Podcast transcript – Early departures

Report title: Managing early departures from the Scottish public sector
What’s this report about?
This report looks at the Scottish public sector’s use of early retirement and voluntary redundancy, which are collectively known as early departure schemes or early release schemes. 
We have taken information and some examples of current practices from the annual accounts of public bodies to build a picture across Scotland. Our report also provides a guide and reminder of good practice in managing and reporting on schemes. 
What have you found?
Between 2010 and 2012 almost 14,000 employees at public bodies took exit packages. That is about one in every 40 people who work in the public sector in Scotland, and the total cost of this was more than £550 million.
Such schemes can provide significant savings to public bodies once the initial outlay of departure packages is recovered, and we found the Scotland’s public bodies are generally following good practice. 
We found striking differences between schemes and a marked inconsistency in the level of information disclosed about costs and expected savings. 
We believe public bodies need to do more to demonstrate the value for money being delivered by early departure schemes. Organisations also need to be clearer about the costs and benefits of schemes.
You refer to ‘striking differences’ between schemes and in the time periods public bodies are using to calculate the so-called ‘payback’ from them. Why does this matter?
The payback period is the length of time it takes an organisation to recover the costs incurred from staff leaving with early departure packages, be that voluntary redundancy or early retirement, both of which have different cost implications. 
The projected payback period is an important factor in considering whether the scheme will provide value for money, as it provides councillors and board members with an easily understandable measure of how quickly that initial outlay will be recovered. 
Generally the shorter the payback period the less risk that savings will not be realised. This is not always the case, however, and organisations may have specific reasons for approving schemes which will take longer to deliver savings. That is for individual bodies to determine as is appropriate to their circumstances, but it is worth keeping in mind that the longer the projected payback period, the higher the risk those savings won’t be fully realised due to unexpected events or factors such as inflation, restructuring and the such like. 
You ask for public bodies to pay more attention to early departure arrangements for senior managers. Why is that, is there a big problem with this?
What we say in the report is that board members and councillors at public bodies need to ensure they are properly scrutinising early departure schemes and particularly exit packages and arrangements for senior managers.
It is important to point out that we did not find any evidence of inappropriate practices, so we are certainly not saying that there is a particular problem here. 
However, we also found limited evidence that the early departure arrangements for senior manager were being routinely scrutinised and authorised by councillors or board members. This leaves deals for senior managers open to questions.  It is our opinion that all senior management early departure arrangements should be authorised independently by councillors or board members.
What do you want to see happen?
Our report aims to provide a reminder of the principles of good practice in managing early departures. We provide a list of these principles and go through them in detail in the report.
In particular, we encourage public bodies to:
•	make sure schemes are clear, well-designed and meet business needs
•	ensure schemes provide value for money
•	report openly in annual accounts on the costs and savings
•	and more closely scrutinise severance packages for senior executives.