Wednesday, 30 September 2009

How to be one of the UK's top HR Directors

(Click chart to enlarge)

This week has seen the publication of Personnel Today's Top 40 Power Players list which aims to recognise HR's most prominent and influential professionals, those who have "played a part in bringing people issues to the top of the business agenda and been a shining light for the HR profession"

The shining lights include the HR Directors of many household names: HSBC, B&Q, Microsoft UK, KPMG and Vodafone to name but a few.

The nominations list includes a brief snapshot of which activities have been keeping each of them busy over the last 12 months. The HR Case Studies Statistical Analysis Team has been working tirelessly to unravel if there are any common themes in the listing, to give aspiring HRDs a clue as to where they should be concentrating their efforts in order to become next year's top HRD.

In pole position is Developing People Capability, including Leadership Development, which has caused 11 out of the 40 to burn the midnight oil.

Next on the grid is Reshaping the HR Function, which has kept nine of the top HRDs busy over recent months.

And taking the third spot on the podium is Managing Redundancies. It's hardly surprising that at this time of recession, eight of the 40 have been involved in headcount reductions of some shape or form.

So, HRDs of the future: Develop, Reshape and Reduce if you want to be on Personnel Today's list in 2010

Tuesday, 29 September 2009

Calls for France Télécom boss to resign as suicides reach 24

Regular readers of HR Case Studies will already be aware of the tragic cost of company restructuring at France Telecom, where there has been a rising number of suicides over recent months. The blame for these alarming statistics has been placed at the door of France Telecom’s 'modernisation' programme, which has seen 22,000 jobs lost and 10,000 people change jobs (often from a technical to a customer service or sales role).

In a further development today, Didier Lombard, the chief executive of France Télécom, faced calls for his resignation after another member of staff committed suicide yesterday, bringing the tally to 24 deaths in 18 months.

The latest in a list of deaths, which has shocked France and sparked debate over restructuring at the telecommunications giant, occurred on Monday when a 51-year-old employee killed himself in the French Alps. The man left a note blaming the ''atmosphere'' at work before throwing himself off a motorway bridge in Alby-sur-Chéran.

Like many of the suicide victims at the former state monopoly, he had recently switched jobs — in his case moving to a call centre where he had been given demanding performance objectives.

Visiting the site in Alby-sur-Chéran, Mr Lombard was booed by employees as he announced an end to the programme of compulsory job changes for managers. He also suspended staff performance indicators at the call centre, but failed to quell a storm of protest over the spate of suicides. The main Trade Union within France Telecom believe that the resignation of Mr Lombard is the only solution, but it seems that resignation is not on Mr Lombard’s agenda. The French government are already involved in the case, and ministers have urged a more ''humane'' approach to job changes at France Telecom, prompting Mr Lombard to hire 100 additional advisers in human resources and launch negotiations with unions on workplace stress.

France Télécom boss lambasted as suicides reach 24

HR: The Masters of Waffle

Reading through the otherwise excellent 2009 CIPD Recruitment, Retention and Turnover Survey this week drew to my attention the fact that as HR professionals, we don't half know how to waffle!

In the clearly crucial section on current attitudes to outsourcing, the report states:

Having a better resourcing capability in-house and regaining control of the employer brand and candidates' experience of the organisation are the main reasons for bringing resourcing activities back in-house.

OK, as a Graduate of the Dave Ulrich University of HR-speak, I can decode the text, but we seem (says he pretentiously, but at the same time establishing his philosophical credentials) to be drifting into a black hole of a Wittgensteinian language game where one has to be part of the inner circle merely to understand the conversation. Or (Warning! Dangerous suggestion ahead!) could it be that we're using such obfuscation to disguise the admission that we've made a strategic error on recruitment outsourcing?

Surely what the CIPD statement means is as follows:

The main reasons why many organisations are ditching their recruitment outsourcing arrangements are:

1. They believe that their own employees can do the job better than those of a third party.
2. They have realised that to outsource recruitment means you can't trust a third party to portray your company's image in the best light.
3. They consider that, where recruitment has been outsourced, applicants are confused about who they are communicating with.

Or is that just simplifying things too much?

Improving employee retention

A previous article mentioned that UK workers in the retail, leisure and catering industries were found to have the least job satisfaction, with 31% saying they rarely or never feel fulfilled in their job. It should therefore come as no surprise to read in the 2009 CIPD Recruitment, Retention and Turnover report that labour turnover in the hotel, catering and leisure industry is running at 34%, but even that is a decrease on the previous year’s figure of 41%. Nationally, the overall labour turnover rate is 15.7% which is a significant reduction from the previous year’s rate of 17.3%. Labour turnover is highest in the private sector, with a turnover rate of 16.8%.

Perhaps the finding that should raise the most eyebrows is the fact that respondents consider that the most effective method of improving retention is to improve the HR skills of line managers. Sadly only 39% claim to be doing this though! What we do instead is offer increased learning and development opportunities (47%), improve the induction process (45%), increase pay (42%) and improve selection techniques (42%)
  • What could be the factors that lead to turnover in the hotel, catering and leisure industry being so high?
  • What could be the reasons why the public sector finds it easier than the private sector to hold onto its employees?
  • How effective do you believe the quoted methods (increased learning and development etc.) of improving retention to be?
  • Why might so few organisations have attempted to improve the HR skills of line managers when it’s claimed to be the most effective method of reducing labour turnover?

