Showing posts with label Recession. Show all posts
Showing posts with label Recession. Show all posts

Thursday, 3 February 2011

New Optimism? – HR Directors Business Summit

 

  I’ve not been able to tweet for a while.  But I’ve got some time spare now, so will see if I can catch up.  It’s either this, or sleep (which I could very easily do too!).

First up, last week’s HR Directors Business Summit in Birmingham, UK.  As an overall summary, I’d say this was a great event – and not just because of my participation in it which I’ll summarise in my next post.  One of the things I liked about it was the much greater focus on innovation, and ambition, than last year.

So back then, I became seriously concerned, and blogged, about how depressing I found it that every session seemed to emphasise ‘we don’t need anything new in HR’.  Attendees, and even more so the speakers, seemed to got themselves to believe that HR is simple – that’s it all about doing easy things well.  One of the speakers in the final panel even put this forward as a summary of the conference herself.

What rubbish I thought – and still do when people suggest this view.  (Good) HR’s isn’t easy.  It’s not simple.  It ain’t the same as our fathers’ HR.  Good HR is complicated.  It’s focused on intangibles.  On differentiation.  On uniqueness and innovation.  And it’s based on new ideas and emerging experiences.

 

So why was I happier this year?

Well we started off with Lynda Gratton, which generally sets things off well (I do wish she would do less self-promotion though).  Lynda emphasised the need for HR to get better at understanding the future, helping us focus on the things which are most important.  She also gave a good plug for social media noting Nokia’s statistic about 5 billion people being connected around the world – and that it’s these connected people who will change the world. (She could have suggested HR people get connected too – there were very few of us tweeting in the session - see my next post.  And despite Lynda’s belief in connection, and her regular blogging, I still don’t think she really understands what social media’s about). 

Then I attended what was just about the best session for me (no, still not one of mine) – delivered by Lynne Weedall at Carphone Warehouse / Best Buy Europe.  Lynne emphasised the way that work has changed and will change further still.  We’ve come to a chasm and won’t be able to jump over it in small steps.  She talked about the need, which I have also described, to think from the future back – to have a vision and work back from there.  To do this, HR people need to pose impossibly questions or at the very least, ask themselves what would fundamentally change their organisations.  And they need to look to do things differently (to zig where others zag).  All music to my ears.

The change theme was reinforced by John Mahoney Phillips from UBS talking about human capital metrics (see slide) and even using the phrase ‘creating value’ in a meaningful way.

So – a lot more focus on ambition, innovation and a desire for new ideas than the year before.  Of course my summary could just be down to the few sessions I attended.  Or just a result of chance emerging from the speakers which were selected.  But maybe, it’s a sign that HR’s feeling more optimistic again.  That we’re starting to raise our eyes above short-term restructurings to look towards what’s going to support the future of our businesses.

 

Of course, not everything was so rosy – for example, the suggestion from Tesco’s Therese Proctor that the credibility of the HR function relies on getting the basics right.  Well yes, but… (let’s just not go there now).  And of course, this was also the point at which we learnt the UK economy had shrunk again (making Vance Kearney from Oracle’s suggestion that we’re getting bored talking about recession appear even more out of touch).  So if there was more optimism this year, it’s certainly possibly that this was badly out of place!

 

What did you think if you were there?  And if you were, or not, are you feeling more optimistic now?

 

Also see summaries of the conference at

 

 

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Monday, 28 September 2009

Developing social capital for the ‘improving economy’

 

House prices The next HR carnival at Blogging 4 Jobs is going to focus on talent management strategies in the improving economy.

My first response is to ask ‘what improvement’?  The US may now be technically out of recession, but the UK’s still got some way to go…  see the latest housing prices figures (and I’m having a tough day!).

Jessica Miller-Merrell at Blogging 4 Jobs notes that even in the US, the recovery is going to have a “"W” or a slow “V” shape.  And over at the Business Execution blog, Erik and Keith predict it’ll be a “U” shaped recovery.  Perhaps the appropriate letter for the UK is an “L” (see, I told you).

Jessica suggests the following very sensible proposals:

  • Poll our employees
  • Seek feedback
  • Take action
  • Follow Up
  • Build a Candidate Pipeline.

 

And Erik suggests companies need to:

 

I think Erik and Jessica are right to focus on engagement. This is clearly going to be an issue for employers as (when!) the economy improves.  I thought Management Today summed it up nicely:

“More than one in five UK workers reckon that they rarely or never feel fulfilled by their jobs, according to a new survey by workplace assessment specialists SHL. This dissatisfaction (which is particularly prevalent among young people) has apparently got even worse as a result of the recession. And although workers are reluctant to act on it for the time being, it supposedly could mean a mass exodus once the job market starts functioning properly again...”

 

Rather over-optimistically perhaps, I spent quite a bit of time focusing on how companies could engage people to prepare for the recovery at the beginning of the recession (naive fool!), and these suggestions are probably more relevant now, so you might want to check out:

 

But I’d like to make one more suggestion too.  And this pick’s up on Erik’s comment that “what drives high performance is a person’s social and emotional connection to work”, and also Jessica’s that “it’s the relationship that matters”.

To me, the new priority is to develop social as well as human capital.  Yes, human capital is still going to be vital.  But if the  W/V/U/L recovery is, as many people are predicting, a relatively jobless one, then organisations are going to need to do more than just optimising the engagement and alignment of their people.

