Leader comment: No justification for rewarding failure

One of the most bewildering aspects of the culture of the public sector is the tradition of using large pay-offs to remove failing leaders.

The Scottish Parliament's public audit committee has expressed concerns about the size of severance payments where the recipient was "at least partly responsible for a performance issue".
The Scottish Parliament's public audit committee has expressed concerns about the size of severance payments where the recipient was "at least partly responsible for a performance issue".

Senior managers whose poor performance may harm the organisations of which they are in charge can expect to receive generous financial compensation if they’re asked to leave.

The private sector simply would not tolerate the use of shareholders’ money to reward the failure of employees yet, in the public sector, taxpayers’ cash is routinely used to “solve” the problem of underperforming executives.

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It is welcome news that this practice may soon come to an end.

MSPs serving on the Scottish Parliament’s public audit committee have raised with finance secretary Derek Mackay concerns about “hefty” severance payments in cases where the departing employee was “at least partly responsible for a performance issue”.

So widespread is the use of taxpayers’ money to get rid of failing employees that the issue has been highlighted in reports by the public spending watchdog, the Auditor General for Scotland.

Members of the Public Audit Committee are quite right to raise the question of whether highly-paid executives are being fully held to account for any negative consequences of their leadership.

Workers across both the public and private sectors have seen wages stagnate over the past decade. At the same time, budgets for the provision of vital services by the public sector have, effectively, been slashed.

The result of this has been frustration and insecurity among staff and an ever poorer standard of service from local authorities and other public bodies.

With public finances tighter than ever before, now is the perfect time to mark a step change when it comes to the awarding of severance payments. If a senior manager is performing so poorly that he or she must be removed from post then they must not be “bought off” at public expense.

Those who authorise substantial pay-offs in the public sector should rethink their behaviour and ask whether each compensation package they offer is justified. And if they can’t show that their decisions are sensible then MSPs should call them before the public affairs committee to explain themselves. Perhaps that prospect would focus a few minds.