A potted history of work-related ideas and events
The 20th century began in an era where prosperity, as recently fictionalised in television's Downton Abbey, coincided with large-scale poverty and harsh employment conditions. Unemployment was low (only around 3% of the workforce), but so was pay, for very long working hours in often insecure jobs. Factory work, domestic service and farm labouring were the mainstays of employment. And work was mostly hard physical labour, for women and children as well as men. Even after the Factory Act of 1901 the minimum working age was as low as 12.
The death of Queen Victoria in 1901 and accession to the throne of Edward VII marked the start of a process of social reform which sat alongside Edwardian opulence. The establishment by the Pankhursts of the Women's Social and Political Union in 1903 kick-started the suffragette movement, while in the workplace enlightened employers advocated better treatment of workers ('industrial betterment'), partly in response to the wider emergence of trade unionism in the late 19th century and the foundation of the Labour Party (formally established in 1906). A small number of companies began to employ welfare workers, in most cases women, primarily to help oversee the welfare of female and youth employees. London hosted the 1908 Olympic Games.
In the vanguard of workplace reform was Seebohm Rowntree, son of Quaker philanthropist Joseph Rowntree who had improved working conditions in the York-based Rowntree confectionary company. Seebohm Rowntree, an ally of Chancellor of the Exchequer David Lloyd George, also had influence on the People's Budget, introduced in 1909 by Herbert Asquith's Liberal Government. This paved the way for unemployment insurance and labour exchanges to be introduced in Britain for the first time. Also, 1909 was the year of the Trades Boards Act which established separate minimum wage levels in a small number of very low paid sectors of the economy (the system being later expanded into a network of wages councils).
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The second decade of the century brought both fundamental change to the world of work and war to the world as a whole, as well as a new monarch (Edward VII died in 1910 to be succeeded by George V). The mastery of nature by human technology, which had recently taken another major step forward with the arrival of air travel and the motor car, also took a knock with the sinking of The Titanic in 1912.
Two pivotal developments of the period were to influence workplaces for decades to come. The American F.W. Taylor published his Principles of Scientific Management in 1911, ushering in 'time and motion' working and the breaking down of work tasks into distinct elements to boost productivity. Within two years Henry Ford had introduced assembly line production to car manufacture. Both developments were to allow workers to produce more at higher pay albeit at the cost of deskilling and dehumanising of the work process. At the same time, deskilling enabled employers to make greater use of women and youths who could now be hired at lower cost to produce manufactured goods previously produced by men with craft skills.
This heightened the importance of welfare work, providing further impetus to establish the Welfare Workers' Association (WWA) in 1913. Given the predominance of women at the Association's inaugural meeting in June that year - convened by Seebohm Rowntree - it is poignant to note that the same month witnessed the death of suffragette Emily Davidson, who threw herself under the King's horse at the Derby.
The outbreak of the First World War in 1914 brought to an end a brief period of slow economic growth and rising unemployment. Instead, the departure of men to fight accelerated the recruitment of women to production roles, especially in munitions. Consequently in 1916 – a year which saw Lloyd George replace Asquith as Prime Minister in the wartime Coalition Government - the appointment of welfare workers was made compulsory in establishments run by the Ministry of Munitions, with around 1,000 in post by the end of the war. To consolidate this growth the WWA adopted a new constitution and branch structure to incorporate a growing band of local associations and in 1917 renamed itself the Central Association of Welfare Workers (CAWW) which then became the Welfare Workers Institute in 1919.
To discourage strikes and enable the authorities a straightforward means of negotiation with workforces, workers were encouraged to join trade unions as a matter of public policy. Trade union membership therefore doubled from 4 million to 8 million between 1914 and 1919. A parallel development on the employers' side was the establishment in 1916 of the Federation of British Industry (forerunner of today's Confederation of British Industry (CBI)) alongside sector specific federations and the widespread appointment of 'Labour Officers', mostly men, to assist in the management of recruitment, discipline, dismissal and industrial relations at plant level amongst unionised male workers.
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The initial post-war rhetoric of 'homes fit for heroes' soon gave way to severe austerity. The Government took an aggressive approach to reducing war debt by means of drastic cuts in public spending. It was also decided that sterling would be returned to the international Gold Standard exchange rate system at the rate prevailing before the war. This required a very tight monetary policy which together with spending cuts depressed the economy. The unemployment rate increased sharply and remained above 10% for the remainder of the decade.
