Date: 15/12/08 Duration: 00:18:28
Looking ahead to 2009, Jackie Orme, Chief Executive of CIPD, John Philpott, CIPD Chief Economist, Liane Hornsey, Google’s EMEA HR & Staffing Director, Satish Pradhan - Executive Vice President Group HR Tata Sons and Alex Wilson - BT's Group Human Resources Director, discuss what is in store for HR and how employers can prepare for upcoming challenges and opportunities.
Philippa Lamb: Hello and welcome to our first podcast of 2009 where we’re going to be taking a look at what’s in store for the year ahead.
To begin with we’ll look back at the events of the past year, and to kick us off, here’s the CIPD’s Chief Economist, John Philpott, summing up 2008.
John Philpott: The year turned out pretty much as CIPD was expecting. At the time we were seen as relatively pessimistic in suggesting that this would be the worst year for jobs in the UK for a decade; if anything, it’s been worse than we were expecting. It has been the worst year for jobs. Unemployment’s already up towards two million, which is what we were expecting. If there’s a difference between what happened in 2008 and what we were expecting then for 2009 is that now we reckon 2009 is actually going to look a lot worse so there’s even more bad news to come.
PL: We have seen a raft of measures from government to try and contain the economic situation, do you think they’ve done enough?
JP: Well, there’s a global problem here and governments all around the world are essentially throwing money at the problem. Central banks are also cutting interest rates. In principle the action that they’re taking should work, the problem is we live in uncertain times, unprecedented financial difficulties, and there are question marks over the effectiveness of policy responses.
PL: Looking specifically at the measures government has taken, which were aimed at helping employers and working people, have they done enough there do you feel? Has it been helpful the things they’ve come up with?
JP: There are two types of approach to stimulate jobs. One is indirectly by having an impact on the demand for goods and services and we’ve seen quite a generous cut in VAT – it’s not clear how much of a stimulus effect that will have. What government’s also doing is increasing the amount of money its offering businesses and people at risk of losing their jobs. Rapid response approaches that had previously been used simply for large scale redundancies are now going to be spread much more widely and people who are at risk of being put onto the unemployment queue are going to be given more assistance with retraining, job search, all of those sorts of things. Even if that doesn’t help them find a job immediately, it increases their chances of getting one relatively quickly when the economy recovers.
PL: You can read more of John’s analysis and his economic predications at cipd.co.uk/labourmarket.
Next, I talked to Jackie Orme, the CIPD’s own Chief Executive. Before she joined, Jackie had a successful career in HR, most recently at Pepsi Co and I asked her how she’d be preparing for the year ahead if she were still running an HR department now.
Jackie Orme: It’s a really good question isn’t it? I think there’s no one answer on this but I think there’s a couple of things that I would say have gone to the top of the list for me if I was still in a big HR role. The first one is cost and cost effectiveness has clearly just gone shooting through the roof. Now it should always be a part of the bread and butter for HR people but absolutely I think it’s gone up in terms of focus and so just stepping back and figuring out even if there are five things which are a good idea to do next year, what are the one or two that you really want to protect and that you really want to keep in place? For the business in the longer term recognising that some of the short term imperatives are going to mean that the funds to do things are just not where they would normally be. The second thing I think you touched on is I’d be paying a lot of attention to my team because ultimately the HR team need to provide a steady hand through, what for some people will be a crisis and for some people will be more business as normal, but for those people who are concerned about what’s coming, for those organisations where there is bad news ahead that the tone and the nature of the HR leadership is really going to make the biggest difference between how those changes get implemented and how employees feel about them.
PL: Of course, there’s uncertainty across many sectors and I spoke with BT’s Group Human Resources Director, Alex Wilson, and I asked him what he expects to be focusing on in 2009.
Alex Wilson: I think the big challenges for us I would say are three.
One we are leading the debate and the actions within the company to appropriately size the manpower of each of our market segments and that’s nice jargon. What it means is expand but don’t add too much overhead ahead of your business in the expansion areas because Europe for us, although it might be a challenge is still going well, Asia’s going very well, the US, all those businesses. In the UK here we’re going to have to lean-size or downsize, we’re going to have to make sure that during tough times, which I foresee and I think we foresee as a company, do you actually take the opportunity to lean-size the organisation, make sure you’re fit? I mean I’ve lived through small recessions and it is a great opportunity, if you take it and do it professionally, to eliminate fat from your organisation that may have built up over time. So I think that’s one; that’s quite a hard edged sort of objective.
