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Committee on Climate Change issues ‘net zero by 2050’ target

Following a request from the governments of the UK, Wales and Scotland, the Committee of Climate Change has published a new report recommending that the UK reduce its net carbon emissions to zero by 2050. This target, which the government is considering whether to pass into law, would involve radical change to almost all sectors of the UK economy, particularly in transport, construction and industry, with increased use of electric vehicles, biofuels, carbon capture and storage and hydrogen gas replacing much of our current industrial energy and fuel infrastructure. The workforce implications of this range of forthcoming changes is something to be explored in more detail.

 

New insourcing trend returns services to public sector

After many years of outsourcing and privatisation, there is a growing trend across local authorities to return services in-house. A report by the Association for Public Service Excellence has shown that over 220 local government contracts have been returned to council control in the past two years and 77% of UK councils plan to bring further services back in-house in 2019, with cost savings and reduced risk of mistakes being the two major motivations. Nationally, the government this month announced that privatisation of the probation service is being ended after reported failures, as is the outsourcing of NHS cervical cancer screening to Capita.

 

Two major steps towards employee ownership

In a dramatic move founder of Richer Sounds, Julian Richer, has announced he is handing control of his company to the workforce, transferring 60% of shares into a John Lewis style trust for the company’s 531 employees. The company has paid £9.2m to him for the stake, but he is returning £3.5m directly back to workers in the form of a £1,000 payment per year of service to every employee. Meanwhile, BT has announced it will be awarding £500 worth of shares to each of its 100,000 staff in a step towards a “new inclusive form of capitalism”.

There is an emerging consensus that the UK corporate governance regime is tilted too far towards the interests of capital, and away from the interests of labour. The dominant ‘shareholder value’ model, with its emphasis on using corporate profits for share buybacks and returning dividends to investors, has a systemic bias towards value extraction rather than value creation, and acts as a barrier to the promotion of internal, long-term re-investment in human and physical capital, productive capacity, and R&D[1]. Strongly embedded incentives for asset holders and corporate executives create powerful tendencies towards short-termism in both finance and industry.

Whilst shareholders can vote on who sits on the board and make other strategic decisions, and directors have a legal duty (under Section 172 of the Companies Act) to promote their interests, by contrast the interests of employees remain secondary. Unlike in other European countries, most UK employees are excluded from representation on company boards, and have almost no formal rights to information or involvement in corporate decision-making. Moreover, whilst shareholders can spread or hedge their risk through increasingly diversified portfolios, workers bear long-term firm-specific risks in companies. The question remains how far these imbalances can be addressed through corporate governance reform.

An increasing range of voices, from across the political spectrum, are now openly advocating for change along several dimensions, from the reform of directors’ duties to limitations on shareholder voting rights. One particularly powerful argument is for worker directors. There is widespread evidence that employee voice at board level can increase trust and co-ownership, drive knowledge and insight by bringing a different perspective and information set to the board, encourage employees to feel more empowered and engaged, and foster longer-term management horizons.

A notable aspect of the Prime Minister’s stated agenda upon taking office, though since then significantly watered down, was around workers on boards. Following a green paper consultation and a select committee enquiry, in August 2017 the government published its response[2], which included inviting the Financial Reporting Council to revise the UK Corporate Governance Code to include a new requirement for companies to adopt, on the Code’s ‘comply or explain’ basis, one of three mechanisms for strengthening employee voice: (i) a designated existing non-executive director (NED), (ii) a formal employee advisory council, or (iii) a director from the workforce. These new requirements came into effect in January 2019. The change in the Code is significant as, for the first time in its existence, the text recognises the importance of the workforce. Firms will currently be considering their responses.

The latest picture suggests there are now five UK-listed companies with employees in their board structures: First Group, Capita, Mears Group, Sports Direct, and TUI. The latter firm is listed in the UK (and in the FTSE100), but incorporated in Germany, and hence has a supervisory board with half employee representatives. Capita is an interesting case as it has appointed two employee directors, following an extensive recruitment process, and so is the first UK PLC to have multiple reps. The two worker directors – Lyndsay Browne (a chartered accountant) and Joseph Murphy (a civil engineer) – have been appointed for three years. They will each act as full, independent directors, with the same responsibilities as other board members, and will be paid £64k on top of their current salaries.

