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CIPD Podcast 155 - Look ahead: key business challenges 2020
Date: 07/01/20 | Duration: 00:27:21
A new year presents new challenges, but what are the key business issues your organisation should prepare for? From providing support and stability to employees following the UK’s withdrawal from the EU, to tackling workplace inequality and addressing diversity and inclusion at all levels of business, our guests discuss the crucial topics set to change the landscape of work.
Join business journalist Josie Cox and CIPD’s David D’Souza and Edward Houghton as they ponder the year ahead, explore what organisations need to prepare for and offer top tips to help you tackle these key business issues.
View the full podcast transcript
Nigel Cassidy: A new year with new opportunities, but tricky challenges too, so here’s our guide to some of the biggest issues people professionals might face in 2020 – it’s the CIPD podcast.
Well not just a new year but a new decade, a new government, new politics and even a new voice on your podcast, I'm Nigel Cassidy. So while it lasts let’s relish the start of term, blank notebook-like bursting with opportunities feeling. We’ve assembled a crack team to pick out some of those key challenges we might need to be ready for this year. So let’s meet our first guests of 2020.
Business journalist Josie Cox writes for numerous titles like the Wall Street Journal, The Independent and The Guardian. She's often to be seen reviewing papers on the telly box and on occasions, I'm told, co-hosts Jazz FM’s Business Breakfast, mm jazz nice!
Edward Houghton is head of research on thought leadership here at the CIPD. He's interested in how skills, knowledge and experience can drive productivity, innovation and corporate social responsibility. Hello.
Edward Houghton: Hi there.
NC: And as a New Year bonus a second guest from the CIPD ranks, David D’Souza is the institute’s membership director. He's been described as one of the UK’s most influential HR and workplace commentators – not by yourself presumably David?
David D’Souza: Sometimes, my mother mainly.
NC: Now as somebody once famously said prediction is very difficult, especially when it’s about the future, but Josie you get the short straw seeing as you bang on about the business world day in, day out. Let’s start very broadly what do you think are the hot topics you think might cross the desk as people professionals in the year 2020?
Josie Cox: Ah so getting my crystal ball out, never easy as you say but if you’re putting me on the spot I think, well, eventually we’re going to get to the B word, so I'm going to kick it off early and I'm going to say that Brexit is inevitably going to have a massive impact on everything that happens in the workplace and beyond that as well. Obviously I think that the UK's departure from the European Union will bring in a new era for policies for all kinds of regulation that might shape the workplace but I think far more fundamentally than that I think it will have quite a severe impact on our personal lives just because of the way that politics is becoming so intrinsic to everything we do and workplaces and communities are becoming more polarised. So I think that one of the greatest challenges in 2020 is going to be for managers and organisations to navigate those polarisations and to ensure that if they encourage their workforces to bring their whole selves to work they can also accommodate those political identities, whatever form they might take. So that would be my first thing to look out for.
NC: Okay so we’ll let you have a three part list.
JC: Okay fantastic. Well I promise I won't be too long. But secondly I think the diversity and inclusion agenda is going to be very dominant again in 2020. Obviously we’ll see the third year of gender pay gap reporting coming out so that should cast some interesting light on progress, or lack thereof. The government’s consultation on ethnicity pay gap reporting, which could be interesting as well.
But I think that more generally it’s just D&I is becoming more mainstream. I think employers and organisations are increasingly catching on to the fact that it’s not an opt in, it’s not optional. D&I has to be a strategic priority for every single organisation. So direction of travel is going to be towards that.
And then very quickly finally an interesting one, I think that the dominance of the millennial in the workplace is going to continue to be an interesting challenge and also an opportunity for employers. Millennials, so those born roughly between 1980 and the mid-1990s, already make up a huge chunk of the labour market and will increasingly do so and they have very particular demands and expectations that can no longer be ignored when it comes to recruiting and retaining talent but also when it comes to ensuring productivity and engagement. So again that will be one of my interesting things to watch in 2020.
NC: Well Ed will dive into all that in a bit more detail in a moment but just initially these are all clearly very different issues but I suppose they all require organisations to respond to unforeseen or unpredictable events.
EH: Indeed so they all really present quite challenging conundrums to organisations and in particular leaders in organisations. So Brexit obviously is the key issue that we face as a country and in organisations it’s going to be continuing to be an issue for many years to come. Beyond whatever happens in the new year there will still be things that we need to tackle in organisations around practice and policies that we need to actually land for individuals and organisations.