The second one is communication with the organisation. This is a time of uncertainty anywhere and one of the questions in this morning’s session actually related to that, how do your employees feel? Do they worry they will have a job tomorrow? A core part of HR is step up the engagement of any company of the employee workforce now, tell them exactly what your strategy is, what has changed, what is an emphasis, be transparent, be honest and if you can do it and you’re a strong enough company, give them that reassurance but without denying the reality of the challenges that exist in the markets in which you operate, so I think there’s another big piece there.
The third is again it’s an opportunity. It’s an opportunity to pick up talent. This is, again, a time where you can display to your own talent the opportunities you have as a company but also look at other companies who may be less fortunate and may struggle and to actually acquire talent from those companies. So these are, as well as challenging, very opportunistic times.
The fourth point – I did say three, but the fourth – is to display to the organisation as a whole you’re still investing in the right things. So, I think those are the three or four priorities for us, in the specific environment in which we’re in and I think we’ll develop in the next few months.
PL: Jackie Orme has experience of working in both public and private sector so I asked her what her extinct was about how organisations had been coping so far in these difficult times.
JO: I notice a real difference in this downturn versus the early nineties. There’s a much more balanced approach to both recognising that organisations need to be set up structurally and financially for success but that they want to retain the engagement of their employees and the trust of their employees through this, so I haven’t seen the same level of perhaps knee-jerk reaction that we may have seen in the past. I think a lot of employers are bringing a very balanced short and long term look to what’s going on and they care about how their employees are going to regard them once the good times set in again.
PL: If you remember, industrial action was the focus of our last podcast and predictions were made of a surge in industrial action during a recession but could the reverse, in fact, be true? Might the worry of redundancy and unemployment mean that peoples main focus is to keep their jobs? I put that to John Philpott.
It seems to me that peoples expectation of industrial action next year have levelled out, they’re not quite so anxious about that prospect as they were perhaps only three to six months ago.
JP: I think the recession is likely to put industrial action on the backburner, but only on the backburner. If employers don’t take action in the depth of the recession to engage with their staff and keep them onboard there’s a risk that grievances will build up and then the likelihood is that we will see the industrial action that’s feared when the good times come. That would be the last thing that you’d want in an economy that’s recovering because you’d want everybody batting for the UK and if we have industrial action that won’t be the case.
PL: When I spoke to BT’s Alex Wilson at the Annual Conference in Harrogate earlier this year I asked him for his thoughts about industrial relations over the next 12 months.
AW: I think some of the debates are going to become more challenging that’s for sure. We genuinely have a very positive and constructive relationship with the two groups. They are a professional but very commercial orientated group who understand that the health and the wealth of the company’s beneficial to their employees/their members so that’s constructive. We are going to have to look at some areas like downsizing some of our more traditional products or services and we are going to have to look at things like the cost of the pension scheme to the company and its sustainability because we don’t want to close it, and they are going to become challenging issues. We haven’t seen industrial action since before my time so it’s maybe ten to 17 years, but yes you’re going to have to move into slightly more challenging arenas in the next 12 to 18 months. But with the right communication, the right transparency, the right justification you can normally work through these things with some degree of angst but success; you don’t have to go for confrontation. It’s not necessary. I’ve got some hope in conference that between me and my team and the union officials we can manage this process successfully.
PL: In the weeks following my conversation with Alex, BT did, indeed, announce that it expects to make significant job cuts in the coming months, the majority of these are likely to be agency and contract staff including offshore workers. The company did say that job losses weren’t a direct result of the economic downturn, more a case (as Alex explained to me) of becoming leaner in preparation for leaner times.
Next, I turned to a very different organisation. I spoke with Satish Pradhan, Executive Vice President of group HR for Tata Sons, which is part of the multi-national conglomerate Tata Group. I asked him what he expected the coming year to mean for his role.
Sadish Pradhan: I expect to spend physically doing the same things that I’ve been doing but in the context of ensuring that the institutions that we have and the institution of the Tata Group is more adapted and moving towards the kind of sustainability that is needed, for the future, and this necessarily means at all levels being cognisant of three important aspects of our existence. The community, the environment and the economic viability of what we do. Increasingly at all levels we will need to fold these into the way we do every transaction as much as every strategy that we consider. So, from the highest level of organisational thinking and perspective to the simplest transaction that we perform, these three must inform the perspective with which we undertake what we undertake.
PL: The focus for many practitioners is going to shift in the coming year, but what about the CIPD itself? I asked Jackie Orme about its place in changing times.
It’s a testing time for the CIPD isn’t it? Do you feel that the role of the organisation is shifting slightly?
