Government Cuts: A view from the inside

Earlier this week I was at St Pancras Station when another woman struck up a conversation with me.  By chance would have it, she was a senior HR professional working the civil service.  On our 25 minute journey home we covered a lot of topical issues including the subject matter I blogged about earlier this week: the fact that the Govenment is looking at making 40% cuts in their budgets.

These are some of the challenges that my colleague in the civil service is facing:

1. The demographic of the workforce:  45% of the staff are aged between 50 and 60, combined with a length of service of c.30 years.   The cuts will enable the organisation to shed some “dead-wood”, but there is also a risk of loss of organisational memory and technical expertise.

   2. Another impact of this demographic is the cost of redundancies.  Most will be entitled to the full-payout, and in this organistion that’s equivalent to three years pay!  The organisation has already taken considerable steps with the unions to negotiate a reduction, but I understand that goverment is frustrated by the delays in this process.  So, they have halted the negotiations and instead have announced that they are going to pass a piece of legislation to reduce the redundancy to the equivalent of a year’s pay.  But it will be some time before this will become a reality.

3.  A third impact relating to the demographic of this workforce is the lack of flexibility.  Many of these staff have been based in a local office, perhaps 10 – 20 minutes from their home for 20+ years.   Many of the local offices are being closed as part of the cost savings, and the organisation is now asking them to travel 30 – 40 minutes instead.  These staff will still have a job, but they are resistent to the change.  A considerable amount of time is being spent responding to staff’s queries and questions relating to the relocation (Will I have a car-parking space?).  Whilst on the face of it these are minor questions, they matter to every individual who is affected.

4.  The attitudes of the senior team:  they hold a belief that HR will find a job for everybody eventually.  But my HR colleague keeps telling them that this is highly unlikely.   The culture needs to shift from being a “welfare” workplace and until that happens the staff on the ground will hear mixed messages, causing greater anxiety and lower productivity.

5.  The organisation is already working to make 10% savings year-on-year for the next 5 years.   My concern is the approach to making 25% or 40% cuts is different to that when an organisation is looking to make 10% cuts.  There needs to be a firm decision about the level of cuts that need to be made, otherwise time could be wasted “tweaking” the edges instead of investing time and energy making significant cuts.

I’ve only touched on the top 5 challenges in this blog, and naturally there will be many, many more.  The lady on the train was energetic and spirited about the challenges that lay ahead and I admire this positive approach.   She’s got a rough ride ahead.

Government Cuts: Lessons from the NHS

On Sunday morning, I woke up to hear the news that Government Departments are being asked to draw up savings plans that equate to 25% or 40% of their budget.  This news left me with a foreboding feeling.

I think this is because I’ve been there.  Whilst the majority believe that the NHS has had a decade of plenty, some Trusts have been through some tough financial times.  A number of years ago, when I returned from one of my maternity leaves, I found myself as a Director of HR in a Trust with significant financial issues.   (The reason for the financial mess we found ourselves in has been documented in a public inquiry and isn’t the subject of this blog.)

Achieving a 25% cut in budget, let alone a 40% cut is going to be difficult.  If I had to live through it all again, then this is what I would be saying:

1) As a starter for 10, work out what is core business and what isn’t.   If it it isn’t core business, stop doing it – unless it generates income.

2) Once you have defined your core business, face the fact that this level of cuts isn’t about trimming around the edges.  This is about service redesign.

3) To achieve substantial savings you will need to be creative and innovate in your approach to service design.  Consider the impossible, because that might just be the option that you eventually decided to take.

4) Be brave.  You will need to take a number of calculated risks if you’re going to be successful in achieving your savings.

5) Don’t drag out the planning stage. Staff will want to know as soon as possible whether they are in or out.  They may not like the truth about their future employment, but they would rather know than being left in “limbo”, waiting to hear.

6)  Think through the implications of any “quick (savings) wins”  before you implement them.  For example, don’t stop the usage of all temporary staff (bank / agency).  Downstream, you’ll end up having to back-track on such decisions and this will undermine your credibility as a manager.

7) Whatever you do, you are not going to be popular.  Accept this and work hard at your communications strategy to compensate for this.

8 ) Stay (legally) safe: Don’t cut corners when it comes to your employment contracts.  In an era where you’re trying to save money, the last thing you need is to have to face a number of ETs – which will cost the organisation time and money.

I decided to stay with my Trust when we were in Turnaround, but a lot of my colleagues jumped ship early on.  I felt that I would benefit from the experience,  but it left me jaded and I lost the passion for my job which gets me out of bed every morning.  For those managers in government faced with this current challenge:  I wish them luck.