Learning from the BBC

How many senior managers does it take to run the BBC?

Apparently it’s quite a lot less, 18% less to be precise, than previously thought according to the BBC Trust which has agreed to proposals from the Executive to cut the senior management pay bill by around 25% over the next three and a half years.

Other savings will come from freezing pay and bonuses for senior management until 2010 as part of a larger plan to cut a whopping £1.7 billion from costs between now and 2013.

Wow.  18% less senior staff!  Savings of £1.7 billion.  What a veritable feeding trough this must have been in recent years; a perfect illustration of how the interests of senior staff can diverge from that of the organization and its shareholders (the public in this case). 

Actually the salary and bonus savings are likely to be just the tip of the iceberg.   The primary cause of inefficiency is not too many staff and an inflated wage bill, bad as that is, but the organizational constipation they cause as they get in each other’s way.  All those staff have to do something, and when there are too many of them they invent work, creating endless and pointless meetings and paperwork, hoarding information, diffusing responsibility and playing (company) politics.   Trust me, I’ve been there, I’ve got the tee shirt.

But if the BBC is top-heavy and over-managed, what of central government?   I suspect the BBC is positively slimline by comparison.  Think about it; most long-established major industries have in turn experienced an existential crisis which has forced root and branch reform – think shipbuilding, coal, steel, motor manufacturing, telecoms and so on.   Some have failed to make the change, others have gone on to thrive (though often under foreign ownership).  The one obvious holdout, protected until now by the endless generosity of the taxpayer, is government.

Well, this party is about to end.  A country needs a government just as a large and diversified company needs a head office but it must add value and it can only do this if it is small and efficient.  If it gets too large it becomes inefficient and self-serving and subtracts value.  That sadly, is what HMG too often does.

Which is why I have always disagreed with the plan to save $20 billion from government spending.   It’s simply too small; it implies leaving the system basically unchanged and making it just a bit more cost-efficient round the edges.  For heavens sake!  If the BBC can find £1.7 billion after a few months what is the potential across government?  £200 billion is probably nearer the mark because that implies a root and branch change in the way government works.

It’s long overdue.



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