Monday, 28 September 2009

Six million UK workers are unfulfilled in their jobs

According to a new survey by workplace assessment and development specialists SHL, apparently 22% of us find work unfulfilling. More than one in five UK workers consider themselves to be rarely or never fulfilled in their jobs. This dissatisfaction (which is felt most strongly in the younger working population) has got even worse as a result of the recession. SHL warn that although the current job market may mean that few workers are actively looking to change jobs, if the economy picks up again this could lead to a mass exodus of dissatisfied employees.

Some frightening statistics:

  • 22% of us rarely or never feel fulfilled at work. That’s around six million employees
  • 23% of the 16-35 age group say they do not feel they are in the right job for them
  • 32% of workers questioned say they have re-evaluated the type of organisation for which they work as a result of the recession
  • Workers in retail, leisure and catering industries were found to have the least job satisfaction, with 31% saying they rarely or never feel fulfilled in their job.

Almost six million UK workers failing to find job fulfilment

  • What are the problems that companies will face if a large percentage of their employees feel unfulfilled in their jobs?
  • What can companies to do remedy this situation?
  • A quarter of those between 16 and 35 say they rarely or never feel fulfilled at work. Why might this be?
  • What could be the factors that have led to workers in healthcare and education claiming the highest job satisfaction levels, but those in retail, leisure and catering claiming the lowest?
  • Further research activity: Explore the different tools that SHL market and consider how these might be used to address this problem.

Sunday, 27 September 2009

Gordon Brown: the new Dirty Harry?

As readers of HR Case Studies will be aware, pressure has been mounting for government intervention on the payment of excessive bonuses, particularly to bankers. Apparently Gordon Brown has now said that "enough is enough" when it comes to the old system, and he is threatening to "ban the old bonus system" and force banks to act in a more responsible manner.

With rhetoric reminiscent of Dirty Harry, the PM is promising to “clean up the system once and for all," with tough new measures which will "represent the toughest action of any country in the world. We are not going to stand by and return to the bad old days,"

The next few weeks will therefore see the introduction of (quake in your boots, all you bankers) a new Business and Financial Services Act. It’s claimed that the act will "ban the old bonus systems and make it impossible for firms to go back to using them."

Brown to "ban old bonus system"

  • Who are the organisations and campaign groups who have been urging for a change in legislation on bankers' bonuses?
  • What progress has been made by other countries on this issue?
  • Is it feasible for such legislation to be imposed, or can the end to the existing bonus system only come through self-regulation within the finance sector?
  • Update No. 1: Alistair Darling adds his voice to the demand for an end to the bonus culture. Cut bonuses, Darling tells banks
  • Update No. 2: Robert Peston offers thought-provoking insight to the changes to the bonus system. Labour bets on bashing bankers

Saturday, 26 September 2009

To tip or not to tip?

The hospitality industry is claiming that new rules on tipping waiting staff could cost restaurants £130 million and as many as 5,000 jobs. The new rules which come into force on 1 October will make it illegal for tips to be used to make up staff wages, often to the national minimum.

Restaurants will have to pay salaries in full, which will also attract national insurance on the whole amount. Restaurant customers seem to be particularly confused, and are not now sure where any tips will be going in future.

New tip rules 'could cost jobs'
  • Do you believe that it’s valid for restaurants to pay staff below the minimum wage, but then use tips to make up the difference?
  • What can be done about what the article refers to as “rogue operators”
  • Do you believe that customers will now change how much they leave as a tip in a restaurant?

Friday, 25 September 2009

G20 leaders divided over "fat cat" pay

Previous postings on HR Case Studies have signposted this week’s G20 leaders' meeting in Pittsburgh as the time when new rules for bankers’ bonuses could be agreed and implemented. It currently seems as if Germany’s Angela Merkel (possibly influenced by this Sunday’s elections) and President Sarkozy of France are the leaders who may be prepared to take drastic action on “fat cat” pay. Britain and the US have been seeking a compromise to resolve the dispute over bonuses by proposing that banks which did not carry sufficient capital should be required to claw back bonuses. It also seems likely that the G20 summit will be in agreement over backing ideas such as clawing back pay in the event of poor performance, and paying some bonuses in shares.

G20 moves against bankers' pay and bonuses

  • Place your bets now! Do you expect there to be any major changes to the payment of bonuses in the finance sector as a result of the Pittsburgh summit?

Sven gets red card for fouling up on induction

Sven-Goran Eriksson this week revealed that in addition to not doing a particularly good job with the England football team, his HR skills are severely lacking! After recruiting ex-England defender Sol Campbell on a five-year deal last month, the ex-England manager expressed his “disappointment” when Campbell left Notts County this week after just one match.

Come on Sven! If you’d been reading HR Case Studies over the last few weeks, you’d know that the danger period for new recruits leaving a new job is the first few weeks. Your comment of
“I really don't know the real reason” clearly indicates that you need to implement a decent exit interview process at Notts County. And as for, “He didn't like the training pitch and the dressing room and things like that but he knew that before because we showed him around before he signed” – what sort of induction programme is that! If a commercial organisation had just recruited a new employee on a reported £40,000 per week, you could guarantee that the onboarding process would be a bit more sophisticated than a swift trip round the office block! You need some HR support Sven. Give me a call.

