With increasing numbers of chief executives and directors being appointed to government quangos and the private sector, many councils are struggling to fill senior vacancies with sufficiently qualified staff.
Research into the nature and scale of the problem has been commissioned by the Society of Local Authority Chief Executives and is due to start in September.
'We have noticed a lot of people are leaving the senior and middle sections of local government to work in outsourced companies, inspectorates and other areas of the public sector,' said SOLACE director general David Clark.
The pay gap between public and private sectors is undoubtedly a major incentive to jump ship. This year, the average private sector pay rise increased by 14.9% for senior bosses, compared to 3.5% in councils.
Mr Lavery was originally from the private sector. In 1997, he left Price Waterhouse Management Consulting in London to take the helm at Newcastle. At the time, aged 37, he was the youngest chief executive to head a major council.
In November he will begin work as the managing director of ICT Solutions, part of Jarvis plc's systems and technology division. Jarvis is a major player in bidding for education PFI projects.
Mr Lavery said: 'I'm very excited to be joining Jarvis. I'm sad to be leaving Newcastle, but I have to think of my future career and put the interests of my family first.
'I hope I have made a small contribution to improving the city and the council.'
Leader Tony Flynn (Lab) said: 'I am disappointed Kevin is leaving, but I understand. When we appointed him we knew we had an exceptional chief executive, and that at some stage he would move on.'