Date: 04/01/11 Duration: 00:19:23
In this podcast Jackie Orme, CEO CIPD, John Philpott, Chief Economist CIPD, Stephen Moir, Corporate Director People, Policy and Law for Cambridgeshire County Council and Alan Walters, VP HR, Unilever, give their insight of the challenges facing HR in 2011.
Philippa Lamb: Welcome to our first podcast of 2011 where we’ll be taking a brief look back over the last 12 months and to look forwards to what the next 12 months have in store.
We’re all aware of the current state of flux in which we’re living and working; cuts and reform are fundamentally recalibrating the employment market but what does this mean for the HR function across different sectors, and for you as individuals? Well first I asked Jackie Orme for her thoughts on 2010.
Jackie Orme: More than any other single year in my 20 years of work it’s been a turning point year, that’s how I’d describe it. Interestingly it’s been a year where it’s been much less about the last few days of the old order and much more about real clarity about the emerging shape of the new order and I mean that in a global context.
PL: But it’s not been the same for all sectors.
JO: Well I think it’s very much been a year of two halves – I don’t mean that in terms of the first half of the year and the second half of the year – I mean that very much in terms of the sector that you work in. So, I think the experience for people who work in the private sector has been in very many ways very different from the experience of people who work in the public sector, who have come at full pelt into the impact of the recession in the last 12 months.
PL: How was 2010 in terms of the economy? The CIPD’s Chief Economist, John Philpott, gave me his views.
John Philpott: Well 2010 turned out to be a much better year for the economy and the jobs market than we were expecting 12 months ago. The economy bounced back very strongly from the recession and we actually saw a very large number of jobs created by the early Autumn. The economy had added 350,000 jobs, which is remarkable really compared to previous recoveries.
PL: John writes an annual barometer looking forward to the year ahead, so what can we expect in 2011?
JP: I think a lot of people in work and those looking for work would hope that the improvement that we’ve seen in 2010 will be continued into 2011, the trouble is that things aren’t as simple as that. There’s a lot of uncertainty about the global economy, particularly the Euro area where the UK exports most of its goods and services. Similarly we don’t yet know the full impact on the economy of the big fiscal squeeze; the government’s going to be cutting spending and raising taxes. Overall that should slow economic recovery or the pace of recovery in 2011, how big an impact on the jobs market it has is a matter of debate. Some economists think it will have a marginal effect, others think the effect will be more substantial. We’re, at the CIPD, in the slighter more pessimistic camp but even that doesn’t suggest anything like a return to recession and although the job situation might be somewhat tighter in 2011 than it was in 2010 things aren’t really back to the dark days of late 2008 and 2009.
PL: The CIPD’s new HR Outlook Survey provides insight and expert commentary on the HR profession. The latest survey looks at emerging trends within HR and asks people about their priorities for the year ahead. The results really are a measure of the mood of UK organisations and Jackie gave me some of the key findings.
JO: It’s really interesting when you look at that research. The top three priorities for organisations are managing cost, growing the current business and focusing on customer needs and it’s really interesting when you look at those three things together because absolutely no one of them in themselves will do it. No business can survive by simply focusing forever on managing costs, it’s an important thing to do but it’s not enough and you’ve got to be focused on growth. In there is a really important message for HR people. We’ve got to be able to manage the cost cutting and the restructuring but we need to know what it is we do that enables growth in the long term. Ultimately it will always be about growth not about cutting costs.
PL: So we’ve talked about organisational objectives – public sector/private sector – what about HR teams themselves?
JO: The three objectives that came out, at the top of the list were managing change and cultural transformation, employee engagement – and I’ve talked a little bit about the fact there was a difference between private and public sector there – and improving performance management and rewards, they were the top three. Now they make sense. They’re quite broad buckets, absolutely they make sense when you think about a backdrop of how do we both save money (cut costs) but how do we also start to grow this or make it more productive or perform better than it’s been in the past?
PL: I mean having said that, of course, there is this divide between public sector and private sector. Did we see different findings in terms of what they’re focusing on?
JO: Yes we did. We saw a lot of similarities but we also saw some differences and I guess the key difference was in the public sector a much lower emphasis on employee engagement than we were seeing in the private sector.
PL: Were you surprised by that?
JO: Very surprised by it and I think there are a lot of HR people who I know who work in the public sector who would say no we really get the importance of employee engagement and, of course, one of the challenges – the big challenge and I’ve said this consistently throughout the year when I’ve talked to people is – the truth of the matter is any idiot can make cuts; that’s the truth of it. What is hard and what requires real talent is after those cuts have been made to build something that’s better than it was before, that’s the real challenge. Ultimately employee engagement is going to be a critical part of doing that.
PL: With that in mind I talked to Stephen Moir, from Cambridgeshire County Council, about how they’ve managed in 2010 and what’s coming up this year. As Jackie says, managing change has been and will continue to be a priority. With a new government, major policy changes and cuts across public services following the Comprehensive Spending Review, Cambridgeshire County Council has had to cope with huge changes.