This was a period of economic and social turmoil, with politics still being strongly influenced by the aftermath of the Russian Revolution. Lloyd George was replaced as Prime Minister in 1922 by the Conservative Party Leader Andrew Bonar Law. Bonar Law, suffering from cancer, stood down as Prime Minister in favour of Stanley Baldwin in 1923. However, a subsequent snap General Election saw Britain's first Labour Government led by Ramsey MacDonald formed in January 1924. But the Labour Government had only a tiny minority of seats and lasted only until October that year, with Stanley Baldwin returning as Prime Minister at the head of a majority Conservative Government.
In industry, national and local negotiations between employers and trade unions were often highly fractious, with attempts to cut pay and increase working hours in coal mining providing the spark that eventually led to the General Strike of 1926. Trade unions had also developed an uneasy relationship with both welfare workers and the 'labour managers' that had evolved from the Labour Officers that emerged in the First World War. The latter were seen as 'bosses' men', enforcing the pay and conditions wanted by business owners, while the former were considered a sop to workers, put in place by owners to limit unrest and pressure for reform.
This was not the most fertile ground for Seebohm Rowntree to promote ideas set out in his 1921 book The Human Factor in Business, notably an end to autocratic management and the introduction of works councils. Nonetheless, the period saw further consolidation of the management profession. The Institute was incorporated in 1924 and became the Institute of Industrial Welfare Workers (IIWW). The decade ended much as it had begun with another bout of economic trouble. The Wall Street Crash of 1929 triggered the start of the Great Depression, a global rather than purely British crisis but one which exacerbated Britain's already severe unemployment problem.
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Britain's unemployment rate soared at the start of the Great Depression to a peak of around 20% in 1932. The political fall-out had seen the demise in 1931 of the Labour Government, which had ruled since just before the Wall Street Crash. But the Labour leader, Ramsey MacDonald, remained as Prime Minister in a National Government of Conservatives and Liberals.
However, the remainder of the decade witnessed a return to economic growth. A fortunate consequence of the deepening crisis was that it led the British Government to abandon the Gold Standard in 1931. The tight money policy of the 1920s was thus replaced immediately by cheap money, fostering a boom in house building, especially in the midlands and southern England, and stimulating consumer-focused sectors of the economy, including the auto industry.
Unfortunately, the boom was not sufficient to offset the impact of global depression and related industrial protectionism on heavy and export-focused industrial sectors such as coal, steel and shipbuilding. Given the geographical concentration of these sectors in northern Britain the first half of the 1930s was therefore characterised by a marked and widening regional 'north-south' divide.
The second half of the decade saw the election of a Conservative Government under Stanley Baldwin at the end of 1935, and in 1936 the death of George V, the abdication of Edward VIII and the accession to the throne of George VI. However, the underlying economically divided state of the nation was exemplified by the plight of those on the Jarrow March of 1936, who arrived in a relatively prosperous London and the south-east from a very depressed north-east. Only later in the decade when the approaching Second World War required increased Government spending did the northern economy recover, by which time Neville Chamberlain was Prime Minister having replaced Baldwin as Conservative Party Leader in 1937. The fact that, unlike in many continental European countries, the worst aspects of 1930s depression was regionally concentrated in Britain rather than widespread did at least help prevent Oswald Mosley's fascist black shirts from gaining the kind of mass popular support similar movements enjoyed elsewhere.
Despite evident macroeconomic and regional difficulties, many employers in the new industries emerging in the more prosperous parts of Britain began to experiment with new management techniques to recruit, retain and motivate staff. And although Taylorism and Fordism remained preeminent in the general approach to managing workers, there was growing interest in the so-called 'human relations movement' led by management thinkers such as Elton Mayo in his 1933 study The Human Problems of Industrialised Societies. Large corporations, especially in the newer industrial sectors located in areas where labour market conditions were buoyant, also started to see value in improving employee benefits, such as pensions and paid holidays.
It is perhaps no coincidence that there was a coming together of the various professional strands of welfare work and labour management when in 1931 the Institute became the Institute of Labour Management reflecting the changing nature of the function. The Institute's journal was retitled 'Labour Management' and the Irish branch was formed in 1938.
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The early years of the decade saw unemployment fall to rates not experienced since the First World War, with dealing with labour and skill shortage a major policy priority for the wartime coalition, led from May 1940 by Winston Churchill. Full-time personnel staff was in greatly increased demand, with the Government insisting on their employment in war-related production activities.