Evidence suggests that far more firms, however, are taking the route of designating an existing NED to represent employees: those announced so far include Diageo, Hays, Legal and General, McKay Securities, and Ted Baker. A recent LAPFF report in May 2019 confirms this. Almost three quarters (73%) of companies surveyed by LAPFF that have decided how to comply with the revised Code said they would appoint a designated NED. Just 5% said they would appoint a director from the workforce, while 27% have opted for a workforce advisory panel. The most common reason given for rejecting a worker director was the size of the workforce. Some companies said their workforces were too small, while larger companies questioned how one person could represent a global workforce.

Clearly the NED route is a weaker option, and some critics have suggested that, far from embedding effective worker voice at board level, this can amount to little more than a PR exercise. The TUC and the bigger trade unions are pressing for more rigorous responses, and stressing the need for independent worker directors who are elected by the workforce, and not chosen by management[3]. Responding to the LAPFF survey, the acting chair Cllr Paul Doughty said: ‘The results are rather disappointing. Although it is welcome that many boards are identifying a director who will be responsible for workforce engagement, it is surprising that so few companies are choosing to appoint an employee director. This feels like a missed opportunity’[4].

All the major UK political parties have made manifesto commitments to workers on boards in different forms. The Labour Party has gone the furthest, arguing that workers in large firms should have a third of board seats. This sits alongside other Labour proposals including: large listed firms transferring 10% of shares to an ownership fund supervised by employee trustees; allowing workers and customers binding votes on executive pay packages; and a six month minimum share holding to vote in takeovers. Commenting recently on the Capita initiative, Vince Cable, leader of the Liberal Democrats, argues that worker directors can ‘add a fresh perspective based on experience of how the company actually operates on the ground… Workers on boards is far from being a panacea, but it is a useful antidote to the current poisonous sense of distrust and malaise hanging over many of our big companies’[5]. As the tectonic plates of British politics continue to shift in the Brexit chaos, other voices are also emerging in support of worker directors. A recent pamphlet written by Chuka Umunna after the formation of the Independent Group of MPs (now Change UK) outlines what a new ‘British model’ of capitalism might look like[6]: this includes workers on boards and remuneration committees, as well as employee ownership trusts, co-determination in workplace decision-making, stronger trade unions, incentives for innovation within firms, long-term financing, and a National Investment Bank.

Some of the policy proposals in this area are being informed by a series of new ideas emerging from left-of-centre think tanks. The latest, Common Wealth, was launched in April 2019, and stresses the need to develop new ownership and stewardship structures as an essential part of a more democratic and sustainable economy, with one key strand of this work relating to ‘transforming ownership and governance of the corporation’[7]. The longer-established IPPR has advanced similar arguments in the final report of its Commission on Economic Justice, proposing that large companies of more than 250 employees should have at least two workers, elected by the workforce, on both their main board and the remuneration committee, as something ‘likely to enhance the quality of strategic decision-making, increase the diversity of opinion and experience on the board, represent employees’ interests, and strengthen employee engagement’[8].

Support for the principle of worker directors is not solely the preserve of our more progressive politicians and think-tanks, but is increasingly mainstream. Andy Haldane, Chief Economist at the Bank of England, has suggested that current company law gives too much weight to the interests of shareholders, and has argued that putting workers on boards and making directors consider the interests of all stakeholders, including ‘wider society’, could be economically beneficial[9]. The last major debate about worker directors in the UK was in 1977, when the Committee of Inquiry on Industrial Democracy (the Bullock Committee) proposed measures for worker directors in all UK-based companies. The Conservative government elected in 1979 abolished existing worker director schemes and undermined further progress in the area for a generation, but, as one academic assessment of board-level employee representation across Europe notes, ‘after 40 years, BLER has re-emerged as a significant issue on the UK political agenda’[10]. Whilst at the start of 2018 there was only one PLC – First Group – with an employee director, by the end of 2019 there will be at least five. This is slow progress, but the direction of travel seems set[11]. Recent polling by YouGov suggests that the principle of workers on boards is supported by about two-thirds of the population in the UK. The current government has made only tepid efforts at reform, and the ‘comply or explain’ principle makes it all too easy for firms to ignore initiatives they don’t like, but it seems unlikely that public policy will stand still in this area, as we witness increasing calls for stronger and more enforceable employee participation in corporate governance structures.

