DIFFICULTY in maintaining the motivation and morale of staff is seen as the biggest threat facing public sector organisations, according to a survey carried out by the Management Consultancies Association (MCA).

The survey, in which 100 public sector managers were asked to rate the risks faced by their organisations divided into four categories – financial risk, risk to reputation, IT and security risks and risks related to people and resources.

Reputational and people risks were both regarded as major current threats (ranked highest by 32 per cent and 30 per cent of managers respectively). However, when asked to predict how risks would change over the next five years, most respondents felt that risks related to people and resources would grow, while reputational risks would diminish.

The director of the MCA think-tank, Fiona Czerniawska, explains: “I think there is a feeling among public sector managers that they are fairly comfortable in the way that they manage financial, reputational and IT risks, but that people risks are far more difficult to predict and control.”

People and resources-related risks include difficulties in recruitment, retention, training, motivation and morale. More than 90 per cent of the managers surveyed described their management of such risks as only partially effective or not effective at all. Motivation and morale of staff was seen as the most significant threat with 58 per cent of those polled rating it as the single most important people and resources risk faced by their organisation.

Rohan Malik, an account director at Ernst & Young, points out that the ability of staff to identify and mitigate risk is a crucial part of any organisation’s risk management strategy. “Having the right staff, with the right training, in the right place at the right time, is one of the most important aspects of risk management,” he says.

“The risk agenda needs to be at the heart of the organisation so that it becomes part of everybody’s day-to-day job. It all comes down to the three Cs: capability, capacity and culture.”

Of the reputational risks faced by public sector organisations, the nondelivery of major programmes was seen as the biggest threat, while living within budget was seen as the biggest financial risk and “complexity” was seen as the biggest IT risk.

The survey results also highlighted a lack of a strategic approach to risk management among public sector bodies. Asked to describe their management of the various risks, only around one in three managers called their approach strategic, with another third saying they tended to react to problems as they were identified. One manager in three said that his or her risk management simply relied on procedure or “ticking boxes”.

According to Nick Jackson, head of local government consulting at Capgemini, this box-ticking mentality will become difficult to sustain as public bodies come under increasing pressure to improve their performance.

“Historically the public sector has been very risk averse and tended to always take the least risk option,” he says. “However, if you completely avoid risk then you will find it increasingly hard to deliver the kind of performance the Government is demanding.”

“For instance, the decision to merge two schools might be entirely beneficial to the pupils’ education but it would also involve a considerable amount of political risk – it might upset the local population, be unpopular with staff, involve short-term costs and so on. So you will have to take a risk to be able to make the right decision.”

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