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.

Interim Partners points out Government spending on consultants is far higher than on interims. The public sector spends £997m on consultants each year, equivalent to 5% of the total public sector payroll and 247% more than it spends on interims.

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.”

Interim Partners points out that interim managers are very cost effective and can charge as little as half the price of a management consultant of the same level of seniority.

Says Doug Baird: “It is often overlooked that interims working in the public sector are there to implement and deliver improvements in services or reductions in costs rather than just to consult and plan.”

“The public sector simply does not make enough use of cost effective temporary staff at manager level and above.”

“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 might occasionally get overpaid but this problem could be fixed by simply benchmarking the pay rates of interims more carefully.

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. Interims bring vast experience of working on cost cutting programmes developed in the private sector that will be of great use to the public sector.”

“You need that level of experience if you are going to deliver significant savings without leaving staff and customers demoralised. Cost-cutting might sound seductively easy, but the scale and complexity of the challenge faced by the public sector means that experience and private sector expertise are going to be crucial.”

“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: “Sir Philip Green recently recommended that the public sector should use more private sector expertise and interim executives are some of the most experienced private sector experts because they spent time working within so many different 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