Recruitment freeze = increase in agency staff: Why it happens

FlipChart Fairy Tales posted on Friday an interesting piece on  how the current recruitment freeze in the public sector has led to an increase in the spend on agency staff.   The fact that this has happened isn’t a surprise, but it is avoidable – if the right strategy is put in place.

From an NHS perspective, Trusts will start with a restriction on their use of “temps”, and when things get worse, a recruitment freeze will be introduced.  Both of these are measured against targets that are discussed at both Executive and Board level. But I often find that there is no public scrutiny of how much they have increased their spend on consultancy services.

The reason for this is that different workforce “options” are accounted in different ways.  In particular, the spend on consultants  (in my experience)  is managed with creative accounting: I’ve known consultancy spend that has been allocated to capital expenditure for a particular project in an effort to disguise the “real” workforce cost.

The end result is that there has been a successful reduction in headcount, the budgets are brought into line and everybody is very pleased with how they weathered the storm.

And the irony is when you look at the cost of employing either a “temp” or a consultant, it invariably costs more than if the person was recruited formally into the organisation.

Luckily I haven’t heard any stories about any “knee-jerk” reactions to the use of agency staff yet….but this might happen following the publication of these figures.  I’ve been unfortunate to see whole teams of temps or casual staff being released in one go, only to see the organisation re-hire them six months down the line.  In the meantime, there has been a serious loss of trust and mutual respect.

Another factor that lies behind these figures is the fear of recruiting substantially to a post: what happens if the person ends up being useless, unable to deliver?  A pragmatic manager with the support of their credible HRM would performance manage this individual out of the organisation.  But with the pressures of work, the risk adverse culture we often see, this rarely happens (particularly at a senior level).

It can also take time to recruit the right person to the right post.  At present nobody is moving as everybody is too worried about their future.  If they stick tight, they have two choices:  1) they still have a job in two years time or 2) they have a nice redundancy package.

As a result, many senior posts are remaining unfilled.  These posts have to be filled to ensure that the cost-savings are made.  And it’s the consultants that are coming in to do this work in the interim.

So I would be interested to see the breakdown of spend between “temp” staff and management consultants, as that truly shows the “health” of an organisation’s workforce.


One comment on “Recruitment freeze = increase in agency staff: Why it happens

  1. BrickBone says:

    Another interesting an informative blog. Howver, there is a massive difference between an ‘interim manager’ and a ‘management consultant’.

    If NHS trust are plugging vacant posts with management consultants then there is no surprise that the costs are running away.

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