Chris Rees is Professor of Employment Relations at Royal Holloway, University of London

[email protected] 

References

[1] Mazzucato, M. (2018) The Value of Everything: Making and Taking in the Global Economy, London: Allen Lane.

[2] BEIS (2017) Corporate Governance Reform: The Government Response to the Green Paper Consultation, London: Department for Business, Energy and Industrial Strategy.

[3] TUC (2016) All Aboard: Making Worker Representation On Company Boards a Reality, London: Trades Union Congress.

[4] LAPFF (2019) Employees On Boards: Modernising Governance, London: Local Authority Pension Fund Forum.

[5] Cable, V. (2019) ‘Could Capita’s move to put workers on boards fix capitalism’s crisis?’, City AM, 14^th May.

[6] Umunna, C. (2019) What Are Progressives For?, London: Progressive Centre UK.

[7] Common Wealth (2019) Owning The Future: Toward The Democratic Economy.

[8] Institute for Public Policy Research (2018) Prosperity and Justice: A Plan For The New Economy.

[9] Strauss, D. (2018) ‘Andy Haldane calls for corporate governance reform’, Financial Times, 27^th September.

[10] Gold, M. and Waddington, J. (2019) ‘Board-level employee representation in Europe: State of play’, European Journal of Industrial Relations, published online 21^st February.

[11] Tom Powdrill’s blog – http://labourandcapital.blogspot.com/

 

As many of you will remember, the Information & Consultation Regulations came into force in 2005.  I led the team at the (then) Department of Trade and Industry which wrote these Regulations.  Evidence suggests they have had limited impact, at least in terms of the trigger mechanism, as detailed in the IPA’s report “ICE and Voice 10 Years On”. In his report, “Good Work – The Taylor Review of Modern Working Practices”, Matthew Taylor recommended lowering the employee thresholds for triggering a request from 10% of the workforce to 2%. This has been taken up in the Government’s Good Work Plan, to be put into effect in April 2020.

The positive impact of this will not be significant unless firms adopt a better practice approach than has largely been seen up to now. The reality of the problem is not so much too few ICE forums as too few good ones.  So often they degenerate into discussions about the state of the toilets, quality of the coffee and individual concerns. Anecdotal evidence suggests that only one in twenty ICE Forums are focussed on the organisation’s strategy and provide an accurate voice which includes the views of the engaged rather than just the disengaged. To truly add value to an organisation and its employees, an ICE Forum needs to focus on the key strategic decisions and policies that have a greater impact on employees’ working lives.

I have spent much of the last ten years advising on, and training, European Works Councils – transnational employee forums that bring together employee reps from across a company’s European workforce. What I have seen over this time is that, to succeed, such forums need a positive, constructive approach from both sides (management and employee representatives), investment of time, effort and determination by all involved. High quality information – early enough for reps to analyse and understand it, and to come well-informed and well-prepared to meetings with management to discuss it – is imperative.

To achieve this, assistance from expert advisers who are able to understand the material, explain it to representatives, and help them provide constructive input, can be vitally important. That was why we set up ProVizon, to provide such support to EWCs, seeking to promote a positive and co-operative approach to consultation, rather than a negative and confrontational one.

Many EWCs have a legal right to such help.  The ICE legislation does not give that right.  But organisations that want more effective dialogue with their ICE forums, and that want to get more from their greatest asset – their employees – will find giving their reps access to such assistance an important contributor.

Philip Sack is the Director of European Employers Group

[email protected]

New EU rules to protect ‘gig’ workers

New rules passed by the European Parliament will guarantee additional minimum rights at work for those in the on-demand economy, including gig workers such as Uber or Deliveroo drivers as well as those on zero hours contracts. The rights include an entitlement to compensation when work is cancelled, as well as having more predictable hours and an end to “abusive practice”. Whether the UK is obliged to implement the rules will depend on whether we are still tied to following EU employment regulations when the implementation period comes to an end in 2022.

