Public sector finds itself in dire need of cost controllers to wield the knife
A public sector long-used to plentiful funding and comfortable remuneration is having to turn to the private sector to find the axemen it needs to implement unprecedentedly savage cuts, with so-called "Six Sigma" experts – the SAS of cost controllers – in particular demand.
The Government has been trying to recruit scores of senior cost cutters since the coalition was formed, with demand expected to increase again after the October spending review.
At that point each individual department will be given its spending limits for the next five years and some will have to secure 40 per cent savings, a tall order even in the private sector. No government department has had to engineer such savings since the Second World War.
A survey by Interim, a management consultancy, suggests that the most highly prized are experts in the art of "Six Sigma". Though it sounds like a martial art, it is in fact a management technique, pioneered by Motorola in the 1980s, which seeks to minimise costs while maintaining quality control.
The name derives from the use of the term "sigma" to signify yield, so a six-sigma process is one in which 99.99966 per cent of the products manufactured are free of defects, compared to a one-sigma process in which only 31 per cent are free of defects. Experts in "lean" methods – keeping stocks and costs to the minimum as perfected by Toyota – are also sought. Interim Partners says it has received requests for dozens of "lean manufacturing" and "six-sigma" senior experts since May. Requests have come directly from the public sector and through management consultancies in the public sector.
Interim Partners has had 40 enquiries for these senior project directors since the election, a fivefold increase in demand compared to last year. They estimate that across the public sector there could be demand this year for about 200 lean or six sigma project directors.
Doug Baird, Managing Director of Interim Partners, comments: "We've already seen a dramatic increase in public sector demand for lean and six sigma senior experts since the election. We are expecting another surge in demand when details of departmental cuts are announced in the October Spending Review. This could push their rates up even further."
The use of efficiency experts seems to be an exception to the current freeze on management consultancy in government. The Chancellor promised savings of £3bn from cuts to management and IT consultancy services. According to Interim Partners, an operations expert at just below board level will command about £1,000 per day in the private sector whilst the management level below will be approximately £700. Current public sector demand is equivalent to half the normal demand from the top FTSE-100 companies.
Mr Baird added: "The Spending Review is likely to lead to major cuts in the use of consultants across the public sector but demand for lean and Six Sigma specialists is likely to grow. [They] have a really specific skill-set, so demand for them can increase while other consultants face cuts."
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