It’s also a really interesting time to talk about the risks and opportunities that Brexit might provide to our organisations. So whilst obviously we colour Brexit in organisations as a significant risk, there are also organisations who see it as a massive opportunity. And so I think that is a really nice theme to also consider as we move into 2020 and one that I think many leaders will be thinking and hoping that 2020 provides some opportunity through Brexit.
In terms of D&I it continues to be a very important agenda for the professional, rightly so, and also for leaders in organisations.
Gender pay gap reporting is a really interesting concept because it seems to be highlighting something. Whether or not you believe the measures themselves at least it’s having an opportunity to have a conversation about gender in the workforce and the unfortunate and actually quite damaging differences that people of different genders face in organisation, in particular around pay.
And ethnicity as well is going to be an interesting one because, unlike gender where it is fairly easy to collect the data, ethnicity is much, much harder. Whether or not it can actually be pulled off in terms of good quality reporting we’ll wait and see but we need a workplace conversation about ethnicity in particular at the senior ranks of organisations.
The challenge I see when we think about all of these issues is what they tell us about the sustainability of organisations and the workplace and you just have to look outside of the workplace into the community to see issues around sustainability coming to the fore and our perspectives on environmentalism in particular changing. So I think sustainability in 2020 is going to be hot on the radar, just because Brexit is the ultimate test of sustainability for organisations.
Finally generational differences, we talk a lot about millennials, we don't talk at all about senior parts of the workforce. I think we need to really focus on surfacing what it means for individuals working later in life and I think 2020 is going to be a conversation about later life working.
NC: So David in some ways more of the same?
DD’S: I think I’d agree with that around the millennials point. So I think if you look at the age band there you’re talking about people who are up to 37, 38, I don't think it’s going to be a surprise with the whole glut of them hitting the workforce. So I think we need to smash some of the preconceptions around millennials in the same way they smash their avocados apparently! I think there are some more straightforward issues which will be facing practitioners in the new year.
So we know that we have IR35 and the implications of that coming in. That will be a significant challenge for a number of organisations in the way that they view the composition of their workforce, in the way that they contract with people. I also think there's likely to be a slew of workplace legislation that comes in that's going to create some challenges for practitioners. So I think one of the things that we know is that we probably overestimate as a profession how much of the change will be driven by trends within the profession and we underestimate actually how much of it is caused by the external environment.
And Josie mentioned the dreaded B word at the very start of this and one of the things we’ve seen is a huge degree of uncertainty and the challenges that's provided for organisations in terms of when and how they invest, particularly in people, that will continue into the next year and it will be interesting to see how that impacts on some of the opportunities people have for learning, how it impacts on the job market more broadly, and how it impacts in terms of access to labour. So I think there are some really broad themes but I also think there are some ones that just will impact practitioners day in, day out.
NC: Okay. Let’s pick up on that with Josie, I mean as we’ve already heard there from David the problems with Brexit have been hitting recruitment and talent planning, the availability of skilled migrant workers, job security, I mean I could go on with this list, in a way company managers and people professionals have got to be watching the news very carefully haven’t they in many ways?
JC: Yeah but I mean they’re only human as well and I think all of us know just the level of uncertainty that watching the news actually creates and one day it’s one thing and the next day it’s something else. And David made the point that investment is actually basically impossible in this uncertain environment, or at least a long-term investment. And people budget, investing in skills, investing in talent, that's often the first thing to go or the first thing to be scaled back at least when there is such an uncertain environment. So that's something that also has an impact on morale, as a result of that unproductivity, on the way people motivate themselves to work. So I think on a very, very basic level that is one impact that Brexit is having. I was trying to figure out what the actual impact of a polarised work environment in terms of different political opinions was having on workplaces and whether anyone’s actually measured that sort of impact.
NC: So you’re not talking here about managing people through this process you’re talking about actually how people feel about what’s happening in the world. And how they find they’re working alongside people with a very different world view.
JC: Yeah exactly. Completely. And if you have to collaborate closely on a daily basis with someone who you know is completely opposed to you politically, how do you actually manage that and how do you come to terms with that? And I didn’t find any specific data on Britain during the Referendum or after the Referendum but I did find some data from the American Psychological Association, APA, from 2016, during the US Presidential campaign which of course was equally divisive and polarising and it was quite stark actually, it was a very, very large study of thousands of members of the workforce and about 17% of those admitted that as a result of political discussions they were being less productive at work; they were feeling more tense; they were feeling more stressed out; they felt like they weren’t able to express themselves as freely as they otherwise would have. So I think that is something we can probably extrapolate to the UK and it’s quite worrying.
NC: And what about managing people who are feeling these issues? In many ways there are opportunities, I guess we perhaps even saw this last year or the year before managers making mistakes because they’re caught in the headlights, they want to try and solve problems that they can't?