  • Just because a new employee happens to be a highly-paid footballer, should they receive a different induction programme to others at a more junior level joining the club?

Thursday, 24 September 2009

CIPD staff get pay freeze, CEO gets bonus. Hmmm!

As the major rival to the CIPD People Management journal, it will have been a source of glee to the Personnel Today editors to be able to report that although the CIPD has banned discretionary bonuses for employees this year because the organisation did not hit its financial targets, and froze base pay for the majority of its staff, it has emerged that CIPD Chief Executive Jackie Orme has received a bonus to top up her £300,000 per year salary.

The pay freeze was implemented to minimise the need for redundancies and to help finance a freeze in 2009 membership fees.

A spokesman for the CIPD told Personnel Today that the CEO’s remuneration package was smaller than that of her predecessor and that her performance was assessed against a scorecard of membership, financial, service development and strategic measures and targets. The launch of the CIPD HR Profession Map was highlighted as a major achievement over the last year.

CIPD branded unfair as chief gets bonus despite pay freeze
  • Does the payment of a bonus to the CIPD CEO make it difficult for the CIPD to objectively enter the ongoing debate over CEO bonuses?
  • Read Jackie Orme bonus row: CIPD official statement. Does this change the way you responded to the last question?

Tuesday, 22 September 2009

Book your party now and beat the Christmas rush!

It's interesting to read that apparently most companies are planning to go ahead with a Christmas party this year despite financial pressures caused by the recession. 24 per cent of 1,100 HR professionals polled by the CIPD said they would be putting on an office party on a bigger scale than last year, while 34 per cent said they still planned an event, but it would be smaller than in 2008. Only 20 per cent of employers (presumably including Scrooge!) said they would be cancelling this year’s Christmas party altogether. The results are said to show that employers are anxious to reward staff who had experienced a difficult year. According to the CIPD's Reward Advisor, “Employers recognise that 2009 has been a tough year for their workers in terms of pay freezes and job cuts. They’re using the Christmas party, albeit on a reduced scale, to thank them for helping them through the past 12 months and believe that the future looks brighter.”

Firms continue to plan Christmas parties, says CIPD

  • Do you believe that employees will regard a Christmas party an acceptable alternative to an annual pay award?
  • In view of the opportunity for excessive behaviour at Christmas parties, many organisations have put a halt to such events. Is this being a bit miserable, or a wise precaution?
  • What other non-financial mechanisms can companies use to reward staff?
  • One for the HR professionals: are you in favour of Christmas parties?

Sunday, 20 September 2009

Does this job sound too good to be true?

The extracts below have all been lifted without alteration from adverts for HR roles in this week's HR online media. Although the HR Case Studies editorial team wouldn't recommend a total "warts and all" approach to attracting applicants (after all, no-one is likely to apply for a role stating, "Relatively tedious job in declining business; would suit mediocre and dull candidate") there is a serious point to be made about whether some job adverts do "sell the sizzle" a little too much, potentially leading to the expectations of the successful candidate not being met, and this subsequently developing into a rapid departure, requiring the whole recruitment process to be repeated.

A fantastic opportunity
An exciting opportunity
Worldwide, prestigious blue chip organisation
The fastest growing organisation of its kind
An exceptional opportunity
A true market leader with a global presence and an enviable reputation
A progressive independent government department
'The' market leader
A high profile services organisation with a great reputation in the market place
A well respected UK retail brand and major player in their niche market
One of the world’s leading organisations
An exciting opportunity for a passionate Training professional
A fantastic opportunity to join our client
A leading national business and a market leader
A superb opportunity has arisen to work for a world leading household name

  • What are the dangers of over-selling a role to applicants?
  • If an organisation found that it was losing a high percentage of its new recruits, what would you recommend that it might do to improve the situation?
  • How important is effective induction to ensuring that new recruits to a company stay there?
  • Graduates are notorious for moving on as soon as their develoment programme has been completed. Is this to be expected or are there measures that a company can take to remedy this?

Friday, 18 September 2009

Coaching on the increase

Research undertaken in advance of the CIPD’s Coaching at Work conference has revealed that 90% of the 500 organisations invited to participate in the survey are using coaching a key part of learning and development. Many organisations consider it 'crucial to their learning and development strategy'. According to the survey, coaching is being used at all levels (i.e. not just for senior managers and directors) for a number of reasons:

  • 23% use coaching to build on good performance
  • 20% use coaching to improve poor performance
  • 23% use coaching in leadership development

It will come as no surprise that the use of coaching is partly in response to the tightening of the budgetary belt for learning and development departments, but it also has the specific benefit that it can be tweaked to meet the needs of the organisation. Most organisations who use coaching believe that it has great scope to improve employee engagement, empower people and boost morale at a time of great uncertainty.

Coaching used by almost 90% of organisations, CIPD reports

  • How would you define coaching, and what do consider its benefits to be?
  • Update: A recent report indicates that tighter training budgets have failed to reduce the use of coaching by employers. Question: is it a surprise that most firms are still using coaching despite the recession?

Thursday, 17 September 2009

Archbishop attacks the bonus culture

Hot on the heels of the Trade Union leaders, The Archbishop of Canterbury has attacked the bonus culture of the City, and condemned the failure of bankers to repent for their excesses.

