Leadership in the civil service has to improve, the cabinet secretary has admitted.

Better delivery skills, a more collegiate approach to work and a slower turnover of staff were identified as key goals by Sir Gus O’Donnell on Wednesday.

“I am very aware that we need to improve the quality of leadership in the civil service,” he told the public accounts select committee after MPs asked about staff attitude surveys which showed that, in most departments, less than half of staff had confidence in their senior managers.

“The results are disappointing, we absolutely need to improve them and measures are in hand to improve them,” Sir Gus said.

He said the new Top 200 group of senior civil servants, which meets every six months, had helped create a more collegiate atmosphere across the civil service.

Changes had been made to training, so that officials got “some real hands-on experience of project delivery”, Sir Gus added.

Top 200 officials already thought operational delivery was a bigger part of their role than policy, a reversal of traditional attitudes, Sir Gus claimed.

Discussing how the rapid turnover of ministers hindered the civil service, Sir Gus accepted the chairman’s criticism that the turnover of civil servants is similarly problematic.

“We are trying to slow down turnover so that we keep people in post,” he said, particularly in project work such as the Olympics.

Committee chairman Edward Leigh also questioned if there is “enough ruthlessness in the civil service in terms of rewarding success and punishing failure”.

Sir Gus believed that a “small element of performance pay is important to the system”, but he also thought changes could be made to severance payments.

“At the moment it is very expensive,” he said. “It is something that we are currently negotiating with unions on,” he revealed.

“We do need performance management systems that are robust. If someone is failing, we should look at why. If it’s not working, we should let them go.”

MPs also quizzed the cabinet secretary about a recent National Audit Office report on the capability review system. While generally positive about the innovation, the report complained that there was no benchmarking with non-government organisations.

Sir Gus said that although he would have preferred a system that was more open to comparison, it had not been possible.

Conservative MP Richard Bacon dismissed such claims: the real reason, he charged, was that “you wouldn’t have got it past the other permanent secretaries”.

Sir Gus, who had earlier admitted that there had been nervousness about the reviews and a question over whether departments would take part, insisted that departments could only really be compared to themselves.

He also said that similar review exercises had been attempted in the past and not been so successful: “This is the first time that we have had the permanent secretaries so heavily engaged.”

MPs had also identified a divergence between capability review scores and how well departments met their public service agreements (PSAs). The Home Office, for example, had a very negative capability review report but had delivered on its targets.

This, Sir Gus said, was to do with how the measures were taken. “There is more to a department being capable than it just meeting its PSA targets,” he said.

In the future, Sir Gus told the MPs, the reviews would be more closely related to delivery, as well as looking more closely at innovation within departments and collaboration with other organisations – all areas highlighted in the NAO report.