Amanda Wilkinson says the public sector ought to make more of headlining its attractive work-life balance and training opportunities in the war for talent.
Case Studies: 5 Boroughs Partnership NHS Trust, Nottingham City Council
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The public sector is undergoing something of a transformation. In the past it was perceived as a workplace that paid low wages, but offered a job for life. If you wanted to get on and progress up the career ladder unhindered by restrictive job grading systems, and be well rewarded into the bargain, the private sector was the place to be.
However, the public sector’s stock as an employer of choice is arguably on the rise. Pay reforms, defined benefit (DB) pensions, work-life balance polices, and training and development are all playing their part.
It does not stop there. The government is encouraging public sector employers to take a wider view of reward in a bid to highlight the true value of working for the public sector. The Cabinet Office is working on an initiative to encourage the promotion of total reward across the public sector. Devised in conjunction with the Hay Group, it is likely to include a diagnostic tool that will enable local authorities and government departments to establish what staff want and need.
Reward statements are currently few and far between in the public sector although some employers have made a start.
But without such statements there is a danger that many employees will just think about their salary. And pay is an area where the public sector has historically lagged way behind the private sector, although change is afoot. The public sector is partway through a modernisation exercise in terms of pay and service efficiency that aims to link salary and progression to expertise. This reform has seen public sector salaries rise at a pace that has, at times, outstripped private sector pay growth rates and has resulted in the sector becoming much more competitive on pay. The process began in the late 90s and is focused around the assimilation of different pay structures, the harmonisation of terms and conditions, and the creation of single status pay structures for staff.
The NHS through its Agenda For Change programme has moved away from locally-negotiated pay deals to a system where staff are being paid in relation to the jobs they do and the skills and knowledge they possess in accordance with a national job evaluation scheme. There is also a clear framework for career progression.
Local authorities are also implementing a national pay framework that allows for local pay variation levels, and is designed to deliver a single status pay structure in place of separate ones for manual workers, and for professional and administrative staff. This has come to form part of the Local government pay and workforce strategy 2005 which focuses on issues such as workforce skills, recruitment and retention of skilled staff, and pay and reward, with support for total reward communication and flexible benefits plans.
Jon Sutcliffe, pay modernisation adviser for the Employers’ Organisation, says the reward culture of local government is moving away from a system of almost automatic incremental progression through grades to promotion based on assessment, merit, achievement and contribution.
This is not to be confused with performance-related pay which some local authorities flirted with in the 90s, but failed to properly introduce because the culture was not ready. "Managers in local government are [now] going to have to accept and be developed for a much wider role in reward management," adds Sutcliffe.
Higher education institutions have also agreed to adopt a national pay framework at local levels which is designed to deliver single status by 2007. And, in the civil service, a new policy of coherence is being fostered in a bid to achieve greater harmonisation of salary levels across government departments. Here though, salary and reward levels at senior levels continue to lag way behind those in the private sector.
Alastair Hatchett, head of pay and HR services at Incomes Data Services, says: "It has been a period in which the biggest changes have happened in public sector pay in a generation or more."
Although the NHS has virtually completed the process, local government has been slow to adapt with less than 50% of local authorities having revamped their pay structure.
Pay reforms, combined with increased investment in some services and the tackling of equal pay disparities, have also fuelled public sector pay growth.
But Rachael McIlroy, policy officer for public services at the Trades Union Congress (TUC), says: "While pay appears to be getting better in the public sector, a big reason for that is a lot of lower level jobs are being contracted out to the private sector such as contract cleaning and catering."
However people are looking again at the public sector. Stephen Brooks, a partner at PA Consulting, says: "I have seen quite a lot of people moving from the private sector to the public sector because public sector pay has risen faster than private sector pay over the last three or four years and well above the rate of inflation. Five or more years ago, you could say that public sector pay was way below the market rate, but you can’t say that now."
Dr David Ewers, a fellow at Henley Management College, takes another view: "Generally, people tend to commit to a sector then stay in it. I see no real evidence of people transferring from the private sector to the public sector."
But with the Treasury tightening its belt and trying to keep pay and expenditure under control following Gershon’s efficiency review, the public sector may have to work harder at self-promotion. Chris Charman, senior consultant at Towers Perrin, says: "We are looking at more restrictive pay bill growth over the next few years for the public sector and it will be really important for it to emphasise the things that are really strong in its benefits offer."