This set the tone for much of the initial post-war era, the growing personnel profession becoming more significant across the economy in both large private sector companies and public corporations. Personnel departments became a distinct feature of the workplace. In1946 the Institute of Labour Management changed its name to the Institute of Personnel Management (IPM).
The economic blueprint for peacetime prosperity and social welfare was set out in the 1942 Beveridge Report – also incidentally influenced by Seebohm Rowntree, – and the 1944 Employment Policy White Paper. At the same time, in 1943 Abraham Maslow published his Theory of Human Motivation, setting out his now well-known 'hierarchy of needs' that govern amongst other things what people want from their work.
However, the post war blueprint was implemented not by wartime prime-minister Winston Churchill but instead by the Labour Government of Clement Atlee, elected in June 1945. As part of the corresponding post-war social settlement the Government nationalised key sectors of the economy and established the NHS, further increasing the role of personnel professions in handling public sector recruitment, retention, payroll, training, and industrial relations issues.
Full employment was maintained but post-war austerity and rationing dampened living standards, though London hosted the Olympic Games for the second time in 1948 (the so-called 'Austerity Games'). The Retail Prices Index was introduced as a measure of price inflation in 1947, to help policy makers assess inflationary pressure in the economy.
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The Atlee Government was re-elected with a tiny majority in 1950 and presided over the Festival of Britain in May 1951 before Churchill was returned to office as Prime Minister in October 1951 at the head of a new Conservative Government. Within months Britain also had a new monarch following the death of George VI in February 1952, and the accession of Queen Elizabeth II.
In 1952 Britain saw the first dip in economic growth since the end of the war combined with inflation at over 3%, the rate having been raised by the effects of the Korean War. However, the slowdown was very short-lived and full employment continued to be maintained. Indeed, labour shortages resulted in the first large waves of immigration to Britain, the initial 'Windrush' immigrants who began to migrate from the West Indies in the late 1940s being joined by Asian immigrants from other parts of the former Empire. Immigration brought economic benefits but also gave rise to social tensions, as evidenced by the Notting Hill race riots in 1958.
While political change had seen Churchill replaced as Prime Minister by Anthony Eden in 1955 and then, after the Suez Crisis of 1956, Eden replaced by Harold Macmillan, the late 1950s were a prosperous time. Employment conditions improved, with workers given greater statutory rights to paid holidays. By 1957 Macmillan famously remarked that Britain had 'never had it so good'.
However, this did not mean that life was getting any easier for economic policy makers. The Government started to become ever more concerned about labour productivity, pay pressure, inflation, and the trade deficit. All of this had implications for the conduct of workplace management which was to become a central focus of economic and political attention in the following two decades (something that Seebohm Rowntree, who died in 1954, might have envisaged). In response, in 1955 the IPM built on its initial post-war theme of raising the standard of the profession by introducing its own external examination scheme and by restricting entry to full membership to fully qualified or practising personnel officers over 35 with several years' experience.
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Prime Minister Harold Macmillan, rocked by the Profumo sex scandal and internal policy dissent in the Cabinet, was eventually replaced as Conservative Party Leader in 1963 by Sir Alex Douglas Hume. But Hume only lasted a year until the 1964 General Election when Harold Wilson became Prime Minister at the head of a new Labour Government. This was also the era when the Cold War was heightened by the Cuban Missile crisis in 1962, and which saw the assassination of United States President John F. Kennedy in 1963, and the start of the Vietnam war which was to last into the 1970s.
At home, the late 1950s and early 1960s were bedevilled by 'stop go' economics, with periods of economic growth continually followed by slowdowns as governments had to cut spending, or raise taxes and/or raise interest rates to combat rising inflation or balance of payments problems. Labour proved little better than the Conservatives at dealing with this, having eventually to resort to a substantial devaluation of sterling in 1967. Meanwhile, industrial unrest was fuelled by a broader international social foment of the period, exhibited by the 1968 student riots in Paris and anti-Vietnam war protests on university campuses in the United States.
On the economic front, British governments instead tried a mixture of voluntary and statutory attempts to control pay and prices in the form of incomes policies. These often involved quid pro quos, such as offering workers new legal rights (for example, the 1960s saw the introduction of rights entitling workers to employment contracts and redundancy payments).