They’re going to need to optimise the way their people work together too.  I think this is going to involve much more than just the use of Linkedin, Twitter and Facebook.  Instead, it’s going to have to be about an appropriate mix of effective leadership, HR and management practices, OD interventions, and yes, web 2.0 tools as well.

More about this soon…

 

 

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  • Sunday, 19 July 2009

    Talking HR 019: Involving employees in budget cuts

     

       In this show, we discuss the current economic environment, particularly in Ireland and the UK.  And we talk about what employers are doing to deal with the impacts of the recession, discussing in particular, British Airways’ recent wheeze to ask staff to work with no pay.

    Jon also discusses passion and engagement, in connection with the MacLeaod review in the UK, and with employees of the French firm of New Fabris threatening to blow up their factory.

     

    Resources:

     


    Listen to the podcast:
    you can download the podcast to your hard drive or play it streaming from the web.

     

     

    Photo credit: Sertion (the photo is supposed to be someone playing rock – paper – scissors with ‘scissors’ (ie cutting) – but you could probably interpret it as something else which might fit the BA discussion just as well!)

     

     

     

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    Wednesday, 20 May 2009

    The revolution within – risks and rewards in banking

     

       Although MPs’ expenses have been the top news item in the UK for a few weeks now, bankers’ bonuses have retained a low hum in the background.

    MPs in the Treasury Select Committee have recently turned their attention away from themselves to this other group of miscreants, placing blame for reckless and excessive risk taking on City bonuses.

    This may seem an obvious conclusion, so much so that Management Today’s reaction is a simple ‘like, duh’!  However, it wasn’t that obvious at the time that all this risk taking was going on.  It wasn’t even that obvious last Autumn – I remember feeling that I had a minority view when I started linking bonuses to the gloomy environment.

    Anyway, in this week’s special report on international banking, the Economist reports on the actions that the banks are starting to take to improve things:

    “Banks will tie compensation more closely to performance and spread rewards over longer periods. It should be said that neither idea is foreign to the industry. Bonus pools based on profits (though not revenues, an indefensible practice) may be seen as a problem now but are clearly more closely tied to performance than a fixed base salary. Awards of shares were common within the industry before the crisis and caused employees, those of Lehman Brothers included, to suffer vast losses when share prices dropped. What the industry as a whole did not do well enough was to design pay so that it better reflected long-term risk.

    The bonus/malus structure introduced by UBS in 2008, whereby a cash portion of a bonus award is held back at the end of a financial year and reduced if targets are not met in subsequent years, will also become more common as institutions seek to track and reward the performance of senior managers over time.

    Other ideas in the vanguard of designing pay structures include “S-curves”, which pay less below a certain threshold of profit so as not to reward employees for market conditions and franchise value, but also pay out less above a certain threshold, to discourage excessive risk-taking. These types of thinking are likely to become more prevalent.”

     

    This is all highly sensible.  However, it may not be as easy to implement as it appears.  As the Economist explains:

    “Attempts to control pay in one area tend to inflate it in another. As bonuses fall, pressure on banks to increase basic pay is already rising. That pressure will grow as the industry recovers and competition for the best staff increases. ‘At some point in the next few years, the industry is going to have an absolutely stellar year,’ says a pay consultant who predicts that firms with clawback policies will have to offer more in upfront pay to attract recruits.”

     

    This is why firms need me rather than a ‘pay consultant’!  We’re just not going to get anywhere if banks simply replace one flawed system with another.  The only way to do things differently, really differently (which is surely what’s required), is to replace the mindset that leads to the dysfunctional behaviour.  As I explained earlier:

    “HR should never have let this situation develop.  And it's not just an issue of compensation design.  Some banks have refused to see their people as purely money motivated, but most have simply accepted their people are only engaged by high rewards, have offered these rewards, and have continued to recruit people who are motivated in this way.

    But it hasn't had to be like this - there is no real reason why bankers need to be paid more that other sectors of the economy.  Not all talented people are money motivated and it's a shame that none of the banks ever looked outside this one stream of employees (leaving aside for a minute the question of whether they really needed talented people anyway ie whether less talented people may have taken more acceptable risks?).

    The key for me, as I've posted before, is the banks' cultures.  Financial services firms need to offer their people a broad and balanced (financial and non-financial) EVP based on a compelling purpose (mojo) which is supported through HR practices including leadership development and succession planning etc.”

     

    Of course, it’s going to take some guts to make this sort of change.  But at should at least be easier now than it was before – as the Economist reports:

    “The traditional argument against changing pay structures has been that no institution could move unilaterally without competitors poaching its best people. Now, no bank can fail to alter its compensation policy without having its executives publicly humiliated by politicians and the news media, and frowned upon by regulators.”

     

    The same argument applies to banks’ cultures / mindsets too.

     

     

    Photo credit: Dennis Brown

     

     

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  • Thursday, 7 May 2009

    HCM in the recession

     

        I’ve been thinking about anonymous’ comments, particularly in connection with my presentation next week on Globoforce’s webinar looking at using HCM, compensation & benefits, and employee recognition to drive positive change in the recession.  (Not that I think my thoughts can have as much impact as anonymous’ comments seem to infer!)

    Actually, there’s not that much I can think of to add to some previous posts, so I thought that instead of redoing this from scratch, I’d simply refer to and link together some previous posts.

    However, I will say that at the moment, I’m feeling a lot more cheerful than I have been – there’s a growing amount of good news about – even Robert Peston is seeing signs of green shoots of recovery!  But then everyone also seems to think that the next decade is going to be much harder than the last, so I would suggest the posts I link to below are likely to apply for some time to come.