Dr Rowan Williams believes that the Government should have acted to cap bonuses and warned that the gap between rich and poor would lead to an increasingly "dysfunctional" society. His comments, which were made on the BBC 2 Newsnight programme, have been summarised in The Times.

Dr Williams said: "There hasn't been a feeling of closure about what happened last year. There hasn't been what I would, as a Christian, call repentance. We haven't heard people saying 'well actually, no, we got it wrong and the whole fundamental principle on which we worked was unreal, empty'." Looking to the future, he expressed his concern by stating, "What we are looking at is the possibility of a society getting more and more dysfunctional if the levels of inequality that we have seen in the last couple of decades are not challenged." He also said that the crisis was a lesson that "economics is too important to be left to economists". His interview also referred to a sense of "bafflement" and "muted anger" at the bonus culture. "I think that's one of those things that feeds the . . . diffused resentment, that people are somehow getting away with a culture in which the connection between the worth of what you do and the reward you get becomes more obscure."

  • How do you think that the comments made by the Archbishop will be received in the City?
  • There will be those who believe that finance should be left to the experts, and therefore do not consider Dr Williams’s comments to be useful or helpful. What’s your view?
  • Concern over the salaries of Chief Executives and the continuation of the bonus culture has led to a number of comments being made about the morality and ethics of the UK finance industry. Should economics and ethics be kept separate, or is that simply impossible?

Recruiting in challenging times

An article in Management Today suggests that as there appear to be some signs of life in the job market, the race may be on for businesses to attract the best people as the economy recovers

Neil Wilson, managing director at recruitment consultancy Badenoch & Clark, outlines his top tips.

1. Don’t compromise
Don’t recruit someone if they don’t have the right skill set for your organisation.

2. Look for genuine enthusiasm
Someone who has singled out your organisation as their ideal next career step is more likely to have a higher level of engagement and productivity.

3. Be proactive
Position your organisation as a more interesting prospect than others by keeping yourself visible and accessible.

4. Get your positioning right
Make sure people know what your organisation has to offer – essential if you are to stand out in an already noisy market.

5. Don't exaggerate
Don’t oversell your organisation and what it offers to new recruits.

6. Look beyond the tried and tested
Don’t just recruit from the usual recruitment channels.

7. Think about cultural fit
Get the cultural fit right and make the most of the skills and experiences available from other industries.

8. Build external relationships
Building your external talent pipeline is key to future success

9. Make your agencies work harder
Take advantage of your chosen recruitment agencies and get full use of their services.

10. Look to the future
Consider your company’s vision, where you want to be and whether you already have the skills and talent to get you there. The challenge lies in keeping your best people in the organisation and maintaining a culture that they want to be a part of.
  • Give examples of how an organisation that is recruiting might implement each of the suggestions.
  • What is meant by the following terms that are used in the article: a higher level of engagement, recruitment channels, cultural fit, external talent pipeline?
  • Research activity: explore recruitment adverts in a range of media (newspapers, trade journals, internet, radio, TV etc,) and discuss the effectiveness and relative merits of each

Wednesday, 16 September 2009

Trade Unions add their voice to the chorus demanding an end to the bonus culture

Speaking at this week's TUC annual congress, a significant number of major Trade Union leaders have declared their opposition to the bonus culture in both the private and public sectors. The most outspoken of the leaders was undoubtedly Gerry Doherty, general secretary of the transport union TSSA, who told delegates, "The bonus culture has no place in society. It's pure greed. This is wrong, it has to stop and it has to come from the trade union movement. Greed has to go and we have to tell the government that." Doherty highlighted recently published statistics that Thomas Cook's chief executive took home over £7m in 2008, while 2,800 employees lost their jobs at the travel company.

David Wilshire, of the Communication Workers Union also pointed his finger of blame at Adam Crozier, Chief Executive of Royal Mail Group: "It's unacceptable that while postal workers have a pay freeze imposed and are having their terms and conditions threatened, Crozier has enjoyed a payout of £995,500 in 2008-2009."

A call for head teachers' pay to be limited and to be made public was made by Brian Cookson of teaching union NASUWT. "Of course teachers must be properly remunerated, but can we say from the size of these salaries that it's more difficult to run a school that a country? The bonus culture has no place in the state education system. Pay and rewards of head teachers must be made public."
  • Which other organisations have recently called for bonuses and salaries to be restricted?
  • Research activity: Which major companies are represented by each of the TU representatives who have called for an end to the bonus culture?
  • Dodgy activity for teachers 1: compare the salaries of the different groups of employees within the education sector.
  • Dodgy activity for teachers 2: compare the salary of a head teacher with that of senior managers in other professions.
  • "Can we say that it's more difficult to run a school than a country" Explore the salaries of MPs and ministers in the UK government.

Tuesday, 15 September 2009

The tragic cost of company restructuring at France Telecom

The female employee of France Telecom’s Orange subsidiary who threw herself out of a fourth floor window last week was the company’s 23rd suicide in the last 18 months. She had just attended a meeting to discuss a reorganisation of the customer service department she worked in. As Management Today has reported, it’s hardly surprising that the French government, which still owns a quarter of the company, has stepped in to reassure staff that the problem is being addressed. The company’s Trade Unions put the blame for these alarming statistics firmly at the door of France Telecom’s 'modernisation' programme, which has seen 22,000 jobs lost and 10,000 people change jobs (often from a technical to a customer service or sales role). Other employees have taken dramatic action when being told that their jobs are changing; last week a technician stabbed himself in the stomach in protest at being moved into a new role.

