As the civil service faces vast cuts, managers are steeling themselves to lay people off. Joshua Chambers investigates how the cuts can be made easier to bear for managers plus departing and remaining staff alike

Tough times are ahead: the civil service is going to be squeezed and will have to shrink in size and scope. Departments are facing vast spending reductions, and last week the Office of Budget Responsibility predicted that 490,000 public sector jobs would be lost by 2014-15 – a figure which has now become controversial because it may be too low.

It has been well known for some time that Whitehall will face difficult times. As business secretary Vince Cable said at Civil Service Live (CSL): “There’s no excuse for any of us saying this is out of the blue. We knew there was going to be a big public spending issue coming after the election.” Cutting jobs is, he accepts, is an agonising process. “It’s very difficult, very painful,” he said. “I don’t pretend it’s any easier than that.”

These messages are intimidating for many civil servants, who fear for their jobs, their pensions, and their salaries. According to John Sands, interim HR director at the Department for Business, Innovation and Skills: “Some bits of the civil service have not been through anything like this before; not to this extent.”

Tough for those who remain

As the scale of what is needed becomes apparent, the task falls on senior civil servants and their HR managers. Vince Cable told an audience mostly comprised of HR managers that: “It’s easy to manage people when you’ve got more money: they can be given incentives and all sorts of goodies and we can all play at being Father Christmas. But in a world of downsizing, it’s much more difficult. Real leaders are people who can manage that and deal with their colleagues with sympathy and compassion, and those of you who are managing to do so in this process will be the real heroes of this exercise.”

This is a huge challenge for HR managers. Owen Morgan of HR consultancy Penna told CSW: “Many organisations within the public sector have never had to downsize in the way they have to currently. Many line managers are not aware of the legal implications, how to keep up employee morale, or many of the steps they have to go through.”

It’s worth noting that the spectre of job losses haunts both those who fear they’ll be affected, and those who fear they’ll have to enact them. What this means practically is that departments will have to support the staff who remain just as much as those who, voluntarily or otherwise, leave the civil service and seek employment elsewhere.

Mark Staniland of HR consultancy Hays says that “downsizing is never easy to deal with. The management are dealing with members of staff who, often, have been with them for a long period of time. So for the organisation itself, it’s a period where the management are challenged, stressed, stretched.” What’s more, at such difficult times managers can’t afford – either financially, or politically –to hire HR consultants to help them with the complex task of making redundancies.

The need for speed

Speaking at Civil Service Live, Sir Gus O’Donnell told the audience that: “There’s a lot of uncertainty out there – what I would say is that pace is necessary, let’s do the changes quickly, let’s get on with this... with a completely engaged workforce who have generated the ideas that have led us to a better place.”

Senior civil servants have suggested that the government will have to install a new redundancy scheme before the civil service can start to reduce its size. Simon Fraser, the permanent secretary of the Department for Business, Innovation & Skills, said at CSL that “what we need now is clarity and certainty of what we can do. We’re not there yet, but we need to get there as rapidly as we can.”

He added that within his department, “in order to meet our 11 per cent savings target, we are going to have to have the voluntary exit scheme starting as soon as we can. In order to be able to do that, we need to know what terms we are going to offer.”

Currently, the terms of the civil service redundancy scheme are under negotiation, and it is likely to be several weeks at the earliest before a new scheme is introduced. However, while it may be a difficult task to find an appropriate settlement, senior civil servants are clear: the longer uncertainty continues, the worse civil service morale will become.

‘Flexible’ work

The civil service can avoid making some redundancies by forcing employees to work fewer hours. The cabinet secretary told CSL: “What I’d like to do is say: ‘Look, we’ve got a lot of people in full-time jobs at the minute. As we’re trying to reduce and prioritise, can we make more of those jobs part-time – which would make them more gender-friendly, as well?’”

This follows the example of the private sector, which has already felt the brunt of the recession and faced the crunch now bearing down on the public sector. Mike Emmott, employee relations advisor for the Chartered Institute of Personnel and Development, told CSW that “the private sector has successfully negotiated the recession – not without redundancies, but in such a way that they’ve minimised the need for redundancies.”

Emmott says the private sector took an “intelligent approach”, adopting flexible working practices, freezing pay and recruitment, and cutting back on the number of temporary workers. However, he notes that some of this has already occurred in the public sector, so there will also now have to be a reduction in jobs.

How to find reductions

The government wants to the vast majority of civil service job losses to come in the form of voluntary redundancies. Cabinet Office minister Francis Maude told Civil Service Live: “We want to keep jobs to the maximum extent possible, but it’s probably unrealistic to believe that, in the environment that we’re in, we can absolutely prevent there being redundancies. If there are redundancies, we want them to be on a voluntary basis, not on a compulsory basis.”

What needs to be in place?

Still, some job losses are bound to be compulsory – and even many of the people who take voluntary redundancy can end up struggling without a job. So some departments are taking practical steps to make job losses more bearable: in particular, the civil service is looking at ‘outplacement’, whereby private contractors provide career advice and support to departing employees.

There are a large number of these firms, both large and small, but they tend to adopt a similar approach: typically, they provide seminars and one-to-one support for departing employees to help them work on CVs, practice interview techniques, and decide what type of employment to seek.