EH: Yes we’re in a very kind of odd situation compared to what we feel. Pay is increasing at a greater rate around 3.64%, it’s not been that high for a very long time, so pay increases are going well. We have very low unemployment. Most job creation that's being created in the economy is in high skilled labour not low skilled labour. So when you look at the economic indicators it’s actually quite a rosy picture. However when you go into organisations and speak to individuals the reality for them is actually quite a lot of uncertainty.
So the practices that HR professionals, or people professionals need to build into their work are around voice, so it’s about incorporating voice activity, listening and sharing and communicating with employees. So not just conducting surveys but actually bringing voices of individuals together in communities and groups within the organisation, actually talking as line managers and supporting individual workers, in particular EU nationals who may have some uncertainty. So we have the EU Settlement Scheme which is actually very positive, and it probably has settled quite a lot of concerns but there will still be some concerns for individual employees, particularly from the EU.
UK nationals, I think the challenge is going to be that long-term potential. So where do they see themselves going? And I think what’s happening is Brexit is making us very short-term and we need organisations and managers to be thinking long-term and that's a very difficult thing to do in this environment where we feel very unsettled as individuals.
NC: That clearly makes perfect sense but I just wonder about the reality. For most people the HR function is pretty remote to them, how do you provide this support? Give us some practical tips as to how you, not only track, as we’ve heard, but then try and keep people on board?
DD’s: Well I think the first step is not to be a remote HR function. So I think it is about that connection and understanding in the organisation. There are different ways you can do that in terms of gathering different data points but also honest conversations with people and opening them up more broadly. So I always say good HR people have good antennae, they know what’s going on in the organisation and they can feel it. <<P>I think to pick up on Ed’s point there is an overriding sense of uncertainty and actually sometimes it’s about how people feel about the external environment rather than what is actually going on. For the last decade or so probably the kind of business guidance has been to talk about agility, to talk about change, to talk about how profoundly different things are going to be and I think there's a good argument to be made that actually providing people with stability in these environments and things that they can feel comfortable with, whilst also being transparent around some of the change, will actually help connect employers and employees in a different way.
So what you need is essentially that two-way voice where I can say, ‘actually I'm concerned about this,’ or, ‘I'm not feeling positive about it,’ or ‘Actually it’s impacting my mental wellbeing,’ and the organisation is responding to that, not just with an organisational drive for change, and we need to be better and we need to be agile, but actually the organisation’s listening to that and going, ‘Right this is how we’re going to solve it together. This is some of the stuff we can be stable on. This is some of the stuff that will be staying the same. This is some of the stuff that's going to be up for grabs, but we’ll work with you to work out how that change happens.’
JC: I think David made a really good point there, if I can interrupt quickly on just the fact that HR should no longer be seen or should never have been seen as this sort of appendage to the larger organisation, this sort of administrative function that sits somewhere upstairs in the corner. And I think people are slowly realising that actually HR has a seat at the boardroom table, that it should have a constant dialogue with upper management, with CEO, with CFO, with CIO, whoever that might be. But I still feel like that's a big barrier to many organisations and I feel like a lot of organisations still think that these conversations around workplace balance, around wellness in the workplace, around mental wellbeing, should be the domain of the HR department, but that shouldn’t be the case. So how do we get around that? How do we progress?
EH: It’s a really important point I think in that a lot of the discourse in an organisation, particularly at a time like now is about productivity and performance but not about wellbeing and individual wellbeing. That is the role of the people function. The role of the people function is to marry those two concepts to enable a productive and well-functioning and efficient organisation and to support individuals. And in a political environment, which is fractured, they will see the workplace as a place where they’re in communities with people who may be very different in political view to them, so how do you build community as well as enable people to be healthy. And I think that is a really important role for the function.
One thing we can be certain about in 2020 is there will be another corporate governance scandal, something will go pear-shaped in an organisation, a very important organisation, in the UK and we will be picking up the pieces. And so the reason I think we need to talk about the senior leadership in HR moving into the senior echelons, is to protect against those governance scandals appearing in the future. And we have to be learning from our mistakes of the past. So as we’ve seen over the last few years we’ve seen more governance, governance regime becoming much more aware of these particular issues, taking much greater attention to culture of organisations, measuring culture, or attempting to measuring culture.
NC: The second hot topic – diversity and inclusion. The gender pay gap that's been very much in the news, large organisations have found themselves in the headlines and you say this will continue to play out in this year.
