Uncategorized

Peers voted 327 to 234, to give a majority of 93 to a Labour motion forcing the Government to set up a select committee to evaluate the bill. The Labour Party suggests that under the proposed bill, it could see its annual income fall by £6 million, as the new legislation would require Labour-affiliated union members to ‘opt in’ to paying a levy to the party instead of having it automatically deducted. 

The Labour peer, Baroness Smith of Basildon said that it would be prudent to examine the issues involved in a select committee, rather than seeing “who can shout the loudest on the floor of the house.” Although the Government claims that the Bill would not have a significant impact on Labour’s finances, Baroness Smith believes that the government is in “denial of the consequences.”

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.

MPs call to scrap employment tribunal fees

MPs have called for employment tribunal fees to be scrapped as they argue it is having an impact on the number of claims being lodged at the Tribunal. Figures from Ministry of Justice show that the introduction of the fees in 2013 has coincided with a steep drop in the number of tribunal cases. About 13,500 single-person cases were brought per quarter in the year to June 2013 but following the introduction of fees, the average quarterly figure dropped to about 4,500 between October 2013 and June 2015 – a decrease of 67 per cent. The figures also showed that the number of ‘pregnancy-related detriment of dismissal claims’ halved since the introduction of the fees – and there was also a huge reduction in the number of sex discrimination cases.

MP Justin Madders, who has been vocal in his opposition of Tribunal fees said: “…Losing your job can affect your marriage, your health, your home, your finances and of course your family, yet we seem to be fostering a culture where an individual is considered a disposable item, to be cast aside with barely a second thought given.” He also said that while employment rights are ultimately beneficial to everyone – the Tribunal fees undermines those rights and “…actively encourages rogue employers to flout the law.”

The Government responded by saying it was reviewing the changes and the impact they had made. Shailesh Vara MP said “if, after the review has reported, the government believe that there are compelling arguments for changes to the fees structure or to the operation of the fee remissions scheme, we will, of course, bring forward proposals for a consultation.”

‘Zero-hours contract workers as happy as permanent, full-time employees’ – CIPD

New research by CIPD claims that 65 per cent of zero-hours contract workers are satisfied with their jobs – slightly higher than the proportion for employees as a whole (63 per cent). CIPD claim that zero-hours contract workers are also more likely to see their work-life balance in a positive light than other employees.

According to Peter Cheese, chief executive of the CIPD, zero-hours contracts are becoming a permanent feature of the UK labour market and that CIPD’s “research shows that zero-hours contracts employees don’t always see their jobs in such a negative light.”

According to the ONS, the number of people on zero-hours contracts was 744,000 over the  period from April to June 2015, up from 624,000 over the same period in the previous year.

The TUC criticised CIPD’s report saying that their outcomes were not based on a representative sample. TUC general secretary Frances O’Grady said: “zero hours contracts do work for some people. But let’s not forget that they have been used as a way of keeping down wages and employing staff on worse terms and conditions.” While the TUC agrees that a minority of employee groups  who are in a position to negotiate their remuneration alongside flexible working patterns are “attracted” to the flexibility of zero-hours contracts, they suggest that there is no evidence that such contracts benefit workers more widely.

Capitalising on digital advances in the workplace

A new report by Accenture Strategy – ‘Success or stagnation in the communications industry’ – outlined key tips for management and HR to “unlock the value of their workforce in the digital age.” The report suggests that organisations need to “shift the balance” between digital and traditional workforce so that they can compete more effectively. Ryan Shanks, managing director for Accenture strategy (Ireland) and author of the report said:  “You might be surprised at the willingness of traditional workers to embrace digital. We’ve found more than half of employees we have surveyed (57 per cent) see the impact of digital technologies on their work experience as being positive. Only 8 per cent see it as negative.” He also suggests that for innovation to thrive, organisations should encourage small teams to work together, and that executives need to understand where “talent lives and how it can be accessed.”

The report also shows that organisations should make better use of digital technologies to support the changing future of work and to succeed in a “digital era”, leaders need to develop distinctive capabilities, and adopt the right culture.

Background

Over the last three years, Zurich UK Life has been on a culture change journey.  Earlier this year, we had the opportunity to take stock of how far we’d come through participation in research led by University of Bath School of Management and CIPD (now published as “Landing Transformational Change”). I want to share our story.

Our journey started when Gary Shaughnessy was appointed as CEO of Zurich UK Life in summer 2012. Shortly after joining, he began working with his top Executive team to create the vision for the organisation and considering the culture which would enable success in a rapidly changing environment. With the attributes of PACE (Passionate, Agile, Collaborative, Externally-Focussed) firmly agreed upon as the behavioural levers on which to build the culture, Zurich UK Life set to work on making the top-down structural changes, building the compelling corporate messaging and inventing the engagement vehicles that would drive, entice and compel the 1,600 employees within UK Life towards the desired end-state.

The legacy of the organisation was strong and its prevailing culture was built on foundations of hierarchy, centralised control and compliance. There had been considerable change at the top of the organisation and this was combined with a tradition of long-service through other management layers. The organisation had been pulled back from the brink over the preceding eight years and had rebuilt its reputation within the Zurich Group and within the UK Market. Employees were proud of these successes and had experienced the rewards that come with being part of an organisation that was exceeding its targets. All these factors in combination meant that our traditional top-down methods of driving change were not going to get to the desired end-state, and certainly not in a timely manner.

