Hello blog viewers,

I return this week to the stuttering state of the UK economic recovery, and although GDP for the last quarter showed a better than expected 1.1% increase in UK productivity, I remain worried about the possible dent to consumer confidence with the VAT increase to 20% due next year.

I’ve banged on before in these blogs about the need to kick-start growth in the UK economy as there is much focus on cutting the public sector. Clearly cuts in public spending are already occurring and more are inevitable, but such cuts could place growth in jeopardy – especially as long-unemployment is rising and - in my view - will accelerate with approximate public sector job loss to be at least 600,000 by 2015 according to Office for Budget Responsibility figures.

Recent estimates from the National Institute of Economic and Social Research (NIESR) indicate that chill winds are still cooling our recovery. To illustrate this point a NIESR economic forecaster warns of, “…headwinds, as fiscal consolidation both in the UK and the eurozone restrict growth. There is clearly a risk that this rate of growth will not be maintained through the rest of the year.”

NIESR also caution “Growth prospects in advanced economies could suffer if overly severe or poorly planned fiscal consolidation stifles weak domestic demand,”

In my view much could be done at a federal and local level to stimulate UK economic growth by ensuring new jobs are generated and workforce skills are improved (see Beveridge Curve blog and my comments in Louisa Peacock’s article in the Daily Telegraph Business Section, page 10, Thursday 22 July 2010). A local investment cycle (stimulating growth, leading to gainful employment, reducing benefit burden and re-investing taxable contributions back into the economy) would see those nasty headwinds dying down.

Are you blown away by this argument, or am I just talking hot air?

Dean

Hello Blog-viewers

I was recently on a long haul flight and to pass away the tedium I flicked idly through the film channels and came across ‘The Damned United’. The film was also shown on BBC 2 last night (18th July 2010). The plot concerns Brian Clough’s disastrous 44-days leading Leeds United and his (losing) battle with the team who had developed a strong union under former manager Don Revie. Brian Clough’s abrasive approach and his clear dislike of the players’ style of play made it certain there was going to be friction. The more consensual Peter Taylor, his right hand man, loyally stayed with Brighton and Hove Albion (my team!) and Clough missed him enormously.

The film (for me) was reminiscent of what goes wrong with an off beam management approach. In this case Clough was the personification of macho management and the Leeds United team the obdurate trades union. Something was bound to go amiss.

HR Academics Boxall and Purcell in their seminal 2003 work ‘Strategy and Human Resource Management’ note the anachronistic conflict-driven style of management and trades union relationships in the UK public sector. Granted the book was written seven years ago but I would suggest not much has changed culturally since then. Followers of the press this year will have observed recent 1970’s-type references to a ’summer of discontent’ reflecting growing strain in the public sector employer and trades union relationship - in my view only to be fuelled by the drastic cuts in expenditure, threat to public sector pensions (see last week’s post) and a two-year pay freeze to boot.

Now, even more so than ever, is the time for discourse not disagreement. Public sector HR professionals have a tough task ahead of them with changes and challenges to the employment landscape not witnessed since World War Two - so please…don’t score any own goals.

 Dean

Hello Bloggers…

This week I return to the vexed issue of public sector pensions (see previous Blog post – Looking at a Black Hole).

Radical new proposals from the European Union are being drafted in a 17-page pensions’ Green Paper that appears not to help the UK problem. John Cridland, deputy director-general of the CBI has been quoted as saying the EU paper is “misguided”. All in all if the proposals from the EU are implemented projections estimate this would cost Britain an eye-watering £500bn; with mounting concern about the adverse impact on economic growth. The CBI argue the EU ’one size fits all’ approach does not account for differences in the pension rules across Member States.

Add into the mix the deficit in public sector pensions funding and the problem appears to be gargantuan. A report published by the Public Sector Pensions Commission (7 July 2010) has warned that public sector workers may have to double their pensions contributions. Pensions consultancy Towers Watson estimate a pensions deficit of £1.2 trillion - nearly two thirds higher than official figures released about the shortfall.

The week has seen intense media speculation that the new pensions’ commission led by John Hutton (former Labour defence secretary) will require public sector workers to increase contributions to pensions’ schemes from as early as spring 2011. Civil servants could come under pressure first to increase their contribution rate from 1.5% - as it currently stands. Other options being bandied about include forcing higher paid public servants to make a higher contribution, and closing final salary schemes to future accrual.

Whatever option is chosen by Mr Hutton and the pensions commission tough choices and tougher decisions look inevitable.

Dean

Apologies bloggers…

I couldn’t resist the play on words. As something of a skirmish has been raging in the media this week concerning the 22 June 2010 emergency budget and the condition of the UK economy…the dark clouds of a double-dip recession appear to be billowing our way from across the Atlantic Ocean. Co-synchronously, the state of public sector leadership capability has also entered the fray - see an article by Claire Churchard, of People Management magazine, ‘Leadership Challenge as budget cuts bite’ (page 6 July 2010).

