Date: 01/01/13 Duration: 00:24:43

In uncertain times, everyone is keen to know what lies ahead for the new year. Philippa Lamb interviews Gary Hamel, author academic and speaker, Peter Cheese, Chief Executive, CIPD, Tim Munden, Vice President, Human Resources, UK and Ireland at Unilever and Michael Davis, Chief Executive from the UK Commission for Employment and Skills.

Philippa Lamb: A year in business is always going to be full of challenges and if recent news reports are anything to go by 2013 may be especially so. In a moment I'm going to be asking the Chief Executive of the CIPD, Peter Cheese, for his thoughts on what those challenges might be and what he thinks HRs should be prioritising in the coming months. First though, at the recent CIPD annual conference, I asked three business strategists about their expectations for the year ahead.

The first of them barely needs an introduction, an internationally renowned consultant and management expert, Gary Hamel was recently ranked by the Wall Street Journal as the world’s most influential business thinker. He offered a global perspective on what to expect from 2013.

Gary Hamel: You know, I think the year ahead is going to be very, very challenging. The fact of the matter is that particularly in the West we have been spending more than we make and for some long time. We are borrowing from the future. We have put a huge burden on our children and we're going to have to face up to that and figure out whether we sacrifice their future or whether we sacrifice some of our entitlements but you can't be an honest politician or a minister today around the world unless you’re willing to confront that problem head on. But I think there's that overhang of debt, public and private, that is going to take a very long time to work off. So I don’t expect the climate to get substantially worse unless we have a major slowdown in Asia but it’s going to be tough sledding I think for all of 2013.

PL: Next up comes a different perspective from Michael Davis, Chief Executive of the UK Commission for Employment and Skills.

Michael Davis: I think that 2013 will be challenging but we need to place it in a perspective that tries to move us away from the idea that there's a quick recovery just to be had around the corner and to start looking at things over much sort of longer term perspective. So the optimist in me says that probably the upturn has already begun and that the data always lags behind that but it’s a long, slow upturn because there's an awful lot of economic rebalancing taking place, not just in terms of domestic economies and them trying to get their public finances sorted out but households getting their finances sorted out, businesses getting their finances sorted out, almost starting to ask fundamental questions about where do we add value? What is it that economies like the UK what are we really good at and what is it that we want to excel at?

PL: In the corporate camp Tim Munden is Vice President of Human Resources for Unilever in the UK and the Republic of Ireland.

Tim Munden: I think 2013 is going to be tough. I think it’s going to be as tough as 2012 as the big issues in our environment work themselves through. I think there's only one thing we can do which is to keep to a strategy, keep to our values, keep to the higher purpose of the business and then manage the discipline, manage the costs tightly.

PL: So unanimous agreement that 2013 will test organisations of every size and shape but what does that business climate mean for people management? Here’s Tim Munden again.

TM: The biggest issues for people in business I think are about keeping our licence to operate and I think we need to make sure we, as we fulfil our business purpose, create good for the world around us. We can't, I think, continue to operate globally unless we improve the sustainability of our businesses and that's environmental, it's social. I think really it’s a year ahead of us of trying to do well by doing good. I think the world is a more demanding place than it has ever been before. I think it demands fresh thinking from business leaders and we have to be able to do two completely different things. We have to be able to inspire with vision and we have to be able to manage with discipline.

PL: And as Michael Davis identifies there are lessons to be learnt from the last recession.

MD: The upside is one of the things that economists seem to chatter about is what they call this productivity/employment paradox which is that as we've gone through this recession unemployment should have been higher given the scale of the economic decline and now what we're seeing is rising employment without real signs of the corresponding economic growth and that is about people learning from the last recession where people let too many people go, too quickly, too fast and then found themselves having skills shortages, skills gaps and I think one of the things that the UK economy has had is relatively flexible labour markets which has then allowed businesses to try whatever they can to hang on to people. I think individuals have been much more flexible in their working patterns, have taken lower hours and that's kept people in work and then that positions you well for when the upturn comes. So that's definitely I think something that businesses have learnt from the last recession.

PL: Revolutionary as always Gary Hamel thinks the time has now come to entirely reinvent our traditional ideas about management.

GH: Management as a social technology was essentially invented to help us control large organisations and control people at scale and in that it has fulfilled that purpose very well. But today I think organisations around the world are facing a set of challenges that lie outside the performance envelope of that old management model because they’re called upon to build organisations that are very adaptable, that are very innovative, that are truly inspiring places to work and by and large those are not the signature qualities of the organisations that most of us work in.