PACE Champions

During our transformation journey, it became clear quite quickly that direct staff involvement in the transformation would be key to the successful delivery. With this in mind, Zurich UK Life corralled a diverse group of change agents from across the organisation into the PACE Champions Group.  This Group has evolved over time, but currently has three distinct purposes : 1) role-modelling the new behaviours; 2) channelling communication in to, out from and within their functions; 3) creating, facilitating and promoting change activity to encourage involvement.  Over the last three years, this Group has been instrumental in the delivery of a number of discreet events aimed at helping create the environment in the transformation can occur, some examples are below:

That’s Life: This was internal expo event aimed at sharing the work that each function did, how it did it and the sorts of roles that existed in different parts of the business. This was one of the first events run by the Champions and was aimed at starting to break down the silos which had arisen from the previous hierarchical and centralised control regime. By providing stalls and giving the whole event the feeling of a trade fair, the Champions recruited people from within their function to share their own stories with colleagues and promote greater understanding of how the business worked

Learning Week: Twice, the PACE Champions have facilitated the Learning Week event, which has involved using in-house experts to deliver training and awareness sessions to delegates from around the business.  Sessions have included a talk on “Introverted Leadership” from our COO; an introduction to “Prezi” from some students on placement with us; and a session on “Motivation Theory” from two members of staff undertaking Masters degrees in Coaching. The event served a dual purpose with employees being able to talk about topics that were important to them (thus demonstrating their Passion) at the same time as allowing other employees to learn and develop.

Changing Habits of Life: The Champions delivered an event aimed at causing disruption to the established routines that exist within everyone’s working lives. The Champions worked to foster an environment where change could be experienced in a way that was putting individuals outside of their own comfort zone. With the appetite for change created, the Champions then ran floor sessions with their areas to identify the activities that were the product of habit and challenge themselves as to whether things could be done differently. As the week progressed, actions for improvement were captured and plans put in place to deliver where JDI wasn’t possible.

The Hunger Games: An inhibitor to the ability of employees to collaborate and work with agility is the lack of effective networks at an Individual Contributor or Junior Manager level.  The Hunger Games was a lunchtime “Speed Dating” event for staff at these grades to get to know each other.  Over 50 members of staff from different functions were assembled and then spent 5 minutes in conversation in groups of four. Conversation starters were offered (on both work and non-work topics) and at the end of each period, the room was rotated and new conversations were initiated between a different four participants. This event was held over lunch time with a sandwich lunch being provided.

PACE Awards

Through the research outcomes, a piece that surprised us was the power of the PACE Awards Scheme. The awards scheme recognises individuals and teams, with all nominations coming from colleagues.   The winners receive a certificate presented by an member of the Executive Committee, high-street vouchers and an invite to an annual “Winners’ Dinner”.  This was set up very early in the change journey but has evolved over the course of the last three years in response to feedback from the PACE Champions and the wider business.  The insight from the research was that the PACE Award Scheme provided a translation of the high-level corporate rhetoric into tangible examples of behaviour, to which other employees could relate. The winners are chosen by a diverse group of judges that draw from all levels and functions within the organisation, which ensures that our employees are part of that translation process. By being part of the translation, the definition of the culture becomes organic and evolving, determined by the employees that live the culture. Over time we came to realise that asking people to volunteer to be judges had a positive impact on the perceived transparency of the scheme and by reducing the cash value of the prize but increasing the number of winners, we could provide greater overt recognition of the people around the business exhibiting the desired attributes. This scheme built the link between the new behaviours and the celebration of success, which helped to decouple the old behaviours from the notion of reward and recognition.  This award scheme has now been in place for three years and the number of nominations continue to increase each quarter, suggesting that momentum and participation continue to grow.

Conclusion

The PACE Culture change journey is ongoing within Zurich UK Life. The events above were raised in response to having identified “the next hurdle” and creating engagements that would help move us forward. By looking at the rear-view mirror, we can build a narrative that demonstrates the quantum of change we’ve already achieved but through the windscreen, the destination remains shrouded in rhetoric. Each junction, pothole or hitch on our journey creates the opportunity for a conscious change choice informed through dialogue and input from inside the operation and an action that moves us towards the desired culture and create more clarity on the end-state.  

In the words of Nobel laureate Paul Krugman, “Productivity isn’t everything, but in the long run it is almost everything.” At the individual level productivity and at the macro-level economic growth, much like compound interest have generated massive differences between successful firms and economies and those floundering under the yoke of unemployment and low living standards. Moreover, in the middle of a period of intense competition in the private sector and spending cuts in the public sector, now more than ever productivity should take centre-stage. But there is one potential area of labour productivity improvement that is typically underdeveloped in the workplace and yet could be both cheap to introduce and popular with workers: promoting labour productivity through improvements in worker wellbeing.

In a series of experiments with co-authors at the University of Warwick, we explore the powerful interplay of human emotion and worker productivity. Our research, simply put, asks the question: does happiness make people more productive workers, or does it rather promote careless behaviour?