Pensions is an area where the public sector is beginning to have the advantage over the private sector. As many companies in the private sector move away from defined benefit schemes, this serves to highlight the advantageous position of those employed in the public sector, where, for the time being at least, the government remains committed to DB schemes. A review of the public sector pension schemes though is ongoing and is due to be completed in 2006. The government wants to raise the age at which public sector employees are entitled to draw an unreduced pension to 65 years.
However, PA Consulting’s Brooks says: "I can’t believe in ten years’ time it will be acceptable to have those kind of pension arrangements in the public sector and nothing like that in the private sector. The politicians will find it hard to sustain that deal and it will change."
But, Mike Emmett, employee relations adviser at the Chartered Institute of Personnel and Development, adds: "Whatever terms and conditions apply to pensions, it seems probable that public sector pensions will continue to be securely funded which is a massive benefit for people who expect to spend a long time in the public sector."
Other public sector benefits are less tangible and could be marketed better. Jan Parkinson, president of the Society of Chief Personnel Officers, and strategic director of HR at Gateshead Council, says: "The public sector is very poor at selling what we have. But we do offer very rewarding jobs."
The public sector, she says, offers a degree of job security due to its sheer scale and opportunities for promotion, lateral career progression, and training and development.
Helen Murlis, a director at the Hay Group London, says the public sector has made an effort to match the private sector when it comes to training. "Once you get below the big employers in the private sector, training is a bit more patchy, while for the public sector it has long-term objectives so it is more considered and quite sophisticated in the training that it offers."
Another key attraction of the public sector is its approach to work-life balance and flexible working. This not only means working from home, flexi-time and shift swapping, but also term-time contracts, compacted working weeks and job share opportunities. Gillian Hibberd, corporate director organisational development and HR at Buckinghamshire Council, says: "There are lots of things on which it is quite difficult to put a value in cash terms, but we know from the research we have done are in fact quite highly valued and flexible working is probably at the top of the agenda."
But accounting for training and work-life balance policies in reward statements and developing flexible benefits packages can be tricky. For many public sector employers offering the range of benefits available in the private sector is not an option for cost and policy reasons. Instead, they are seeking out non paid-for product discounts and offering perks such as home computers, childcare vouchers, and bikes for work through salary sacrifice arrangements. But complex pay structures and pensions rules can limit salary sacrifice opportunities, notably for teachers. "For local authority [staff] who are not teachers their pension scheme allows them to have salary sacrifice as it counts their pre-sacrificed salary as their pensionable salary, whereas the teachers’ pension does not," says Hibberd.
The public sector is also faced with a government-led efficiency drive following the Gershon review and with it a move to tackle sickness absence. Whitehall has already introduced occupational health experts and systems to control absence. But if the public sector is to continue to raise its game as an employer of choice then it will have to embrace total reward by promoting positive benefits whatever their value.
Case Study: 5 Boroughs Partnership NHS Trust
The 5 Boroughs Partnership NHS Trust has introduced an extensive range of work-life balance and flexible working opportunities.
Gail Nicholas, head of workforce capacity and development, says: "We fully support flexible working, but we always ask how it is going to benefit the service and the patients.
"We have a work-life balance policy, a flexible working policy, a maternity policy, a parenting and co-parenting policy, special leave, purchase of additional leave, a career break scheme, and offer term-time contracts and job shares." The trust also lets staff work from home, on a reduced hours or annual hours basis. The opportunities are open to all of its 2,350 staff depending on circumstances.
Case Study: Nottingham City Council
Nottingham City Council overhauled its benefits package to ensure that it is able to recruit and retain motivated staff to deliver its services.
The council, which has 12,800 employees, had found that it was competing with large employers in the private sector offering comprehensive benefits packages.
After research into the benefits staff wanted, it launched Works Perks with the help of P&MM last year. A home computing initiative and bicycles for work scheme were introduced on a salary sacrifice basis to add to childcare vouchers that were already being offered. A wide range of voluntary benefits were also introduced, including discounts on holidays, car rental and travel insurance. Works Perks was also used to communicate the council’s work-life balance policies.
Helen Humphries, HR consultant recognition and benefits at Nottingham City Council, says: "The new employer benefits package is helping us achieve our objective of becoming the family-friendly employer in the Nottingham area and is making the council more attractive to new recruits and existing employees."