CIPD Podcast 38 - Preparing for the upturn

Date: 01/01/10 Duration: 00:19:32

In this podcast Jackie Orme, CEO of CIPD, Joe Dugdale, Director of the HR and Organisational Development at the UK Border Agency (UKBA), Richard Needham, Director for International and Cmmercial affairs at Dyson and David Benson, Head of Talent & Resourcing, Oxfam look ahead to the coming year and at how HR can prepare for the forthcoming challenges.


Philippa Lamb: Happy New Year and welcome to our first podcast of 2010 in which we’ll be looking ahead to what the New Year has in store for HR and the wider economy. To start off with I asked Jackie Orme, the CIPD’s Chief Executive, whether she’s feeling pessimistic or optimistic as we launch into 2010.

Jackie Orme: Am I feeling generally optimistic or pessimistic? Definitely optimistic and I think that’s partly just by contrast to the way that we all came into last year, where I think it was just a really difficult start coming off the back of the Lehman Brothers crash and just knowing that the recession was really taking hold but just a massive amount of uncertainty. Whilst I think there’s still uncertainty this year it just feels much less.

PL: In this podcast we’re going to hear representatives from a variety of sectors including a public sector organisation (the UK Border Agency), a voluntary sector organisation (Oxfam) and a private sector one (Dyson). We’ll be looking at how they fared in the last 12 months and what they expect from the next 12. 
As a profession, HR has been at the frontline of the recession rising to the difficult resourcing challenges it’s thrown up. As far as Jackie’s concerned, HR has been instrumental in making this a different kind of recession.

JO: Much of the private sector change that we’ve seen in the last 12 months show signs of having learnt from previous recessions and so there’s been much less slash and burn and I think that CEOs, business leaders and HR people together have, in large measure – not completely but in large measure – have gone into this recession and they have tried to make the cuts they need to make for the short-term but to plan and to have an eye too what was needed for the long-term. I think HR functions, many of them, have carried that very balanced role and done it well.

PL: So a marked difference to the last recession.

JO: Yeah, a really marked difference to the last recession, a really really marked difference to the last recession and I think that that comes back to both maturity of business leaders but also maturity of HR functions and HR leaders.

PL: Joe Dugdale is the UK Border Agency’s Director of Human Resources and Organisational Directorate; I asked him about the Agency and its work.

Joe Dugdale: The UK Border Agency employs approximately 24,000 people. In general we’re responsible for managing migration for the benefit of the country so when you come through the border at Heathrow Airport or at a port the people that check your passport are UK Border Agency Border Force staff. So, the 200m passenger journeys through the border are monitored by us. We monitor the border for elicit goods, whether they’re illegal drugs or whether they’re goods that just haven’t had the right tax paid on them. In addition in 135 countries we process all the visa applications from people who want to come to work here, study here or just to visit and we process about 25,000 applications for asylum from people who believe they need the protection that’s offered to those genuinely in need in the country.

PL: Right, so it’s a wide and complex remit. 

JD: It’s surprisingly wide and complex and certainly before I joined I thought I knew about immigration, and most people do think they know about immigration, but the detail behind that level of understanding and the opinion that we all hold is quite complicated and challenging.
PL: What effect, if any so far, has the recession had on the work that the Agency does?

JD: At a general level the recession has resulted in a reduction in the amount of travel. I mentioned 200m passenger journeys across the border we’re seeing a decline in that, which isn’t surprisingly. There hasn’t been a significant impact on asylum claims yet. I think the impact really has been for us to recognise what’s happening more generally in the public sector and to start to think about even greater efficiencies. We believe over the last three or four years we’ve made a real difference in terms of running an efficient operation but the recession has just made it clear that that needs to accelerate.

PL: The public sector is facing serious budget cuts for what’s likely to be many years to come, meanwhile in the private sector there are some signs of growing confidence, although a return to the pre-recession labour market is a long way off. The CIPD’s Chief Economist predicts that it’ll take the best part of a decade for the market to fully recover. Jackie Orme says the difference between sectors will be marked but no sector remains unaffected.