To pre-empt the rest of this article, our findings show that boosting worker wellbeing can generate dramatic increases in productivity. Positive emotions appear to invigorate human beings, while negative emotions have the opposite effect. But more than that, we find that the core transmission mechanism is through effort: happier workers put in extra effort compared to their less happy peers. At the same time, we find that unhappiness stemming from bereavement, or serious illness of family members, reduces productivity to a striking degree.

We conducted randomized trial experiments involving paid piece rate work for over 700 subjects. In one experiment, we boosted happiness in the laboratory. We did this via some extremely simple mood induction procedures common within psychology. The first was through audio-visual stimulus (a form that psychologists consider especially effective, working on more than one sense): a short comedy clip. A second was the simple provision of some water and snacks. In a variation we noted existing real-life shocks, stemming from bereavement and family illness, and checked to see if these more serious life shocks might also generate an effect on productivity many years later.

The subjects of our experiments were Warwick University students who were asked to add a series of five two-digit numbers in 10 minutes. The task is a very simple one, but taxing under time pressure. It might be thought of as a very stylised representation of an iconic white collar job since both intellectual ability and effort are rewarded. The subjects were paid a show-up fee and a performance fee based on the number of correct answers.

The comedy movie clip succeeded in raising the reported happiness levels of those who saw it, as compared with those who did not see a film or who saw a placebo film, a clip depicting patterns of colour sticks. The free water and snacks had the same positive effect. The real life shocks did seem to produce a lasting and negative effect on the reported happiness of our subjects up to 3 years after the event (we asked them about real life shocks at the end of the session so as not to prime them and so as not to confuse the effect of the shocks with the effect of recalling the shocks).

Among the subjects who reported higher happiness levels after seeing the comedy, productivity was significantly higher: 12% higher than the productivity of the other subjects, for both men and women. The subjects who watched the movie but did not report higher levels of happiness did not demonstrate higher levels of productivity. As a result, the increase in productivity seems to be linked to the increase in happiness, not merely to the watching of the comedy movie per se. The story with snacks and water was virtually identical with this group also performing much better at the task. Similarly for those subjects who suffered a “bad life event” in the previous 3 years productivity was 10% lower than those who did not suffer any family bereavement or serious illness in the family. Given the extraordinarily homogeneous sample of our subjects in terms of age, experience and ability, the difference in productivity was unexpectedly striking.

As mentioned earlier, our results indicated that this increase in performance was achieved through an increase in the number of attempted additions, while the probability of being correct when carrying out each addition was unaffected. Hence, we argue that the effect on productivity works through increased effort rather than ability. This distinction is of interest. It might be viewed as one between industry and talent, between the consequences of happiness for pure effort compared to effective skill, although in related work psychologists have shown that boosting happiness can also boost creativity (which they measured as the raw number of ideas).

In terms of applications of this work, most directly we now have some evidence generated through controlled conditions which supports the idea of the “happy-productive worker”. While many managers have known for years that establishing a happy environment can work wonders for productivity, many still see worker wellbeing as an alternative to profitability. Our message is that happiness and profit can move in the same direction. As for how to achieve this, perhaps starting with simple low-cost changes such as better positive feedback, nicer environments (even fresh coats of paint or buying that new coffee machine workers have been asking for). More expensive happiness boosting measures might well be justifiable but this can only reasonably be checked through a process of trial and error, but given the potential gains, it might be worth experimenting with new ideas.

Dr Daniel Sgroi, Associate Professor of Economics, University of Warwick

Junior doctors to go on strike

Junior doctors in England have overwhelmingly voted in favour of carrying out strike action in a dispute with the Government over changes to their contracts. Under the plans, the standard working during which doctors are paid at the basic rate, will be extended.

According to the BMA, the “unfair deals” risk forcing promising young doctors to “speak with their feet” and go abroad to work. BMA council chair Mark Porter said: “While the BMA regrets the inevitable disruption that this will cause, junior doctors have clearly been left with no alternative but to consider strike action due to the Government’s continued threat to impose a contract that is unsafe for patients and unfair for doctors.” But Jeremy Hunt, Secretary of State for Health claims that the changes are necessary to improve services at the weekends, and to truly have a “7-day NHS”.

Additionally, NHS England recently announced limits on the hourly pay rate for agency staff in order to reduce costs but the Association of Professional Staffing Companies (APSCo) has called the move “an absolute sham.”

Rise in workplace bullying in the UK

A recent study by Acas has revealed that workplace bullying is on the rise in the UK, with Acas receiving about 20,000 calls about harassment and bullying at work. Sir Brendan Barber, Chair of Acas said that the victims who got in touch with Acas’ helpline had faced some “horrific” incidents around bullying that have included “humiliation, ostracism, verbal and physical abuse.” The report also showed that managers were unwilling to speak to offenders of bullying if they were perceived to be valuable employees. “Managers sometimes dismiss accusations around bullying as simply personality or management-style clashes, whilst others may recognise the problem but lack the confidence or skills to deal with it”, Sir Brendan Barber added.

