Digital Leaders Study 2023
Building the digital leadership cadre
Constrained pay for top digital roles leaves many civil services unable to recruit or retain the quality of talent required to lead transformation
Asked in a survey whether constrained pay presents a “major challenge in the recruitment and retention of senior digital leaders”, the digital workforce leaders attending our online People and Skills workshop gave an average answer of 4.1 – meaning this is ‘largely true’. Indeed, a third of respondents replied that it is ‘completely true’.
And what impact do these recruitment problems have on the digital agenda? Asked whether difficulties in filling senior roles have “a major impact on the transformation and digitisation of government”, the mean response of 3.5 was less emphatic – sitting between ‘elements of truth’ and ‘largely true’. But this average conceals a wide range of answers: while some respondents were unconcerned, two thirds replied that the statement is ‘largely’ or ‘completely true’ (see graph H).
This diversity of opinion reflects nations’ very different experiences: the problem is particularly acute where countries have a strong domestic tech sector – creating competition for staff – and where political pressures lead to arbitrary caps on senior digital salaries. As one workshop participant explained, the issue of pay for digital leaders is politically sensitive because it’s “wrapped up with all sorts of other perceptions across our ministerial stakeholders about what it would mean for pay reform across other parts of the civil service.”
In the UK, for example, the media regularly lists in shocked tones all those civil servants who earn more than the prime minister; yet the PM’s official salary has not risen since 2010, due to the political difficulty of announcing pay rises for politicians (though their overall pay packets have grown slightly with rises in Member of Parliament salaries, which are set by an independent body). As a consequence, the UK civil service operates an informal but powerful pay cap, pegged to the job of someone who isn’t a civil servant and hasn’t had a rise in well over a decade. In the words of former UK Cabinet Secretary Lord O’Donnell: “If we want to hire the best in, we have to pay very high salaries. And then you get some criticism – I should try and be polite about it – saying: ‘You mustn’t pay anyone more than the prime minister,’ which is just crazy.”
It is notable that the UK government spent five fruitless years trying to recruit a permanent secretary-level government chief digital officer (GCDO), finally announcing an appointment last summer. That job was advertised at up to £190,000 (US$230,000): more than the PM’s £165,000 (US$200,000), but well below what such a senior leader might expect to earn in the UK’s thriving digital industries.
The link between constrained salaries and recruitment problems in digital leadership is pretty clear: Cabinet Office figures told Global Government Forum in 2020 that an inadequate pay offer had scuppered their GCDO recruitment, and almost all our survey respondents complaining about low pay also said that recruitment problems are hampering delivery. The UK’s experience illustrates the consequences: for five years, government was unable to bring in the kind of long-term, senior, strategic leadership it wanted for the digital agenda – leading inevitably to slower and less coordinated progress on digital across the civil service. The country’s experience is a common one: asked whether “a previous generation of IT leaders have been replaced by leaders with digital skills in most key roles,” the average answer from our workshop participants was 2.6 – halfway between ‘largely untrue’ and ‘elements of truth’.
Some argue that the interesting range of work and sense of social purpose in civil service roles compensates for their lower salaries. To some extent, it clearly does: in many countries, civil servants of all professions – many of whom could be earning more outside government – show far more commitment and dedication than can be explained by their salaries alone. Strengthening connections with the private sector tech workforce, and offering alternative ways to contribute, can tap into this goodwill (see Solution 3). But this factor is less potent when seeking permanent staff with the advanced digital programme management skills found most commonly in the private sector, where staff haven’t experienced the public service culture and face a challenging transition into a very different sector.
Where civil services find themselves unable to hire the digital leaders they’d like, they have limited options. They can employ interims; yet these lack the authority, the mandate or the longevity to drive strategic change. Or they can fall back on internal staff, risking over-promoting people without the required skills and experience – and thus seeing costly transformation schemes end in failure.
Few countries have cracked this problem. Singapore has nailed it, but its civil service pays market rates for digital staff – an option not available to most civil service leaders. Israel, another country with a big tech sector, has sought to create a single, highly flexible jobs market: only a handful of its most senior digital leaders are civil servants, with most departmental roles filled by contractors who move between public and private employers. And some civil services are introducing pay flexibilities for digital leaders (see Solution 1), or delinking pay from management responsibilities – allowing talented technologists to increase their earnings without having to swap delivery for executive roles (see Solution 2).
There may be the potential to apply more radical solutions. In the UK, for example, the government faced similar challenges in its defence purchasing operations: its commercial staff frequently left for better-paid jobs in the defence firms, leaving it constantly outgunned in procurement negotiations. Its solution was to hive off the Ministry of Defence agency Defence Equipment and Support as a ‘bespoke trading entity’ managed by a private sector contractor, freeing it from Treasury-set pay rules. Here, the government recognised that the money it was saving by keeping salaries down was dwarfed by the sums it was losing in failing and overpriced equipment programmes, and found a way to get around its own civil service-wide pay frameworks.
There are obvious parallels with digital: the difficulty of recruiting strategic leaders creates huge opportunity costs in terms of slower progress across government, while transformation programmes led by people without the right skills are far more likely to fail. What’s more, pay gaps are growing as civil servants receive below-inflation pay rises while demand for digital leaders spikes in the private sector. “Since the pandemic, we are seeing much greater adoption of digital both in government and the private sector,” commented one workshop participant. “As a result, the demand for professionals has gone up; we have seen attrition rising over the last two years.”
