Poor management poses a greater threat to public service reform than tightening budgets, a report has warned.

Efficiency savings and moves to local accountability have been the focus of the reform debate so far, but effective people management will be just as important, the paper from the Chartered Institute of Personnel and Development (CIPD) argues.

The institute's 'Building protective public sector workplaces' report argues that a public sector pay freeze and a 10 per cent cut in the workforce will be necessary, and that kind of change will have to be accompanied by an improvement in management skills.

CIPD's senior public policy adviser Ben Willmott, one of the report's authors, said managers face a challenge to "motivate and engage the public sector workforce in the delivery of change, despite the need for pay restraint, redundancies and pensions reform".

While success would mean increased productivity and "public applause", Willmott says, "failure risks derailing efforts to reform public service delivery and get a grip on the public finances".

His report notes Office for National Statistics figures which show that public sector productivity has fallen by 3.2 per cent between 1997 and 2007 and criticises the failure to tackle poor performance.

It quotes a 2006 survey by HR consultancy Chiumento which showed that 40 per cent of respondents thought poor performance was a major problem in their public sector organisation, compared with 27 per cent in the private sector. The same research showed that more than 60 per cent of public sector respondents thought their employer turned a blind eye to poor performance.

"Inadequate people management skills are also often at the heart of catastrophic service failure," the report states, citing the example of the Baby P case.  Attempts to avoid repeats of such events often focused on ministerial accountability or naming and shaming a particular organisation, while "the more thorny issues of managerial and front-line practice
are the ones that get lost", the report added.

One cause of poor management, the institute claims, is the centralising nature of government and tick box culture, depsite decades of talk about increasing local and frontline freedom and accountability.

The result is frontline managers who do not trust their senior managers. A 2009 CIPD survey found that only a quarter of public sector employees had confidence in their senior managers, only 22 per cent trusted them, and only 20 per cent thought they were consulted about important decisions. All much lower than the private sector, where the equivalent figures were 41 per cent, 39 per cent and 26 per cent respectively.

Another cause of poor public sector management, CIPD argue, is the promotion of specialists - such as social workers or doctors - to management posts without adequate training. The report argues that it is possible to cut down on the perceived bureaucracy of the public sector, as long as the remaining managers are helped to develop the right people management skills.

The institute also attacks the role of the unions and the "centralised system of employee relations" for driving up wages and benefits faster than in the private sector.

While unions argue that this is not the case, the civil service has frozen pay and only this week announced changes to redundancy compensation - resulting in the Public and Commercial Services Union breaking with other bodies and calling a strike ballot.

CIPD's report argues that being a "good employer" - such as following best practice on diversity or promoting flexible working - does not necessarily lead to efficient working.

"Productive workplaces are workplaces that work, not workplaces full of good intent – and it is evident that too many public sector workplaces are not working as well as they might," says the report.