18 April 2017

How to retain key staff and ensure financial sustainability in the public sector

We set out eight key questions public sector executives should be asking to help recruit and retain the best staff, whilst also balancing the books.

Public sector bodies are facing unprecedented funding cuts. These cuts are expected to impact all operational areas and lead to tough questions about spending priorities. The highest cost-base for most public sector bodies is their workforce, which accounts for around 60-80% of total expenditure. However, the national policy of no compulsory redundancies makes any potential ‘quick wins’ in this area in terms of balancing the books unlikely; even without this policy, removing posts in order to reduce expenditure would be a short-sighted measure with potentially harmful longer-term consequences.

Funding cuts also mean bodies find it difficult to provide competitive reward packages. If pay rises, bonuses and even non-financial rewards cannot be offered, or are limited, there is a risk that staff will seek ‘better’ conditions elsewhere. Non-competitive reward packages are often one of the reasons we see individuals move from the public to private sector. Anecdotally, this quite often happens with clinicians, such as doctors and dentists, who train with the NHS and then move into the private sector as reward packages are more attractive. The problem with this is that we all want the best clinicians working in the public sector so that when we (or our family and friends) need treatment, we get it from the highest qualified and most experienced clinicians.

Training budgets are often the first to be cut when there are funding pressures, but we would argue that this should be the last budget to be cut. By providing training and development opportunities to staff, you are much more likely to retain key staff and make them think twice about moving on. Supporting staff by providing opportunities for training and ongoing development is also likely to encourage them to buy-in to the organisation’s strategy and build loyalty. Cutting training budgets is only a short-term fix, which will lead to longer-term issues.

Public sector bodies therefore need to be more creative and methodical in terms of how they ensure financial sustainability, whilst also retaining their key staff. Long-term workforce planning, coupled with robust budget setting, can be a hugely difficult exercise; but there are still measures public sector bodies can take to retain their best staff.

We set out below eight key questions public sector executives should be asking themselves to ensure they are doing everything they can to recruit and retain the best staff:

  1. Are we satisfied that our recruitment process is robust and that we only recruit high-quality staff who can contribute to our strategy?
  2. Do we regularly review our rewards package with a view to making it as attractive as possible?
  3. Have we considered non-financial rewards that may be attractive to staff and do we provide tailored options that suit different personal preferences?
  4. Have we benchmarked our rewards package against other public sector bodies, as well as the private sector?
  5. Are our training and development budgets protected?
  6. Do we have a robust employee appraisal process that is followed by the whole organisation? Are we satisfied that all staff have SMART objectives that are aligned to our strategy?
  7. Do we use the information from the employee appraisal process to perform a formal training needs analysis at least annually? Does this include emerging trends and themes around training needs?
  8. Do we have sufficient data around workforce utilisation in order to identify areas of over and under-utilisation of staff?

Asking yourself these key questions may help you to identify areas that could be improved in order to enhance both the current recruitment and retention of staff, while also making the best use of the organisation’s scarce resources during times of funding cuts.

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