A separate poll carried out by YouGov for TUC showed that at least 36 per cent of UK workers quit their jobs as a result of being bullied at work. Women were more likely (34 per cent) to be victims of bullying than men (23 per cent) and in nearly 72 per cent of cases, the bullying was carried out by a manager. Frances O’Grady, general secretary of TUC said that organisations need to make sure that they have a zero-tolerance policy towards bullying and that many employers are “simply ignoring bullying behaviour and are failing to support their staff.”

‘Engage or Bust!’ – Engage for Success Conference 2015

This week, senior business leaders, HR Directors and more gathered at the Engage for Success – ‘Engage or Bust!’ Conference. Mark Price of Waitrose, John Timpson of Timpsons and Tanith Dodge of Marks and Spencer, from some of the strongest brands in Retail, all said that employees are at the heart of their working cultures and have been for many years. They consider that vital to their success.

Attendees heard from the Engage for Success thought and action groups about engagement and wellbeing and from Dr David Halpern about how the smallest nudges can bring about changes for the better in behaviour in the workplace. 

The founders of Engage for Success, David Macleod and IPA Director Nita Clarke, wrapped up the day by asking attendees to consider if they, and our organisations, want to “see what happens, wonder what happened or MAKE things happen” and change the way they work.

As the recovery beds in and gathers pace, the challenges and opportunities facing people managers seem to be changing. Labour market forecasts indicate that as the job market becomes more buoyant, employees will be seeking new opportunities and employers will need to do more to engage and retain workforce talent. The key driver for business remains productivity and awareness of the increasing productivity that arises from a highly engaged workforce (www.mgassessments.com/employee-engagement.aspx) needs to become more widespread.

A recent ILM survey suggests 37 per cent of workers plan to leave their company in 2015 up from 19 per cent in 2014. Replacing an employee who leaves can cost up to 150 per cent of the departing employee’s salary. Evidence shows that highly engaged organisations have the potential to reduce staff turnover by 87 per cent. And having strong, engaging managers is absolutely crucial to this.

Engagement Coaching for Managers

One of the four key enablers of employee engagement is having engaging managers (Engage for Success, 2014).  Good quality coaching can significantly improve the capability and confidence of managers and enable them to develop self-awareness and their ability to cope with challenging situations.

It is a common view, regularly seen in our work with employers, that managers who receive coaching are themselves more engaged and more productive and in turn are able to facilitate and empower rather than control or restrict their staff; they treat their staff with appreciation and respect and show commitment to developing, increasing and rewarding the capabilities of those they manage.

As part of an employee engagement programme, coaching your managers can deliver important benefits to the organisation.  Evidence from, the Corporate Leadership Council shows that engaged employees are likely to perform 20% better than non-engaged and, according to the CBI (www.engageforsuccess.org/wp-content/uploads/2012/09/The-Evidence.pdf) they have lower average absence rates (2.9 days per year) than their disengaged colleagues (6.19 days per year).

IPA’s Coaching for Engagement Programme

This programme brings together a wealth of expertise and experience in employee engagement and performance coaching. Our qualified coaches have extensive experience in coaching and employee development, gained through both the private and public sector. Our coaching team are experts in fostering sustainable engagement cultures in organisations to deliver increased performance.

The programme is suitable for executives, senior managers and anyone with line management or supervisory responsibilities. It can be designed for a group of managers or for individuals. Executive coaching, for example, concentrates on how the strategic narrative and walking the talk is communicated, not just by established communication channels but by subconscious signalling and behaviours. This offers essential insight into how leaders can bring about cultural shift.

Each coaching programme is developed in partnership with the client organisation and the manager(s) themselves to ensure objectives are identified at the outset and that the training is bespoke to their needs.  Depending on the objectives and the number of managers participating in the programme, this could include:

• Engagement and Coaching Masterclasses to develop a deep understanding of coaching for engagement and skills development for Managers
• A comprehensive Coaching Toolkit reference pack
• Professional one to one coaching for each participating manager
• Coaching observations with structured feedback for enhanced skills development
• 360 feedback to support personal and professional development

For further details contact Sarah Dawson, Head of Operations

[email protected]

 M 07713178699

The Information and Consultation of Employees (ICE) Regulations, were seen by some at the time of their introduction in 2005 as a potentially transformative measure. Brendan Barber – the General Secretary of the Trade Union Congress – said that the rights ‘could lead to the biggest change in workplace relations for a generation.’ Ten years on, we’ve taken the opportunity to look back at the impact of the regulations in the UK, and in the EU. Did they live up to these high hopes?

Well, not exactly. The Workplace Employee Relations Study (WERS) shows that there was no increase in the incidence of workplace-level Joint Consultative Committees (JCCs) from 2004 to 2011. It also suggested a narrowing of agendas in terms of JCCs, with an increasing tendency to consult only on the management’s preferred option.

As a result, some have characterised the ICE regulations as a damp squib. This is perhaps a little unfair. There was an increase in the incidence of workplace level JCCs among medium-sized organisations (50 – 249 employees), which were big enough to be affected by the regulations. Previous waves of the WERS survey had shown a decline in the incidence of JCCs, so perhaps the regulations helped arrest that decline. So, although perhaps not a damp squib, the regulations certainly haven’t exploded into life.