So I think management as a technology needs to change, it needs to probably be reinvented like many technologies do and it’s more than just fiddling at the margins, I think it’s almost an architectural problem. If you think about right now for example in the world of IT how we're moving from software that we ran inside of the enterprise, on our own servers and we're moving all of that into the cloud but we need almost something literally as dramatic as that and the work of managing is always going to have to get done, we always have to schedule and plan and direct and control and major and so on but I think more and more of that work is actually going to get pushed out to the periphery of the organisation and so we’ll no longer think about managers as this particular group of people in what is, after all, kind of a corporate caste system, we’ll thinking managing as a work that everybody needs to be involved in and so that work of scheduling and planning and hiring will be syndicated out to the edges of the organisation and everyone at some point in their week and their day and their year is going to have managerial responsibilities but if that doesn’t happen we're simply not going to have organisations that can respond fast enough to the very dynamic world in which we live today.

PL: Well it’s a fascinating theory but can it really work in a mainstream organisation here in the UK? Gary believes it can.

GH: First of all it’s good to remember that the management model we have hasn’t always existed, it too was invented. So we have to be a little careful in before we declare something is not possible because it would have been very hard to imagine management 1.0 before it was created and it’s a little bit hard to imagine management 2.0. But I think it’s going to be created in the same way. It’s going to be created one step at a time. I think we need a radical shift, those shifts are going to happen one step at a time through experimentation, through organisations starting with a new set of principles, trying to build companies that are as adaptable as they are focused; that are as innovative as they are efficient, that are both highly disciplined but also have a lot of freedom, but working towards those goals one step at a time. But one thing we know if you look back over the last century the companies that have really won long term are companies that have constantly innovated around their management practices in ways that extend their capabilities and extend the capabilities of human beings more generally.

So I can’t tell you exactly how this is going to play out but I know it’s going to happen for three reasons. One, it’s going to happen because, as I said, organisations face new challenges and the companies that solve those challenges are going to win. Number two, it’s going to happen because we have a whole new set of tools, principally the tools that we get from the social web that now allow us to collaborate and to work together with much less managerial overhead than ever before. I mean you see right now about 300,000 open source projects around the world with nary a manager in sight. So if you don’t use those tools somebody else is going to use them instead.

Thirdly and perhaps most importantly, you have a new generation coming to work and this is the first generation literally in history whose primary social reference point is not a hierarchy. So if you’re over about 30, 35 years old you grew up, everything in your life was a hierarchy, school was a hierarchy, church was a hierarchy, government was a hierarchy and you just got used to dealing with those institutions and that shaped your expectations. Now you have this generation coming to work for whom their real reference point is something that's amazingly flat and meritocratic, open, transparent and they’re only going to want to work in organisations that mirror those same qualities and if your organisation doesn’t look like that, doesn’t feel like that you’re simply not going to attract the best and the brightest.

PL: Okay so the consensus there seems to be that this year the smart money will be on organisations which move away from short term objectives to really concentrate on creative or even revolutionary ways of working and which choose to play a far longer game than we've generally seen here since the last recession. Peter Cheese, Chief Executive of the CIPD, is here with me now. Does that chime with your own analysis Peter?

Peter Cheese: Yeah, very much so. I think there's no doubt that we live in a very uncertain economic environment. There's nothing that's indicating that that's going to change. We have many other dimensions of uncertainty which I think are increasing the pace of change such as the demographics of the workforce, young people, all this debate about things like culture and leadership. So these are real issues and I think we have to confront them as real issues and recognise that they’re not suddenly going to change and that therefore the premium is going to be in the coming year on how we manage in this continuing uncertain environment, how we innovate differently, how we manage our people differently, how we engage our workforces differently and all of that has got to be thought about in the longer term context.

PL: Okay well let’s bring this home and talk about the state of the HR nation right now. I mean as you say the crisis of trust in business, young people locked out of the labour market, inadequate capability in I think a lot of firms to really address future skill needs, where has HR been? What’s it been doing wrong?

PC: Yeah I mean I think to some degree I've said before that with some of these issues around things like emergent cultures that are clearly not right you have to ask the question where was HR in some of that debate or indeed some of the leadership problems that we've seen and I think HR does need to stand up and have the confidence to confront management around things like cultures that aren’t right, about leaders who aren’t right and helping to be seen as part of the solution but in order to do that we've got to confront management in ways which are understandable. We can't just wave our arms around and say this is all terrible, we have to be able to bring real insight, real understanding and demonstrate to management the reality of the challenges which they’re facing around issues that historically have been thought about as soft and fluffy. So it’s bringing a hard edge to those debates and I think that is a key role for HR and I think if we can do that then we can truly make a difference to what are very sustainable challenges in business today.