A spokesman for France Telecom pointed out that France as a whole has a high suicide rate, of 17.8 per 100,000 people. But since that's about the number of people France Telecom employs, its suicide rate is clearly well above average, and definitely high enough to cause serious concern. The company has promised to bring a temporary halt to its restructuring programme while it introduces measures to deal with workplace stress. The good news for French HR professionals is that France Telecom is recruiting a number of them.

France Telecom forced to account for human cost of restructuring

  • What action would you expect the HR team in France Telecom to be taking following these events?
  • How might France Telecom have anticipated its employees reacting in such a dramatic fashion?
  • What are your views on the restructuring which has led to so many employees being required to change jobs?
  • What actions do many organisations take to minimise workplace stress?
  • As this latest even was the 23rd suicide in 18 months, should the company have taken action earlier and, if so, what?

Monday, 14 September 2009

£36.8m. Not bad for a year's work.

Despite the current recession which has led to FTSE 100 companies losing almost a third of their value, executives at Britain's top companies saw their basic salaries leap by 10% last year. The most highly paid chief executive was Bart Becht of Reckitt Benckiser who received £36.8m in pay, bonuses, perks and share incentive schemes.

The Guardian's annual survey of boardroom pay reveals that the average chief executive of a FTSE 100 company now earns a basic salary of £791,000. However, adding bonus payments, share awards and the value of perks (which range from cars and drivers to school fees and dental work), the average pay package rises dramatically. Nearly a quarter of FTSE chief executives received total 2008 pay packages in excess of £5m, and 22 directors now have basic salaries of more than £1m.

Liberal Democrat Treasury spokesman Vince Cable called such pay deals "breathtakingly cynical," while Brendan Barber of the TUC commented that "it looks depressingly like we are going back to 1980s greed-is-good politics."
  • What are the arguments that FTSE companies would use to justify the salaries of their chief executives?
  • Is it justifiable to award significant salary increases to the CEO of an organisation that has seen its share price slide over the last 12 months?
  • Look at the example of Bart Becht. Is any individual (whether an international footballer, film star or businessman) worth £37m per year?
  • Compass have called on the government to establish a High Pay Commission to curb excessive pay. Look at their campaign statement and consider how they would respond to the Guardian survey results.
  • Update for Teachers : Since this article was first posted, the Guardian has added a "datablog" of background information on the salaries of the top FTSE 100 Chief Executives. There's a wealth of data to explore and analyse, including comparisons of the salaries of CEOs with that of the average employee within the company. Enjoy the gasps of amazement!

Sunday, 13 September 2009

Performance Appraisal: Problems in Implementation

In the first of a series of more detailed case studies in performance appraisal, we will look at the issue of ensuring that the design and implementation of the appraisal system is properly addressed.

For any performance management system to be effective, it's vital that some of the obvious questions have been answered: questions such as who is to be reviewed by whom, what exactly is being assessed, whether training for reviewing managers is required, what the timescales are for completion, and whether there is any requirement to consult with Trade Unions prior to the introduction of an appraisal system.

Generally the appraisal will be undertaken by the individual's immediate line manager, though in some smaller organisations there may be some involvement from the HR department. Many organisations are now moving to appraisals every six months, but with a final rating (which may or may not be linked to the annual salary review) being given at the end of year meeting.

In order for the appraisal system to be effective, it is also vital that the cultural factors of the organisation are taken into consideration, so the use of an off-the-shelf system may not be appropriate.

Many organisations have learned to their cost that failing to consult with employee representatives, or not giving the newly introduced scheme the full support of the senior management team are usually recipes for disaster.

The detailed case study below identifies how one organisation made a number of easily avoidable mistakes which would limit its ability to develop its appraisal system (Document open in another application)

Performance Appraisal Implementation Problems at Albion Drinks

Learning from Chelsea

A former non-executive director of Barclays Bank has suggested (possibly with tongue firmly in cheek!) that the FIFA-imposed ban on Chelsea registering any new players until 2010 could be used as a way of limiting salaries in the banking and finance sectors.

His proposal is that banks who are caught inducing employees to leave their existing employers by offering guaranteed bonuses should be banned for a period of time from further engagement in the recruitment market

The idea has already been rejected by Lord Myners (the UK's City Minister) who believes that there are already enough safeguards under existing contractual law to address the problem of inducements to employees to breach their contract of employment. But the minister himself has not been able to suggest any viable alternative.

Chelsea transfer scandal has much to teach the City on bonuses

  • Is this suggestion simply unworkable, or could it be imposed on the banking and finance sector?
  • Do you think that it is reasonable that (particularly in our current economic climate) employees in this sector should be able to demand such high salaries?
  • Can you think of any other way of controlling salary-drift in this area?

Friday, 11 September 2009

Performance Management

The most common Google search term that directs people to the HR Case Studies site is "Performance Management." Although there are a couple of brief references on here to this subject, it's not one that has been covered in depth, so it's planned to develop a series of more detailed case studies over coming weeks, starting with design and implementation, and then progressing to more sophisticated appraisal systems and covering the problems commonly encountered in organisations which have formal Performance Management systems.