But why does this matter? There is a growing body of evidence that employee voice is vital. It matters for employees; voice is an essential component of good work and is linked to employee engagement and other positive outcomes. It matters too for employers; engaged employees tend to be more productive and innovative. Consultation can help improve decision-making and prevent conflict.

There is worrying evidence that the UK performs poorly in terms of voice. The ETUI rates us second worst in the EU in terms of participation at work. According to WERS, only one employee in three (35 per cent) says their manager is good or very good at allowing employees or their representatives to influence decision making. Under one in two (43 per cent) are satisfied/very satisfied with the extent of their involvement in decision-making. Both figures have increased slightly, but they remain worryingly low

So, given evidence of an unmet demand for voice, why were the regulations not more successful? Their failure to transform employment relations was in large part due to the attitudes of the Government, employers, and the union movement.

The Labour Government did not see the ICE regulations as necessary. Having already introduced the minimum wage and the social chapter, there was little appetite for further employment regulation, particularly on a collective level.

There was also little stomach to enforce stringent new regulations on a reluctant business community who opposed the ICE regulations from the start. The CBI argued that the regulations were unnecessary and potentially burdensome, enforcing a one-size-fits all approach through rigid rules when existing practice was sufficient.

The trade union movement – with some honourable exceptions – were luke-warm on the regulations. Many in the movement saw the regulations as a potential Trojan Horse for anti-union employers to undermine or pre-empt recognition, promoting non-union voice as an alternative to trade unions. Unlike in This limited their willingness to engage with and use the regulations, as many of their counterparts in Europe have done.

So the regulations lacked fulsome support from either the Government, employers or unions. As such, they have been described by Hall and Purcell as ‘an idea without a constituency.’

As a direct result of the lack of enthusiasm, the regulations were transposed in a way that would inevitably limit their use. Instead of an automatic right of consultation, if employers did not chose to introduce a forum, 10% of the workforce would have to petition to ‘trigger’ the regulations. With the lack of interest among unions in using the regulations, the possible fear of employer retaliation, and the low levels of awareness of the regulations, this has represented a significant barrier to the use of the regulations.

So what of the future of the ICE regulations? There is currently a review of the regulatons being carried out by the European Commission, but this aims only to consolidate and simplify directives so significant change is unlikely. We’ve set out a number of ways in which the regulations could be strengthened at a national level to make them promote voice more effectively. These include lowering the trigger, basing it on a business unit level, rather than across a whole organisation, and allowing recognised unions to automatically trigger the regulations. In order to ensure high-quality consultation, we suggested that representatives should be offered training, as happens in German and France, and that there should be a basic level of rights for JCCs, establishing on which issues they should be consulted as in Denmark, and that they should be consulted on a range of options, rather than just a preferred option.

However, there is clearly no appetite on the part of the current Government to strengthen employment regulation. Given that, we’ve suggested that a number of actors – including Engage for Success, CIPD, ACAS and indeed ourselves – could encourage better use of the ICE regulations. Crucially, trade unions are well placed to use the regulations. While the 10% barrier makes it virtually impossible for employees spontaneously to trigger the regulations, unions would be well placed to organise this.

So, the ICE regulations should not be seen as a failure, as they were not necessarily designed to transform the labour market. As Phillip Sack, the author of the regulations explained, the objective of the Government ‘was really to limit the impact and where possible to promote voluntarism.’

This poses a question. Whilst voluntary action might be preferable, and whilst responsible and enlightened employers do consult with and involve their employees, many still do not. Exhortation can be effective, but it will struggle to convince everyone. Given this, surely smart regulation has a role to play in establishing minimum standards.

Joe Dromey is Head of Policy and Research at the IPA. We would like to thank Friedrich Ebert Stiftung London for supporting this project.

The IPA has produced a timely, detailed, coherent report looking back at the ICE Regulations 10 years on.

I say ‘timely’ but there’s an argument that this report is anything but timely. We have a Government, that hasn’t yet committed to developing an industrial strategy and that has embarked on a piece of anti-union legislation for which there was no need. But the IPA report is timely for this reason: At some point – hopefully some point soon – the UK will need to think again about its economic and social model, and when that happens, the role of information and consultation will take centre stage.

We were promised a ‘march of the makers’, but our manufacturing sector is still in recession. We have an economic recovery, but demand is led by consumer spending, with credit expanding at its fastest pace since the economic downturn. Across the OECD, we have the fourth highest level of youth unemployment – that’s the workforce of tomorrow – relative to older workers. The share of full-time employee jobs is still below pre-recession levels.

I support the government’s desire for a strong trade relationship with China. Emerging markets are vital. But to make the most of that relationship, we need to develop the goods and services that China wants to buy. We cannot compete with them on the back of low skills and low wages. We can only compete on the basis of high skills and high value. We need to become more productive.

Information and consultation can make an important contribution to building that high skill, high value, and high productivity economy. As the IPA report shows, employee voice leads to better organisational performance. It leads to improved decision making and less conflict. Employee satisfaction is higher, leading to greater loyalty and commitment. These are all strong reasons for strengthening information and consultation.

There is also a basic democratic reason, for as the TUC argues, employee voice is a good in itself. It is a key part of social justice.

