Date: 03/01/12 Duration: 00:23:19
In this podcast John Philpott gives his new year forecast and Jean Tomlin, HR Director for The London 2012 Organising Committee, tells us about running the HR side of the Olympics.
Philippa Lamb: This time last year the CIPD’s chief economic adviser John Philpott predicted that we were in for a difficult 2011 he was right. So let’s turn to him again to look back over the past 12 months and to see what 2012 might have in store for us.
John Philpott: 2011 turned out to be a difficult year although it was in line with CIPD forecasts things turned out to be a lot worse than many people were expecting. The economy virtually didn’t grow at all, unemployment has started to rise and that's before we see the full impact of what’s going on in the Eurozone and the unfortunate consequence of that is that 2012 is likely to be an even worse year. The economy is forecast to grow more slowly, there'll be fewer jobs, unemployment will be rising and most people still won't be seeing any improvement in their living standards.
PL: So the big question about 2012 is whether we're going to see the stagnation turning to slump and it’s a tough call but what’s your feeling about that?
JP: I think we’re really uncertain as we're moving into 2012. We know things are going to be difficult what we're not quite sure about is how difficult they’re going to be. A very good outcome would simply be an economy that's growing relatively modestly with a small rise in unemployment. The chances, however, are that the economy might not only slip back into recession but actually remain very weak for quite a period of time and that would see unemployment rise very sharply and dampen the economic outlook not just for 2012 but 2013 and 2014 too.
PL: Are most of those job losses going to be in the public sector still or are we still expecting to see private sector employment pretty stable?
JP: Looking at things at the moment we're expecting the public sector to be shedding in the order of 30,000 a quarter through 2012 with the private sector not actually going into a sort of new jobs recession as we saw in 2008 and 2009 but probably not seeing jobs expanding to any great degree. So the difficulty in the labour market will be driven primarily by what’s going on in the public sector but the private sector won't be filling the gap.
PL: The CIPD’s labour market outlook survey found that UK private sector employers have scaled back on all employment-related operations with fewer planning to offshore jobs abroad or recruit overseas workers against a backdrop of less recruitment and the one slight glimmer of good news, fewer redundancies. Essentially they’ve been sitting on the fence but John thinks this is the year when they’ll be forced to get off it.
JP: At some stage in 2012 the crunch time will come. If businesses are servicing markets that look as though they might be improving then the chances are that they’ll start recruiting again and possibly offshore or onshore jobs, depending on the markets they’re servicing. However I think a lot of employers will actually see that the situation is deteriorating, they’ll cut back on recruitment even more and the likelihood is that we’ll see a burst of redundancies at some stage as well.
PL: Unsurprisingly then John’s expecting unemployment to rise quite significantly this year to more than 2.8 million by the end of 2012.
JP: That is probably the best that we can hope for. There are possibilities on the up side or the down side in this kind of forecast but I'd be surprised if unemployment comes in any lower than that and if the economy were to turn out to be even weaker than we were expecting and we were to see a serious recession then we might be talking about something closer to three million again. Either way I expect unemployment to continue rising into 2013 and probably peaking at around 2.9 million at that stage.
PL: So what about youth unemployment because obviously that was a very big issue last year wasn't it?
JP: Youth unemployment was the big story of the recession and in 2011 we saw the headline figure rise above one million which was of political significance and led the government to introduce a new initiative The Youth Contract to tackle the problem. My own hunch is that that is likely to simply alleviate the rise in unemployment amongst young people in 2012 and beyond and we’ll probably see the level sort of hovering around the million mark throughout the rest of this year.
PL: A pretty grey outlook on the jobs front so where does it leave pay?
JP: For workers on average pay is still going to be lagging behind inflation so there'll be a continuing real wage squeeze but the slight good news is that we expect price inflation to be a bit lower in 2012 so the squeeze on pay will be a bit less than it was in 2011. However the story’s going to be a bit different depending upon which sector you're looking at. In the public sector workers are going to be feeling a much bigger squeeze as their pay rises are held down. In the private sector we're likely to see somewhat better pay rises but probably still only in line with inflation nothing promising any kind of big largess in terms of real standards of living.