Important! If there are specific issues that you would like to see addressed in the forthcoming series of HR Case Studies on Performance Management, please leave a comment!

Although clearly humorous, the Dilbert cartoon above still addresses some of the factors required in appraisal systems, such as how to rate individual employees, how to give feedback, how to ensure that the employee remains motivated (regardless of appraisal rating) and the importance of keeping records of appraisals in case they are required in future (during a disciplinary hearing for example)

  • What ratings or rating scale would you expect to see in an effective Performance Management system?
  • Why is the retention of accurate Performance Management records important?
  • Are there sometimes external pressures for a manager to rate an employee either higher or lower than they would prefer?
  • What skills and training do managers need in order to undertake effective employee appraisals?

Thursday, 10 September 2009

Dutch knock out Scotland, and take the lead on executive pay

Sorry! It's yet another HR Case Studies item on executive pay! This week not only have the Dutch shattered Scotland's dreams of World Cup glory, but they are also on the verge of becoming first nation to put a cap on the value of bonuses paid to their most senior banking executives.

Their new code, drawn up by the Dutch bankers’ association and the finance ministry, will restrict such pay-outs to one year’s salary. The code does not extend to traders and investment bankers who are not executive board members, but it does call for a "meticulous, restrained and long-term remuneration policy" (along the lines of the guidelines issued this week by the CIPD). The Dutch finance minister has stated that such a code would not even have been debated a year ago. The approach of the Dutch will inevitably put increasing pressure on other countries attending the G20 summit in Pittsburgh later this month.

Surprisingly, rather than rejecting the introduction of the code, the chief executives of ING Bank and ABN Amro have given their broad support, even if they will have to face the future challenge of how to attract foreign executives.
  • Will other nations follow the lead set by the Dutch?
  • How effective will this code be if only the Dutch follow it?
  • If banks in the Netherlands are unable to compete on the basis of high bonuses, what other methods may they be considering to attract talent from elsewhere in Europe where such a code is not yet in place?
  • The code affects board members, but not traders and other senior managers who are not on the board. Is this likely to tempt successful managers to remain below board level?
  • Further research activity: What are the major Dutch financial institutions that are likely to be affected by this decision?

Wednesday, 9 September 2009

Another U-turn on HR outsourcing

Outsourcing much of the transactional work of the HR department has been fashionable with many organisations over the last decade, especially when combined with the transformation of the remaining HR professionals into Business Partners. But not all companies have gone down this road, and some of those that have are now reversing their decision and bringing this activity back in-house. The latest example is UK insurance group Liverpool Victoria, whose HR Director believes that by doing so he has reduced the company's costs by £3m over the last year. As the business is growing, the Chief Executive demanded a change in HR strategy, and made it clear that he didn't want an outsourced HR function run by someone else, but wanted the activities to be undertaken in-house, enabling the HR team to be fully supportive of business growth and change. The U-turn on HR outsourcing has demanded a redesign of almost all of the HR processes, with particular attention being focused on recruitment and learning and development.

  • Why did many organisations outsource the work of the HR function, and what are the reasons for this decision now being reversed?
  • Give some examples of transactional HR activities.
  • The summary refers to HR Business Partners: what is meant by this phrase, and what are the sort of HR activities that they would be involved in?
  • The first process that Liverpool Victoria re-engineered when bringing it back in-house was recruitment. What are the benefits but also the dangers of allowing an external organisation to manage a company's recruitment campaign?
  • Further research: what other examples can you find of businesses that have been involved in outsourcing HR, and also in reversing this decision? (Hint: use the subject tags on the right!)
  • Bringing the HR activity back in-house is said to have saved Liverpool Victoria £3m. Would there have still been an argument for doing this if the savings were lower, or even if by doing so it involved an additional cost?

Tuesday, 8 September 2009

CIPD issues guidelines on executive reward

Followers of HR Case Studies will be aware of the debate that has been buzzing around concerning the calls for regulation of the salaries of the highest paid UK executives, particularly within the banking and finance sectors. The CIPD (the organisation that represents the interests of the UK's HR professionals) has this week issued guidelines to its members to assist them in developing sensible and fair remuneration policies and practices. The CIPD has commented that, “Unfortunately, the issue has degenerated into a slanging match around how much executives earn, rather than about what organisations need to consider to ensure that the way they reward their executives supports the needs of the business.” Echoing the views of EU finance ministers, the CIPD recommends that variable pay, such as bonuses, should be linked to financial and non-financial objectives and deferrals of cash payments should be considered if necessary. In particular, the principles address the issue of linking reward to business performance, and advises that variable elements of the executive's pay (e.g. the annual bonus) should ensure that the value of the package, in its entirety, will vary with business performance. In simple terms, if the business performs, the exexutive is rewarded with a bonus, but if it doesn't the bonus is reduced or withheld.

Read the CIPD Principles of Executive Remuneration guidelines and answer the following questions:

  • What does the CIPD mean by a Remuneration Committee?
  • Why does the CIPD recommend that at least one member of the Remuneration Commitee is independent from the company?
  • What is meant by fixed and variable elements to a remuneration package?
  • What is meant by an incentive scheme?
  • Principle 4 states, "Incentives should reward outcomes that lead to, and reflect, sustainable and measurable value creation." What does that mean in simple English?
  • The principles talk of deferring cash bonuses. What does that mean and why might an organisation consider it?
  • The CIPD is seeking feedback on its proposals. What would your comments be?