Stephen Moir: I suppose for my organisation having started the journey of what the cuts looked like 12 months ago we feel better prepared to address those but the scale of the reductions will be massive so actually we’re already in the process of looking at fundamentally redesigning services we do. That’s partly about cost but it’s also about recognising that the government’s given a clearer view that they want to roll back the state and give more local responsibilities to communities, to individuals and to other providers, not just the public sector. This year’s been very much adjusting to the changes, dealing with those issues, implementing some of the plans we had in place and trying to understand what the future looks like as well.
PL: So next year?
SM: I nearly said more of the same; it’s not quite that simple unfortunately. Next year will be about implementing those major changes to what we do as an organisation and not just for a short term period. It’s what does the long term look like for us, what are the needs of the citizens of Cambridgeshire and how can we best fulfil those?
In terms of things we’ve already done as a consequence or we’re in the process of doing, there are certain parts of the organisation we’re already having to consult on major workforce reductions, changes to the way we deliver services. In October of this year, which will lead through into major changes next year, we went live with one of the biggest shared service arrangements, both Cambridgeshire and Northamptonshire County Council now have a single integrated range of corporate support functions. HR is now shared across both of those organisations, which has been a major challenge for me, a major challenge for my team but also a really good opportunity because it gives them some sense of what the future looks like as well.
Next year’s going to be dealing with an awful lot of those changes, transformations and reform but the biggest bit for me is about how do we maintain the trust of the workforce, the values that we built into the organisation over the last few years and give people a clear sense of what the future looks like because change creates uncertainty and change impacts on performance. We’ve got 18,000 people in Cambridgeshire we employ who serve roughly 600,000 citizens, if we don’t keep them engaged, we don’t keep them informed and motivated and we don’t give them a sense of what the longer term looks like we’re really going to struggle.
PL: As you say, this is a transformational year for you coming up in a way that I would imagine the County Council’s never experienced before. It’s in every area isn’t it? So, from an HR perspective, the challenges for you are enormous aren’t they?
SM: The challenges are massive.
PL: Stephen’s experiences reflect what the CIPD’s own research has shown about the importance of employee engagement in the year ahead and as John Philpott points out, employee relations may well be a hot topic in the next 12 months too.
JP: I think what’s been interesting about the recession overall is that trade unions or employees generally in the private sector have got on quite well with their employers. They’ve worked together to try and keep pay rises down and protect jobs.
As we look to 2011 and beyond, however, we’re in a slightly different situation because the cuts are going to be felt in the public sector where employee relations generally haven’t been that great in recent years and also where the influence of trade unions is a lot stronger. The expectation is that there will be more industrial action in 2011 from the public sector and that employment relations and the industrial relations environment will be a bit tougher than it has been in recent years but again there are different views on this. Some people are expecting conditions almost akin to a general strike, others think that there might be a reality check within the public sector workforce and they’ll become more amenable to actually getting on with delivering the cuts and ensuring that as many jobs are preserved as possible.
PL: There’ll be this twin squeeze of anxiety about job security and also a squeeze on living standards from other pressures, which is all going to add up to a tricky situation isn’t it?
JP: I think 2011’s likely to be a troubled year simply because people in the public sector will clearly be worried about the possibility of losing jobs and most of them won’t be getting any pay increase. People in the private sector, even if they’re in work, may be finding that inflation’s quite high, taxes are increasing and their living standards are being squeezed. If there’s a sense of unease and unhappiness generally people may be more inclined to take that out on their employers and one could see some period of discontent within the labour market and society more generally. This wouldn’t be totally unexpected because we’re looking at a situation probably more like the 1980s than the 2000’s but one would hope the more conducive employment relation scene that’s prevailed over the past 30 years will probably be enough to ensure that we don’t see the conflagrations of the type that we saw in the miners’ strike or at Wapping in the 1980s.
PL: So what about the private sector? I spoke to Alan Walters, Vice President of HR for Unilever UK and Ireland.
Alan Walters: Yeah, it’s been another exciting year from a business point of view where we are a consumer business so we’re selling into the Sainsbury’s and the Tesco’s of the world and I’m sure everybody knows what it’s like in that environment at the minute; it’s very very tough so that’s been tough but we’ve done well. We’re performing well as a business so that’s been good.
From an HR team point of view there’s been probably two main things we’ve been focused on, one is our talent agenda. We’re finding it even more important now to have the best people in our top jobs and there’s not many of that talent around that we’ve found, whether that’s in customer or in marketing which are the two main drivers of the business. Finding those really good people, there’s lots of people about but the really good people are getting maybe even harder to find for us, so getting those really good people and getting them in.
PL: Is that unexpected? Did you imagine there might be a lot of really good talent floating around?
AW: I guess at a superficial level yes, there’ll be more volume, full stop, and surely in that volume there must be some really good people but what we’ve found increasingly through the year is that they’re being held onto in the same way that we’re holding onto our really good people. They’re being loved and cared for by the people they’re currently with so it’s a real challenge to say come join Unilever rather than be wherever you are now.
PL: What are the big priorities for this year?