Debenhams latest in high street closures

2019 looks to be another painful year for high street retailers following the collapse of Debenhams, the UK’s largest department store chain. 50 of the chain’s 116 stores are set to close, with 22 named this month in the first phase which will affect 1,200 jobs. Lenders took control of Debenhams earlier in April after buying it out of administration and defeating a rival bid by Mike Ashley. House of Fraser has similarly been shutting stores since it was bought out of administration in 2018, while Marks and Spencer is meanwhile closing 100 stores by 2020. The collapse of BHS in 2016 led to the loss of over 160 stores.

ICE regulations changed

The government passed in April the statutory instrument to implement proposed changes to the Information and Consultation of Employees Regulations 2004, lowering the threshold of workers required to trigger the establishment of fall-back ICE forums from 10%, to just 2%, with a minimum of 15 emloyees. The changes will take effect in April 2020, giving employers who want to avoid the fall-back provisions just 12 months in which to establish their own satisfactory employee voice mechanisms.

This week the IPA are co-publishing with Acas ‘New technology and the world of work: the winners and the losers.’ This discussion paper is designed to prompt debate about the impact that technology is having on our working lives, for good and for ill.

The first aim of this paper is to move the debate away from a simple focus on the number of jobs created or lost to technology. Much as the media likes to fixate on apocalyptic warnings of automation replacing vast swathes of human jobs, in reality it is not entire jobs that are being automated for the most part, but individual tasks. The automation of certain tasks will in turn lead to profound change in the skillsets needed for many jobs and will change which skills are valuable in the modern economy quite radically. And this may leave many people and places behind. Hub cities like London are seeing the bulk of new job creation, while job losses are concentrated in small towns and northern cities like Sunderland and Mansfield. Will people simply be expected to move to the growing cities or can a way be found to protect these left behind locations?

Technology has winners and losers at different ends of the labour market as well. The IMF published last year ‘Should we fear the robot revolution (the correct answer is yes’ which concluded that “automation is good for growth and bad for equality.” Highly skilled workers, capital owners and top performers in their field are likely to be big winners, while the bulk of people who depend on their labour to earn money, but have average rather than exceptional skills, are likely to lose out in the growth of ‘winner-takes-all’ or ‘winner-takes-most’ economies.

Meaningfulness at work might improve if automation takes away most of the dull, repetitive tasks from our daily work, leaving humans to focus instead on the more varied, creative or social tasks that machines find harder to perform. Two groups of humans could still lose out significantly though. Firstly, those who perform meaningful but unpaid work, such as caring and domestic or reproductive labour, who are predominantly women. Secondly, those who perform paid but meaningless work; the so called ‘bullshit jobs’ identified by David Graeber; ‘flunkies’ like door attendants or receptions and ‘box-tickers’ like performance managers, whose work has no real social value. As these roles are unlikely to be automated, more and more workers are likely to find themselves in these categories unless we rethink how we value and reward labour.

Those who want more flexibility from work and enjoy working from home are likely to be another of the winners from technology. Remote working in the UK has increased by over a fifth since 2005 and is forecast by ONS to reach half of all workers by 2020. On the downside, however, those who like to have a clearly defined work-life boundary are in trouble. Smartphones, email and other virtual communication means work is continually invading further into our personal space and blurring the lines between work and home life. The continual information overload and volume of communications we receive are having a detrimental impact on our mental health and wellbeing, even while technology improves our physical wellbeing by automating away dangerous or strenuous tasks and providing fitness trackers and other devices to improve our health.

Of course, the spread of these fitness trackers points to another danger from technology; increased monitoring and surveillance and growing questions around who has access to our personal data and what they are doing with it. With ever more intrusive devices and software available, from sentiment analysis, motion sensors, to wearable tech or even implanted chips, the impact on privacy and autonomy could be profound unless clear guidance and boundaries are established. While employers might think they could be big winners from these possibilities, in practice both employers and employees will be losers if excessive surveillance crashes employee engagement and poisons trust between management and the workforce.