PL: The economy's been in pain for a long time now and John believes that this will really start to show in the collective psyche of the workplace this year. When hopes of better times are dashed over and over again people may begin to reach the end of their tether.
JP: I'm always reminded of my favourite quote from Victor Meldrew in the TV’s One Foot in the Grave where he says, “Just when you think things are never going to get better they suddenly start to get much worse.” And that's probably what a lot of people will be thinking like in the workplace this year. I think in the private sector workers will probably continue to do what they’ve done through the recession which is keep their heads down and simply try to keep hold of their jobs if possible. In the public sector we're seeing jobs going, we're seeing pay being squeezed, we're seeing pension tensions. All of that is going to lead probably to continued sporadic bouts of industrial unrest.
PL: With unemployment predicted at 2.9 million by 2013 improvement clearly isn’t going to happen in a hurry so when then can we expect to see some real light at the end of the tunnel?
JP: I'm still of the hope that from 2014 onwards we’ll start to see some improvement, how rapid an improvement depends very much on how strong the economy recovers. The big question mark is when the economy will start to recover again. That's not going to happen in 2012, it’s not going to happen strongly in 2013, one would hope that we might be able to see the first inklings of it in 2014/15.
PL: It’s a glimmer of hope but a rather distant one isn’t it. I mean I suppose closer to now we do have the Olympics coming up in the summer don’t we?
JP : Well I think the Olympics and indeed the Queen’s Jubilee will be kind of giving some sense for national celebration. Of course we know from previous periods in history that if we can get sporting success and achievement that often provides a lift on the shop floor in British workplaces and therefore one hopes that success in track and field or elsewhere might actually have some kind of economic dividend at least in the short term.
PL: With a demotivated workforce on top of a raft of other difficulties this is bound to be a challenging year for the HR profession. In the public sector particularly there'll be more redundancies and decreasing engagement is likely to be a problem across the board, how then should the profession respond? Well according to John this is a time for HR to have a good long think about its role in the recovery.
JP: What you might see, and this won't be a sort of one year phenomenon but might be a sort of ongoing one is what HR sees as its future role. Is it there simply to deliver on senior management objectives and try to keep as many workers on board in that sense or is it going to be seen as something that's more about championing the position of the workforce and challenging senior management to do more whether it be in terms of improved management strategy or in areas like executive pay where HR probably has been a bit too silent given the welter of public discontent about this.
PL: Do you think there's enough confidence within the profession for them to take on such a task as that? That's quite a bold step isn’t it?
JP: I think HR always talks a good game. I think the record is patchy examples where sort of good things have been done but a lot where bad things have been done or at least performance has been limited. I think it may well be that in much the same way as we saw some of the orientation of HR change during the boom one might see another reorientation during what looks like being now a lost decade of prosperity and high unemployment and how HR comes out at the end of that may well determine whether it is still an active profession in the years to come or sort of withers on the vine over a period of time.
PL: That’s an interesting thought John because we all know that HR didn’t come well out of the previous recession, really not at all, and had a lot of ground to make up subsequently, from what you’re saying I mean it’s a big task but there's a real opportunity here for HR.
JP: A big task, real opportunity the key question is are HR up to the job? As an economist I can’t necessarily answer that question but I think it’s one that will require quite a lot of soul searching in the coming years.
PL: Food for thought for the profession?
PL: With that in mind I asked a range of HR professionals about their agenda for 2012.
Male voice: Working in the private sector for me the big issues next year are going to be around leadership and culture change.
Female voice: We’re in a local authority but we're actually trying to work much more as a commercial business so it’s around HR being a lot more commercial savvy and understanding the organisation.
MV2: Return on investment. Whatever you’re doing you need to be able to make money or save money, that's it in the market the way it is at the moment. People will always invest and good companies will always invest in the development of their people but they’ll want to know how they can do it to greater effect, more cheaply and so it’ll be all about working smarter rather than harder I think.
PL: What sector are you in?
FV2: Private finance, PFI.
PL: What are the big HR themes going to be?
FV2: Employee engagement probably. I think after the recession are perhaps demotivated, disengaged and I think our company probably will focus on engaging their staff, trying to look forward to the future more positively.