JO: I think there will be disparity between the public and the private sector, I think for sure there will, but I think that it won’t be business as usual in any sector. I think there’s going to be longstanding change everywhere but I do think that for the public sector they’re going to have a very tough few years ahead of them, irrespective of whichever government takes over. 

PL: One organisation that seems to be performing well, despite the recession, is the global appliance manufacturer Dyson. Ex-Government Minister Sir Richard Needham is Commercial Director there.

Sir Richard Needham: Dyson started 18 months ago to really look at its future strategy and that involved in really hammering back on the overheads, it involved taking out a lot of new product development which we couldn’t justify, it involved looking at the market and what the market would require in a new tough world and then adapting the business to achieve that. So, whereas everybody else in the domestic appliance scene has fallen through the floor we have done extraordinarily well and I don’t know what the profits are (I don’t want to give the secrets away) but they’ll be very substantially up this year than last year and that is because we managed it right.

PL: Dyson is a truly global organisation, their products are sold in 45 countries around the world, but the recession has impacted on different parts of the business in different ways. Here’s how the business is looking now.

RN: There’s been a massive increase in profits and success in Japan, the US is down, Europe is pretty flat, UK is flat, international business development; new markets that we’re getting into like Korea, Taiwan, Mexico, some of those have been doing very well. We haven’t got that many vast numbers of new products coming out so I would think next year it will be probably better than this year but it’s not going to be way better.

PL: The products that Dyson produces are not products that can be brought to market in a matter of months; you have to plan well ahead in order to achieve this, so you’re currently striking a balance current harsh reality and when and how you think the upturn will actually occur properly.

RN: I wouldn’t plan for an upturn at all. I don’t think you can begin to think of an upturn in the UK economy for the next three or four years and where’s it going to come from? If you tell me that we’re not going to go on declining then I accept that. If you tell me that we’re going to get back to some measure of minute growth, okay I might buy that, but I don’t believe there’s going to be an upturn; I don’t see where it’s going to come from.

PL: A gloomy outlook from Sir Richard Needham. The state of the economy has slowed the jobs market, with few choosing to move around right now some analysts have highlighted a shift of former private sector employees into the public sector in search of a stable birth in a recession. There are now fears, however, that the trend may be reversed with a brain drain from a public sector facing the Treasury axe to a recovering private sector.

JD: That’s got to be a risk, clearly, and if people perceive that there are fewer opportunities in the public sector and, as I’ve said, particularly in Central Government, then understandably they will look outside. I think what’s interesting is that certainly, in my experience in HR in Central Government, we haven’t seen a great wave of people from the private sector trying to get in and I’m not convinced that we’ll see the reverse trend as the private sector and the rest of the economy picks up. I think it’s beholden on us to be clear about the opportunities that will exist. Whatever happens there are going to be great career opportunities for HR professionals in Central Government and I think we’ve got a fantastic story to tell about the challenges and the development opportunities that sometimes we’re too slow to explain to both prospective employees and those who currently work for us in their function.

PL: Like Joe Dugdale, Jackie Orme doesn’t agree with those who foresee a mass exodus from the public sector to the private.

JO: I don’t think that’s inevitable at all actually. I think it comes down to how we go about making the changes in the public sector because actually there’s huge opportunity to make things better at the same time as making things leaner and I think for a lot of people that will be a challenge they’ll want to take but I think it does rather depend on the way we go about it. If when it becomes, in a sense, a slash and burn then I think there will be a brain drain for sure, people will get out, but if people can see there’s an opportunity to make improvement and at the same time to make it leaner then I think they’ll stay because that’s a really worthy challenge.

PL: So how can HR play into that idea and reassure people?

JO: Well, I think it isn’t just about reassurance actually. When you look at much of the challenge that you see in the public sector, good people management practice would be a real underpinning in terms of making many of the cuts and many of the changes so I think you go right back to the roots of what HR functions do, which is to create the environment for good people management practice. You can see how that can unleash productivity and efficiencies in the public sector that aren’t currently there. As a profession, we have an opportunity to make things leaner but we have an opportunity to make things better.