Finally there is the question of algorithmic decision making and bias. We know that, when used well, algorithms can make far more consistent decisions on objective criteria than human managers, offering the tantalising prospect of removing bias from workplace decision making. However, an algorithm is only as good as its training data, most of which is itself full of human biases – so in many cases algorithms can simply embed and amplify human biases while hiding them behind the black box of computer decision making. Accountability risks being sacrificed on the altar of greater efficiency. If we are going to entrust our future to the machines, we had best make sure that they are programmed with human values and ethics, or else we will all lose in the end.

Patrick Briône is Head of Policy & Research at the IPA

[email protected]

0207 759 1004

With few signs of progress in the cross-party negotiations on Brexit, Labour and Conservative party figures have begun to accuse one another of approaching the negotiations in bad faith. But can negotiations ever really be based on good faith?  There are various definitions and assumptions relating to the practice of negotiation.  To use one randomly, “negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute. In any disagreement, individuals understandably aim to achieve the best possible outcome for their position (or perhaps an organisation they represent). However, the principles of fairness, seeking mutual benefit and maintaining a relationship are the keys to a successful outcome.”

As a whole, the statement makes sense but if we examine the some of the sentences in isolation, it is more difficult to picture what a negotiation looks like in reality as opposed to the aspiration. Do, for example, practitioners regard negotiation as a method by which people settle differences? In many joint workshops I have facilitated, managers and trade union representatives will happily agree at the outset of the discussions that this is how they both see it. It rarely takes long for each party to state that, in reality, they believe that their management or trade union counterparts are trying to win the argument rather settle any differences. Far from being a process by which argument and dispute is avoided, the lack of a shared understanding and trust of the other party can sometimes result in an unnecessary escalation of tension over issues where perspective and a sense of proportion has been lost.

The reason perspective and proportion can easily get lost is because practitioners will focus on “the best possible outcome for their position” A group of representatives recently embarked on a campaign to increase pay based on feedback that “a significant” number of staff were dissatisfied with pay and were “leaving in droves”. This position was clearly based on the representatives concentrating solely on the disengaged leading them to present a very inaccurate picture of both dissatisfaction levels and staff turnover. It was relatively simple for the organisation to counter this with factual information that highlighted a strong engagement score based on a recent staff survey plus statistics that staff turnover was below average and manageable. The hangover from that negotiation was a breakdown of trust that influenced subsequent discussions which were clouded by both parties feeling that the other was “trying to get one over on them”.

This example is not uncommon. Many senior managers wonder why their representatives are, in the words of one “always assuming we are trying to shaft the employees”. The representatives will often reply by asking why the managers “only pay us lip service and share as little information as possible” And so the vicious circle continues. Only when both parties share their core objectives, dilemmas and challenges can negotiation begin and continue on the basis of good faith. To establish this as the basis of any negotiation will require either one party to blink first or agree that they should blink together.

Negotiations can achieve fairness, mutual benefits and more honest relationships – but, more importantly, they can inform employees and create a true sense of perspective around the critical issues that will, eventually, shape whether an organisation flourishes or regresses. To achieve this, each party has to “open the books” by sharing key information at outset. Where pay is concerned, for example, that transparency works both ways – the organisation needs to share its market data and affordability projections; the unions need to present an accurate temperature check and a truthful analysis of what people are expecting.

If a trade union asks for a certain percentage increase, managers should present a cost impact analysis of paying that claim in full with the consequences of doing so being made perfectly clear. That won’t always stop disagreement but it will give people a fact-based choice of whether to accept the market rate or push for more regardless of the risks that have been communicated honestly to them. In the current climate of uncertainty, managers and representatives need to be more honest with each other than they ever have before. If they can take that step, both parties can enter into progressive discussions based on problem-solving to keep organisations competitive.

The vast majority of staff will understand that neither managers nor trade unions have a magic wand to deliver everybody’s wishes. It is time to use that realism as the basis for good faith negotiation based on mutual interests rather than on mutual suspicions.            

