Public sector usage of interim managers costs less than £290m

• Only 1.4% of public payroll currently spent on interims • Interim rates lower for public sector employers • Call for Government to make greater usage of interims to deliver savings identified in Spending Review

Usage of interim managers across the whole public sector is believed to cost less than £290m* each year, just 1.4% of the total £20.5bn public sector payroll, according to analysis by Interim Partners, the leading provider of interim management solutions.

Interims are senior managers and executives who are recruited on a short-term basis.

Doug Baird, Managing Director of Interim Partners, comments: “Whilst it is popular to portray any contractors used by the public sector as evidence of excess the reality is that the use of interims is a tiny fraction of the public sector’s pay bill.”

“The public sector does not make enough use of cost effective temporary labour.”

“Making greater use of managers on a flexible contract basis, without any of the public sector’s large pensions or redundancy costs could save the public sector hundreds of millions in payroll costs.”

Interim Partners says that as with the private sector some interim managers in the public sector are paid far more than their market rates but this problem could be fixed by simply benchmarking the pay rates of interims.

On average daily rates for interims in the public sector at £743 are actually 2% lower than in the private sector (Q2 2010)*. Daily rates paid to interims in the public sector have also fallen substantially over recent years – down 4% from £777 in Q2 2007 to Q2 2010 – which is a major fall in real terms.

Demand for Interims to lead cost cutting programmes will continue to increase Interim Partners says that they expect continued high demand for interim efficiency experts from the public sector.

Adds Doug Baird: “The Government is finding that it is far harder to deliver cost savings without undermining frontline services than they have expected.”

“That is why there is currently so much demand for “lean manufacturing” and “six-sigma” *** experts from the private sector. If you hire an interim they will have experience of working on so many cost cutting programmes that they can virtually do the job blindfolded.”

“You need that level of experience if you are going to deliver significant savings without leaving staff and customers demoralised. It is a bit harder than just cutting out cab journeys and doughnuts at meetings.”

“An interim leading a cost control programme will be expected to deliver savings that justify their costs hundreds of times over.”

Doug Baird says that interims undertaking cost control programmes in the public sector will look to deliver: • Costs savings early rather than in just year two or three of the programme • Redundancies in a way that retains the best performing staff with the “managing out” of some poor performers • Manage down cancellation charges on severed contracts

Doug Baird says: “It is disappointing that Sir Philip Green failed to recommend that the public sector use more interims in his recent efficiency review, especially given how effectively interims are used by retail businesses.”

• Based on Cabinet Office data on use of interims across the public sector and National Audit Office research into use interims in Central Government. Excludes local government. Ipsos MORI research conducted for the Interim Management Association * Lean manufacturing is a process pioneered by Toyota that seeks to reduce waste and simplify service delivery whereas Six Sigma seeks to eliminate errors in a process and was pioneered by Motorola