    The first thing to note is that it’s very difficult to predict exactly what is going to happen from this point on.  So the use of scenarios is probably an appropriate approach.  I think, to a large extent, which of these scenarios emerge will depend upon upon how much peoples’ attitudes, the role of business, or even of capitalism itself, changes within what has been called the global reset.

    But no matter what happens, there seems to be two key roles for HR / HCM.   The first role is about managing through the downturn, responding to the impact of the recession.  This includes making layoffs and managing survivors, but also avoiding redundancies by, for example, introducing salary reductions.

    The second role then is about navigating a way out of the recession - particularly as a lot of innovation tends to occur in difficult times.  Linked to this is taking advantage of the slack in the system (I know it may not feel as if there is) to increase the capability and the impact of HR.

    Anonymous, I hope that helps!

     

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    Tuesday, 21 April 2009

    Globoforce webinar: HCM for positive change in a recession

     

         On Thursday 14th May, I will be participating in a webinar with Globoforce’s Derek Irvine and Compensation Force’s Ann Bares in a roundtable discussion and Q&A session on the importance of HR during this recession.

    Derek will chair the session and talk about Recognition.  I will bring my expertise in Human Capital and Talent Management and Ann will join with great insight into Compensation and Benefits. The second half of the presentation will be left open to questions from the audience, so please feel free to submit questions on the registration form, or at any time during the presentation.

    Register here

    Time:
    11:30 am Eastern Daylight Time (GMT -04:00, New York)
    4:30 pm GMT Daylight Time (GMT +01:00, London)  
    10:30 am Central Daylight Time (GMT -05:00, Chicago)  
    8:30 am Pacific Daylight Time (GMT -07:00, San Francisco)

     

     

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    Monday, 23 March 2009

    Cold war for talent?

     

       A recent post on Taleo's blog referring to PDI research suggested that talent management had fallen from 2nd to 8th place in business leaders' priorities.

    More recently, Gartner made no mention of talent at all in its list of the seven greatest concerns for CEOs in 2009 (Restructuring; Can't write off fast enough; Loss of business and governmental trust; Globalization instability; New major regulation coming; Government as the new emerging market; and Green is not going away).

    And today, Personnel Today reports on a PwC survey finding that the availability of workforce skills has fallen in CEOs' lists of priorities from 1st to 7th place.

     

    Human vs financial capital

    It's not too hard to see a pattern here, and of course, it's not that surprising given that human capital once again took a supporting seat to financial capital towards the end of last year.  But as I've noted several times, and as most of my readers will know for yourselves, people still remain the main long-term source of competitive success.

    This dichotomy is shown through in much of the current research.  So, Personnel Today, for example, notes that

    "A quarter of the 1,100 chief executives surveyed worldwide said they are looking to reduce headcount this year and 35% of CEOs in the UK want to cut jobs over the next 12 months.

    While no longer an immediate matter, however, the war for talent was seen as a strategic concern by 97% of respondents. UK chief executives, in particular, expressed concerns about the limited supply of candidates with the right skills - 78% of them saw this as a problem, compared to 69% globally."

     

    A cold war for talent

    And I think another report from Stepstone and the Economist, 'The cold war for talent' expresses the tension even better.  The research for this was conducted in November and December last year, so some of its conclusions are already well out of date (for instance, I'd certainly argue that the Gulf's vibrancy is now much reduced), but I think the main conclusions do still stand, and I'd suggest the main ones are:

    • Hiring talent is now less about volume and more about targeting a few highly skills individuals for specific roles - including targeting competitors' employees who have lost their jobs (which I think is where the cold war metaphor comes from).
    • Developing existing talent is now even more critical.  I liked this example about Vodafone, although I don't know whether the programme survived the company's 500 redundancies last month:

    "As a result, some companies are focusing on developing a talent pipeline from which to fill their executive ranks. To achieve exactly this, Vodafone, a mobile telecoms operator, launched an initiative, initially targeting 75 people who are on development programmes of either 18 months or three years. 'This programme is designed to fill the gaps globally that are coming up as we expand,' says Kerensa Sheen, HR director of Vodafone’s global leadership and talent. 'By year three, we’ll have 200 high performers on it who are on succession plans'."

     

    • HR now has a great opportunity to demonstrate the strategic value of HR to the business (although the function has to show its relevance first).

     

    The future of talent management?

    I've been considering these findings against a post by Andrew Boyd at Aberdeen Group who refers back to an Economist article from last November predicting the rise of the CEO (which itself is interesting in connection to my last post on Dick Beatty, CFOs, trust and HR).

    The article notes:

    "The biggest loser in the struggle for power will be the human resources director. In the past five years HR has been enjoying the greatest power it has ever had. The “war for talent”, which companies have fought tooth and nail, will be over in 2008, neither lost nor won: there will be a ceasefire brought on by lack of funds and exhaustion of the troops. An old truth will be whispered by the brave: most workers are not terribly talented and most of them don’t need to be, as most jobs don’t require it.

    In 2009 a more elitist shift will occur: companies will worry about the performance of those at the top of the pyramid, while everyone else will be managed like a commodity. 'Talent' will be a word we wave goodbye to. In 2009 the word “staff” will make a comeback, as will 'headcount'."

     

    In my view, that was almost, but not quite, right.  It's not just talent at the top that's being seen as important, but a broader range of people with key skills.   Therefore, I think 'talent', and the need to differentiate talent from other staff, hence 'talent management', are actually becoming more important, not less.

