Public sector must learn private sector lessons to avoid change ‘bloodbath’

Public sector employers should learn from the private sector’s handling of the recession to avoid a “bloodbath in change”, the CBI has advised.

The advice comes as the government is set to announce today how it will create £6bn efficiencies this year.

Unveiling the CBI’s Picking up the Pace survey, John Cridland, deputy director-general of the CBI, said: “Drawing on the experience of the private sector in engaging employees during the recession to deliver much-needed change could help the public sector minimise the pain of spending cuts.

“It doesn’t have to be a bloodbath in change in the public sector if some of that experience can be transferred across.”

Cridland added private employers fared better during the recession than expected after making changes with agreement of staff instead of imposing them.

The CBI/Harvey Nash survey of 666 firms, which employ more than 10% of the UK workforce, found 91% communicated the impact of the recession to their staff, and as a result 87% said staff better understood the need to change working patterns, while 56% showed a flexible attitude to change. Nine out of 10 firms changed working patterns, with 58% implementing a pay freeze and 54% implementing a recruitment freeze. A further 35% enhanced flexible working opportunities.

As the economy now recovers, the survey found employers have been able to “remove the emergency brakes”, phasing out more drastic measures taken to control costs. Only 5% of firms now operate a recruitment freeze, compared to 37% six months ago, but most plan to target recruitment in crucial areas rather than increasing it across the board, it said.

Just 16% still operate a pay freeze, compared to 47% six months ago, and 29% plan to raise pay in line with RPI inflation, while one-quarter intend to target rises at selected staff.

Firms overwhelmingly told the CBI that their priority going forward was engagement, with 67% citing this as their focus. Seven out of 10 said employee engagement would play a vital role in their business’ recovery.

Cridland said: “We have an engaged level of interest in our workforce and they don’t want to go back, they want the regular engagement but with the better news that’s now coming through.”

Other survey findings:

  • 48% said reducing labour costs was their priority, while 42% said retaining staff and recruiting to key vacancies.
  • 6% plan a graduate recruitment freeze, compared to 38% a year ago.
  • +14% was the balance between employers looking to increase and decrease their graduate intake, compared to -31% six months ago.

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