PL: Now this is a key moment for the CIPD I think isn’t it, in more ways than one, it’s 100 years since it was established, I know you want to broaden its purpose does that mean you feel the profession has taken a wrong turn somewhere along the line?

PC: No I don't think so I mean there's a lot of our agenda which is about getting more strategic, closer to business and some of the points I've already touched on but as an institute I want to make sure that we are impacting all aspects of the workforce and to that extent to the economy in all types of enterprise.

Historically I think we've been very focused on what I think of as big HR, large corporate HR, well the reality of course in this economy as in most economies two thirds of the workforce are actually employed in small to medium size enterprise. We need to be able to impact that part of the economy and those sorts of businesses and help business leaders in a context which is very different to large organisations in terms of the level of HR support that they have to be able to understand what it means to create an engaged organisation, to build the right kind of cultures, to be able to recruit young people into those business which is important for overall economic growth as well as of course supporting the growth of small to mid size businesses. So that's an example of, I think an extension if you will of what we have historically thought of as our remit.

I'll give you another example which is I think historically also we've thought of ourselves as about individual HR practitioners, individual HR members and I want to extent that much more to us thinking about how we work with organisations, so, if you will, the totality of HR skills in an organisation and what are those skills? Where are the gaps? How do we help build those gaps inside an organisation? And how, indeed, do we focus those skills and capabilities and building what are really the right kinds of practices within any organisation in order to best support their businesses.

PL: And this all plays into the three core themes I think you've identified haven’t you?

PC: Yes I mean I'm very intrigued in all the changing context and we talked a bit about 2013 and I made the point that there are many issues we're seeing now which are long term systemic changes, whether it’s Generation Y and the changing nature of the demography of our workforces, the changing nature of the skills that we need and the fact that most businesses today find it very hard to predict the skills they need so that it then says how does education have to shift and how do businesses work with education to ensure that we are able to build the workforces of the future.

So we think about it in three main dimensions which are very simply understood as work, workforce and workplace. So what is the changing nature of work, the kind of skills that are going to be needed in the enterprise of the future? What is the changing nature of the workforce, its demographics, a lot of this debate about for example young people and use of technology and ways we communicate and connect in very different ways? And then thirdly is workplace and indeed some of the things that Gary Hamel touches on there, what is the nature of organisations of the future, the nature of management structures and how do we get more out of our people and engage them in very different ways? So those are three dimensions of what I see as a huge contextual shift which will shape the nature of what HR has to deal with in the future.

PL: It strikes me that progress in all of those areas is going to mean organisations will need to become more forensic in their approach to people issues and indeed about measuring the outcomes that the strategies they’re using are actually producing.

PC: Yes I believe that's absolutely right I mean we talk about at the centre of our HR profession map the notion of insight, insight led HR and these savvies that we describe. So business savvy, really understanding a business and where value comes from. Contextual savvy which is really about understanding these things I've already touched on - what is the changing nature, the context in which we're all operating? And thirdly organisational savvy which is do we understand the dynamics of the organisation and can we articulate and express those in meaningful ways to business leaders, as I touched on before, for example around organisational culture?

So with all of that said we need to start to build what I think of as the business language of HR, we often talk about HR being able to speak the language of business which is true but we also need to have the business language of HR. We need to have a more quantified way in which we describe what we do and how we add value. We need to be able to articulate better the investments that we make in people and how that yields results in terms of the values to the business and a lot of it frankly has got to start with some real basics, I mean do we understand the makeup of our workforce, the different levels of diversity that we have, how are we managing people in and out of the business and indeed what are we spending on investing in talent for the future?

So I think it is absolutely time for us to move forwards with a clearer agenda, clearer framework on how we measure these aspects of business because at the end of the day everybody recognises, financiers, stakeholders, shareholders, that the majority of business value today is tied up in what we have historically called intangible values and most of that intangible value is actually related to the human capital of the business so we need to understand that better now. We need to understand better therefore what organisations are doing to build the workforces and organisations in the future and how would we know and how can we compare between them and how can we therefore encourage business leaders to think about these things just as much as they think about their profit and their assets and their sales plans and all the other things which are highly quantified in business today.

PL: Okay well we've talked a bit about what HR practitioners need to be doing and some of the directions you’d like to see them urging their boards to take perhaps but what about the CIPD? What would you say, having had your feet under the table for a while now, that it is doing well right now and where does it need to do better?

PC: I think the CIPD does many things really well. I mean its core business around certifying and training people as they come into the profession, as they develop their careers, recognising profession skills in HR, so not just what I’ve learnt but how I do it. That's its core business and it’s excellent at most of that for sure. There's a huge amount of goodwill associated with CIPD and as I say to the organisation we sit in a privileged position as being the recognised HR institute if you want to work in the field of HR.

