of a job for life, if organisations working within it can meet the current challenges head on it could still offer highly attractive careers.