IPA’s report correctly reminds us that, at the time the ICE regulations were introduced, the TUC did have fears that some companies would try to use them to bypass unions. But it is also correct to say that the problem was partly the UK’s culture of adversarialism. Unions were content to believe that managers’ problems were not their problems. The Thatcherite belief in the “right to manage” still loomed large in too many companies.

We simply cannot afford that luxury in today’s world. Compare the UK with Germany, where large companies have employee representatives – usually trade union members – that serve on Supervisory Boards and Works Councils. This allows union’s great influence on company policy, to the benefit of their members.

In 2012, the TUC published a report called German Lessons. This report took evidence from Siemens in Nuremberg to see how information and consultation works in that company.

Siemens had a policy – negotiated with the works council – of time accounts, so during very busy times, employees could credit hours rather than being paid more. When work levels were much lower, employees could work less hours, with credited hours making up the difference. So when the economic downturn hit, and work dried up, employees were protected.

When Siemens introduced its new production system, there was inevitable nervousness on the part of the workforce. However, Harald Kern of the Siemens Works Council told us: “If you implement the production system in the right way, there is more space for employees. It depends that the employees are very involved in the system, they accept it and they work with the system.”

Sceptics of information and consultation often believe that it is a soft option, an attempt to avoid the hard decisions of management. But the Siemens works council used it to protect the workforce during the downturn and to make the company more productive in a way which didn’t threaten employees.

The TUC believes that the UK needs a social market economy. To change our model, we need to change our culture. Strengthened information and consultation an important part of that culture change.

The IPA and the TUC agree that the current trigger mechanism, which requires 10 per cent of employees to vote for information and consultation arrangements, is much too high a hurdle. The TUC believes that a minimum of five employees should be able to request information and consultation, irrespective of the size of the company. In the medium term, we believe there might be a case for works councils once a company reaches a certain size, without the need for a trigger. We believe a basic constitution for a works council should be developed by the government, employers and unions, to ensure that the works council is meaningful.

The IPA report discusses the rising appetite for direct communication among employers and I accept that this could be valuable in some circumstances, but having independent trade unions that are strong enough to say ‘no’ on occasions often leads to better decision making by management.

There is nothing in information and consultation that removes the need for collective bargaining and for more traditional models of trade unionism where necessary. It is a fact of life that management and workforce will sometimes have different interests. But trust built on issues of mutual interest can help tough negotiations on areas of difference.

If I am correct, this debate isn’t going to go away. In fact, the call for a new economic model will only get louder – and the role of workers voice, through the information and consultation of employees, will only become more important.

Ten years on, it is important to look at what information and consultation has achieved and what more needs to be done. The IPA has served a great purpose in producing this report to take that debate further. The TUC looks forward to playing a full part in that discussion.

Tim Page is Senior Policy Officer at the TUC

CIPD highlights the risks of short-termism

CIPD’s new research, covering 3,500 business leaders and 2,200 HR practitioners around the world found that a many business leaders were seeking to enhance organisational performance by rewarding high-performing individuals ‘regardless of the values the demonstrate.’ Their research suggests that businesses are increasingly focussing on the short-term without considering the long-term consequences of their decisions.

CIPD’s survey showed that only 24 per cent of business leaders were ready to make short-term sacrifices for the long-term benefit of the company and its people. Business leaders also said that while their employees had the ability to influence decision making, they did not consider it a priority – with 75 per cent saying employees inputs ‘as either nice to have but not imperative’ or as ‘applying but can be compromised.’

CIPD chief executive Peter Cheese said: “This risks unintended consequences when people try to cut corners or maximise short-term returns without thinking about the consequences of their actions on all their stakeholders, which includes employees, customers, suppliers, and communities, and, as we’ve seen in the case of VW, the shockwaves are considerable and can significantly damage even the biggest brands.”

Collaboration with employees crucial to innovation

The EveryDay Innovation Report, produced by Wazoku with Cisco, Waitrose, Great Places to Work and The Future Shapers covered 1,000 board-members, senior managers, middle managers and everyday workers within large enterprises across the UK to identify organisational challenges to drive innovation.  The study reveals that although most believed innovation to be crucial to organisational success, most were faced with barriers and ‘ambiguity’ from implementing innovative policies and strategies.

More than half of those questioned said that their organisation is ‘full of people with great ideas’ – but that they do not have the right platform to share them – while almost 60 per cent said that management did not take their suggestions seriously.

Cris Beswick, Innovation Expert and Founder of The Future Shapers said: “Building a culture of innovation isn’t rocket science but it does require something more than a note on a board report or yet another senior team discussion. The ultimate goal is for every person at every level throughout an organisation to embrace EveryDay Innovation. The challenge is for leaders to step up and make it happen.”

Employers to spend an extra £1.6m in wages next year finds PwC

A survey conducted by PwC of over 100 employers with an average of 11,000 employees each shows that they expect to pay an extra £1.6m in wages next year as a result of the National Living Wage in – rising to £11m by 2020.

Figures published by ONS earlier this week indicated that in 2014, around six million employees were paid less than the Living Wage in the UK. This is the figure calculated by the Living Wage Foundation which reflects the cost of living. At £7.85 and £9.15 in London, it is higher than the National Living Wage of £7.20 which will be introduced in April, becoming the new minimum wage for employees over 25.