The preferred structural solution to stop-go was increased productivity engendered by new technology; famously referred to by Harold Wilson as 'the white heat of the technological revolution'. Management thinkers were starting to consider the workplace implications of technological developments too. Indeed, Peter Drucker in his 1959 study The Landmarks of Tomorrow had already coined the term 'knowledge worker'. But while successive governments had sought to achieve this with industrial policies and a levy-grant system to boost workplace training, progress was stymied by poor workplace management and adversarial employment relations. Although 'productivity agreements' were common, these were often little more than a cosmetic device for enabling employers and staff to get round pay norms set by incomes policies.
This so-called 'British disease', fostered by fragmented bargaining systems which tended to empower trade union shop stewards and exemplified by strikes and union work to rules, thus served to restrict productivity growth and trigger unaffordable pay increases. The disease and the inadequacy of managers and workers is viciously lampooned in the 1959 comedy film I'm All Right Jack. However, as the more recent 2010 film Made in Dagenham – based on the 1968 anti-sex discrimination strike by female Ford plant workers – shows, industrial action could have a positive outcome. The Dagenham strike gave impetus to the Equal Pay Act of 1970 (the terms of which were implemented in 1975). This also reflected an increase in the number of women in the workplace with changing social attitudes and the advent of the contraceptive pill offering women greater economic freedom and choice.
A Royal Commission under Lord Donovan, which reported in 1968, was critical of employers and unions, and recommended a greater role for personnel management in the conduct of industrial relations. However, the efforts of some Labour ministers, notably employment secretary Barbara Castle with her white paper In Place of Strife, were torpedoed by political colleagues in 1969.
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The Wilson Government, having been re-elected in 1966 with an increased majority, lost some credibility for economic management following the 1967 sterling devaluation, and in turn lost the 1970 General Election to Edward Heath's Conservatives.
The Heath Government initially adopted a market-oriented approach to tackling the British disease but was forced by economic difficulties into a u-turn and resorted to the same kind of corporatist measures applied by previous post-war administrations. Incomes policy deals were thus struck between government, employers and unions to combat inflation. This, however, proved an almost impossible task in the context of the Oil crisis of 1973 and trade union militancy, especially in coal mining, which resulted in strikes, electricity blackouts and the three-day week. The Heath Government was defeated in the first of two General Elections in 1974 which saw Harold Wilson and Labour return to government.
Perhaps the most notable achievement of the Heath Government was successful negotiation of British entry to the European Common Market (which was to become the European Union) in 1973, which was subsequently ratified by a referendum in 1975. This was to have profound implications for British workplaces insofar as workers came to be covered by a variety of social protections governing employment rights. There was also new domestic UK employment legislation covering sex discrimination, unfair dismissal and trade union activity. And the arrival in Britain of thousands of Ugandan Asians, expelled by the regime of Idi Amin, added another dimension to increasing ethnic diversity.
At workplace level personnel professionals were developing new motivational techniques derived from management theory, such as job enrichment and 'motivator-hygiene' theory, first advanced by Frederick Herzberg beginning with his 1968 publication One More Time, How Do We Motivate People. It was also somewhat more common for managers to specialise in recruitment or reward as well as in staff training. However, day-to-day necessity meant that most personnel managers became focussed either on developing processes and procedures needed to comply with emerging employment regulations, or on dealing with the complexity of industrial relations in an era of workplace conflict and incomes policies.
Harold Wilson stood down as Prime Minister in 1976 to be replaced by James Callaghan. But the Callaghan Government proved no better than that of Wilson or Heath in combating the 'stagflation' – that is simultaneous slow growth, rising unemployment and rampant inflation – that came to characterise the 1970s. The resulting pressure on the public finances meant the Government had to ask for financial support from the International Monetary Fund, though this was dependent on agreement to limits on public spending. By the late 1970s unemployment, and especially youth unemployment, was once again becoming a major concern, angst about which was conveyed amongst other ways in the music of the punk rock movement.
Fiscal austerity made it increasingly difficult for the Government to get agreement from the public sector trade unions on pay restraint, exemplified by the Social Contract, as part of anti-inflation policy. This eventually culminated in a rash of strikes in the public sector that in late 1978 and early 1979 came to be labelled 'The Winter of Discontent'. This provided the political context which saw Conservative Party leader Margaret Thatcher enter Downing Street in 1979 as Britain's first woman Prime Minister.
