Public Service Commissioner Stephen Sedgwick.

Public Service Commissioner Stephen Sedgwick.

The Canberra Times reported this week that some government agencies are loath to hire retrenched public servants because "they regard them as duds whom their previous workplaces rejected".

The Public Service Commissioner, Stephen Sedgwick, later suggested the article grossly overstated the problem. (He also thought the word "dud" was rather unfair, though, as someone whose job involves cramming as much into a column inch as possible, I adore three-letter words).

But, putting aside that quibble, the fact remains that Sedgwick and the Public Service Commission believe agencies use redundancy processes to target "low-quality staff" while ensuring they keep their better employees. At least, this is their view in briefings obtained under freedom of information law.

As Sedgwick (or one of his staff) wrote in April this year: "[It] is often the case that staff of lower calibre are made excess, given the need to retain highly skilled staff. Other agencies (and other areas within agencies) are therefore cautious of accepting exempt staff."

We've all heard anecdotes that suggest agencies take advantage of redundancies to shed dead wood, rather than to identify the positions they can do without. The problem, however, is that this may be illegal. The purpose of a redundancy is to abolish a job that's no longer needed or affordable; it should have nothing to do with the performance of the person doing that job.

So why does this actually matter? Surely it's good for everyone if agencies rid themselves of poor performers and low-skilled staff? Perhaps – but not if they pay through the teeth to do it.

The federal government's spending on redundancy and separation payments tripled in the five years to 2011-12, when it reached $234 million (an amount that includes employees in the Australian Public Service, the military and other government workplaces). It's likely to rise again this financial year due to the extra redundancies brought about as a result of the government's latest economy drive.

But while paying underperformers to leave may be the simplest way to get rid of them, it's poor management and it's costly. It's also a handy way to demotivate other staff, who see their less-than-capable colleagues pocket a tidy sum as a reward for their ineptitude or unwillingness.

The Public Service Commission knows this is a serious problem; it highlights it regularly in its State of the Service reports. The latest report cites research that says "poor performers are very costly to businesses, not only because they are less productive than their co-workers, but because they can have a negative effect on their colleagues and the work environment by hampering productivity and lowering morale".

Yet while the APS retrenched 1788 staff in 2010-11, it sacked only 186 (71 of them for misconduct, the rest for underperformance). I'd be willing to read that as a sign that most public servants do their jobs well, but even public servants themselves doubt that. The latest State of the Service survey found two in five staff believed their agency failed to deal with underperformance effectively, while less than one in four thought it did a good job.

The report also said that some managers complained that trying to dismiss staff was "time-consuming and resource intensive", and as a result they were "becoming more risk averse".

No one said managing staff was easy; indeed, I think it's the toughest job in any workplace. But that's no excuse for wasting public money, as seems to happen regularly during APS redundancy rounds.

The commission did point out this week that it was reasonable for agencies with shrinking budgets to try to keep their best workers. Nor is it possible to cope with the current, relatively steep, budget cuts solely by weeding out underperformers – agencies would need much more time to do this than the government has given them.

Here, the fault lies not with the bureaucracy, but with the ministers who thought it reasonable to expect the public service to shed thousands of jobs at a time and, somehow, make the process work efficiently. That was never going to happen.

Markus Mannheim edits The Public Sector Informant. Send your tips to