The employers surveyed said that almost one in four of their employees (23%) are currently on less than the level of the National Living Wage (£7.20 an hour) and nearly two in five (39%) are on less than £9 an hour – the target rate for the National Living Wage in 2020.

To cover the overheads, around a third of businesses that took part in the survey said that they are planning to pass on the increased costs to customers while over a quarter said they plan to reduce their workforce. John Harding, employment tax partner at PwC said: “While many employers should be able to afford the increase to their wage bill, the disproportionate impact on sectors employing a large number of lower paid workers such as retail, transport and logistics, healthcare and hospitality and leisure cannot be ignored…Organisations must have a plan to deal with these costs, that isn’t simply passing them on to consumers or reducing headcount.”

It’s well known that UK plc faces a crisis in productivity. A solution that needs more attention is workplace participation. When people have more autonomy in how their workplaces run, they are more motivated to put in effort. If you know that your employer – especially if it is a faceless corporation – is going to take all the benefits of your work, you probably are not going to try as hard in your job as you would if the gains were shared fairly. This is nothing new to economic theory: Adam Smith saw the connection between fairness and productivity in 1776, Alfred Marshall saw it in 1895, and now we have good evidence from behavioural economics. If the UK wants to boost productivity, to catch up with the leaders in Europe, but without the risk of the extreme inequality that we see in the United States, binding legal rights for workplace participation are a good way to start.

                As it turns out, one of management science’s best known studies – the “Hawthorne experiments” – first shed light on the importance of workplace participation for productivity. Shedding light on participation was not, however, the intended consequence. It began in 1924, led by an Australian researcher at Harvard Business School called Elton Mayo. Originally, Mayo wished to get evidence for the odd hypothesis that more lighting intensity would make workers work harder. To test this out, he borrowed five factory workers from the Hawthorne Works of the Western Electric Company and brought them to an observation laboratory. They would work as normal, assembling telephone relays, as Mayo’s two research colleagues fiddled with the light switches. Unfortunately for Mayo, this had no effect. Not ready to give up, Mayo’s team tried something new: they varied rest breaks, lunches, and daily working times. But this time, the key was that Mayo’s observers were instructed make the workers feel comfortable, and stay out of the way of the workers work as much as they could, to avoid ‘contaminating’ the test environment. So, the observers asked the workers themselves to decide which breaks and working times would suit them, and other things like the meals they would prefer. Otherwise they stayed out of the way. The fascinating result was that productivity went up when breaks were introduced, when meals were given, and also when an hour was taken off the day. But even more curious, productivity continued to improve when (with the participation of the workers in the decisions) all these benefits were removed.

                The proper interpretation of the Hawthorne experiments has long been debated and it remains one of the most important experiments in workplace psychology. Mayo himself published all the data, and wrote up various results, but never quite found what he was looking for: how managers can make employees work harder, unilaterally. But later, other people who looked at the experiments found something else. The ‘Hawthorne effect’, a term first been coined by the renowned economist Herbert Simon, was said be that ‘the very act of observing people in organizations and making them the subject of study and experimentation may well change their attitudes and behavior’. ‘We now have,’ said Simon,

a considerable body of evidence to support the participation hypothesis—the hypothesis that significant changes in human behavior can be brought about rapidly only if the persons who are expected to change participate in deciding what the change shall be and how it shall be made. (Simon (1955))

In 1968, sociologist called Paul Blumberg also looked back at the archives Mayo left, and highlighted the one absolutely solid finding. Workers in the test lab consistently outperformed those who stayed in the factory in productivity. Even stranger, the workers seemed happier at work, and began to socialise with each other more after their shifts. Among the interviews were several statements about how they were glad to escape the authoritarian managers back at the factory. Blumberg argued that Mayo had never thought this was important, or written about it, because his main objective was to show how workers can be made productive, so that employers can take all the gains. But like Simon said, the Hawthorne workers were more productive because they gained the ability to participate in workplace decisions. Even when benefits were taken away, the act of joining people in the process of decision (because it was genuine) meant that the staff had a reason to want to work more effectively. Productivity only dropped as the experiments continued toward 1932, and involvement in workplace decisions was removed. Workplace participation improved productivity, and lack of it did the reverse.

                In the last ten years, the growing field of behavioural economics has piled on the evidence. To give just two examples, on the negative side, a study by researchers at the ‘Institute for the Future of Work’ has shown that when managers unilaterally change people’s terms of employment, especially by cutting their pay, productivity drops dramatically (Cohn et al (2014)). On the positive side, another study has shown there can be significant productivity gains when employees are delegated control over how wages will be shared in the enterprise (Charness et al (2012)). It shows that the connection between fairness and productivity is intrinsic, and that the best way to get fair treatment is when employees have the right to participate in workplace governance.

