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

Extraordinary times - extraordinary events.

We have witnessed bitter political rivals put aside their differences last week to form a political alliance not observed in the UK in decades. There are key leadership lessons to be gleaned from the UK’s governance and economic situation - the manifestation of which produced affiliation between previous political foes.

In terms of leadership lessons learned I stress the importance of the ’situation’ descriptor. Challenging situations require situational leadership, where an adaptive leadership style produces innovation, co-operation and commitment to a common cause.

In the two London Boroughs I work for, two different political administrations have worked together to create a unique HR shared service - in fact all three main political parties have contributed to produce a unique outcome that provides efficiency and cost reduction locally to the tune of saving £500,000 each year in the cost of HR.

Replicate this approach and level of savings across the public sector and surely we’d be a long way down the road to address the national debt?

Dean Shoesmith - PPMA President

Joint Executive Head of Human Resources - London Boroughs of Sutton and Merton

When I refer to a Greek Tragedy I’m not talking Aeschylus, Sophocles, and Euripides and the March Dionysia - for the classically educated amongst this readership.

No, rather I’m referring to the straitened state of the contemporary Greek economy. You may recall I blogged a few weeks ago concerning the austerity measures in Ireland (When Irish Eyes Aren’t Smiling) taken by Finance Minister Brian Lenihan – who is tragically suffering from terminal cancer but is making superhuman efforts to straighten Irish finances in what appears to be a final act of courage and leadership; putting country before self. In this blog I compare two different approaches taken to repair respective economic wreckage.

Ireland and Greece are joined by two other European countries (Portugal and Spain) making up a rather unkind acronym these ailing economies have become known as amongst economists and journalists in equal measure – ‘PIGS’ (Portugal, Ireland, Greece and Spain).

Greece’s 2009 deficit reached a massive 13.6% of gross domestic product (GDP). Just in case you’re beginning to feel smug the UK deficit for 2009 (according to the Office for National Statistics - ONS) was £159.2 billion, equivalent to 11.4% of GDP.

Comparing Ireland and Greece however, there is a marked difference of approach. Ireland has severely tightened its belt – especially through diminution of wages and pensions – reducing 6.1m public sector workers’ income by an average of 15%. However, all of this has been achieved in Dublin without the strikes or riots we’ve witnessed, via the media, in Athens. Greece, by comparison, has just secured a three-year, £95 billion bail-out from eurozone finance ministers. Whilst Greece has, in effect, secured loan money from Europe to address the problem it resembles paying off debt through a gigantic credit card.

Despite the cash injection the Greek Government is also taking unpopular employment measures - increasing the retirement age for women from 60 to 65 and scrapping bonus wages for Greek public sector workers. President of the Greek GSEE union, Yannis Panagopoulos, has declared, “It’s time to step up the social battle” – in a modern-day parody of a Greek Tragedy.

Whilst I have trepidation about UK finances it’s clear all three main political parties appear to concur public spending has to be reduced. With news breaking that we have a hung Parliament (the first time since 1974) it will be fascinating to see how the UK economic condition will be dealt with. Cut or spend to save the economy – what’s your favoured approach?

Dean

Hello bloggers

So, who was the originator of this well-know phrase? You have to go back into the annals of history to find the answer… it was Plato the Greek author and philosopher writing in The Republic in Athens (427 BC - 347 BC).

The phrase may well be over 2,300 years old but I suggest it’s as appropriate to our contemporary situation as it was all that time ago…

…as we face tremendously challenging times, post-election, to reduce the cost of public service expenditure we’ll need to consider ever-increasingly inventive ways of service delivery.

With all these thoughts whirling round in my head faster than my washing machine’s 1400 spin cycle, I was suddenly struck this week by the launch of a new business scheme - ‘Business Thinking’ sponsored by HSBC Bank. HSBC has committed to supporting the growth of UK businesses by offering the UK’s best business thinkers the chance to share in £90 million lending plus a financial reward of up to £100,000 each by sharing creative thoughts and business solutions. The scheme is deliberately designed to encourage inventive thinking in the business community to enable the UK to compete effectively within the hyper-competitive global economy as we emerge from recession.

Taking a leaf from Michael E Porter’s ground-breaking book Competive Strategy, the HSBC-led scheme is seeking to sow the seeds of competitive advantage - necessity being the mother of invention. In other words, create something different that the consumer wants and you have a competitive advantage over your rivals.

Whilst competitive advantage is a private-sector, profit-making, concept it also struck me that in the public sector we could usefully adopt a similar scheme to ‘Business Thinking’ to generate, stimulate and share ideas about how to provide transformed public services. The Improvement and Development Agency (IDeA) has made a start with their communities of practice guides. Gillian Hibberd and I were speaking this week to incoming IDeA chief executive, Rob Whiteman, about transformation issues, including Total Place and I mentioned ‘Business Thinking’ during our discussions.