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The Thatcher Government broke the post-war political consensus by prioritising low and stable inflation, achieved by controlling the supply of money, rather than full employment as the principal objective of macroeconomic policy. Raising economic growth and cutting unemployment were instead the target of structural or supply side policies, such as de-regulating markets, privatising state-run enterprises, switching more of the burden of taxation from incomes to VAT, abolition of the wages councils, and curbing the power of trade unions to affect pay bargaining or prevent managers from changing work practices.
The initial combination of tight monetary policy, tight fiscal policy and economic restructuring was a major recession, lasting from 1979 to 1981 and soaring unemployment. Unemployment rose above 3 million (close to 12%), higher than at any time since the 1930s depression, and remained at around that level until 1986. Manufacturing bore the brunt of job losses, partly because tight monetary policy caused the value of the pound to rise which priced UK goods out of global markets, and partly because the recession coincided with greater use of advanced robot technology and increased competition from emerging economies. Society became imbued with a strong sense of economic insecurity and it was commonly said that people could 'no longer expect a job for life.'
The efforts of unions to counter the impact of global competition and technology on jobs clashed with the Thatcher Government's aim to fully embrace market forces by weakening union resistance. That resistance was broken most visibly and violently in the Miners' Strike of 1984-85 and the Wapping newspaper dispute of 1986. Broader social unrest was in turn witnessed in a series of inner-city riots, often involving conflict between the police and disadvantaged ethnic minority communities. Trade union membership, which had peaked at around 12.2 million in 1980, entered what was to prove the start of a period of continual long-run decline (the number falling to less than 6 million by 2011).
As in the 1930s, the 1980s witnessed a widening north-south divide. Recession, increased competition and technology hit manufacturing and heavy industries, concentrated in the north of Britain particularly hard. By contrast economic recovery, boosted by reductions in interest rates, a boom in house prices and a surge in spending on consumer services, favoured the south. The growing economic power of London and the south-east was symbolised by The Big Bang financial deregulation of 1986 and fictionalised by Harry Enfield's comedy creation Loadsamoney, an employed brash southerner who delighted in flashing his wad of banknotes at poor, jobless, northerners.
Once the economic recovery gathered pace more generally, resulting in a sharp fall in unemployment from 1986 onward, personnel managers in the private sector schooled in the strife ridden post-war era of collective industrial relations and pay bargaining, made full use of the structural and legislative changes taking place.
There was a clear strategic decision to depart from traditional collective procedures and instead focus on employees as individuals. British managers also started to adopt the new US fashion for calling personnel management Human Resources management (HR or HRM). This combined the concept of treating employees as a resource with investment potential with that of treating employees as people who needed to be nurtured and motivated. More and more HR professionals started to specialise, focusing on specific roles in training, reward or diversity. The development of the European Community plus the emergence of multi-national corporations operating in different countries in turn set in train a shift toward what would later be labelled 'global HR.'
HR managers led HR departments and started to introduce individual performance appraisal, and individual performance-related pay conditioned by market forces rather than national or sectoral collective agreements, and strong>direct communications between front-line managers and their employees. Organisations also started to be influenced by the management practices of overseas businesses, especially in the car industry, that started to invest in the UK. Increased attention was paid to the quality movement inspired by management writers like William Edwards Deming whose 1982 study Out of the Crisis drew on his post-war experience of Japanese management practice. Concepts like lean production and just-in-time systems entered the management lexicon.
British employers and HR gurus started to talk in terms of 'flexible firms' comprising a core of workers on permanent contracts working alongside armies of temporary staff and self-employed contractors. Charles Handy published his study on The Future of Work in 1984, forecasting that fewer people would have a single employer but instead be 'portfolio workers' performing jobs for a number of different employers. The shift of employment from manufacturing to services also shifted the gender and hours balance of the workplace, with women taking advantage of the greater opportunity to work part-time and workers in general more likely to be employed to work flexible hours rather than on a traditional 'nine to five' basis.
Government and employers claimed that greater labour market flexibility explained why unemployment started to fall rapidly from 1986 onwards. Unfortunately, however, as the decade drew to an end, economic recovery once again turned into an unsustainable inflationary boom (nicknamed the Lawson boom after the then Chancellor of the Exchequer, Nigel Lawson). And as usual a bust was soon to follow.
