Wage bills are often the largest expense for government organizations. According to International Labour Organization (ILO) data, public sector expenditure in developed countries can range from 15% to 20% of the Gross Domestic Product (GDP). Additionally, the share of employment by the public sector is even higher in developing countries. To ensure sound financial management for government organizations, managing salary budgets, mitigating risk and creating spending predictability is essential. This is especially pertinent to newly elected governments that may revisit civil service salary scales and adjust pension arrangements which can add a long-term liability.
When looking at the differences between civil service management and human resources in the private sector, there are several key distinctions to be aware of. The complexity of government payroll rules, budget planning, payment management, workforce management, and commitment controls all mean that private sector HR software solutions do not meet the needs of government.
What is Civil Service Management?
Civil service management is essential for modern governments to effectively manage their operations, such as salary and personnel management, resource allocation, and analysis. Having efficient technology in place is key to achieving this goal. FreeBalance’s (CSM) Civil Service Management software offers a digital transformation solution for civil services to stay competitive in the rapidly changing geopolitical environment.
Human Resources (HR) is different in government and commercially available human capital management (HCM) software and human resources information systems (HRIS) rarely provide the full capabilities that governments need.
Differences between CSM and HR
Payroll rules are far more complex in government than in the private sector, due to different levels of complexity in taxation, labor regulations, cost of living adjustments, etc. This complexity makes it essential for governments to have specialized systems that incorporate legislation and can ensure accuracy in payroll. For the private sector, payroll rules are largely determined by the size of the company, with smaller companies having fewer rules to adhere to than larger corporations.
Because the budget in government is legally binding, salary budget planning is far more important in government than the private sector. Governments must ensure that their spending meets budgetary requirements and that their budget allocations are being used appropriately. In the private sector, budgets are often more fluid. Private companies often make adjustments to their budget, whereas government agencies must adhere to set budgets and adjust their spending accordingly. In the private sector, budgeting is primarily focused on revenue generation and profit optimization rather than meeting particular spending allocations.
Payment management is also more complex in government, particularly in emerging economies where financial services are often less advanced. For example, civil service employees have to adhere to specific rules whereas in the private sector payment terms are largely determined by the employer. Furthermore, government agencies often have specific rules governing how payments can be processed and require additional oversight of vendor contracts.
Workforce management is also more complex in government than the private sector. Governments must ensure that their workforce is made up of qualified personnel that meet certain criteria, with certain rights and protections being provided to them. In the private sector, workforce management is focused on optimizing the workforce to meet the needs of the company, with fewer restrictions in place. Furthermore, as reward and recognition in the private sector is often linked to profit, which governments don’t have, performance management in the public sector is also more complicated.
Commitment controls make civil service management more complex than human resources in the private sector. A well-designed commitment control system helps monitor and regulate expenditure arrears by tracking spending well before payment obligations materialize. It also helps regulate the availability of cash amongst spending units. Thus, appropriation controls and cash controls are inbuilt in commitment controls in government. In the private sector, commitment controls are not as stringent and are instead focused on ensuring that cash is used appropriately to meet company goals.
Why Private Sector HR Solutions are Inappropriate in Government
Private sector HR solutions are often centered around optimizing profitability which is inappropriate for civil service management. Government agencies have specific rules, regulations, processes, and protocols in place that must be followed to ensure compliance with the law. Private sector solutions may not always take into consideration the unique needs of government agencies or the complexities of public service delivery.
FreeBalance Accountability Suite™- (CSM) Civil Service Management
(CSM) Civil Service Management is one of the six core product pillars within the FreeBalance Accountability Suite™ and is composed of a number of modules that can be implemented as a standalone or part of a unified solution. FreeBalance’s Civil Service Management software provides a fully integrated web-based human resource information management and payroll system designed exclusively for government. From recruitment through retirement, Civil Service Management delivers a complete government HR solution.
To find out more about FreeBalance’s (CSM) Civil Service Management solution, click here or get in touch to speak to a CSM expert.