Ultimately, those countries with strong tech sectors and big pay disparities are going to have to move on this, or face the failure of their digital ambitions. Refusing to offer senior technology specialists competitive salaries is a big mistake: governments may save something on their salary bills in the short term, but these sums are dwarfed by the longer-term costs of progress forfeited, projects abandoned, and talents lost to the private sector.
1/ Introduce pay flexibilities for senior digital leaders
Finance ministries are of course as subject to political pressures as any other department – but they also tend to understand the operation of markets, investments and incentives, and take seriously their responsibility to protect value for money in public spending. Presented with arguments such as those outlined above, finance leaders may consider reforming pay rules to ensure that public investments are managed by digital leaders with the skills and expertise to ensure they bear fruit.
As our Finding 4 text reveals, this argument is far from won. It has, however, at least been heard by some finance leaders: speaking at the 2022 Government Finance Summit, one argued that “finance departments should exercise flexibility in terms of procedures,” citing the issues around “how we retain talent; how we pay people.”
Introducing differential pay will never be straightforward. “I think we’re going to have to bring in ring-fenced ICT competitive pay,” said one digital leader at our People and Skills workshop, acknowledging that “unfortunately, that probably will lead to a two-tier structure; but I’m not sure there’s any way around that.” There is evidence, though, that non-digital officials – recognising the harm caused when departments can’t fill senior digital jobs – would support higher wages for digital leaders. Research carried out by GGF for NTT DATA in 2021 found that 76% of UK senior civil servants supported “salary flexibilities allowing departments to hire more senior, experienced digital and data professionals.” Among all respondents – just 5% of whom were themselves digital and data professionals – 70% of civil servants also backed such flexibilities.
Things are moving now in the UK. Megan Lee Devlin, Chief Executive of the Central Digital & Data Office (CDDO), has been working to quantify the additional costs generated when departments must rely on contractors for key roles – providing evidence of the false economies within the current system. Developed with the Treasury, the new Digital, Data and Technology framework will enable digital talent to attract market-competitive uplifts in pay, based on rigorous benchmarking and value for money requirements. So the argument can be won, Lee Devlin believes: after all, “the business case stacks up.”
2/ Create non-management career paths for technical professionals
Some outstanding digital professionals revel in solving complex technical issues, but have no interest in – or talent for – climbing the executive ladder. These specialists can be poorly served by civil service career pathways, which often tie people’s seniority and salary to their management responsibilities. Some governments, however, have found ways to get around this problem – retaining brilliant technologists who’d otherwise have to leave government to develop their careers.
Canada, for example runs a ‘free agent’ programme “where we have senior technologists centrally in a pool, and can allocate them” to departmental projects, explained Stephen Burt, the country’s Chief Data Officer. In the UK’s cross-government pay framework for digital staff (see Finding 5, Solution 1), salaries for junior and middle-ranking staff have been anchored to roles rather than grades, allowing people to rise without becoming line managers. And Singapore runs a Community of Distinguished Engineers (CODE) programme for people who are “very, very good at what they do in a specific field of technology, but don’t want to run a team,” Chan Cheow Hoe, the country’s Chief Digital Officer, said at the 2019 Government Digital Summit. Given the tools to pursue their specialism in a system that respects their skills, he added, “they coach the younger people, and become role models.”
3/ Establish secondment programmes with businesses – and governments?
Even where governments succeed in attracting digital leaders over from the private sector, they can find that new recruits struggle to adapt to civil service cultures and working practices. Technologies and goals may have much in common across the public and private and sectors, but the operating environment is very different: approaches to decision-making, staff engagement and project management that prove effective in business can fail utterly inside government. Yet it’s almost always helpful for civil service leaders to have seen from the inside how things are done in the private sector, picking up useful skills and expertise.
Secondments and placements – in both directions – can help square this circle. Civil servants spending time in the private sector can return with new approaches, attitudes and techniques, strengthening their departments’ handling of digital technologies. And private sector staff doing a stint inside government quickly learn whether they’d enjoy the transition: some will fit right in and build new careers in the civil service, while the rest return to their companies with new skills and experience – benefiting both their own careers, and their employers’ capabilities. For both sides, such temporary placements offer a way to learn about life over the fence without having to stake their careers on this leap into the unknown.
Unsurprisingly, it is Singapore that has taken this agenda the furthest. A secondments programme places civil servants in private businesses for periods of six to 12 months, focusing on skills development in fields such as cybersecurity, data science and project engineering. In the other direction, a ‘Smart Nation Fellows’ scheme entices private sector talent into government secondments, while the government encourages Singaporeans working in Silicon Valley to help out with coaching and training. Nearly 70% of GovTech’s 1000-strong workforce have spent time in the private sector.
So business-to-government placements – and the reverse – can help to strengthen governments’ digital skills and swell their workforces. And there is another option here: government-to-government secondments. Civil services regularly help one another with mutual advice, fact-finding visits and data exchange; two-way secondment programmes could also benefit both sides, bringing new perspectives into employers and providing staff with fresh skills and experience.
As in private sector secondment programmes, organisers may have to find ways to overcome pay differentials; where departments’ salary budgets fall short, workforce development and training funding could help plug the gap. But placements in parts of the developing world may carry advantages to offset a temporary drop in pay: the prospect of a year in the Caribbean, Africa or Latin America has its own attractions. In multinational firms, it’s common for people to move around the world during the course of their career; indeed, it’s an important part of employers’ offers to talented and ambitious staff. Perhaps it’s time that civil services also started to make use of this powerful staff development and recruitment tool.