    So although I didn't think much of Beatty's tone, I am still looking forward to reading his new book, the Differentiated Workforce (first review I've seen here) - I'll let you know my thoughts once I've read it.

     

    In the meantime, do let me know your thoughts on the future of talent management...

     

     

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    Tuesday, 17 March 2009

    CIPD Managing through a Downturn conference

     

       Most of the sessions in today's conference have referred to the need to balance both short and long-term perspectives in people management strategy.  Some have also dealt with the potential reset and its HR consequences, that I've also been posting on.

    I particularly liked the metaphor used by Arvinder Dhesi, Group Talent Management Director at Aviva, which was of a (dramatic) change in season, moving from Summer to Autumn.  Dhesi explained that this change includes the increasing democratisation of organisations ( listening more closely to the voice of the ordinary worker, as well as the ordinary shareholder and tax payer), and a corresponding reduction of faith in the celebrity CEO (the myth that these individuals have a magical power, and that autocrats are the right people to run our organisations).

    The change may even involve increased use of social media to stay in touch with all the constituents of a business (although I wasn't convinced that Aviva are doing much with this technology as yet).

    The metaphor changes the way other aspects of HR practice are seen - for example, the war for talent becomes looking after a forest or a fertile field.  Dhesi describes HR's role as one of constantly nurturing and guarding the environment - talent will grow itself but how fertile are we making the ground?

    Dhesi also believes, and I would support his view, that this seasonal change provides HR with an opportunity to pause and reflect, to ask how well we have secured the institutions we work for.

    We also need to think smartly about how we engage the rest of the business with this change.

    Steve Tappin, ex-Managing Partner for Heidrick and Struggles, and author of 'the Secrets of CEOs', described how, in his view, we have the wrong CEOs at the top of most of our organisations - a lot of whom won't be able to adapt to the changes in the business cycle fast or far enough.  They may say the right thing, but their focus will be on survival and they will just cut people out.  Other types of CEO (the missionaries) may not cut enough.

    In Tappin's view, the real war for talent is an internal one - and involves championing talent and HR within a company.  And this requires making cautious but brave moves from within HR.

     

    Photo credit: Hedwig Storch

     

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    HR in the new capitalism

     

       I'm at the CIPD's conference, Managing through a Downturn, today, so I'm going to go back to the theme of layoffs, and in particular my questions / suggestions over the role of HR in the global reset, for a couple of posts.

    Before I write about the conference, I'm going to focus on some broader reporting, particularly some recent articles in the FT's new series on the future of capitalism.

    This notes that "capitalism – our ability to buy and sell, move money around as we wish, and to turn a profit by doing so – is in deep trouble".  I actually think the issue is broader than this - the change I'm most interested in is that people are becoming less interested in serving the goals of capitalism, and will therefore be less ready to invest a major proportion of lives for the luxurious lives of their bosses and the profit of anonymous shareholders.

    Although as I've pointed out before, I think there is evidence both for and against this situation.  But I still feel the pro change is pushing ahead.

    Did you see, for example, that Jack Welch, regarded as the father of the 'shareholder value' movement that has dominated the corporate world for more than 20 years, has said that "we are in unchartered waters" and that it was “a dumb idea” for executives to focus so heavily on quarterly profits and share price gains....  "Your main constituencies are your employees, your customers and your products", he says.

    And even those who have benefited most from the single minded focus on shareholder value seem to be started to push back against what everyone else has already been viewing as unfair rewards.  The FT series provides the example of a banker who turns down an airline upgrade, and the BBC Analysis programme has also broadcast an excellent episode on this, the Threat of Thrift.

    Writers in the FT series also note that we have sacrificed "the most important source of happiness, which is the quality of human relationships", allowing our society to become "too individualistic, with too much rivalry and not enough common purpose".

    It's not that capitalism will disappear: "Like democracy, it has serious flaws – but, just as one find faults with democracy, the critics of capitalism will discover that all other systems are worse...  We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values."

    But the key question is still, "If, as it has become painfully apparent, the value system and operating principles that informed the corporate psyche since at least the end of the cold war were found wanting, what should replace them?"

    A model may come from the Scandinavians countries which have "managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world".

    And also in Asia, "executives – with the exception of some family tycoons who use their companies as piggy banks – have generally eschewed the sort of remuneration packages that have become so discredited in the west".

    It's all interesting reading.  But I suspect not half as interesting as what will happen next...

     

     

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    Friday, 27 February 2009

    A recession in Arabia

     

       I've been back in Dubai doing some work, having more meetings and presenting at an HR conference.

    It's my first trip back since November, and the mood has changed dramatically - both in my clients and contacts I met in the UAE, and in participants at the conference who came from across the whole of the Middle East.  It's certainly been a complete reversal since my first, hugely optimistic post on the UAE last April.

    HR people working in the UAE are now very somber, and especially so in Dubai itself.  Local banks haven't been affected in the same way as those in the west, but businesses are still impacted by the fall-off in global trade.  And people are concerned that Dubai resembles a giant pyramid scheme in which people have invested in new developments, sold out and re-invested in bigger opportunities - a model that only works while there remain new bigger developments to invest in.  Across the region, people are particularly concerned because of their governments' lack of transparency - they don't really know how bad things are.  However, in Dubai, there's widespread speculation that Abu Dhabi's latest investment of another $10bn of its oil wealth isn't going to cover the state's debts.

