Last July The Chartered Institute of Personnel Development predicted 350,000 job losses in the public sector over the next five years, with its chief economist adviser John Philpott stating the recession will cause 'a bloodbath in public finances,' with major job losses.
Redundancies and pay freezes were widespread in the public sector last year, particularly in local councils who were under intense pressure to reduce spending and improve their services.
Now there is major uncertainty in light of the forthcoming election, a potential new government and perhaps further sweeping job and spending cuts. The Institute of Fiscal Studies predicts the next government will cut spending on public services by 2.3% a year from 2011, reinforcing the fact there will be tough times ahead in the public sector.
Restructure and transform
Amidst this uncertainty, interim managers are being used increasingly as a resource to help public sector organisations restructure and transform, reshape their management teams, manage change programmes and fill in senior level gaps. In many cases they are being used in favour of management consultants to provide hands-on change management programmes because they are a more cost effective option and have a primary focus on delivery.
Interims also prove a logical resource option because they hit the ground running on day one, add immediate value and bring their extensive experience to implement programmes tailored to the needs of each organisation.
Additionally, the proactive transfer of their knowledge and skills to permanent staff provides a long lasting legacy to their work. Buying solutions, the government procurement agency estimates that £2.5bn will be spent within the public sector in the next four years on non permanent staff.
This view is also supported by the latest market research from Russam GMS which shows that from July – December 2009 pay rates for interim managers working in central and local government remained steady.
This stability was notable against a backdrop of the recession and continued uncertainty around future spending in the lead up to a general election.
Interestingly, interims working in education and the NHS where there is perhaps less insecurity than in local and central government saw their pay increase respectively. Those in education experienced pay increases of 18% and interims in the NHS saw their pay rise by 5% in the last six months.
One notable change in the deployment of interim managers in the public sector over the past six months is their use in leading transformation programmes that deliver efficiencies or economies of scale.
This is evident in the design and implementation of shared services programmes in local councils - streamlining IT, HR, finance and procurement services to deliver savings and improve services.
Shared services programme
While UK councils are at completely different stages of developing their shared services programmes, interims are being used to help at all levels, with both small and large councils. Birmingham city council for example, has a well established transformation programme, saving around £120m over the last three years, while other councils are just starting out.
It is likely that this trend will continue as councils plan more radical reforms to save money. Take the 'easyCouncil' model currently being pioneered by Barnet; it will offer a range of base-line services with additional 'added-value' services at extra cost to residents.
As other councils follow suit and adopt these types of models, there will be opportunities for interim expertise to assist in council reform.
The future of non-departmental public bodies (NDPBs), could also prove another area of opportunity.
The Conservative party has indicated that NDPBs will be under threat and the void this would create would be filled at a more regional and local level with greater involvement of local authorities and the third sector. Interims could play a big part in helping with this restructure and managing this change.
We cannot predict with any certainty how the interim management market will evolve in the next six months given the level of change and uncertainty ahead. However, we do know that interim managers will be used more strategically than ever before to help the public sector, both centrally and locally, deliver transformation projects that will allow them to deliver more with less.
Gary Lawton is managing director, public sector, Russam GMS
From Flip Chart Fairy Tales
From Bubb's Blog
From Whitehall Watch
