Talent pools to talent puddles?
If we could wave a magic wand, there would be two things which we’d wish for.
First, we’d clone senior leaders, with amazing track records, so that their wisdom could be applied in multiple organisations. (This could also prevent their knowledge evaporating in a puff of smoke when they retire.) The second wish would be to pause time. Just enough to give the sector time to invest in the development of new leaders before the old ones disappear.
Unfortunately, we’re experts in recruitment and not magic. But wouldn’t you wish for the same?
As many organisations know, and are experiencing, there is a ticking time bomb with an ageing demographic in many public sector leadership teams. But that’s only half the issue. The bigger risk is the lack of talent wanting to step up into these roles, not to mention the alarming decline of early career entrants who want to join our challenging recruitment professions.
Recent statistics from a large survey highlighted a dramatically shrinking pool of service heads who wanted to move up to director level. There were even fewer wishing to become a Chief Executive. What’s more, a recent Penna survey revealed that 50% of local authority Chief Executives aim to leave the sector in the next 12 months.
Why is the number of people wanting to step into these roles shrinking?
The media has a part to play, of course. There’s still consistent negativity about the quality of officers in the public sector and challenges raised about their worth. Added to this, there have been a wave of high-profile public departures involving Chief Executives, FDs and DCS’s that discourage once aspirational officers from wanting to take on the top jobs. There’s a danger that jobs become untenable ‘poisoned chalices’, rather than aspirational challenges.
Let’s focus on S151 officers for one moment. Local authorities are currently operating in an eight- year period of austerity. The public sector has worked incredibly hard to meet a reduction in funding that most organisations would have crumbled trying to meet. This does suggest that there was (and still is) some fat in the system. However, it doesn’t hide the fact that organisations and senior leadership teams have risen admirably to the challenge.
We’re now at a point where the latest settlement agreement has left large holes in funding for meeting statutory requirements, such as social care. So, is it truly the fault of an FD that they cannot set a balanced budget, or that the MTFS is scattered in red?
I recently attended an event for local authority FDs, purely around how to protect yourself in the event of needing to issue a section 114. This highlights how real the threat is, even for a well-run organisation. So, if a council’s financial performance should start to drop, is the best option to fire the FD and bring in an interim? Where there is culpable blame and negligence then the answer is ‘yes’. However, is there perhaps a better way to improve performance, while at the same time developing the staff in the sector, enabling them to improve and innovate?
My role at Penna is to recruit interims so we are, of course, happy to deliver these individuals into statutory roles. And I would like to think we do this very well. However, there is a question of sustainability for the sector. If we keep losing our senior leaders, who will be left to take on these jobs? More to the point, is there an interim pool big enough to support this?
At the time of writing this article, our team is currently working on three Finance Director S151 roles. Penna has placed another eight since January into other authorities. The available (as in ‘not currently engaged in an assignment’) interims with a clean track record of delivering successful financial transformation in a number of authorities, is decreasing quickly as they secure new roles. If demand exceeds supply this not only raises issues around market rates. It also means that some authorities will have to think differently about how they meet the legal requirement to have an S151 officer. This is the same with the pool of DCS’s.
Recent and upcoming legislation changes - IR35, the pension cap as well as emerging legislation around settlement capping and paying back of redundancy packages - have also amplified this issue. So, where we would normally have new names coming into the interim market, this is no longer happening. Many of those ‘career interims’ are choosing to go back into permanent employment or only take on other work that sits outside of IR35 legislation.
This is a time when strategic capacity and organisational experience is essential. So, should the only option for ‘saving the day’ be to exit your director and hope to bring in an interim? This, of course, can work (and has done) but, in situations where the existing director has potential, I do think there is another way.
How about using interims in their true form, as strategic advisors or consultants? Allow them to bring their years of experience to your organisation, and use them in a way that transfers their learnings over to you and the permanent incumbent. Historically, many interims have been brought into vacant posts and become so bogged down in day-to-day management and operational issues that they haven’t been able to add strategic value against the initial brief. Use an interim to work alongside your permanent staff to coach and mentor them, while helping to shape a plan and own it internally. It’s an opportunity to not only boost staff engagement, but also develop your permanent workforce so they can benefit from the experience rather than become crushed.
This helps for a few reasons. Firstly, it shifts us away from a blame culture and that will breed innovation as people realise that it’s okay to take risks and make mistakes. It will also shift some of the negativity around being a senior officer in a local authority. This will attract more talent into the sector at a junior level and aid in the retention of those staff.
It will also mean that the shrinking pool of interim talent can be spread out to benefit multiple organisations. They’ll be in a position to transfer their knowledge onto the future leaders of tomorrow. CIPFA Penna is developing a network of experienced FDs who can mentor and coach aspirational and new FDs as they step into the role.
So, while we may not have invented cloning or a time machine, Penna can certainly provide a range of options to build your short, medium and long-term capacity and capability. And, in our eyes, that’s pretty magical.
Anthony Lewis, Director, CIPFA Penna