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Without an incomes policy to combat rising prices the Thatcher Government instead in 1990 decided to fix the value of the pound and set interest rates at a relatively high level within the constraints of the European Exchange Rate Mechanism (ERM). The result was a depression of demand which resulted in recession. Alongside political turmoil caused by the Government's plan to replace the household rates system of local taxation with a poll tax, this marked the end of Mrs Thatcher's premiership. Following a Conservative party leadership election John Major became Prime Minister in November 1990, just prior to Britain's involvement in the first Gulf War with Iraq. He remained in Downing Street after securing victory in the 1992 General Election despite the weakness of the economy.
The recession of 1990 to 1992 not only saw unemployment once again rise to around 3 million but also coincided with management thinking that was to find expression in Michael Hammer and James Champy's 1993 publication Reengineering the Corporation. Restructuring, outsourcing, offshoring of jobs to lower-cost locations abroad and downsizing became common – albeit somewhat euphemistic - management buzzwords. This was most obvious in the private sector but the public sector was not totally immune, with jobs often being outsourced to private sector organisations as part of a parallel management drive that came to be known as Reinventing Government.
This was clearly a propitious time for the IPM which from the mid-1980s onward had been debating its direction and that of the HR profession in general. The key question was should the Institute grow or consolidate? A growth strategy was pursued, including a merger in 1994 between the IPM and the Institute of Training and Development (ITD). The result of the merger, the Institute of Personnel and Development (IPD), represented all strands of what more and more commentators were starting to call the people management profession.
The IPD was able to take advantage of a growing body of research-based thinking on the strategic role of HR, such as that set out by David Ulrich in his 1996 book Human Resources Champions, as well as numerous independent academic studies, often instigated by the IPD itself, highlighting the link between HR practice and organisational performance. HR professionals were to be agents of change and strategic business partners, sitting on company boards and working alongside line managers, in addition to ensuring basic administrative tasks were effectively fulfilled. Indeed, many organisations outsourced basic personnel tasks such as record keeping and payroll management, which could increasingly be performed off-site by contract staff using new IT technologies, leaving core HR to focus on strategic matters.
Ironically, therefore while the IPD was growing, the more general vogue was thus for slimmed down decentralised organisations in both the private and public services. Organisations developed flatter management structures, one result being that in the 1990s recession white-collar as well as blue-collar redundancy became a more commonly observed feature of the economic and social landscape. The Government was itself in the process of starting to cut almost 900,000 public sector jobs but this was more than offset by job creation in the private sector. The private sector jobs boom began at the turn of 1992 to 1993, aided by sterling's ejection from the ERM in September 1992 which resulted in a fall in the value of the pound and lower interest rates.
In a significant development, in signing the Maastricht Treaty which established the European Union in 1992, the Major Government secured a UK opt-out from the so-called Social Chapter covering EU employment regulation. However, the UK was required to implement the Working Time Directive, which was introduced in earlier legislation and began to influence working hours in the UK from 1998 onward.
Although the economy continued to grow rapidly after 1992, the experience of ERM membership and exit tainted the Major Government's reputation. The 1997 General Election thus saw a landslide victory for the Labour Party and the arrival of Tony Blair as Prime Minister.
The national mood grew sombre in the autumn of 1997 following the tragic death in a car accident of Diana, Princess of Wales. But otherwise the general atmosphere was one of optimism. The Blair Government maintained the economic momentum of the later Major years and also pursued a 'fairness at work' policy agenda, including signing up to the EU Social Chapter and the introduction of a series of new employment rights. The latter included the UK's first National Minimum Wage which became effective from October 1999.
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What initially came to be known as the 'nice' decade for the economy ('none inflationary, continual expansion') proved to be a period of sustained economic growth despite external shocks to the system caused by the Asian economic crisis of the late 1990s, the bursting of the dot.com investment bubble in 2001 and the destruction by terrorists of New York's World Trade Centre on 11 September 2001. The 'nice' years witnessed a return to near full employment (the unemployment rate eventually dropped to around 5%) and led to greater strategic emphasis on the importance of making effective use of people as a source of competitive advantage.
Management thus started to combine individual performance management with what have come to be called employer branding and employee engagement strategies as means of attracting, retaining and motivating staff. Policy makers likewise began to stress the importance of workplace consultation procedures and how new employment rights to improve 'lifestyle flexibility', especially those helping families better reconcile work with child care responsibilities, offered a 'win–win' outcome with employers as well as staff benefiting through reduced labour turnover and higher workplace productivity.