Further reading from Management Today: Ten Top Tips: Designing bonus schemes

Monday, 7 September 2009

Employers are unaware of the talents of women

Helen Alexander has been appointed as the new head of the Confederation of British Industry (CBI) employers' group, the first woman to occupy the position of president since the group was founded in 1965. In her first interview she has stated that "industry in the UK is missing out by failing to exploit the talents of women." The statistics certainly seem to support her: of the board directors in the FTSE 100 index of leading UK businesses, only 11% are women. Ms. Alexander doesn't believe that there is prejudice against women in the boardroom, but suspects that many employers are simply aware of the talent that women can offer. She also stated that there was plenty of female talent around but does not personally favour positive discrimination.

  • What's the current legislation on Equal Pay and Sex Discrimination in the workplace?
  • Are there particular skills that only women can bring to the workplace, and in particular to the boardroom?
  • Thinking of your answer to the last question, are there certain roles that are best undertaken by women?
  • What examples can you provide of women who have "made it to the top" in what is a business area predominantly populated by men?
  • What does Helen Alexander mean by "positive discrimination" and what's the current legislation on this?

Sunday, 6 September 2009

A Sunday shambles!

London Midland runs about 1,200 train services, calling at 149 stations between London, the Midlands and the North West. It relies on drivers volunteering to staff its trains on Sundays but this week not enough had offered to work, so services will not run. Rail users' groups have called the situation "a shambles" and the company's unions have said it could have been avoided. "This weekend, so few have volunteered to work, that we have had no choice but to cancel services," said a spokesman for the company. Bob Crow, who is general secretary of the Rail, Maritime and Transport Workers Union (RMT) said the move was not organised action by workers but simply a case of the contractual right not to work being exercised. "Their contracts of employment say they're not forced to work on a Sunday, so it's their choice." As far as passengers are concerned, a user commented, "It's a shambles. How can they run an essential service on a voluntary basis? It's an astonishing way to operate a train service." Understandably, the government has been urged to look into the firm's voluntary work rules.

  • How could this situation have been prevented?
  • What are the advantages to both a company and its employees of paying overtime when additional work is required?
  • What are the typical premium rates that an employee might receive for working overtime on (a) a normal working day, (b) a weekend, and (c) a Bank Holiday?
  • Can a company require its employees to work on a Sunday?
  • How could a refusal to ever work on a Sunday limit an individual's career development
  • Research activity: Explore the work of Keep Sunday Special who campaign for Sunday remaining primarily a day of rest for family, friends and community.
  • What happened next? Suggestion for further activity: the dispute has now developed and a resolution seems to have been reached. Discuss the possible solutions to this employee relations issue, and then read the attached article to see what actually happened.

Stay-away train drivers have Sunday double pay reinstated

Saturday, 5 September 2009

The bankers' bonus row becomes global

Although the UK has already rejected the idea of imposing a cap on excessive bonuses for bank executives, other countries concerned about how best to recover from the recession seem to be giving the idea their support. The French finance minister has already stated that France is ready to launch an "onslaught" against large payouts, and her view has been given support by ministers from other EU countries.
UK Chancellor Alastair Darling is expected to suggest a compromise that bonus payments should be paid out over five years and in the form of share options rather than cash, with the bulk of the bonus being paid in the final two years, and with the possibility that the bonus will have to be paid back if the bank's performance subsequently dips.
It now seems inevitable that the issue of bonus payments to banking executives will dominate the discussions at the G20 summit in Pittsburgh later this month.
  • Will the UK be able to withstand the pressure from other countries to impose some form of cap on bankers' bonuses?
  • Why do you think that the UK is standing alone on this issue?
  • The French Finance minister Christine Lagarde has said that excessive bonuses had contributed to the global financial crisis and needed to be capped to avoid problems happening again. Do you agree with her statement?
  • Suggestion for teachers: This debate will inevitably develop over the next month. Use the reports on (e.g.) the BBC website to chart the progress of the UK's view in the lead-up and during the G20 summit

Friday, 4 September 2009

How not to manage a recruitment campaign

For a classic HR case study in how not to manage a recruitment campaign, look no further than the Dorset Police Force. The force is seeking to fill 40 roles, and had invited candidates to phone in for an application pack, but after an unprecedented 500 phone calls had been received, the force closed down the phone lines. One of those who didn't manage to get hold of an application form had been on the line for two hours and compared the experience to applying for tickets to Glastonbury. The Dorset Police Federation have criticised the treatment of potential recruits, but have also welcomed the review of recruitment procedures that the force has promised. "This was an appalling way to treat people and does not ensure the force gets the best people for the jobs" said a Federation spokesman.

BBC News: Police officer jobs block phones
  • Should the Dorset Police Force have anticipated a higher demand for applications for these 40 positions?
  • Describe what you would consider to be a fairer way of attracting applications for these positions?
  • What criticisms can be made of requiring applicants to phone in for an application pack?
  • A Dorset Police spokesman said: "As is the common practice, we limited the number of applications to 500 for practical and economic reasons" Do you think that this is reasonable?