    So UAE firms are taking the same actions the rest of us are, and are facing the same dilemmas too. At the conference, Ahmed Al Khalifa, Group GM Human Resources & Development at Batelco in Bahrain spoke about the need for HR to give the right advice to executives – to be surgical rather than think across the board when planning layoffs – and to look for areas of inefficiency.  And the CEO of Mobily in Saudi Arabia emphasised the need for leaders to role model the right behaviours, those which customers require (linked to Ulrich's leadership brand).

    But I still believe the cloudy view has a silver lining.  Businesses in the UAE have been growing so quickly that their HR teams have had little time to do anything other than recruit.  There's now some slack and spare time in the system and wise HR Directors will use this opportunity to increase the professionalism of their teams, and to prepare for the future (or as Annie McKee said at the conference, to create an architecture for leadership once we come out of these turbulent times).  There's also a greater opportunity to attract talent from the west, who may not have been attracted to travel to the region before, but due to layoffs here, may now have enough incentive.

    At the very least, the recession's made it a lot easier to get a taxi.

     

     

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    Thursday, 26 February 2009

    The Layoff

     

       There's a great case study with commentaries from four experts in this month's Harvard Business Review.  It's called 'The Layoff' and as the name suggests, looks at one organisation about to embark on a redundancy programme.

    Linked to my last few posts, one key theme in the expert, and amateur comments is the need to avoid layoffs altogether if at all possible.  For example, Rob Sutton comments that:

    "Unfortunately, too many executives blindly assume that layoffs are the best way to cut costs. With the exception of a lower-level vice president, none of the managers in this case seriously challenges the notion that 10% of the employees must go. The top executives don’t discuss alternatives such as pay cuts, reduced benefits, unpaid vacations or days off, or incentives for voluntary departure.

    Nor do they consider how long it will take for the savings from the head-count reduction to kick in. A Bain & Company study of layoffs at S&P 500 firms during the 2001 downturn showed that it took them six to 18 months to realize savings from job cuts. And, when calculating savings, most executives fail to account for the cost of recruiting, hiring, and training new people who will be needed when good times return—let alone consider the damage to morale and productivity.  Those costs are often much higher than people imagine, which helps explain why the study also found that firms that made layoffs their last resort and cut the fewest employees performed better than their competitors did."

     

    I agree with Sutton's perspective, and also with those commenters who argue that a combined approach is needed - reinforcing performance management in order to remove lower performers a bit more effectively, looking at slack in the system, putting less strategic projects on hold etc.

    However, one thing I think has been missing from the debate is the need to review what the business is doing, where it's going, and the resources it needs to arrive at its destination.  We always (OK, normally) have a sensible objective in mind when we recruit.  Similarly, we need to have a clear rationale in front of us when we lay off.  We need to understand how much business has or will reduce, and therefore how many people we need to implement a certain business process.  Reductions in force should be driven by the number of people we need to achieve our objectives, not simply by a desire to save costs.

     

     

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    Wednesday, 25 February 2009

    Avoiding redundancy

     

       Most of my recent posts have focused on preparing organisations for the future, once the current recession starts to turn, or at least to stabilise.  But clearly, all organisations have difficult times to navigate until then.

    But this still doesn't mean that they need to react in a knee-jerk manner making savage cuts which will make life more difficult later on.

    There is clear evidence that redundancies cost much more than business leaders sometimes think (for example, see the CIPD's equation to calculate the cost of redundancy) and various models for organisations to use in considering alternatives (for example, see Peter Capelli's advice to use real option theory).

    And there are plenty of organisations that are are being much more progressive in their short-term response to the recession.  In fact, the reaction of my current clients and other organisations I'm in regular contact with, suggests that they're treating this recession in a very different way to how they've responded to previous difficult times.  There are a number of possible reasons for this, some of which are to do with the increasing proportion of work which is knowledge based, and therefore relies on collaboration, innovation, customer service etc - all activities which are hit harder but sudden reductions in resources.

    So organisations are looking at a range of other options, and the CIPD's February 2009 labour market outlook reports that:

    • 50% of organisations have implemented a recruitment freeze
    • 40% of organisations have terminated temporary / agency contracts
    • 19% have introduced more flexible working
    • 17% have cut bonuses
    • 15% have introduced short-time working, and
    • 7% have cut wages.

     

    One organisation that's been written about quite extensively is KPMG.  Their programme, called Flexible Futures, is designed to respond to the collaborative, knowledge based environment I referred to earlier (Head of People for Europe, Rachel Campbell notes, "One of the main drivers is to make sure that should things deteriorate we can keep our team together.  We've invested an awful lot of money in recruiting and developing a talented team, and we want a more positive, responsible solution than redundancy should we be faced with a deterioration."

    Under the programme, KPMG's 11,000 partners and staff have been asked to volunteer to change their terms and conditions of employment for 18 months, enabling the firm to require those who have agreed to the change to work a four-day week or take between four and 12 weeks’ sabbatical at 30% pay, with the maximum annual salary loss capped at 20%.

    It's not a strategy that would work for all organisations.  30% of pay still tends to be quite a bit at KPMG but might not suffice in many others.  And as Management Today points out, "Absenting yourself from the office for a long period (or even one day a week) might keep you out of the firing line - but it also might make your employer realise how easily they can manage without you. KPMG staff will no doubt be worried that they might not have a job to come back to when they get back from their holidays..."

    The key factor that makes it work is trust (the central factor in my change for the future model).  As Campbell notes, "Flexible Futures will stand or fall by the level of trust we have created. Only if our people trust our leaders to exercise the options sensitively, taking into account individual situations wherever possible, will they sign up. It is a great test of the culture we have built."