AW: So, bring that a bit closer to home rather than just globally, we’ve announced the acquisition of two very big businesses, one the Sarah Lee business that people will probably know as Radox and another one called Alberto Culver which is Tresemme and Simple (those are two big brands for them) and they will transform our personal care, so that’s our personal care bit of our business; the things about helping you feel good and look good. So how do we bring that into a big structure and a big company and culture like Unilever and keep that capability? A great challenge for us as an HR function about how we do that.
PL: Yes, I mean how does that translate into action on the ground for the HR team?
AW: We’re right in the middle and now in terms of thinking about what is the organisation and we get to start to see some of that and we start to see the people, we want to make sure that we retain their best talent out of that and that takes some effort without just being too simplistic about we bought this and we’ve got one of those already we don’t need another one. That whole approach is really very personal and down to those individuals.
PL: So talent is very much at the forefront of your mind at the moment and presumably engagement as well in the sense of retaining your talent.
AW: If there was only one focus I could have for 2011 it would be about talent. Now you see that in an acquisition environment but also the development of whether that’s female talent which is an important focus for us over the next few years, but talent right across it’s really important.
PL: The HR Outlook Survey also looked at which of the behaviours from the CIPD HR Profession Map were most and least often displayed. Here’s Jackie Orme.
JO: There’s a lot of signs in there about HR people knowing what the organisation, what the business wants from them and their agenda sitting at the heart of what the business is looking for and I think that’s terrific. There’s also commentary in there about what are the skills gaps we’ve got? What more do we need to be doing? Then there’s this whole issue of curiosity that comes out and lots of people I talk to say wow that’s actually something that really knocks you between the eyes, that the behaviour that’s least displayed, least encouraged across every sector that we looked at and at every level of seniority is curiosity. Now when you’re operating in a world that’s changing so fast that’s a big challenge to us. I think in many ways the challenge for us is to become an inquisitive function so everything that we are doing is informed by our situation and our context, that’s the way that we need to move. There’s something in there that many people I talked to are looking at and they’re saying yeah that’s something we need to really think about and look at how we fix.
PL: That’s for the profession as a whole but what about individual priorities and goals? I put that question to Stephen Moir at Cambridge County Council and Alan Walters at Unilever.
What about you as an HR leader personally? It’s going to be a very big year isn’t it?
Stephen Moir: It’s going to be a huge year. Again a year of fairly hard work, I couldn’t not say that really. It’s going to be tough, it will be challenging but actually that comes back to the strength of the team I work with so as a leader I’ve got to look after the team. I’ve got to give them clarity, I’ve got to make sure what we’re doing is the right thing but equally I’ve got a responsibility to make sure that my team not only looks after themselves and each other but supports me, if I can put it that way. Resilience is really important. Dare I say work life balance is becoming even more important for me? Because actually if I don’t take time out I’m beginning to find that my performance can suffer so some of the things that I’ve been espousing for a long time I’m beginning to put more into practice myself so I think finding that balance is really the key for the coming year.
Alan Walters: I’ve probably spent 20 years – which always makes me feel I’m a lot older than I am, in my head, but there you go, I have worked for 20 years – restructuring or ‘re’ everything. Re-engineering, re-designing, re-whatever. I now have absolutely in my grasp the opportunity to do some real transformational growth stuff in the business in my own country, having worked abroad where you see more opportunity to do that and now I get to do it here. Which is, on the one hand incredibly exciting, and on the other very scary about actually delivering that but I do now, I want to grow something. Quite honestly I’ve got two kids who are 13 and 10 and I don’t want to just keep driving past places and say well I closed that down, I actually want to have something where I say that’s what I was part of growing that, that wasn’t there and we made it happen and I was a small part in that. The opportunity to leave a legacy of something positive and growing and vibrant rather than just cut stuff, that gets me out of bed in the morning.
PL: In 12 months time the economy could look very different. Here’s John’s perspective.
John Philpott: I think in a year’s time we’ll probably be in a situation where on the worst case scenario unemployment’s closer to something like 2.7m than 2.5m, probably somewhat fewer people in work. I think that situation will probably continue into 2012, after that I’d expect the economy to be motoring ahead quite nicely and unemployment starting to fall as jobs are being created but how employees react and the social and economic mood between now and then will clearly determine the long run prospects for UK economics and social development.
PL: And the HR profession is in for a challenging year too. Here’s Jackie Orme.
JO: I think what we do, as a profession over the next couple of years, will define our role and our contribution over the next 20 years. We need to step into that space that is beckoning us to make sure that we are looking at the long term performance of organisations and we need to put that at the heart of our purpose and I think if we respond to that and we do that we’ll be a bigger stronger profession with the greatest impact we can have on the organisations that we work in over the next couple of decades.
PL: So a challenging year but it sounds like a real year of opportunity.
JO: A massive year of opportunity, huge.
PL: For more information on the CIPD’s HR Outlook and a detailed look at the 2011 barometer have a look at the shownotes at http://www.cipd.co.uk/podcasts. In next month’s podcast we’ll be looking at the value of measuring human capital, join me then.