JC: Yes absolutely, especially because we haven’t yet seen any significant progress towards creating perfectly balanced organisations and we certainly won't for a long time so rightly so the spotlight will continue to be on that. 2020 will bring the third round of reports on the gender pay gap which is, of course, one of the most obvious metrics of diversity and inclusion currently in the media headlines. Last year we didn’t see too much progress on that front so it will be interesting to see whether we’re at least moving in the right direction this year.
But I think also interesting other metrics beyond gender will start to move into the mainstream conversation. The last government had quite an exhaustive consultation on ethnicity pay gap reporting and the prospect of that coming in at some point. Obviously there are lots of challenges in this respect, reporting on ethnicity relies on people feeling comfortable, sharing more about their own identities, about their ethnicity, their backgrounds, how they consider themselves, which many organisations will perceive that as a real challenge. I'm doubtful whether we’ll see any sort of concrete regulation coming in around ethnicity pay gap reporting in the near term but I do think that it will move more into the mainstream conversation.
EH: I agree entirely that the conversation around D&I at the reporting end is going to continue. So the CIPD’s research hidden figures looked at the way that we currently conceptualise these data points, and also, more importantly the narrative that we use to describe this data and we know from the previous rounds of gender pay gap reporting that organisations have struggled to even measure individual’s gender in their systems because they don't have the appropriate technologies in place. When we get to ethnicity it’s going to be even harder and it’s going to be highly unlikely, because of levels of disclosure in organisations.
What that does tell us unfortunately is that there's a conversation there about trust. Do individuals actually trust their organisation to capture and securely hold their data and use it in the appropriate way? And so the D&I conversation is also a conversation about trust. And it’s a question about relationships of individuals in the workplace.
NC: Is there sometimes tension with management who might not necessarily fully understand or want the people professionals to be spending time on this?
DD’S: I think it’s probably the opposite problem which is lazy management and leadership expecting HR to solve it. And I think to go back to our previous point where we were talking about the role of HR it can't be to solve all of these complex issues, it can be to help build some systemic solutions to them and to help leaders understand their role in it. But D&I doesn’t get solved in a silo in HR because it’s not a siloed HR problem. HR has an ethical responsibility to it and a professional responsibility to make a contribution but I think there's some really lazy thinking in this space and I think, as Josie said, the key is helping people get comfortable with it.
But I think actually part of the key is helping people feel more uncomfortable about how things stand, so whether it’s the gender pay gap, whether we’re talking about ethnicity, whether actually we’re talking about just the treatment of people in work, if you want to have good work people need to feel comfortable in their surroundings, need to be paid fairly and transparently and there are a whole host of other factors that you want in play there. We’re not in that situation currently and actually for us, given the amount of resources that we have as a modern nation, particularly in the UK, that's nothing short of disgraceful and I think we still use words about slow progress, actually it’s reprehensible that we’re in the situation that we’re in and that day in, day out, people are undervalued societally and we’ve got a role to play in that but organisations more broadly have an obligation to solve that.
NC: Because it’s all about corporate culture isn't it? And I guess when things are broken on the inside they get revealed on the outside. I was intrigued the other day to see Trevor Philips who’s founding chair of the Equality and Human Rights Commission who now chairs Green Park, a recruitment company, he said, ‘People of colour seem to be superglued to the floor.’ He was talking there about the diversity of FTSE boards, but what do you think he really meant by that?
EH: That's an interesting way of describing what is essentially systemic oppression of people not being able to move through, or progress in organisations, so superglued to the floor is an interesting way of saying it but what we need to do is move beyond a conversation about race at the upper echelons of organisations and actually put in place practices that work, that support individuals to progress and that we see senior leaders being good allies around race. So we see people allying to support others in their organisations to progress, no matter what their background, no matter what their sexual orientation or gender identity etc. We need a conversation that includes progress through activity and action.
The issue with gender pay gap reporting is that a lot of it is about words on a form and what we need is much better action plans to change practices in organisation.
NC: So Josie do you want to round up because we’ve talked about a lot of different aspects of this?
JC: One point I was just going to add to what Ed was saying was that I completely agree I think that's absolutely right. And I think we have to start thinking about how we can get the ear of the upper echelons of management and unfortunately the way it is we still live in, well I don't know if it’s unfortunate or not, but shareholder primacy is still a reality, so the CEO, the top management is still going to be concerned about the bottom line of an organisation. So if we can start linking the discussion around DNI to the discussion around the bottom line, revenues, profits, then that is one way that I think we’re going to get people to realise just how important it is to make it a core strategy of any organisation. So if we can create incentives, if we can do something like that, that would certainly help to centralise that priority and to get rid of those siloes that David was talking about because I think that's exactly it.