JO: The role of the organisation continues to be about the advancement of the HR profession and it’s the advancement of the HR profession in order to build sustained performance in organisations and I think that hasn’t shifted. I think it’s the day to day content, the day to day questions that members want to know about. The day to day issues that they’re dealing with that’s shifting and that’s changing. I’ve said this reasonably consistently (I said it at Harrogate), the trick for us is to know and to understand what our members and people in HR practice want and need at or before the time that they know they want or need it and I think that’s probably got dialled up in importance at the moment because the context that we’re all working in is changing so fast. Two or three months ago it looked very different from how it looks now. I think it’s less about the role of the organisation changing, I think it’s about the speed of response in such a fast changing environment that we have to really put at the fore, if we’re going to deliver on that promise, that commitment that we’re going to give our members and people in HR practice what they want and need at or before the time they know they want or need it.
PL: One organisation that seems to be weathering the economic storm pretty well so far is Google. I asked their HR and Staff Director for Europe and Middle East Asia, Liane Hornsey, whether like many organisations they might be consolidating in 2009.
Liane Hornsey: I very much doubt that Google will be consolidating. I think there’s a lot more in terms of geographic and product expansion for us. So no, I think my agenda next year is probably going to be bucking the trend in terms of the HR agenda, it’s definitely going to be much more about expansion. Clearly one of the things that is always important for anyone working at Google is the employee engagement piece. We work very very hard in having what we consider to be an incredible culture and that will always be core to everything I do, so really that’s what I’ll be about next year. It’ll be a bit of a difference from many other people I think.
PL: So, what will be Google’s main focus?
LH: The big agenda item for me is much more around the development of our existing employees – we call them Googlers – and we have some phenomenal people. We hire very talented individuals and I think much of what I’ll be doing over the next 12 months is to make sure that those people have really clear and broad development paths. We’ve grown very considerably through hiring from outside, I think now is the time to really develop our people into more senior roles and hire from outside at the more junior level with more graduates. We’re in a bit of a moment of change in terms of our strategy in terms of growth so, for the first time ever, we’re looking really seriously at hiring big big numbers of graduates so that we hire at the more junior levels and we’re looking to promote from within. That whole talent management succession planning development agenda is tremendously important to us. I’ve gone on record several times saying it’s very difficult for me because in many organisations you work on maybe 10% to 20% high potential people. I genuinely believe in Google you’re working on 80% to 90% high potential people because we’re so careful about how we hire.
PL: Clearly a recession is affecting different organisations in a variety of different ways but CIPD members can share their experiences and discuss the issues they’re wrestling with in our online discussion forums, so log onto cipd.co.uk/community, and to get that conversation going I asked Jackie Orme about her fears for 2009.
JO: I think that we talk ourselves into a worse place than we need to be and I think that’s actually a wider issue than HR. There has been a huge amount of talking ourselves into the place that we’ve gone to and I’m sure that at some point in time somebody’s going to do a case study on the role of the media in this particular economic crisis and how it’s played and how it’s influenced consumer behaviour, government behaviour and just the behaviour more widely in organisations. Let’s go at the pace we need to go at and let’s not over-anticipate the bad news or the future. It doesn’t mean we don’t have to plan ahead and do some scenario planning, absolutely we do, but I think not talking ourselves into a worse position.
I think for the CIPD it’s making sure that we understand really quickly what members are needing and how they want to respond and I think that’s something we can’t every lose sight of (and I said it earlier on) as the pace of change around us quickens there’s a huge challenge for us in there about making sure we are really fleet of foot, and that’s an area that we need to make sure we’re really focused on.
PL: Certainly from early on in this crisis the media seem quite keen to play up the gloom and doom. Finally, for a more considered if less sensationalist viewpoint, I returned to John Philpott. The CIPD’s Chief Economist has been in great demand recently for his level headed perspective and I asked him for his predictions for the year ahead.
JP: Well a lot depends on what happens with regard to this stimulus package and the cuts in interest rates. My current expectation is that in the best of all possible worlds unemployment’s going to rise to at least two and a half million. If the package doesn’t work as much as the government hopes then we’re talking about something closer to three million. The likelihood is that we’ll see unemployment up above two and a half million by the end of 2009 and higher still coming into 2010. If there is good news on the horizon it’s that we would expect the economy to be recovering by Christmas 2009 with the prospect of some growth in employment returning by the middle of 2010.
PL: The next 12 months looks certain to test all of us with some tough challenges but there will also undoubtedly be opportunities. To find out more about the resources the CIPD can offer to help you visit cipd.co.uk/recession.
Next time around we’ll be looking at organisational development and in March our podcast will take a closer look at redundancy, how to manage it and how to cope with the implications in the workplace.
As ever, you can find the notes accompanying this programme at cipd.co.uk/podcasts.
Until then, goodbye, and a very Happy New Year from me and all at the CIPD.