FV3: I don't think it’s going to get any easier in 2012 and I think we've got to get used to being in challenging times but also times where change and uncertainty are part of the norm and for those reasons I think we have to adjust our whole mindset around what leadership and organisational life looks like and stop trying to just pretend that it’s a temporary blip.
MV3: I’m in the public sector in East London and one thing we have to plan for this year is the Olympics because it’s going to have a massive impact on how we deliver our services and we're having to do a lot of work to prepare.
PL: What sort of issues is that throwing up for you?
MV3: How we're going to deliver our key services, how staff are going to get to work.
FV4: In my role I think it’s specifically about talent and making sure that we have the best people in the right roles and buying into the culture of the organisation.
PL: People are talking to us about the Olympics as quite an issue for HR is that going to be something that you’re going to be thinking about?
FV4: We’re actually sponsoring the Olympics so for us it’s very much on the agenda. So yes, team spirit.
PL: And as an HR person then what plans are you putting into place for your people around that because it’s a big chunk of time in the summer isn’t it?
FV4: People are very interested in the Olympics and because that motivates them we're talking to them, just getting them more engaged and just trying to get them bought into the brand of the business and that we're working with the Olympics. So hopefully a win/win for us and the employees.
PL: The Olympics are certainly going to loom large this year, especially in the capital and there's one HR who knows just what it takes to stage them, Jean Tomlin. In the past she's been HR chief for M & S and the Pru and she's a former CIPD VP for diversity and inclusion. For the past six years however she's been HR director for the London Organising Committee for the Olympic and Paralympic Games or LOCOG putting the people and the programmes in place to stage what’s being billed as The Greatest Show on Earth. In workforce terms it’s the biggest mobilisation of people since the Second World War so how did Jean react when she was asked to take on the job just after Britain won the Games back in 2005?
Jean Tomlin: Well I looked at the six year journey ahead, the various stages that the organisation would inevitably go through from start up to maturity to dissolution, numbers ranging from 30, which is what we started with post the bid, to a workforce of 200,000 people spanning volunteers, contractors and paid staff. How were we going to mobilise that workforce? That was the challenge.
PL: Can you sum up for me the journey so far?
JT: First of all I think it was, and it has been, very important to look at that significant workforce in bite-sized chunks and to plan the work very fastidiously over the five year period, so looking at how were we going to attract up to 70,000 volunteers, that was one significant chunk. How were we going to attract significant contractors across cleaning, catering, waste, transport etc. How do you get 6,000 paid staff into roles, 4,000 of whom are recruited in March 2012. Bite-sized chunks, a key element of my thinking.
PL: What’s been the big HR headache so far?
JT: The big HR headache…
PL: Or has it all been…((laughs))
PL: I suppose the thing is if you clearly planned this like a military campaign I'm wondering whether anything has come at you from left field or whether you knew what the big challenges were going to be and they have been?
JT: No I think it’s a very fair question. Mobilising a workforce in the period of time that we have to the scale that it is, is actually in itself the biggest HR challenge. So understanding exactly how you’re going to programme manage that makes the HR experience not purely HR but you’re actually at the heart of mobilising a huge business, making sure that the right talent is in the right place at the right time. If you fail on that with an immovable date absolutely the Games don’t happen. So it’s not purely HR it’s actually HR inside of a big, big machine, at the heart of it, it has to work.
PL: It’s a really exciting role isn’t it? It’s a really evolved 2012 version of what top flight HR is?
JT: Absolutely I think this experience has taken not only myself but my very significant team who have been absolutely fantastic because they have also realised that doing this role in this environment at this pace, where the economic climate has changed, where nothing stays the same and where you’re constantly having to change to organisational emotional journey we always say when we interview people, “You get 25 years experience in five here,” and that's a fact.
PL: So you’re in the final stretch what happens between now and the Games?