                So how can you achieve employee participation in workplace governance? The most direct route is through work councils with binding rights and in a corporation, votes for the board of directors. In the UK, we often forget that we have had it in universities for hundreds of years. To take just one example, the Cambridge University Act 1856 says that staff can vote for the governing council, and even pass resolutions (a ‘grace’) that instructs the governing bodies. In private companies, it appears that Winston Churchill might have introduced the world’s first employee participation law, even before well known systems like Germany (McGaughey (2015)). The Port of London Authority Act 1908 gave employees the right to elect one director on the board. One of the sadder twists in British history is that these experiments did not continue on a larger scale after World War One, as they did across northern Europe. The Conservative Transport Minister proposed that railway employees should be able to elect one third of each board of directors in 1920. But the Cabinet memoranda (that until recently were confidential) show that they could not overcome the entrenched opposition of existing managers on one side, and those who wanted nationalisation (and nothing else) on the other. It’s one of those peculiar areas of policy where at one time or another everyone from one nation conservatives to liberal progressives to Fabian socialists have agreed on the evidence: more voice at work leads to more economic freedom, less inequality and – most pressing right now – more productivity. It’s just a question of who will actually have the vision to get it done.

References:

• P Blumberg, Industrial Democracy: The Sociology of Participation (1968) chs 2 and 3
• G Charness, R Cobo-Reyes, N Jiménez, JA Lacomba and F Lagos, ‘The Hidden Advantage of Delegation: Pareto-improvements in a Gift-exchange Game’ American Economic Review, (2012) 102(5) American Economic Review 2358
• A Cohn, E Fehr, B Herrmann and F Schneider, ‘Social Comparison in the Workplace: Evidence from a Field Experiment’ (2014) 12(4) Journal of the European Economic Association 877
• Liberal Party, The Report of the Industrial Partnership Committee: Partners at Work (1968)
• A Marshall, Principles of Economics (3^rd edn 1895) Book VI, ch 4 (n.b. hyperlink is to 8^th edition)
• E Mayo, The Human Problems of an Industrial Civilization (1933)
• Ministry of Transport, Outline of Proposals as to the Future Organisation of Transport Undertakings in Great Britain and their Relation to the State (1920) Cmd 787
• E McGaughey, ‘British Workplace Participation and Employee Share Schemes’ (2014) UCL Labour Rights Institute On-Line Working Papers – LRI WP 2/2014
• E McGaughey, ‘The codetermination bargains: the history of German corporate and labour law’ (2015) LSE Legal Studies Working Paper 10/2015
• E McGaughey, ‘Can behavioural psychology inform labour law?’ in A Ludlow and A Blackham (eds), New Frontiers in Empirical Labour Law Research (2015) ch 6. Also in LSE Legal Studies Working Paper 20/2014.
• Railways Bill, Memorandum for the Cabinet by the Minister of Transport (March 1921) CP 2749
• HA Simon, ‘Recent Advances in Organization Theory’ in SK Bailey, Research Frontiers in Politics and Government (1955) ch 2
• A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776) Book I, ch 8, §43
• S Webb and B Webb, The History of Trade Unionism (1920) 760, Appendix VIII

UK businesses losing out on £84 billion a year due to poor management

Research from Investors in People (IIP) found that UK organisations are missing out on £84bn a year from failing to implement good people management practices.

The research shows that the social care industry could benefit from an efficiency gain of 8.9 per cent, while the UK economy as a whole could benefit from an efficiency gain of £77bn.

The research looked at 8,750 businesses and analysed data from the Office for National Statistics. It identified six factors to boost performance and efficiency: ‘having a set of strong values, strong and inspiring leaders, structuring work, recognising and rewarding performance, delivering continuous improvement, and adopting sustainable practices.’

Paul Devoy, Head of IIP, said: “This study provides the evidence that focusing on excellence in people management can lead to significant performance gains for the sector and economy as a whole.”

Productivity gap between UK and other G7 countries ‘biggest since records began’

Figures from the Office for National Statistics suggest that the productivity gap between the UK and its G7 peers ‘is the biggest’ since records began in 1991.

Initial results for 2014 show that the UK’s productivity – measured as output per hour worked – is 20 percentage points (pp) below that of its G7 counterparts – the United States, Canada, France, Germany, Italy and Japan.

A spokesman for the Department for Business, Innovation and Skills said: “The reforms set out in our productivity plan – Fixing the Foundations – will deliver step change that will increase long term investment in people, capital and ideas and help to realise the ambitions of hard working people.”

However, TUC General Secretary Frances O’Grady said: “We need a better economic plan focused on higher public investment in modern infrastructure and workforce skills.  A new round of severe public service cuts and pay freezes will keep the UK in the slow lane.”

Trade union reforms are ‘counter-productive’ – says CIPD

The measures proposed in the Trade Union Bill – which will make it harder for unions to take strike action – have been termed as being ‘outdated’ by the CIPD.

The Bill proposes a minimum 50 per cent ballot turnout for industrial action to have a legal authority. Industrial action in key services like health, education, fire, transport, border security and energy will only be legal if 40 per cent of all members eligible to take part in the ballot vote in favour.

The CIPD has urged the government and employers to instead build better social dialogue with their employees and consider alternative approaches – rather than ‘focussing on ballot thresholds’. Peter Cheese, chief executive of the CIPD, said: “We need to see more consultation and ongoing dialogue, and engagement with the workforce, rather than the introduction of mechanisms that reflect the industrial relations challenges of the 1980s.” There has been growing opposition to the Bill with a wide variety of groups expressing concerns.