Picking up the nautical captaincy theme, a related question emerges for me about public sector leadership…are we more like Captain Bligh (infamous for his team mutiny) or Captain Cook, intrepid explorer who led his crew to wonderful new discoveries - notching up the first European contact with the eastern coastline of Australia and the Hawaiian Islands?

The Captain leads the team into uncharted territory, taking calculated risk, seeking out new environments and new ideas for the philanthropic good of society - isn’t that analogous to the current public sector leadership challenge?

New research from Ashridge Management Centre (Ashridge Magazine, issue 4, pp 23-25, summer 2010) reflects the current leadership state, albeit the Ashridge Management Index (AMI) covers all UK sectors, comprising of 1,200 senior and middle managers a survey respondents. The survey is longitudinal - having gathered data since 1994.

The results are revealing. Over 50% of respondents expressed concern that top leaders do not spend sufficient time communicating with employees. Those working in smaller organisations showed more positivity that we will achieve business benefits from transformation. Perhaps most telling of all, the AMI shows that those respondents who feel motivated, answered more favourably on any other survey areas including the ability of top leadership.

So do you think we are about to set sail, or are we stranded in dry dock?

Dean

I’ve recently taken up scuba diving (pursuing the PADI qualification) in my spare time (not that there’s much of it!). One of the key skills for a novice scuba diver (like me) is to achieve equilibrium, often referred to as neutral buoyancy. This is an underwater state of suspended animation – neither floating nor sinking and the ideal position for the scuba diver. As I occupied a state of watery suspended animation five metres below it made me reflect on other events this week…as I sought to master the ‘fin-pivot’ manoeuvre and the ‘hover’.

“So what the heck has scuba diving got to do with anything else?” I can hear you say.

Well…as I bobbed along in the deep I thought about this week’s Emergency Budget – 22 June. It seems to me that there has been considerable emphasis placed on cutting the deficit by cutting public service expenditure. Not that I have any issue with this and it creates necessary conditions for re-thinking our whole approach to the provision of public services (see ‘Necessity the Mother of Invention’ blog post). However, I’m not convinced the equilibrium is yet right.

All the balance seems to be tilted towards cutting cost as we sink ever downwards. However, what about growth? Another way to reduce the fiscal deficit is to energise growth. I just hope the VAT increase to 20% doesn’t dent consumer confidence and inhibit much-needed spending so that the economy is kick-started with robust economic growth following.

The idea of using expansionary fiscal policy to combat recessions was introduced by John Maynard Keynes in the 1930s, partly as a response to the Great Depression. Keynes understood the perfect equilibrium between economic cuts and growth.

I’m now off to practice the CESA – Controlled Emergency Safety Ascent. Let’s just hope we come out of the Challenging Economy Safely Affluent (CESA).

Dean

Hello Blog-viewers

No I’m not talking about the latest beauty product that professes to revitalise your skin - because you’re worth it. Nor am I talking Botox, face lifts, nips or tucks.

I’m actually talking about the vexed issue of the default retirement age and the thorny issue of working beyond 65.

A study published by the University of London on 12 June reveals interesting results including almost nine in ten workers in their early fifties believe they will have to work past their state pension age so they can have enough to live on when they retire. The survey of 10,000 people tracked throughout their lives revealed that, when asked about their retirement prospects, 70% fear not having enough to live on.

89% of those surveyed are prepared to work past the state pension age to improve their chances of a comfortable retirement.

25% strongly agreed that they would continue to do some paid work when reaching their retirement age if it meant a better standard of living, while another 47& concurred. The concerns are not limited to those with modest incomes, according to the research. More than 60% in higher professional or managerial jobs, or with a net household weekly income of more than £800, admitted to being worried about having enough to live on in retirement.

Matthew Brown of the Centre for Longitudinal Studies, the author of the study, said that paying into a pension no longer appeared to ease people’s financial worries.

Personally, I think the only thing that’s served its useful time is the default retirement age - don’t you?

Dean

I’ve read these five words more times than I care to remember when a brown envelope has plopped gracefully on my mat and I’ve raced eagerly to open it to find out whether my job application was successful; then read ‘I regret to inform you that your application was unsuccessful on this occasion’

Unfortunately I’ve had to cope with a big disappointment - but then that’s life.

New research published by Saville and Holdsworth (SHL), the psychometric testing company (8th June 2010) picks this theme up and reveals results that will be a cause for employer concern.

SHL’s research (based on job applicants’ views of applying for work in the retail sector) reveals that the way in which job applicants are handled can leave a long-lasting, damaging effect on that organisation. In other, words this is all about customer care and brand…and getting it right - or in many of the survey respondents’ cases, wrong.

Nearly 50% of the survey respondents told SHL they had a negative view of the organisation because of how their application was handled. 18% were going to take their retail custom elsewhere, 46% were unhappy to receive little or no feedback and 36% had no acknowledgement of their application.

