Workers in the public sector associating news of a more buoyant economy with long-awaited pay rises, team size increases and job moves could be disappointed in 2014, according to a new report from CMI (Chartered Management Institute). While the UK’s managers are generally optimistic about economic prospects for the year ahead, the research conducted with more than 278 public sector managers warns that controlling costs is set to be bosses’ number one priority in 2014, with budgets for outgoings like employee pay and headcounts forecast to hold steady, or face cuts.
Managers in the public sector are slightly more positive about how their organisation will fare in 2014 than they were this time in 2012; 44% are optimistic about their organisation’s prospects for the next year, a 5% increase on last year and 17% up on the year before. However, the annual ‘Future Forecast’ research indicates this optimism won’t give rise to a wholesale increase in investment in the coming year. As in 2013, controlling costs continues to be the highest priority business challenge for more than three quarters of managers when looking ahead to the new year (80%). Furthermore, optimism in the public sector still trails behind that of the private sector, with 76% of private sector managers feeling positive about their organisation’s prospects for 2014 (32% higher than the public sector).
When asked about different spending priorities, managers indicated that just one out of 11 budget areas was more likely to see investment increase compared to last year – 42% intend to increase investment in IT. Investment in training and development remains at 37%, showing no growth from 2012. What’s more, 82% of organisations will hold employee pay steady or cut it and 73% will freeze or reduce headcount.
Ann Francke, Chief Executive of CMI, comments: “With growth to date largely driven by consumer spending, hopes for a sustainable recovery depend on business investment following suit. Today’s research suggests this isn’t on the cards. Yes, business confidence has had a much-needed boost, but managers remain cautious about finances, especially in the public sector climate.
“This raises a question about how strong economic optimism really is, and if organisations are not investing in developing their teams to build that growth, such optimism could be short-lived. The challenge for public sector employers in 2014 will be how to reward and retain staff when pay rises and bolstering teams through recruitment aren’t options.”
Managers also expressed doubts about whether they have the right people in place to achieve anticipated growth. Just 43% report having the right people in post to achieve their organisation’s objectives and nearly two thirds (62%) have had difficulty recruiting people with the skills and talents they need. Reflecting this finding, employers highlighted managing performance 71% as a high priority, followed by restructuring (56%) and developing people (48%).
Despite 2013 being a more successful year for many organisations compared to the year before – 26% reported growth compared with 19% in last year’s report – the findings suggest the upturn is yet to produce happier, more secure employees, and may not do so in the immediate future. Managers are more pessimistic than this time last year about staff morale in their organisation in the coming year (from 49% in 2012 to 59% this year).
Francke continues: “After years of pay freezes and redundancies, many workers will be hoping to see the economic upswing improve their pay packets, but this is unlikely to be the case. Instead, public sector employers need to look at other ways to invest in their staff. Motivation is about more than money – development opportunities and sought-after benefits like flexible working are much prized.”
The report details CMI’s recommendations for how managers can engage teams in the year ahead including:
• Develop the skills of staff - if budgets are to remain tight, organisations should focus on developing the skills of existing staff through coaching and supporting career development. Design more challenging roles and consider different routes for broadening managers’ experiences and skills, through job rotations, shadowing and secondments.
• Build agile teams - an organisation will be better able to cope with external factors if its internal systems are sound, dynamic and adaptable. Being agile has become increasingly important when staying competitive in business. It is about being able to adapt quickly to change and to juggle people, processes and technology innovatively and creatively, to get the most out of them.
• Focus on your people – workplaces with high levels of employee engagement score higher on productivity, creativity and ultimately, perform better. In an environment where controlling costs and having to make do with existing resources is still key, organisations have to offer staff training, development and a range of other non-financial benefits to keep employees motivated.
For more information and to download the report visit: www.managers.org.uk/forecast2014