Friday, August 27, 2010

The NAO on staff costs in "a period of spending reduction"

Last week the National Audit Office published A framework for managing staff costs in a period of spending reduction. Its a timely guide - less than two months until the Spending Review on October reveals where the axe will fall in terms of Whitehall departments. The NAO suggests that the guide is relevant to the "wider public sector" beyond the central government departments who are the primary audience of the NAO.

I have only had a quick scan of the report but I noticed that the "context" warns:

In their planning assumptions, departments have been asked to produce plans of what budget reductions of up to 40 per cent would entail. We expect departments to need to explore the more radical strategic and sustainable cost reduction options ... in order to deliver savings on this scale.

It goes on:

however, delivering cost reduction of this nature usually demands higher implementation costs and longer timescales. This increases risk and therefore requires a clear strategy from the outset, as well as strong project management and control if expected savings are to be delivered.

The report identifies the challenges in conducting staff cost reduction activity. It also stresses the key elements required including high quality management information and robust data analysis.

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