There will be a lot of HR people thinking ‘there but for the grace of God’ after reading about the Hays employee who accidentally sent the details of contractors’ day rates to 800 RBS staff. I’ve never done anything quite that bad, though I have sent, er, inappropriate stuff out by mistake, causing a wee bit of embarrassment. I know many other people who have done something similar. Those ‘Reply to All’ buttons are potential weapons of mass destruction.
The media reaction has been interesting too. A few years ago this story would probably not have made it further than a small column on some of the business pages but now that RBS is predominantly state-owned and everybody hates bankers anyway, it’s fair game for a bit of righteous indignation. Everyone from the trade unions to the Daily Mail is having a go. Strip away the outrage and the complaint is that RBS should not be paying contractors £2000 a day at the same time as it is making staff redundant and sitting on a taxpayer bailout.
But, as anyone who has been involved in a major cost reduction and reorganisation will know, RBS is almost certainly employing these contractors because it is downsizing.
When you shed staff, often people go before you want them to. There is no point in recruiting someone for a soon-to-be-redundant role so you plug the gap with a contractor. Sometimes even the best managers mis-judge and get rid of key people too quickly. Again, a temporary fix is to bring in a contractor until your new structure is in place.
Furthermore, any major organisational change requires skills that are not needed in the organisation on a permanent basis. You bring in change specialists and project managers to run the downsizing exercise. Unless your organisation is constantly restructuring, downsizing and relocating, you wouldn’t bring these people onto the payroll. In short, it is almost inevitable that any big organisational upheaval will mean a temporary increase in the number of contractors.
Many of these people do not come cheap. Even in today’s labour market it is unusual to get a good change project manager for under £1000 a day. Add on the agency’s cut and it’s not difficult to get up towards the £2k mark.
As public sector organisations, of which RBS is now one, rapidly restructure and cut costs, they will need to employ expensive contractors on a short-term basis. Doubtless there will be FoI requests which will uncover ‘scandalous’ payments similar to those made by RBS. Journalists and mischief-makers, who know nothing about running organisations, or who deliberately choose not to know, will make hay with this information. This will cause extra costs and aggro for the public sector managers who will have to deal with the outcry.
The truth is, though, that the private sector uses contractors and pays these sort of rates too. The presence of consultants and other temporary professional staff does not mean the organisation is inefficient. It’s just that such people are necessary during a period of upheaval and change. The more far-reaching the change, the more of them you are likely to have.
Given that the public sector is about to go through its biggest change since the 1940s, it will be a bloody miracle if this does not lead to a temporary increase in the use of contractors. That will be as true for the NHS and local government as it is for RBS. Let’s hope people are more careful with their keyboards in future. There will be enough outrage anyway, without rogue emails fuelling the fire.