Some departments, such as the Treasury, BIS and the Ministry of Defence, already have these arrangements in place – and the scale of job losses required will probably increase the use of these services across all departments. This is also likely to be seen in arms’-length agencies, which have so far felt the brunt of spending reductions. Following its abolition, the government agency that oversaw technology in schools, Becta, is currently in the process of finalising an outplacement deal for its employees.

Firms are understandably coy about the cost, but Owen Morgan of Penna told CSW that “typically, if you average it out per person, it’s not more than £300 or £400”. At a cost of £400 per person for 490,000 public sector workers, this would work out at £196m – and the calculation begs the question: could the money not be better spent elsewhere?

John Sands of BIS is convinced that outplacers are value for money. Speaking at Civil Service Live, he told civil servants that he had never run a redundancy programme without providing outplacement.

Others are unconvinced – and some unionists are positively hostile. Mark Serwotka of the PCS union says: “At a time when civil service jobs are under threat from the most draconian cuts in living memory, it’s a disgrace that private consultants are being brought in to offer career advice. When Treasury figures show that more than a million jobs could be lost in the public and private sectors as a result of budget cuts, I’m not sure that career advice is going to be much use. What they should do is come and talk to us about the alternatives” [to job cuts].

How do you measure success?

One problem with outplacement services is that it is difficult to quantify their success. Outplacers are often keen to point out that the effectiveness of their product shouldn’t be measured by how many people find work after being helped by their services.

Former chairman of the board of the Inland Revenue Sir Nicholas Montagu is now a senior advisor to the Savile Group – an HR company which provides outplacement services. He tells CSW that “you mustn’t think of outplacement in the current climate as getting people into employment in a set number of months. One is looking over a longer timescale.” Outplacers also told CSW that they help people to look at new career paths or learn new skills, and so can’t just be assessed by the number of clients for whom they manage to find new jobs.

However, government may want more evidence of success before investing. David Cameron said at Civil Service Live that it is a key tenet of government policy that providers are paid according to the results they achieve, adding that “we can’t afford not to do this”. In particular, he set out plans to pay welfare-to-work providers not just according to how many people they manage to help find employment, but how many of those people remain in employment for a year.

If the government is pursuing this payment method with welfare-to-work providers, then it may consider paying outsourcers by the number of civil servants they manage to help find employment elsewhere.

Targeted spending

Ultimately, the value of outplacement is going to depend on local and individual circumstances. Sir Nicholas Montagu told CSW that “it’s clearly stupid to spend money on doomed enterprises and, given some of the more alarming figures for job losses in the public sector – some journalists are talking about 750,000 – you’re not going to resettle people on that scale.”

Instead, Montagu suggests targeting outplacement at those who are most likely to benefit. “It’s inevitable that you’re going to divide people up into those who are marketable and those who are not,” he says. “I’m not saying you should write the second people off, but it’s obviously not practical to spend large amounts of money on outplacement for them.”

This does present potentially scary questions as to what will happen to public sector workers who are not immediately attractive to employers. Government figures predict that there will be an increase in private sector employment, but many fear that new jobs here won’t draw in lower-paid civil servants – particularly those in regions where the public sector makes up a large proportion of the local economy.

Regional help

The government is keen to ensure that particular regions are not disproportionately affected by public spending cuts. Government may shrink, but the coalition appears keen to ensure that it doesn’t shrink back into Whitehall and the South-East of England.

Indeed, Vince Cable said at CSL that the policy of relocating civil servants to other areas of the country “is continuing and I’ve no indication that the process is intended to stop. People from the regions say it has been a major contributory factor in supporting their big cities: places like Liverpool and Sheffield have had a major injection, not just of people moving from the South-East, but also benefits to their economy through spending. I think the policy of relocation is a good one.”

However, when civil servants in such areas are laid off, they often struggle to find work. Regional civil service networks appear to have a role to play here. According to the chief operating officer of the Efficiency & Reform Group, Ian Watmore: “It seems to me to be a really important part of the agenda to get stronger links across the agencies in the regions so that people have job options without moving to a different part of the country.”

A terrible task made tolerable

Some techniques exist to help senior civil servants to reduce the size of their departments in a sensitive way. They can reduce working hours or pay levels in order to minimise the number of jobs lost; use regional networks to ensure that people who have relocated are able to look for other opportunities; and provide support to departing employees to soften the blow and help them find employment elsewhere.

However, departmental morale is bound to suffer throughout the process, and it seems vital that managers do all they can to support those staff who remain and will have to shoulder an increased workload. With little money to go around, even some outplacement firms accept that it is unlikely that their services will be brought in to boost permanent HR staff. Senior civil servants will have to recognise the pressure on HR managers, and rally around those who feel aggrieved by what is happening.

In the end, the fates of those people made redundant by government departments and agencies – with public sector recruitment moribund – will depend on the strength of recruitment into the private sector. And this will be decided by two factors. One is the force of the economic recovery – in danger from these public sector cuts, but boosted in weaker regions by Budget small business tax reliefs. The other is the marketable skills of redundant civil servants.

Of course, government has a more than altruistic interest in helping its former employees get jobs: not only would doing so reduce future benefits bills, but it would also help support the recovery. While outplacement may look like an expensive option, the alternatives could end up more expensive still.

Written by Joshua Chambers