Yet another organisation withholds bonus payments

Although the scenario may be very contemporary, the Dilbert cartoon strip is actually from August 1998, which may give slight comfort to those employees whose organisations will be refraining from paying out bonuses for 2009 performance! As ever, behind the humour of the Dilbert cartoon, there are serious issues raised:

  • The strip hints that bonuses are paid out every year, and employees have assumed that they are a certainty. If this is the case, does the bonus lose its motivational impact?
  • Many organisations pay employee bonuses based partly on company performance, and partly on the employee's perormance. What happens where the employee has worked hard to succeed, but the company hasn't hit its financial targets?
  • When times are financially tight, what else can a company do to motivate its employees to perform?
  • Any suggestions on how Dilbert's boss could improve his motivational and communication skills?

Thursday, 3 September 2009

Trust the boss? Not me!


A recent survey undertaken by Management Today and the Institute of Leadership and Management shows the average British worker as a rather suspicious person when it comes to putting trust in The Boss! The survey reveals that about a third of British workers don't trust their managers and leaders to do the right thing. According to the survey of 5700 workers, 31% of non-managers and 28% of managers say that they have ‘no’ or ‘low’ trust in their management team. Worrying statistics! The factors assessed in the survey were ability, understanding, fairness, openness, integrity and consistency. The report highlights some interesting variations: The larger the organisation, the less trust employees are likely to show in its leadership; the longer an employee has been with the organisation the less they trust their management team; women are generally more trusted and trusting than men; the highest levels of trust in management is to be found in private sector organisations.

The report's conclusions are simple and stark: Establishing trust takes time and is improved when the relationship between leader and follower is close. This finding has important implications for new CEOs of very large organisations, many of which are in the public sector and feature long-serving employees.The CEOs of these organisations have the steepest hill to climb to establish trust, and they will not be able to reach the summit without demonstrating a strong sense of personal integrity. If they can’t show the qualities of principle and honesty, and that they are in it for the long haul, not just as a lucrative or advantageous career move, they will not be trusted.
  • Are these results surprising, or is it generally to be expected that employees will distrust their management teams?
  • Why are employees in larger organisations less likely to trust their bosses?
  • What might be the reasons why women are generally more trusted and trusting than men?
  • Private sector industry bosses enjoy a higher level of trust than their counterparts in the public sector. Why might this be?
  • What follow-up research might be useful for managers to obtain further information on why employees do 0r don't trust them?
  • The survey assessed ability, understanding, fairness, openness, integrity and consistency as signs of a trustworth boss. Are these the best measures of a good leader?

Tuesday, 1 September 2009

How long do you have to work to afford an iPod nano?

An average wage-earner in Zurich and New York can buy a nano from an Apple store after nine hours of work. At the other end of the spectrum are workers in Mumbai, who need to work 20 nine-hour days – roughly the equivalent of a month’s salary – to purchase a nano. For us mid-range mortals in the UK (or London to be precise) it will take the average worker 11 hours. If you need a Big Mac, and need to earn it fast, then Chicago, Tokyo and Toronto are the places to work, and you can start licking your lips after a mere 12 minutes. But pity the worker in Nairobi who will need to work 158 minutes to get his teeth into his burger. These eye-opening facts are all part of the 2009 UBS Prices and Earnings survey which looks at which are the most expensive cities to live in, where you're likely to get paid the highest salary, and where your money will go the furthest. When it comes to choosing where to base yourself for the highest pay, a nasty surprise is in store for those living in London. Three years ago the British capital was in the No. 2 spot, but now it has slid 19 places, to 21. The reason? The falling pound has made London employees around 25% cheaper for multinational companies than they were three years ago. So choose where you live and work wisely. And look after your iPod in Mumbai!

UBS Prices and Earnings Survey 2009

  • According to the UBS report, which are the most expensive cities to live in?
  • Where are the cities whose workers take home the highest pay?
  • How do salaries compare between Western and Eastern Europe?
  • Once tax and social security deductions have been made, where are the cities with the greatest purchasing power?

No.10 takes a stand on bankers' bonuses

Although he refused to endorse the comments already made by Lord Turner, UK Prime Minister Gordon Brown has taken the debate over reform within the global financial sector to a new level with his statement that pay and bonuses should be based on long-term success not short-term speculative gains. In an interview with the Financial Times, he also stated that banks should “claw back” bankers’ rewards if their performance suffered in subsequent years. Mr Brown said he hoped that the G20 leaders meeting in Pittsburgh this month would provide a forum for further global debate on the issue, and made it clear that although he supported attempts to tackle the high pay of bankers, this was not an action that the UK could take unilaterally. The debate has already started to be addressed within other European countries, where leaders have also called for steps to be taken to prevent excessive risk-taking by large banks. In Berlin on Monday, Germany's Chancellor, Angela Merkel commented that “No bank should be allowed to become so big that it can blackmail governments.”
  • Is some form of reform over the pay of senior managers within the financial sctor now inevitable?
  • Why is taking a stand on this not an issue that the UK would wish to take independently?
  • What are the risks of reform being introduced in Europe, but not in the other economies of the developed world?
  • What preparations might the HR Directors of financial institutions be making in advance of such reform being introduced?
  • Gordon Brown has stated that "pay and bonuses should be based on long-term success not short-term speculative gains." What might a remuneration package that rewards such factors look like?