Personally I think ‘time and tide wait for no man’ to quote another well-know phrase…the earliest known record of which is from St Marher in 1225.

So what do you think?

Dean

Hello bloggers

Have you read the press headlines recently about public sector services? If you haven’t they go something like this…’Public sector bad, private sector good’ or ‘Town Hall fat cats overpaid and clueless’ or ‘Public sector needs a bonfire under it’.

This type of crude reporting, quite frankly, gets my goat.

Gillian Hibberd and I met Jackie Orme, CIPD Chief Executive, last week to discuss mutual agendas and how we can work in successful collaboration. Fortunately, we see balanced reporting concerning public sector management from the CIPD through People Management magazine. However, we discussed the current plethora of anti-public sector reporting that appears to plague the more sensationalist elements of the media.

The damage crude and melodramatic reporting may cause is of considerable concern both now and for the future. Jackie, to her great credit, was quick to identify the problem. The problem being that we need to recruit and retain talented people if we are to be successful in the challenge of transforming public sector services. Bashing the public sector as a ‘basket case’ puts at risk our ability to recruit and retain those talented people who will be tasked with making fundamental change to public services. If employee engagement takes a hit, so will our ability to provide good quality services at an affordable cost - empirical evidence from Investors in People, MORI, the Work Foundation, to name a few well-respected research organisations, demonstrates a casual relationship between employees engagement and organisational performance.

If the UK is to emerge in reasonable shape from the recession, we need the nation to get behind the public sector to reduce the country’s level of debt and bashing us isn’t going to help one little bit. If top talent leaves the public sector, how will we deliver the fundamental change that’s needed?

Jackie agreed that we need to promote the successful changes already being implemented across the public sector, share the learning and spread the success.  If only others were as enlightened - but then I suppose good news seldom sells newspapers, unless it’s ‘England wins the World Cup’?

Have a good week.

Dean

Hello blog fans

In a week that has seen Icelandic volcano Eyjafjallajokull cast a pall of gloom over the airline and tourism industries, there may be just a glimmer of hope for the country piercing the miasma.

I have no doubt though in this specific instance those in the travel and tourism industries can point to a clear correlation between geographic and economic disaster. Strangely, how many of us in the world of HR thought we would end up scribing emergency volcano leave procedures in double-quick time?!

The Met Office has experienced a difficult week and come in for a bit of a bashing from the press with their dubious mathematical predictor of the effects of the volcanic extrusion drifting South that led to a total ban on flights and thousands stranded abroad - funnily enough including both my bosses from Sutton and Merton.

The glimmer of light comes from renowned commercial guru Sir Terry Leahy (El Tel), Chief Executive of Tesco fame.

Sir Terry is confident that economic recovery has started - giving us hope that the UK won’t go through a W-shaped (double dip) recession. Let’s hope that Sir Terry’s predictions are more accurate than those of the Met Office. In this week’s financial press Sir Terry is quoted as saying “The recovery has taken hold…customers went into recession in the summer of 2007 and they came out in the summer of 2009 - and they will stay out”.

Optimistically, a further flicker for the forlorn fraternity came from the International Monetary Fund (IMF) who are recommending, through a report to G20 nations, that the banks should be taxed and pay a ‘financial stability contribution’ and ‘financial activities tax’ on excess profits. The IMF recommends the resultant funds should go to repair the economic damage caused by the banking sector meltdown. Now, I don’t want to raise your hopes, but if this came off it might just lessen the impact on public sector retrenchment.

Don’t hold your breath just yet though - unless it’s to avoid an in-take of Eyjafjallajokull’s contents!

What do you think - is there some shred of light at the end of a very long, dark tunnel?

Dean

Hello PPMA bloggers

This week I’m taking a look at the correlation between unemployment, jobs and skills. This is natural extension from ground we covered at the PPMA conference 2010 and the theme of the conference - the Global Skills Race.

Many leaders and mangers are currently focusing on how to make cuts and efficiency gains faced with financial austerity in the public sector. Whilst this is quite understandable and necessary, there is danger however, that it is myopic thinking, insufficiently strategic in approach - inadequately linked to proper comprehension of economic forces.

Enter the Beveridge Curve. The curve is named after William Beveridge (1879 to 1963). The Curve, expressed as a graph, portrays the relationship between the percentage of the workforce unemployed and the number of job vacancies (i.e. unfilled job).

Essentially the Beveridge Curve shows that if workers and jobs available match up well there are few job vacancies when the unemployment rate rate is high, and a high vacancy rate when unemployment is low.

If unemployment reduces without a significant increase in the number of job vacancies, then the labour market is becoming more efficient because workers are finding new employment from the stable vacancy pool more quickly and remaining unemployed for a shorter period of time.

If however, the number of job vacancies increase whilst unemployment remains constant, this shows that those people in the labour market who are unemployed may lack the skills required for new job vacancies that are being created. Enter the Global Skills Race.