Policy reviews were even conducted into employee engagement and improving health in the workplace. The subject of stress at work became a focus of attention as the downside as well as advantages of rapid advances in communications technology became apparent. Email and mobile phones greatly aided work and meant workers could work at home as well as in the office. But this presented a challenge to managers who not only had to understand how to manage staff working away from the office, but also how to protect workers from information overload and a blurring of home life and work life. And organisations were starting to come to terms with the arrival of social media, such as Facebook and Twitter, in the workplace.
Fierce competition for staff in a tight labour market in turn led many organisations to develop 'total reward' packages (mixing pay and other financial benefits with lifestyle benefits such as corporate gyms) to attract and retain staff in what, following a McKinsey study, came to be known as 'the war for talent'. Labour and shortages were eased by record immigration, especially that from Central and Eastern Europe following EU enlargement in May 2004.
It is perhaps no coincidence that in this employment context the IPD, having achieved unity amongst the personnel, training and development traditions within a single institute, set about securing chartered status. This was granted in 2000 and the CIPD came into existence from 1 July of that year. On 1 October 2003, the CIPD awarded chartered status to over 37,000 full Members, Fellows and Companions of the Institute.
In such beneficial economic circumstances, the Blair Government was re-elected with large majorities in both 2001 and 2005. However, Blair's economic position was undermined by a combination of internal political wrangles within the Labour party and lingering public concern about the wisdom of the Iraq War which had been launched in 2003. Tony Blair was eventually replaced as Prime Minister in June 2007 by his long-standing Chancellor of the Exchequer, Gordon Brown.
Within months however, the economy was starting to be rocked by the initial signs of an emerging crisis in the global banking system and the start of what was to become a major 'credit crunch' as financial institutions cut back on lending in order to recoup financial losses. This first became apparent in the fall and subsequent nationalisation of Northern Rock in September 2007. Almost exactly a year later the collapse of Lehman Brothers in the United States led to the nationalisation of the Royal Bank of Scotland and Lloyds TSB.
The resulting global economic recession saw the UK economy suffer the deepest and longest recession since the 1930s. To combat this and prevent an even deeper depression the Bank of England slashed interest rates to a record low level and started printing money to support demand in the economy (a process known as 'quantitative easing'). The Government in turn increased public spending in an effort to support the financial institutions and demand in the economy more generally. With recession causing a drop in tax revenues this resulted in a sharp rise in the fiscal deficit (the gap between Government spending and tax revenue) to a post-war record, and mounting public debt.
The recession was severe enough to cause unemployment to rise from 1.5 million (around 5%) in 2007 to 2.5 million (around 8%) in 2009. However, unemployment did not rise as much as expected because cuts to the pay and hours of work of people in employment took much more of the strain of the economic downturn than in previous decades, thereby limiting job losses. This in part reflected the efforts of HR professionals to persuade businesses to minimise redundancies in response to the recession in order to keep hold of skilled workers, though it also meant that employers had to persuade employees of the need to accept less reward in order to keep a lid on total staff costs. The less palatable side effect was that holding onto workers meant organisations cut back on recruitment, making it harder for young entrants to the jobs market to find work and thereby causing a relatively sharp increase in youth unemployment to above 1 million.
The recession and the burden on the public finances came to dominate the May 2010 General Election which resulted in a hung Parliament, with neither Labour nor the Conservatives winning enough votes to form a majority Government. The Conservatives instead formed a coalition Government in alliance with the Liberal Democrats, with Conservative leader David Cameron as Prime Minister and Liberal Democrat Nick Clegg his deputy. Although the economy had started to grow, and unemployment to fall, the coalition's policy of fiscal austerity, combined with a squeeze on real pay for people in work and uncertainty in the business community about the outlook for global economic growth, resulted in a double-dip recession in 2011 and 2012.
Fiscal austerity also meant the loss of more than 400,000 public sector jobs between 2010 and 2012. Angry demonstrations by students over higher tuition fees and strikes by public sector workers created an air of social unrest which was further heightened by widespread urban rioting in the late summer of 2011. Yet despite this the labour market appeared to perform remarkably well, with more people in work overall and unemployment starting to fall once more in 2012. Moreover, the nation received a psychological boost from the 2012 London Olympics, which was generally seen as a management and organisational success as well as a sporting triumph. By the end of 2012 the HR community thus looked toward the CIPD's centenary year of 2013 in the knowledge that economic times remained tough but also with the hope that things might be starting to get a little better.
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