So, Shell fires some middle managers. Ritchie comments….

That’s 20% of managers doing non-jobs that can be dispensed with.

Useless, wasted bureaucracy.

And then they say the public sector is inefficient.

Now, why is that?

Err, because the public sector never does go out and fire 20% of middle managers? Never does attempt to cut out the deadwood and become more efficient?

14 thoughts on “So, Shell fires some middle managers. Ritchie comments….”

  1. His logic appears to be this:

    Shell have too many bureacract so have been able to sack plenty. Few sackings in public sector bureaucracy therefore equals no slack in the system.

    Correlation does not imply causation.

  2. In BUREAUCRACY, Von Mises makes a very compelling argument that bureaucratization of the private sector is a direct consequence of gov’t.
    interference in the marketplace and that, in the absence of such interference, there is no tendency toward the accumulation of “deadwood” in the management hierarchies of private industry–that the constant pressure to serve the consumer in the most profitable way is the surest guarantor of efficiency in the use of resources, whether those be material or human factors of production.

  3. he seems to be having a go at Shell recently – basically because they contradict his fundamental belief that the oil is about to run out

  4. Interestingly the Economist on line has just reprinted its original article on Parkinson’s law from 1956. In it he demonstrates that Government bureaucracy grows by around 5.5% per annum, give or take, when there is no underlying need for growth.

    If we take 1997 as the starting point then the civil service has grown by around 90% in unneeded bureaucracy. That is on top of all the extra nurses, teachers etc and the support staff legitimately need to manage them.

    As I don’t remember any “head count reduction” programmes in the civil service under New Labour we can deduce that it is highly overstaffed and in need of similar treatment to Shell’s.

  5. Ritchie is just an attention seeker. His lack of logic and economic literacy should be well known by now.

    When confronted he simply buries his head in the sand, so what’s the point?

  6. erm… the public sector does get rid of middle managers

    HMT has imposed a 5% efficiency plan on all govt depts’ sponsored agencies for the past 3 years – reducing ‘admin’ costs incl all staff budgets by 5% each year. Aiming to push more money out to beneficiaries. This has reduced public sector headcounts – typically amongst middle managers.

    Which country have you been living in for the past few years???

  7. Glenn, I’m sure many such scheme have been announced. Have any of them ever been carried out? Has anyone independent ever checked the headcount or are we reduced to trusting that pack of liars masquerading as a government that headcount did indeed go down?

  8. Hi Phil I certainly heed your reservations from messrs brown and co in terms of ‘efficiency savings’!

    headcount certainly went down in the BIS sponsored agencies, one of which I work for – we’re about 20% down on staffing compared to 3 years ago.

    My organisation has frozen recruitment now, and has done really for the past year – as we are anticipating further cuts. Some of this will be through natural wastage – cancelling vacant posts, early retirement incentives.

    Its certainly possible to trim down the workforce without resorting to the pretty emotive language of ‘firing’ everyone left right and centre.

    Unfortunately not all areas of govt have had to apply the efficiency savings targets – take the actual govt depts themselves. They have overhead costs at about 20-40% of revenue. Ours are 11%.

    The public sector actually has an older age profile than the private sector too which means natural wastage is easier. Its funny how the govt wants to take away the options to retire at 60 for public sector workers, yet at the same time will probably incentivise them to do so!…

  9. >erm… the public sector does get rid of middle managers


    If you want to prove it then give us the number of middle managers in the public service in 1997 and the number of middle managers now. I bet you the number will be higher, not lower (and certainly not 20% lower).

  10. Read Von Mises book on Bureaucracy as Gene Barman suggests.

    The number of people involved isn’t really that relevant. What’s relevant is the functions that they perform.

  11. I’d not be holding Shell up as a model on which the public sector should be based. Having worked for them, I left with the impression it was a pension vehicle which happened to own oil wells.

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