     

     

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    Tuesday, 24 February 2009

    Scenarios for HR's future in the global reset

     

    I've been posting on how organisations may change, and how HR may need to respond, to what the world leaders gathering in Davos earlier this month referred to as a 'fundamental reboot', or 'global reset', a turning point in the way that the world, and its' businesses, work.   I've also explained how scenarios can be constructed for potential futures by identifying two main dimensions of change, and looking at how these dimensions interact.

    For the global reset, I think the two main dimensions that concern HR are: 1.   whether or not business will bounce back, eg whether stock markets will return to their former levels in 2010, or not until 2020, 2030..., and 2.   whether HR is seen as a critical part of a business' strategy in responding to whatever economic conditions they find themselves in.

    These two dimensions can be drawn up into the following matrix:

     

    HR scenarios

     

    The four quadrants, which I've named after forms of transportation, and have linked to levels in the value triangle, are reviewed further below:

     

    Milk float round (flat lining business environment, no change in the role of people management)

    • Milk floats have a motor (the people in an organisation) - but don't expect anyone to get excited about it!  The focus here is on value for money - increasing the efficiency of the workforce, and of HR, for example by outsourcing.  HR will keep a mainly administrative role.

     

    Yachts at sea (business has bounced back, but people management isn't seen as key to the recovery)

    • Yachts also have motors, but they travel fastest, or at least most excitingly, when they're powered by other forces.  The role of people management and HR is adding value - supporting the business to do what the business needs to do.  Key people management processes will be leadership development, succession planning, talent management, organisation development etc.

     

    Deep sea submarines (business is still flat lining, but organisations realise that if they're going to compete, they can only do so through their people)

    • I like a submarine as a metaphor for this scenario because I can picture the careful use of sonar to identify new opportunities, but also the risky nature of this means of transport.  And it's nuclear powered of course - so maintaining the motor (people) is critical to its use.  The focus of HR is about creating value - finding new ways of doing things based upon the capability and engagement of people in the business.  Key activities will include innovative approaches to reduce costs, perhaps tapping human capital that lies outside of the organisation, the use of performance management, variable compensation etc.

     

    Formula One track (business has bounced back - but needs to be done in a different way - people are king)

    • Brrm, brrm.  The Formula One track scenario is about unleashing potential in people, liberating them to perform and to take advantage of opportunities for innovation and growth.  Organisations are human capital-centric and like the deep sea submarine scenario, HR is about creating value - but here it's about using innovative approaches to provide new opportunities rather than to save costs.  This may include, for example, segmenting the workforce and personalising support to key individuals.  Key activities include developing and implementing employee value propositions; engaging and retaining talent.

     

    The formula one track is the environment I've been writing about in my last series of posts, but I'll leave it to you to judge whether it's likely to come around, and of course different countries, sectors and organisations may find themselves in different places on the chart.  But one thing is clear - the opportunity for HR looks very different in each one.

     

     

    Photo credits: Oxyman, RLing, Kamalsall.

     

     

     

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    Saturday, 21 February 2009

    More on Ctrl-Alt-Del

     

    Over the next couple of days, I'm going to be continuing the series of posts on the 'global reset' that I began earlier this month:

     

    Firstly, I've been thinking about my response to Jo, who challenged me to think more clearly about the changes I believe may be coming.  However, although I've thought about this in a couple of different ways, I keep on coming back to a diagram I used in my Digital HR webcast with Knowledge Infusion,  and another webinar with Kennedy Information, last year.  This is it (slightly updated):

     

    Pressures for Change 

     

    The diagram suggests that two key factors associated with the business context (the competitive environment, and new technology), and another two factors linked to the employment relationship (the demands of the organisation, and changing expectations of the individual) are influencing workforce attitudes.

     

    • In terms of the environment - globalisation; increasing focus and importance given to human capital; and also to internal diversity, supporting increasing external diversity (of customers, partners etc) are leading to increased sensitivity and intelligence in approaches to business.
    • Organisation pressures focus on the increasing proportion of work which is knowledge-based, and also the proportion of knowledge that is included within 'non-knowledge based roles' (it's becoming increasingly difficult to identify roles in which knowledge isn't now a key component).  This means that work is increasingly intangible and leads to increasingly disparate levels of performance between the strongest and weakest employees., therefore emphasising the role of talent management.  And knowledge work can be done anywhere, so virtual teaming is increasingly important.
    • Individual pressures focus on what I call 'millennial expectations' which are especially evident in the millennial generation, but I think are also increasingly prominent in the rest of us as well.  These expectations are supported by a desire to be treated as individuals, with our own identities and needs for self-actualisation, but also a growing need to be part of a community.
    • The key technological change is the growing access to, and comfort with, new media, including social networking, and web / knowledge 2.0 applications, enabling user driven content.

     

    The factors impact on workforce attitudes through customer, investor and stakeholder attitudes (none of us are employees alone), and also by the recession.  This is driving some factors forward (for example - talent management: we need to get much better at understanding what good performance really looks like, and rewarding it effectively), and constraining others (for example, millennial expectations - people are increasingly happy to have a job, and forgetting about their desire for meaningful work).  However, the greatest impact of the recession is to increase the attention we're giving to this whole picture, which has the potential to increase the rate of change, regardless of the strength of the individual forces.

    And here are some of the changes I think may result from these forces.  This diagram is still very much work in progress, but is the best answer I think I can give to Jo.