PL: Meanwhile, the voluntary sector has had its own challenges in the recession, with fund raising particularly badly hit. David Benson is Head of Talent and Resourcing at Oxfam in Great Britain. 

David Benson: We’ve seen about a 10% downturn in our income, so traditionally we’re about £3m income, we’ve dropped down to about two seventy which obviously has an impact in terms of what we’re able to deliver. As an organisation we guarantee that 80% of all our income will go directly to the programme work so what we’ve tried to do is guarantee that that’s still the case even during the economic downturn. We had a programme called Fit for the Future that ran earlier this year where we’ve been stripping out as much as we can from the central operations to make sure that we’ve still got the resources to send out to programmes.

PL: Including a head count?

DB: Absolutely, so HR, finance etc we’ve all seen some modest redundancy programmes going on. We’ve probably lost about 50 or 60 people in total, which is quite significant when we’ve only got 1500 operating in the UK.

PL: On the other hand, Oxfam’s retail network, consisting of 710 shops on the UK high street, has benefitted from the increased number of job seekers in the market.

DB: Actually we’ve seen a greater number of volunteers coming in, our sense is people who are being made redundant and might be out of work who perhaps haven’t experienced that before are looking for something to fill the gap on their CV so they don’t just say ‘I’ve been out of work’, they can actually say ‘I’ve been doing some worthwhile stuff’ in the meantime.

PL: Okay, so that must have worked well for you.

DB: Absolutely, also it’s meant that we’ve had an influx of really good talent into the shop network as well as some of the retail commercial organisations have been downsizing and losing some of their good shop managers, we’ve been able to benefit from that and take some really good talent that maybe we wouldn’t have been able to access before.

PL: Is that a temporary benefit do you think; do you expect to lose them next year?

DB: I don’t know. I mean the turnover for shop managers is quite high anyway so we’re not sure. We’re hoping that it will ride out and people who experience working for Oxfam will see actually that we’re an incredible credible kind of presence on the high street and we are a proper retail outlet not just a charity shop.

PL: So have you been taking the opportunity to cherry pick some of this new talent to try and persuade them to stay with you?

DB: We’ve been trying to, yes, so we’ve got quite a comprehensive talent programme within the organisation, both at the very very senior levels but also trying to get down into the shop network and into programme outside in the countries in which we operate as well, so trying to identify who are our high potentials who have both the skills but also the ambition and the engagement to stay with us. It’s great to invest in people but we want to invest in those that want to stick around and want to continue to work for Oxfam.

PL: Yes, that’s an unexpected benefit of the recession in some ways.

DB: It is rather, I have to admit, and it’s been rather nice that people have been looking towards the charity sector in general as a more credible employer I think during these current times.

PL: Of course it’s not all about the recession, for many it’s business as usual. Joe Dugdale told me about some of the challenges he’ll be facing in the year ahead.

JD: Well in the Agency we are in the midst of bringing together the three previous organisations that operated separately – the Border Immigration Agency, the detection staff in HMRC and the UK Visas operation – and there’s a lot of work to continue around the nuts and bolts of those mergers; around terms and conditions, around improving the efficiency and effectiveness and consistency of the way we manage our people and I think that’s going to be a focus. There will, undoubtedly, be a need to look very carefully at the shift of resources from support functions to frontline services, being clear about what those frontline services are and how best to organise them whilst reducing the expenditure on the support functions behind them. 

PL: So how does David Benson see 2010 playing out?

DB: I don’t know at the moment. I think it’s anyone’s guess in terms of what’s going to happen to the marketplace. Are we going to expect a double dip recession; who really knows what’s going to happen? I think what we’re trying to do is make sure that we secure the right resources for the future, trying to work out what we need not just now but also in 12 month’s time.

LP: Is it possible for you to do that when you’ve no idea what you’re income level’s going to be?