 

Derek Luckhurst is Training and Development Director at the IPA

[email protected]

07780 697024

FRC to be replaced with new regulator

It was announced this month that the Financial Reporting Council is being abolished to make way for a new regulatory body for accountancy firms; the Audit, Reporting and Governance Authority, which will also take over responsibility for the new corporate governance rules on employee voice introduced last summer. The change will come with new powers to directly enforce changes to accounts, without the need for a court order.

Minimum wage to rise above inflation

Following recommendations from the Low Pay Commission, the minimum wage in the UK is to rise from £7.38 to £7.70 an hour for workers aged 21-24 and the so-called National Living Wage for workers aged 25+ from £7.83 to £8.21. This is an increase of 4.9%, around three percentage points above recent inflation. The UK minimum wage is now among the highest in the OECD as a proportion of median earnings, but still below the levels recommended by the Living Wage Foundation as necessary to meet the cost of living – £9 or £10.55 in London.

CBI and TUC issue joint statement on Brexit

The heads of the CBI and TUC took an unusual step last week of issuing a joint statement declaring the UK to be facing a “national emergency” because of political failures to produce a solution to Brexit. Carolyn Fairbairn and Frances O’Grady wrote that “Decisions of recent days have caused the risk of no-deal to soar. Firms and communities across the UK are not ready for this outcome. The shock to our economy would be felt by generations to come.” While Brexit has been delayed beyond 29^th March the UK remains on track to leave with no deal on 11^th April.

 

Excessive working hours hurts UK productivity

Evidence published by the Office for National Statistics has revealed that UK workers are putting in an average of 30 minutes a week more in the office than they did 10 years ago, with few signs that this extra work is productive. ONS suggested that employees were often coming in to work despite feeling unwell, with potentially negative consequences for themselves and their colleagues. ONS estimated that “presenteeism” cost the UK economy £15.1bn last year compared with a cost of only £8.4bn from “absenteeism.”

Employment tribunals face backlog of cases

Employment tribunals in the UK are facing a rapidly growing backlog of cases since the abolition of fees back in July 2017. The list of cases waiting to be decided has risen 77% in the year to September 2018. Of 36,900 individual claims over the 12 month period, 23,700 were left outstanding at the end of September, compared with only 13,360 outstanding cases a year earlier. Legal commentators have blamed a lack of staff resources to cope with increased demand since the tribunal fees were scrapped.

National Gallery suffers first public sector gig economy ruling

A group of 27 art experts who worked at London’s national Gallery educating the public have won a landmark tribunal case stating that they should have been treated as workers rather than self-employed. This is the latest in a string of similar decisions regarding workers in the gig economy, though it is believed to be the first such ruling affecting the public sector, and may set a precedent for more such cases involving other public bodies. The tribunal found that “it is unreal to describe the dealings between the parties as transactions in which the gallery stood as the ‘client or customer of any business undertaking’ carried on by any of the lead claimants”.

Towards the end of 2018, the Government published a more detailed response to the Matthew Taylor Good Work Review. The “Good Work Plan” was described by the government as the “largest upgrade in a generation to workplace rights”.

The Government agreed with most of the Taylor Review’s recommendation that the UK employee voice should be improved with a stated aim of to help achieve fair and decent work. It was recognised that the existing Information and Consultation of Employees Regulations provided a framework to encourage long-term information and consultation arrangements between employees and their staff by providing a mechanism for staff views to be considered in major workforce changes.

In an attempt to make this framework more accessible, the Good Work Plan states that the threshold needed for a request to set up Information and Consultation arrangements will be lowered from 10% to 2% of employees. The 15 employee minimum threshold for initiation of proceedings will remain in place.

Whether this change will significantly increase the number of requests or not is difficult to predict as it will depend on the level of publicity it receives and whether those already in the know, the Trade Unions for example, decide to use the legislation more strategically than they have done so far. Regardless of this, the change provides an ideal opportunity to examine what employee voice really means and why so many information and consultation forums have failed to represent it effectively.