So that's a fantastic platform to build from but we have many things to build to as well and I look at this 100 year anniversary that we're coming up to in 2013 as an inflection point for the CIPD in the context of what I think is truly an inflection point for the HR profession. All of this contextual stuff we talked about, all of the need to get more insight driven HR, more strategic in our thinking, that's a real inflection point for the community of HR professionals and I'm determined that the CIPD will play its role in that in helping to lead the profession into the future as it has done over the last 100 years but into a really exciting and interesting and changing context which in my view creates an opportunity for people to come into the HR profession and create careers and build careers in really interesting and exciting ways at the very heart of what business and society is about.

PL: Okay. So for members listening to this and looking ahead to another tough 12 months what new help can they expect to see from the CIPD this year?

PC: Well we're looking at a number of things and first of all I spent this morning in fact going through our training strategy. I think there's a lot that we need to provide, not just in the traditional training of how do I get through a particular certified level of competence but really helping our members and others understand some of these issues we've touched on. So things like how do I engage people in a very diverse workforce environment? What is it that I've got to think about in bringing young people into work? We have this fantastic campaign going at the moment called Learning to Work which is really about helping organisations first of all understand the importance and business rationale and business case for employing young people but also what are the mechanisms? How do I do it? And how do I engage and attract and bring in young people from a school leaver age into my organisation? And how do I build vocational education programmes, apprenticeships to help me get the best value from these people?

So these are real today issues, today agendas and it’s very important that we as the CIPD are out there, first of all helping to raise awareness and champion the cause on some of these things but secondly providing real practical help to our members and beyond our membership to HR professionals everywhere around how you deal with some of these sorts of issues.

PL: And plans afoot to make the organisation perhaps more regional?

PC: Yes I'm very excited about this and talk to a lot of the branches now about how we connect better all the way through the branches and through up into a more sort of regional structure because as we've heard from Heseltine and many other agendas which I think are being driven not just within the UK but many countries that we need to get the balance better between regional and localisation and what we do from a central or central government perspective and we need to be part of that structure as well. I mean if I go back to another idea such as our ability to connect to small to medium size enterprise we can only really do that locally and we need to be connected to local enterprise partnerships, to local chambers, we need to connect better to things like training institutions and universities and we're going to do that an awful lot better if we have a more regional structure and we enable those connections more regionally and locally.

And the other point of course is about how we better support our branches. Many of our branches do fantastic things and engage their members incredibly effectively but we know that we can do more, we know that we can share best practice better, we know that we can encourage the branches to reach out to their membership in more creative and innovative ways and to share some of these sorts of ideas that I've touched on, on what I think are some of the real themes that many business need to engage with.

So that's all part of a more regional structure and we're going to move forwards on that fairly rapidly. We're already down the road with discussions about establishing a region in Scotland which is an obvious region for us to think about but we are looking at regional structures right across the United Kingdom and in Northern Ireland and that model also incidentally I think will set the tone for how we think about some of our international expansion as well.

PL: Okay so I mean a key year in every way, not least because of the anniversary but also lots to do for the profession, lots for the CIPD to do. I mean I know you take the view there's never been a more interesting time to work in HR, it does seem you feel there's a lot that needs changing too. What would you really like to see change in the world of work over the next 100 years to come?

PC: It’s a great question. I always get amused by the thought that when we started as the Workers’ Welfare Federation 100 years ago the main role of the institute at that point in time was to get young people out of work and back into education and we had the Young People Act and all those sorts of things and today of course one of our big missions as I've already described, or campaigns, on Learning to Work is helping young people into work. I think there's so much that will change and everybody talks about the pace of change accelerating all the time and it’s true, it’s extremely hard to predict what the nature of work will be in 100 years time, or even the nature of workforce, but I think even looking much shorter term in the next five to ten years I think we're going to see very different ways in which people connect to the world of work.

We're already losing I think the language of work/life balance. Work and life are intermixed and much more flexible ways of working which is fantastic for people of all backgrounds. This is not just about how we get, for example, more women into the workforce although I'm a very passionate advocate of that, this is about recognising the nature of work and the nature of society is shifting, people want more flexible ways of working, want to be able to deliver their skills in different ways and using social media as ways in which we truly do build very different communities. So that is the sort of agenda that I think is not 100 years away I think it’s in the next five to ten years and I would hate to predict or even imagine what the world will look like in 100 years time.

PL: Interesting times. Peter thanks very much for joining us today.

PC: Thank you.

PL: In February’s podcast we’ll be exploring flexible working. In light of the government’s recent decision to extend the right to request flexible working to all employees what will this mean for you and your organisation? Join me then.