The US is beginning to witness an adverse impact upon it’s own economic situation associated with the Beveridge Curve. Martin Hutchinson, for the Business Section of the Daily Telegraph, 16 April 2010, reports on the phenomena of a deteriorating Beveridge Curve and the implications for the US economy. Long-term unemployment in the US has doubled over the past year as unemployed workers are struggling with the requisite skills to fill the new job vacancies being created. If this trend continues it will have a devastating effect on the longer-term US economy; as well as the consequent societal problems that are a corollary of worklessness.

I will be writing to IPMA-HR colleagues from the US to discuss this problem with them and I hope to be able to post their reply as a future blog item for our PPMA website.

There is a hypothesis that events in the US are mirrored approximately six months later in the UK. I hope this blog post persuades you why the Global Skills Race is so vital for the longer term prosperity and wellbeing in the UK.

Go tackle your organisational deficit now… before it’s too late.

Dean

Scientists like Stephen Hawking define a black hole as a concentrated area of mass so immense, that the mammoth force of gravity denies anything within a certain area around it from passing. Such scientists say black holes are created in space by the collapse of a red super giant star. As these stars reach the end of their lives, an imbalance of inward and outward pressure forces the star to collapse.

There are comparisons drawn by the press between these scientific analogies and the pensions’ deficit experienced in Local Government. Latest research from Anthony Kimber, an independent financial consultant, predicts the gap in the pensions deficit has grown in UK Local Government (including Northern Ireland, Wales and Scotland) from last year to this. The size of that gap Mr Kimber estimates…?

From £39.9 billion to £50.9 billion. Taking the black hole analogy, this is why the press apply the description to Local Government pensions.

The larger the local authority, often the larger the shortfall - for example, Birmingham City Council faces a deficit of £1.06 billion.

Of course, care needs to be taken when addressing these figures as it would mean every single member of the Local Government Pension Scheme retiring tomorrow to make a call on the fund simultaneously. The pensions fund is also linked to investments - so like any business investment these investments are subject to market forces and can go up, or down. We sincerely hope that with the glimmer of an economic recovery there will be an upwards performance. This is a complex issue however, as increased life expectancy, as well as the prospect of reduced public sector spending, are important factors that will put further strain on the pensions fund.

For many of us (me included) who have paid 6% of our salary into the pensions fund over many years, these figure are worrying. So what can we do? Increase contributions from employees? Create a two-tier system where new entrants no longer have a final salary scheme? Ask employers to increase contributions when they’re already strapped for cash?

I expect there’s no easy answer otherwise it would have been forthcoming already - but I’d love to hear your views, click on the ‘leave a comment’ box underneath the headline to let me know what you think.

Dean

Just when you thought there was a chilling post-Budget menace from Chancellor Alistair Darling’s cross-examination by the press concerning the anticipated level of public sector cuts (under media scrutiny he likened the level of retrenchment to that witnessed in Margaret Thatcher’s era), here’s an even cooler blast from across the Irish Sea to chill you to the marrow…

The ‘Celtic Tiger’ - a few years ago - was renowned for an unmatched economic joie de vivre, but the world recession has put paid to that. Like mainland Britain it seems to bail out the national debt the only option is to make savage cutbacks in the Irish public sector.

However - in events unparalleled in mainland Britain - Irish Finance Minister, Brian Lenihan, has reduced 6.1 million Irish public sector workers’ pay on average by up to 15% per annum - this has been achieved either through direct pay cuts, or forcing the Irish public sector workers to make significantly higher contributions to pensions where the Irish Government has withdrawn funding. In all Mr Lenihan has announced cuts in public sector spending of up to 4 billion euros. For more about this read an article by Henry McDonald (in Dublin) and Larry Elliot in the Guardian, Friday 11 December 2009, or Neil Tweedie of the Daily Telegraph, 29 March 2010.

Public servants, such as teachers, have been badly hit by the cuts. For example, the 31,000-strong Irish National Teachers’ Organisation says the average primary teacher’s salary of 60,000 Euros will be reduced by a fifth following a 6.5% pay cut, combined with two other cuts in pay last March and April. Sheila Nunan, the organisation’s incoming general secretary, said morale among Irish teachers was “the worst ever”, due to the Budget.

In Ireland these events have been compared to the British Winter of Discontent of 1979, when the Prime Minister, James Callaghan, attempted to hold a pay freeze to combat inflation.

However, strikes in Britain now seem to be beginning to build a head of steam - such as British Airways, Network Rail, as well as other public services including courts, job centres plus and the like, led by the public and commercial services union. So, things aren’t exactly plain sailing here either. But what would their reaction and yours, be to taking a 15% lop in your pay? Could this be a stark reality for the UK after the General Election…? 

What are your thoughts on this?

Dean

Check out this video diary from new PPMA President Dean Shoesmith filmed at this year’s Conference in London on 22nd and 23rd March 2010.

Dean Shoesmith PPMA Conference 2010 Video Diary from PPMA on Vimeo.