If we go back to the original intentions behind the legislation, it is interesting to note that it was designed to give all employees a voice. The word “all” is highly significant – and given the fact that the vast majority of ICE forums concentrate on the complaints and areas of disengagement, it is clear that the word “all” has been largely forgotten. Many terms of reference even limit the representatives to the job of “raising the concerns of their constituents” and so the concentration on these negatives has resulted in the voice of the disengaged to be disproportionately louder than those who are fine with their jobs and how their organisation is run.

Of course it is important that staff concerns are heard but it is equally important that they are put into perspective. ICE Forums are in the perfect position to do this – they are not challenged with meeting the expectations of paying members in the way that trade union representatives are. So, they should be able to represent the diverse views of staff – the 30% who might be disengaged; the 30% who are highly motivated and content at work plus the 40% in the middle who are ticking along fine. The key to building a successful ICE Forum rests on the representatives regularly reporting on the changes to that temperature check – if they are just bringing complaints to senior managers it is difficult for trust to develop – especially when the line managers would have been the better route to resolving an issue.

One of the key problems in representing the views of an entire workforce is that, traditionally, representatives have positioned themselves to be there for people who have a problem. Highly engaged staff often perceive that a representative body is not there for them and tend not to report anything to their representative. The problem with this is that a highly engaged member of staff might perceive that all the attention is focused on the disengaged and, as a result, their positivity is taken for granted. Recently, a staff representative stated that “the only way you get heard in this organisation is to complain about something.”

This organisation had recently published a staff survey identifying that around 20% of their staff were highly disengaged and that just under 40% considered themselves highly engaged. The organisation’s next step was to inadvertently concentrate solely on that 20% whilst forgetting that the 40% might have some insights that would be equally valid in identifying improvements. This approach is not uncommon but what it does is, once again, provide a disproportionate platform for the disengaged.

Does this help a disengaged individual in the longer term? In my experience it does not. The voice of the highly engaged might be the key to addressing the core problems of individuals who have rarely had their cynicism challenged. By offering them a different perspective, it might help them more than if their disengagement is allowed to fester. The “Good Work Plan” has to be for everyone and this change to the ICE Regulations might be the start of a long road to achieving that aim.

 

Derek Luckhurst is Training and Development Director at the IPA

[email protected]

07780 697024

High street braced for further job losses

January has been yet another a bruising month for the UK high street. Patisserie Valerie, Oddbins and HMV have all fallen into administration over the past few weeks with large numbers of store closures and job losses expected as a result. Meanwhile Tesco has announced major redundancies with 9,000 jobs to go as they close down their in-store fresh food counters. This comes after Carpetright, New Look, Mothercare and Marks & Spencer have also all closed dozens of stores each over the past year in major restructuring programmes – overall more than 1,100 shops were counted to have closed down in the first six months of 2018 alone.

A third of firms considering relocating abroad finds IOD

A survey by the Institute of Directors has found that 35% of firms are considering or actively planning to relocate operations abroad, with 29% reporting that Brexit was the primary cause. Sony and Panasonic have already relocated their European headquarters out of the UK, while Bank of America Merrill Lynch is moving to Paris. Dyson also moved their headquarters to Singapore this month, for what they say were non-Brexit related reasons. Meanwhile, Barclays were given approval this month from the High Court to move assets worth £166bn to their Irish subsidiary because of “continuing uncertainty over … a ‘no deal’ Brexit.” This comes as the Airbus CEO branded the UK government’s handling of Brexit ‘a disgrace’ and warned their operations in the UK may also have to be relocated. The IoD’s interim director general, Edwin Morgan, commented, “We can no more ignore the real consequences of delay and confusion than business leaders can ignore the hard choices that they face in protecting their companies.”

Boards braced for revolt over excessive executive pay

While the first mandatory pay-ratio reports are not due to be published until next year, an investigation by the Mail on Sunday found that bosses at some of the UK’s largest firms are receiving remuneration worth up to 1,000 times more than their average employees. This includes Jeff Fairburn, former boss of Persimmon, who earned £47m – 882 times average worker pay, and Simon Peckham, CEO of Melrose plc, who took home £43m, 1,017 times the average wage for his employees.