SHL’s Chief Executive, David Leigh was quoted as saying “…unsuccessful job applicants are also potential customers and ignoring them could impact the bottom line,”

In my view this is also an issue for all employers, including the public sector - OK we don’t aim to make a profit, but we do have a community reputation to foster and many job seekers will also be local residents and tax payers. Whilst we are staring into the abyss of significant service retrenchment in the public sector we will still need to employ key skills. Anti public sector press is also hardly helpful to our employer brand image and features in an editorial piece in the MJ magazine of 10 June 2009 (page 2).

Clearly there is resource pressure to dealing with high-volume applicant enquiries, but I believe this research teaches us some salutary lessons. What do you think?

Dean

Hello Blog-viewers

This week I received a ‘phone call from headhunters - no they weren’t after me, but they were trying to extract talent from my organisation. I expect you might receive similar calls, “Any aspiring talent in your organisation that could fulfill this wonderful new job opportunity?”

This creates a bit of a conundrum for me. Generally, I take a stance with headhunters that I’m polite to them - after all they have a difficult job to do (in case any are reading this!) and equally I hope I’m not too over-confident to realise at some future point I might need the services of Tribal, Gatenby Sanderson, Odgers and the like. But - and this is a big BUT - ‘phone calls of this nature engender a feeling in me of “Please go away and stop trying to rob me of my best people”.

However, my conscience then pricks me and I ponder, “But should I keep my people shackled to the organisation - don’t they need to develop grow and move on?” I might even contemplate “Are some of my best people on the cusp of making their next move in any event?”

As we embark on a journey of public sector transformation, my prognosis is that we’ll need to retain the best talent we possibly can as we’re in for tough times ahead. That might mean trying to persuade top people to stay through fulfilling their development needs, or even looking to increase their salary to hold on to the very best - although this will be tricky with the piggy bank hemorrhaging pennies as fast as trying to fill a bucket with a hole in the bottom.

So what would be your answer to my ‘phone call - and the broader issue of having too much talent?

Dean

Hello Bloggers

I was idling through the business pages this weekend (I know…my actions qualify me for a Millet’s overcoat!) and stumbled across a fascinating review of a new management book published by Canongate books - the title being Drive: The Surprising Truth about What Motivates Us. The author Daniel H Pink, business leader, was writing about his experience at work. This feature made me leap from my chair with a yelp and Mrs S shot me an agonised glance that said ‘Oh Lord, he’s off again!’

Daniel Pink was describing the complex problem of pay and rewards for two private sector ICT companies (from the US and UK) and, more specifically, how their sales team were motivated to increase sales. Equally complex systems had evolved in both companies where commissions were characteristic as the main means of increasing motivation to improve sales -in sales a fairly traditional mechanism to stimulate employee productivity.

The two companies (Red Gate Software from Cambridge in the UK and System Source from Baltimore in the US) had developed increasingly sophisticated means to overcome human behaviours that manipulated ‘the system’ in order to maximise commission returns. Eventually, and entirely independently of each other, they thought the unthinkable and decided to scrap the commission-based carrot and stick reward system - preferring a flat-rate, salaried approach.

The result? Improved teamwork, improved employee engagement and improved sales.

In the public sector as we contemplate total rewards and contribution pay, Daniel Pink’s work suggests to me that we need to construct and implement our reward strategies with great care. After all…we’re strapped for cash as it is.

Dean

My old mum used to say to me “you have to be cruel to be kind” – usually when administering iodine to a bloodied knee, or convincing me that swallowing cod-liver oil (or some other semi-noxious substance) really was good for my health.

The analogy of my formative years can roughly translate to the contemporaneous age of impending austerity - the public sector is poised on the brink of swallowing, what appears to be, some rather nasty medicine.

But, on reflection, my mum had a point - and the medicine actually did me some good. In the traditions of a SWOT analysis – the challenge ahead provides enormous opportunity, as well as threat.

Sir William Beveridge (see previous blog post - the Beveridge Curve) founder of the welfare state (The Beveridge report 1942) realised that his socio-economic model whilst addressing many societal problems also created another set of issues…in particular the creation of a dependency culture in people.

Sutton’s Chief Executive, Paul Martin, comments on this societal concern in MJ Magazine (page 13, 13 May 2010) in an article titled ‘Why independence is key’. Paul advocates the transformation of service delivery for vulnerable adults to promote independence and to redefine the social contract between the individual, family and state – making a shift to a ‘liberating’ relationship, rather than a ‘dependency’ relationship. It’s well worth a read.

Shifting embedded behaviour is not to be under-estimated in terms of the scale of effort required, whether in society or within organisations. Equally, reducing the UK’s deficit is also a daunting task. But the situation, by necessity (see previous blog post – Necessity the Mother of Invention) does provide the momentum for real change and the cuts, if managed well, could produce better outcomes for our citizens. Without this ‘necessity’ it’s arguable that we’d all carry on in the same old way.

Pass me the cod-liver oil…

Dean