Have you heard of the Anna Karenina principle?
It’s based on the Tolstoy novel, where the Russian author wrote that “happy families are all alike; every unhappy family is unhappy in its own way.” PayPal co-founder Peter Thiel pinched the principle when he wrote in his book that, while unsuccessful businesses have certain things in common, “all happy companies are different.”
It’s this variety in firms that makes our UK Employer Skills Survey so valuable.
In our survey we speak to a huge variety of establishments: family-run businesses, start-ups, large private companies, as well as public and third sector organisations. This breadth allows us to pick up a great deal of difference in the working practices and business strategies that employers adopt.
The working practices of a company are notoriously hard to unpick; not for nothing are they referred to in HR literature as “the black box”. Our approach to measuring this is to ask establishments if they carry out any of a range of 21 practices, and we keep a tally of how many are in place. We talk about planning activities (e.g. setting an equal opportunity policy or training plan), offering autonomy to employees, developing employee skills, offering rewards and incentives, and organisation design and structure.
Those that adopt at least 14 of the 21 measures are designated as high performance working or HPW establishments.
So what kind of organization is high performing? And what makes them different? Here’s a quick run-down of some of their characteristics.
Bigger is better?
In pure percentage terms, 12% of employers are HPW (that’s the same as in 2013).
Given the greater resources they can bring to bear, it’s understandable that larger employers are likely to adopt HPW practices: employers with 100 or more staff were nearly five times as likely to be HPW than the UK average. Conversely, very few micros (fewer than five staff) are HPW – just 4%.
HPW employers fare better in the job market
HPW employers are much more likely to be hiring – 40% had a vacancy at the time of ESS 2015 compared with 16% of non-HPW employers.[1]
HPW employers are more attractive to potential staff, and find it easier to fill the vacancies they advertise. We can tell this because a smaller than average percentage of their advertised vacancies are hard-to-fill. (HPW employers are actually more likely simply to have a vacancy that’s hard to fill, but this is a product of the larger number of vacancies they have overall.)
However, it’s more complicated than that. Where HPW employers do encounter hard-to-fill vacancies, a greater proportion of these are caused by skills shortages (72% compared with 67% of non-HPW employer HTFVs). This suggests HPW employers have greater demand for skills, qualifications and experience when recruiting.
HPW employers train more
There’s more to being a high performing employer than training, but alongside identifying skills problems, taking steps to deal with them is a sign of enlightened HR. Indeed, having a training plan is one of the 21 items on the HPW questionnaire, so we would expect a link between training and HPW status. We’ve also seen that HPW employers recruit heavily and identify relatively high levels of skills gaps. These factors might also lead them to train more.
This is borne out by data from ESS – nearly all HPW employers had arranged training in the past 12 months (98% compared with 62% of non-HPW employers). Consistent with this, HPW employers train a much larger proportion of their staff – 77% of staff compared to 54% of staff that see training in non-HPW employers.
BAE and IPA – putting high performance to work
So what is a real-world example of high performance working?
BAE Systems Maritime Naval Ships is testing out new ways of working at its manufacturing facility in Glasgow.
The scheme gave production teams at the plant greater autonomy – including being able to make adjustments to their working environment and determine their own working hours. A key part of this was that incentives changed: the teams were rewarded for their level of output, rather than for their attendance. The payoffs were clear for the workers: many were able to benefit from a shorter working week, while the organisation, in turn, benefited from increased productivity and efficiency.
BAE worked with IPA Involve as a key partner for this work. IPA worked with the unions at the site to study and explain the scheme, and tell others. There is potential for the findings of the scheme to be used elsewhere in BAE, by other manufacturers, and even by firms in other sectors altogether.
[1] This difference also stands after controlling for employer size.