JT: Well as you can imagine everyone’s minds are concentrated on this immovable date, the 27th July. All the work that's gone over the past five or six years is now coming to fruition. So the most important elements are teamwork, the fact that we are transitioning from the office environment into venues. Teams are coming together who have hitherto worked in their functional areas, they are now going into teams. So the element of leadership and teamwork, critical moving forward. That's the first thing. The second thing would be the readiness programme, making sure that we are all ready and understand the journey we're going on between now and July 27th. That involves extensive employee engagement and communication but the communication has to be rapid, absolutely accurate and it has to happen fast and furious. So we have regular forums lead by the readiness team to ensure that everyone knows how fast things are changing and they’re ready to do their job.
PL: Do you wake up at night sweating?
JT: I probably don’t wake up sweating but I absolutely have two or three things that are absolutely at the forefront of my mind. The first is how do we make sure that those individuals that we have to contract with early are retained through the next six months because having invested all the time and money in training, attraction etc. we have to make sure that they're ready to do the job and they’re with us in July 2012. They have to be with us. There’ll be lots of extra activity going on around the UK but particularly in London so we have to watch market movements. We have to watch how other companies who may not be directly related to the Olympics and Paralympics but are actually setting up their businesses to attract people. So how do we make sure that we understand that we're not all dipping in the same pond and actually counting the same person twice, a critical element to focus on.
PL: It’s probably almost impossible for you to think beyond the Games themselves at this stage but I am interested to ask you what you think you’re going to take away from this in terms of HR lessons for roles you'll do ahead and what other HRs can take from your experience?
JT: One of the key elements that will be a lasting memory and something that will go forward is the fact that if you free human beings to do the best work of their lives that they surely rise to that talent and despite the fact that we have the most compelling objective here, these are the Olympic and Paralympic Games, we have created an environment where individuals do what they can. We encourage them to extend themselves and to do fantastic work and they are doing that. So that's the first thing, don’t create artificial barriers, artificial limits for individuals. I'd say the second thing is that we have absolutely said to everyone that works here in our promises that we have made that we know you’re going to have a deadline, we all understand that deadline and we've all got the same deadline, we’ll all finish here over a two week period. So what were we going to put in place to make sure that individuals could plan their life beyond 2012? So we committed to put a programme in place where individuals would receive outplacement support, CV writing, one on one coaching. That's happening, that's real but the challenge there was how do you keep them focused on the prize in July through to September but actually in parallel focusing on their life after 2012, themselves, their families, their commitments? And we've done that very successfully. It’s a big take out, parallel processing, keeping your eye on the prize but looking after your people. And I think the third take out would be don’t isolate HR, HR is a function that's critical in any business. I've always maintained this and for me this has been the sort of culmination of 35 years of experience where you can just see if you don’t have people mobilising the Olympics and Paralympic Games they won't happen, it’s a truism but it’s absolutely real here. So HR, heart of the business, make it happen.
PL: So there it is a rallying cry for the year ahead if ever there was one. Jean has her work cut out for the next few months that much is clear but how should the rest of us approach the Olympics. I asked her what her tactics would be if she was still HR chief in a large London-based organisation?
JT: First of all I would be saying, “This is an opportunity of a lifetime I want to be part of it, all my people want to be part of it so how can I achieve that?” So I'd be looking at our internal policies and approaches for the summer, for 2012 and I'd be trying to flex those to enable individuals to participate, you know, we're going to have live sites all over the country, how do we enable them to be able to, number one, be in their communities and engage in the Games but also how can they get the opportunity to go to the various venues that are right across the UK and be part of it. So that's what I would be doing I'd be looking at how do you free up time to make sure that everyone in the UK can be part of the greatest show on earth? In addition to that I would be trying to listen to all the messages that are being promulgated around how intense it’s going to be in London, so looking at working time, looking at how individuals can be flexible, working from home etc. how holidays will be changed to reflect this opportunity so that individuals can be part of it. And I guess finally I'd be looking at how we can excite the whole workforce to support the Games, to want it to be the best thing on the globe during that time and for us to feel proud of our country.
PL: Well bring on the Olympics it might be just what we need in what looks set to be another economically gloomy year. To find out more about the issues we've discussed, including the CIPD’s annual barometer report and the latest research on pay attitudes take a look at the show notes at www.cipd.co.uk/podcasts
Next time I’ll be exploring business savvy. What is it? How do you achieve it? And why is it so vital for HRs? Join me then.