With gender pay gap reporting last year we saw that reams and reams of organisations waited until the very, very last minute to publish their figures which, to me, indicated that a lot of them were just thinking of it as an administrative tick box, something that rolls around once a year that they have to do. But we have to start changing the dialogue around that and making them realise that actually it is of real benefit to the organisation if they can get this right.
EH: One thing just to say that they published, a number of organisations then took their numbers back and then they published again, took it back, published again, there's no way that we know the quality of the data that's on that system. So there's a long way to go before we can trust any of the data that's been published on gender pay gap reporting.
NC: And lastly on Josie’s list the younger members of the workforce, the millennials we talked about at the beginning. an increasingly important force, to be ignored at the employer’s peril.
DD’S: I'm not convinced. So I think there's a healthy disagreement between Josie and I on this. I think understanding how work needs to vary for individuals and understanding actually how flexible you can be I think that's a concept or a principle that extends across all parts of the workforce. I think there are too many consultancies selling too many reports and too much consultancy on the back of work around different generations. I'm not entirely sure it’s helpful, I’d rather organisations and HR practitioners took a healthy look at their own organisation, its composition, but more importantly to Ed’s point listen to people more actively about what they want, what they need in their role and help people have a voice to help build trust in organisations.
NC: Your witness Josie.
JC: Yeah I do actually agree with everything that David’s saying but I do think that millennials have started a conversation that other generations have perhaps not started and perhaps that stems from the fact that these are the people who grew up on social media, they grew up in a world where they were accustomed to being able to make their voices heard on the internet, broadcast to thousands of people at their whim. So that is something that they expect in real life as well and I think what that’s done is when they move into the workforce it’s given them the confidence to make their voices heard, to voice their opinions, to be very vocal about the expectations that they have of their employer. And I think that that has created a bit of a challenge to the sort of traditional concepts of the working world that we’ve been accustomed to for hundreds of years. So they're creating that sort of momentum but I do agree I think it’s something that isn't just important for millennials, it’s important for every single generation and every demographic that is in the workforce.
NC: And given that some of the problems facing companies at the moment some managers might argue you need to manage people’s expectations, you can't pander to people, or maybe offer them some kind of hope that things will change when the organisation can't deliver those changes.
EH: There's a reality of life that exists between an organisation and an individual and in the people profession we talk about this concept of employee experience, so there's not much evidence about what it actually means but what seems to be happening is organisations are crafting individual practices around different parts of the workforce. So I think that's the level at which organisations are moving. So instead of having a one size fits all approach, now organisations, through their practices, are considering what the needs are of individuals and that's particularly important to different workers of different generations, not just millennials, not just older workers, but there's more individualisation happening for individuals in the workforce and that's quite interesting because as consumers we want individualised products and services, it’s now happening in the workplace.
NC: So David let’s try and sum all this up what kind of mindset do you think that smart people professionals will be adopting to deal with some of these things in 2020?
DD’S: Oh it’s all about mindsets these days isn't it? An agile mindset. No I think the key one is actually for too often I think it would be a fair criticism of HR and the people profession that there have been too many initiatives and not enough difference made. And I think it’s about genuinely resolving to solve or make a difference or shift the dial, to use the kind of words that Josie did. Some things over the New Year, pick two or three things that you want to be fundamentally different in your organisation next year and list everything you would need to do to help that change happen. And we’ll do this and we’ll do that and we’ll do that. And it becomes inevitable that at least one of those will be a success.
EH: So I'm quite optimistic about 2020. I feel like 2020 is the year I hope that the world rights itself, and I mean that politically but I also mean it environmentally. We should have a conversation about environment and workplace. So that's going to be my hope for 2020. And I also hope when we start to think about all of these concepts in the round we become much more evidence-based as a profession. So I hope 2020 is the year where we really adopt evidence into our practices as a people function.
JC: I hope that for 2020 organisations start to view individuals as humans, more so than they have in the past. I think that we’ll see that in individualisation of workplace practices, of meeting demands and requirements of generations, regardless of whether that's the millennials or older workers.
I think that if we don't get the diversity and inclusion equation correct then we might as well not bother with any of the rest of it because we need everyone, every member of a workforce to feel like they're being valued for who they are and for what they can offer and I think that is so basic and I'm very, very surprised that we’re in 2020 now and we are still not quite getting that part right.
NC: Well thank you then one and all, business journalist and commentator Josie Cox; Edward Houghton and David D’Souza from team CIPD.
So that's what 2020 may, or may not, have in store for us. Whatever happens rest assured that these podcasts will continue to keep you up to speed with the latest developments and talking points in the people professional world. If you can please take a moment to rate and review us. Do send us your comments about what you might like to hear on these podcasts and don't forget to subscribe. Until next month goodbye and thanks for listening.