     

    Social factors slide 3

     

    • Culturally intelligent management is a response to the increasingly global, diverse environments in which many firms now operate.  It implies an increasingly sensitive, empathetic and personalised approach to people management.
    • Conversation based development recognises that the key improvement tool in a knowledge based environment is the conversation that people have which each other, and attempts to increase the quality of the conversation in order to improve business performance.
    • Transparent communication is a result of the use of social media - if you're reading this, you recognise the effect.
    • Team orientation is a response to the increasing expectations of the workforce - it doesn't ignore the individual, but focuses on individual within a social context (individual and team at the same time).
    • All of this is based on relationships based on trust, or it doesn't work at all.

     

    There you go, Jo.  I hope it helps - any suggestions?

    Of course, I still don't know whether the 'global reset' will actually encourage these changes to take place, and will come back to this question over the next few days...

     

     

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    Wednesday, 11 February 2009

    Ctrl - Alt - Del: Your Comments

     

       Thank you for everyone who has responded to my poll, and commented on my recent series of posts on HR's role, City risk taking and the recession:

     

    Most people seem to believe that change is coming. I think this was well articulated by Gireesh Sharma who wrote:

    "A big change is needed, the way Business treats its secrets, especially financial books, the way captains are chosen to helm the business (because of recent CEO failures), the way employees manage their finance (because of foreclosures), and the way salaries and profits are distributed. The change is needed."

     

    However, P Milton worries about whether the people who got us into this situation will be able to steer us out of it:

    "My lack of trust in these 'banksters,' runs deep, and it is difficult at this point to listen to the ones who drove us into the ditch suggesting fundamental change. The sheep is suspicious when it's the wolf doing the suggesting."

     

    Both Jo and Hayli M think the internet is going to play a key role in the change.  Hayli notes:

    "This period will go down as the "Golden Age of the Internet" for many reasons, including the way it revolutionized the workplace."

      

    And, discussing apps like Zumbox, Jo suggests we are on the cusp of commercial change as fundamental as the introduction of the penny post and the limited liability company.

    Anne Marie McEwan and Derek Irvine both agreed that HR will be involved in the change.  Derek noted:

    "The extent of that involvement is reliant on how HR is perceived in the organization. HR must have a respected seat at the executive table to, in your words, 'have the capability to lead this change.' This is certainly not the case in many organizations today."

     

    Anne Marie put it more simply...

    "Does HR have the capability to lead this change? No, it doesn't."

     

    ... and provides some great references, see her comments to my HR in the spotlight post.

    However, Jo very appropriately challenges me that my questions are to general and I need to be clearer about what changes I think are coming, what are the first steps we have to take, and how can we assist each other to take those first tottering steps?

    I'm going to try to answer some of these concerns in my next post (and yes, Jo, I know I need to do my 25 things for you).

    In the meantime, keep your comments coming...

     

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    Tuesday, 10 February 2009

    Sexism in the City

     

       In my last post, I noted that changes in bank bonus structures need to be supported by broader changes in their HR practices and greater diversity in their staffing - particularly in terms of people with different engagement drivers, but also with different perspectives in general.

    Debate on this, in the UK at least, has concentrated on equality for women, particularly at the most senior levels in City firms, which government minister Harriet Harman believes is "top of the list for treating women employees unfairly".  She has therefore asked the Equality and Human Rights Commission to investigate the City's male-dominated culture.

    Management Today reports:

    "Salary was the most egregious difference between the sexes, according to Harman. Female bankers apparently earn on average 40% less than their male counterparts, which is almost twice as big as the overall pay gap in the UK. It’s partly because there are so few women in the upper echelons of the industry: just one in 20 managing directors is female, despite the fact that the industry actually employs more women than men. But even those who make it to MD level usually get paid less – and they’re few and far between anyway. ‘City boards are still mostly a no-go area for women,’ Harman insisted today."

     

    The Equality Bill

    What's behind this situation?  One recent suggestion is that it's because "women are judged to be less visionary than men in 360-degree feedback. It may be a matter of perception, but it stops women from getting to the top."

    However, there are a range of other systemic issues involved as well and I think the government is probably wise to avoid solving these and simply aiming to find ways around them. 

    The main response will come through the Equality Bill (see my previous post on this).  Although this bill has been criticised for detracting from women's existing, undiscriminated ability to reach senior levels in organisations (see here for example), I personally believe it strikes an appropriate balance between doing nothing and imposing more drastic measures on businesses (see for example Thomas Otter's comment on my previous post).

    The key question is, if City firms had included more women in their senior teams, would we have actually avoided the present difficulties?  Referring to this, Sylvia Ann Hewlett notes: "Finance has always been dominated by men and driven by a testosterone-enhanced culture."  She quotes research which suggests that men can tend to be aggressive - and sometime irresponsible - risk takers, and goes on to ask: "if women had been running our banks, might we have avoided the sub-prime mess and the resulting economic meltdown?"

     

    Superwoman Returns

    Responding to a similar question, 'superwoman' Nicola Horlick commented last year that

    ‘‘Women have a totally different approach to life.  They are less concerned about grabbing as much as they can for themselves and have a greater desire to build firm foundations that will endure.  I have absolutely no doubt that the world would have looked totally different if women had been in charge."

     

    Niall Fitz-Gerald, deputy chairman of Thomson Reuters adds:

    "There is a feminine approach to leadership, which is not, of course, confined to women. It is about being intuitive as well as rational. It is about multi-tasking and being sensitive to people's needs and emotions, as well as relationship-building and generous listening."

     

    My initial reaction to Hewlett's question was similar to Nick Jefferson's in his post:

    "The idea that men and male behavioural patterns are to blame for the global economic meltdown smacks of some terribly outdated stereoptypes that should have been left behind in the 70s and 80s.