Boardrooms meanwhile face the increasing risk of shareholder revolts over such high pay packages as investor activism increases. Advisory service ISS has issued an alert against Virgin Money, Clydesdale and Yorkshire bank owner CYBG, after it was proposed to pay CEO David Duffy a bonus of 118% and long-term incentives worth 177% of his £1million salary, despite the fact that “the company’s share price has declined significantly since the deal was approved.” ISS also advised shareholders to vote down the pay policy and report of mining group Tharisa.

The last few years have seen continued slow or even stagnant productivity growth in the UK (0.6% in 2018), a challenge which policy makers have struggled to find a solution to for many years now. Successive governments have targeted skills acquisition and past Conservative governments’ employment relations legislation has weakened trade union power beyond all recognition. The problem, therefore, must lie elsewhere: presumably in work organization and management.

The question though is which management practices or approach are required. Is it a strengthening of the recent emphasis on performance management, with its focus on targets, monitoring, and individualized performance-related pay? Or an approach centred more on employee involvement and enhancing coordination and intra-organizational relationships? Drawing on a rich body of knowledge – much of which is British and based on a national survey which is the envy of the world, the Government-led Workplace Employment Relations Study (WERS) – which shows employee involvement is good for productivity and other related measures such as product and service quality, this new report argues for the adoption of the high involvement route.

High-involvement design firstly includes job- or role-involvement management, often known as empowerment or enriched job design; an approach to the design of high-quality jobs that allows employees an element of discretion and flexibility over the execution and management of their primary tasks. Secondly it includes organizational-involvement management which involves workers participating in decision-making, beyond the narrow confines of the job, in the wider organization or the business as a whole. Thirdly it involves putting this as the centre of Human Resource Management (HRM). All three elements have been increasingly neglected as the concept and techniques of performance management have taken centre stage.

The value of high involvement design is partly that it increases employee well-being, but more significantly that it changes, for the better, the way people connect what they do with what others do, develop shared understandings, and learn from each other. It helps workers to develop a sense of collective destiny and improve coordination in organizations. This approach would also help address concerns about excessive stress and mental health problems at work; while there has been much recent discussion on the role of coping and support strategies in the workplace for those suffering from these problems, there has been insufficient attention given to the stressors themselves – particularly those generated at the organizational-level such as wage freezes and lack of opportunities for involvement. TUC and other surveys of employees find that stress is the number one concern of employees, they feel over monitored and that surveillance in the workplace is on the increase, and there is a large unmet need to have a say in how work is organized. Opportunities to learn, advance and do fulfilling work are high on the list of employees’ priorities.

Extending employee involvement is a principle that should extend to the whole organization and the design of all elements of HRM. This report makes suggestions for how the involvement principle could be applied. For example, recruitment processes should involve employers soliciting job previews from applicants and not just giving their own realistic job previews. Training and development needs to be focused on supporting the requirements of involvement, team working, creativity, and diagnostic skills, and built into day-to-day activities. Appraisal processes should include frequent feedback and be focused on development and not ensuring obligations are fulfilled or means of determining pay increases. Individual performance pay systems could be forsaken in favour of collective ones. Idea-capturing through improvement or project teams must be targeted as well-circumscribed problems and the membership of these should include people from across hierarchical levels. Conventional ‘employee attitude surveys’ need replacing with instruments designed through employee involvement processes. High involvement design also has implications for management education, as it implies this should be oriented towards deep learning and developing principles, dispositions and attributes; not simply a process of alerting management to best practices, as a literal interpretation of evidence-based management might suggest.

The Chancellor recently stressed that the future of the UK will be less about Brexit than “it will be about a technological revolution of a speed and impact the like of which the world had never seen before…” There is little hope, however, of the UK being able to fully seize the opportunities of this revolution while the involvement of users and all employees in the design and implementation of new technologies remains so woefully limited. If we are to seize the coming technological revolution, we first need a revolution in our workplace management. The time for high-involvement design is now.

 

High-involvement design: the time has come is available to download here.

Professor Stephen Wood is Professor of Management at the University of Leicester

He is contractible on 07757727260 or [email protected]