Measures to improve public-sector efficiency

Public-sector organisations would be more efficient if they built planning and control systems based on results.

This article is based on research by Carlos Losada, Francisco Longo & Manuel Férez

Government-run organisations in Spain could be more efficient. Esade Professors Carlos Losada, Francisco Longo and Manuel Férez have revealed research-backed measures that can improve public-sector efficiency in their book Public employment in Spain: Challenges towards a more efficient democratic state.

The publication, a joint collaboration with Professor Adrià Alvareda from Leiden University and the Spanish Institute for Economic Studies, warns that one of the major challenges in public-sector organisations is the need to recruit more talent and tackle what the authors call the qualification deficit.

"Our study reveals that one of the main problems of public employment is what we call the qualification deficit," says Longo.

A high number of public employees are currently overqualified

In Spain, around 70% of public-employment positions do not require a university degree. However, and paradoxically, according to the Spanish Statistical Office, around 67% of these employees do have a university degree, which means that a high number of public employees are currently overqualified.

Qualification gap

"This qualification gap is hindered by two additional aspects. One is the ageing factor – our public-employment workforce is composed mostly of older workers only a few years away from retirement. This means that the public system will experience a drop in talent in the near future and government-run organisations will need to take measures to recruit new talent to compensate for the talent loss derived from retirement."

The second aspect that has aggravated the current qualification gap is the country's high rate of public-sector employees with temporary contracts. "The percentage of public-sector employees with temporary contracts in Spain is one of the highest in Europe, surpassed only by Poland," warns Longo.

Senior executives and specialised positions in the public sector are compensated below the private sector's salary threshold

Salary compensation

The findings also emphasise the need to review the compensation system for public-sector employees. In Spain, the average annual salary for public-service employees is 26% higher than in the private sector. However, senior executives and specialised positions in the public sector are compensated below the private sector's salary threshold.

"In order to stay competitive and attract talent, public salaries need to be reviewed to bring them closer to the compensation that private-sector employees earn for similar positions," says Esade Professor Carlos Losada, co-author of the report.

"We suggest changes in remuneration that include introducing more variable components linked to employee performance and results, establishing salary progression (especially for high-level executives), reviewing the salary range for each position and creating group incentives."

Public library in Madrid
Public library in Madrid (Photo: Tobias Messer/Unsplash)

People management

The study recommends a battery of measures that HR departments can introduce to improve public-sector efficiency. "Among the suggested measures, we propose reviewing the current HR recruitment methods and policies, as well as the internal processes established for people management and mobility," says Losada.

The researchers also call for new HR policies that strengthen social values among employees and explain why it must be a priority to set measures to attract new talent and highly qualified employees.

Public-sector executives

The authors of the study also stress the need to revise the current selection system for recruiting public-sector executives. Spain is one of the OECD countries with the lowest percentage of HR practices targeting high-level executives.

To improve public-sector efficiency, governments would benefit from less rigid and more decentralised structures that allow high-level executives to have more decision-making autonomy.

Public-sector organisations would be more efficient if they built planning and control systems based on results

According to the report, public-sector organisations would also be more efficient if they built planning and control systems based on results. These mechanisms would ensure accountability and effective control of executive performance.

The team of researchers at EsadeGov analysed official data from key government organisations, including the Spanish Ministry of Finance and Civil Service, the Spanish Statistical Office, Eurostat and the Organisation for Economic Co-operation and Development. The results were cross-checked with in-depth interviews and working sessions with public-sector leaders and managers.

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