    My problem is not that this is offensive (although just try replacing the word "men" at every point in this article with your choice of "women"/ "comprehensive school-educated people"/"gays"/"ethnic minorities" if you think it isn't) but rather that it is so sweepingly generalistic as to be ridiculous.

    I have met as many risk-averse men in the City as I have risk-prone men, possibly more. Equally I have met many women who thrive on risk and excitement. To characterise these very human issues as a matter of gender does a disservice to us all."

     

    While these are all good points, Nick (and sorry it took me so long to reply), I still feel there's something in it too.  If City boards had been proportionally staffed by women, I think things might well have turned out a bit differently to the way they have.

    It's a bit like the Equality Bill itself - on the surface it looks wrong, but there's a good chance it might just lead to the right results...

     

     

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    Monday, 9 February 2009

    HR in the spotlight: banking bonuses

     

       I suggested last September that HR, or at least HR practices, are in many ways behind the current crisis.  It was a relatively rare viewpoint at the time and the Bank of England was criticised for 'sticking its nose in where it doesn't belong', when it dared suggest bank's compensation schemes might be partly behind the situation.

    No longer.  Compensation in financial services firms is now headline news.

    Following Barack Obama's lead in capping bonus payments for banks receiving US government support, the UK government is also now seeking to impose pay restraints across large parts of the banking industry.

    This isn't something that any of the UK's main political parties would have contemplated last September, but the public's revulsion of rewards for failure is so acute, it's no longer an issue that can be ignored.

    Of course, the perception that the gap between rich and poor is too wide has been growing for some time.  But it's also clear now that the gap isn't just wide, it's also unjustified - and has been one of the major contributors to our current problems.  And it's not helped by John Thain spending $1.2m on his office renovations, including the famous $1,400 waste basket, as Merrill Lynch went to the wall.

    Barclays, which is to pay bonuses of about £600m has been relatively unscathed, but then it has earned profits of close to £6bn and is cutting bonuses by 50-60% and has announced its own top-level review of its bonus structure.

    RBS is going to have a much tougher week.  The UK's prime minister, Gordon Brown, has already said that he is “angry” that the part-nationalised bank, which has made a £28bn annual loss, is preparing to pay out £1bn in bonuses.

    The bank argues that it needs to make these discretionary payments to retain its best staff.  In the main, this is a red herring - few other banks are recruiting, although there will always be a demand to talent, and Josef Ackermann at Deutsche Bank has noted, for example, that "talent will be happy to work for us".

    The bank also has contractual obligations to pay some bonuses. However, it is possible to argue that the bank basically went out of business when it was taken over, and that without state funding employees wouldn't even have a job, never mind a bonus (see for example, former deputy prime minister, John Prescott's Facebook campaign).

    Of course, most people still understand that an average bank teller has had little to do do with financial malpractices, and that therefore, they should still receive a bonus.  But bearing in mind the above points, these should probably be reduced.

    We'll have to wait and see what happens... legal issues may yet stop the government from making any changes, although they may find a way to override these obligations.

    But the bigger issue is how we ensure bonus schemes are better designed.  It's been announced that both Citigroup and UBS are writing clawback provisions into staff contracts so they can recoup large bonus payments if business performance suffers.  What? - how on earth weren't these provisions included before now?

    HR should never have let this situation develop.  And it's not just an issue of compensation design.  Some banks have refused to see their people as purely money motivated, but most have simply accepted their people are only engaged by high rewards, have offered these rewards, and have continued to recruit people who are motivated in this way.

    A few recent comments in the news help to show how accepting and reinforcing this link has led to a situation in which bankers see high reward as a right, regardless of their business' contribution:

    • On the BBC news: "I deserve my bonus - I've worked hard for it - after all, I only earn £95,000."
    • In the Sunday Times: a Morgan Stanley banker who last year was "paid a bonus of only £2m" now "feels unfairly treated as the bank makes across-the-board cuts, no matter how individual have performed... 'The contract has been broken,' he said".

     

    I think these comments show how far bankers' perspectives have become divorced from the public's. 

    John Hollon at Workforce Management sums the problem up well, discussing Wells Fargo CEO John Stumpf's full-page ads in The New York Times, The Washington Post and The Wall Street Journal:

    "Regular Americans believe that Wall Street bankers are largely responsible for the financial mess the country is in right now. Whether that perception is right or wrong, Stumpf and his CEO friends need to buck up, shut up and be more sensitive to how their business practices might be perceived by the folks on Main Street. This is hardly the time to defend business as usual, no matter how legitimate it might ultimately be."

     

    But it hasn't had to be like this - there is no real reason why bankers need to be paid more that other sectors of the economy.  Not all talented people are money motivated and it's a shame that none of the banks ever looked outside this one stream of employees (leaving aside for a minute the question of whether they really needed talented people anyway ie whether less talented people may have taken more acceptable risks?).

    The key for me, as I've posted before, is the banks' cultures.  Financial services firms need to offer their people a broad and balanced (financial and non-financial) EVP based on a compelling purpose (mojo) which is supported through HR practices including leadership development and succession planning etc.

    So, it's going to be another interesting week.  Tomorrow, former CEO of RBS, Fred Goodwin (who left the bank with a £8.4m pension pot) will be grilled by MPs on how he led the bank to the edge of collapse.

    But given that these are HR issues in the spotlight, where is the HR response on this (from the CIPD, SHRM etc)?

     

     

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