DB: It is within reason, you know. Whilst we invest in development what we try and do is make sure that development’s done as cheaply and cost effectively as possible so Oxfam operates quite a strong policy around secondments for example, which is a relatively cheap way of helping people develop, gain new skills, see different parts of the business and the organisation that perhaps they wouldn’t have done before.

PL: Do you second outside Oxfam?

DB: Yeah we do occasionally. We’ve been doing some partnership work with both private and public sector where we both transfer staff outside but we also get the benefit of transferring people in from unusual organisations in different places as well.

PL: Yes, you can see how that would tick a lot of boxes for both sides.

DB: Absolutely! I think coming to work for an organisation like Oxfam, particularly for an organisation that might be trying to develop it’s talent but finding that they don’t have the opportunities to develop that talent, seeing an organisation like Oxfam being able to come and do a six month or a 12 month secondment for us is a really great opportunity and we benefit from that because we get some different knowledge and skills in.

PL: Another big thing for 2010 is, of course, the general election; here’s Joe Dugdale again.

JD: It will affect the Border Agency; the general election has always had an impact on the organisation of Central Government. There’s no question that whoever’s elected after the next election will have views on policies and organisation of the UK Border Agency that will impact on the way we deliver our services and on our people and through that the HR function.

PL: Whatever flavour of government we have after the next election, what would be the thing that a new government could do that would make your life simpler?

JD: I think to be as clear as possible about the expectations of the Agency as quickly as possible and to engage, as there’s no doubt Ministers will, in both looking to the future and building on what, I think, is a very good track record to-date.

PL: I put the same question to David Benson and Jackie Orme; so what about the general election?
DB: What about the general election? That’s a very good question. 

PL: Any thoughts about how that might impact on Oxfam and the sector?

DB: Not at the moment. I think we are well aware that there might be a change and we’re certainly making sure that we remain not affiliated to any one political party to make sure that we are able to flex and be quite agile, depending on what happens with the general election next May. It will certainly be interesting times for us I think.

PL: Yeah, we’re doing an election special for the podcast following this one, talking to MPs from all three parties; I’m intrigued to know whether you have any questions you might like to ask.

DB: For Oxfam one of our big things at the moment is around climate change so there’s the big question still around their commitments around climate change; what are they going to be doing in the UK? How are we going to be meeting some of those expectations? I guess as an organisation all of the impact on poor people and their livelihoods overseas, we kind of contract back to some of the impact around climate change so famine, flood etc. A farmer in Uganda might not understand the intricacies of climate change but they know that the rains aren’t coming when they need to. So, for us, climate change is absolutely critical and we’d want to see some real commitment there from MPs around what they’re going to be doing, some really practical things, but also how are they going to make sure that we can continue to secure resources? Are they going to continue to invest in overseas developments? Are they going to make sure that the volunteer market is still invested in and that flexible working is still seen as something that’s really really key because for us flexible working is incredibly important?

PL: Now it is, of course, an election year; tell me, what is on your HR wish list from whichever party proves to be successful?

JO: It’s not a long wish list actually because I think what we need from politicians are two things. I think it’s an understanding of what matters the most and a staying away from populist headlines. I think there is a real debate to be had about excess and particularly financial excess and bonuses, but at the same time, we need to be clear that the motions that we take are balanced and are rounded and that we don’t err on the side of populist gestures because they will come back and bite us. So, if I had number one wish on the list it would certainly be that, it’s let’s step back and see what’s really needed and there are as bigger questions about leadership and culture as there are about compensation and let’s understand that and let’s take that to heart. I think if I had a second wish it would be around the whole area of employment regulation. We’ve seen a massive increase in the amount of employment regulation, again in the last decade. Businesses are going to need to be flexible, they’re going to need to be collaborative going forward, and by this I mean public and private sector, so let’s make sure the employment regulation that we have enables that.

PL: That’s it for this time but don’t miss next month’s podcast when we’ll be asking representatives from the three biggest political parties about how their policies could impact on business and HR over the next few years. Until then, goodbye. 


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