Creating growth

My friend Rick over at Flip Chart Fairytales wrote a post recently bemoaning (or at least questioning) the lack of creativity in business. Pulling together a number of commentators he makes, as you’d expect, some great points and the comments are equally as good. But, I read the post with a certain sense of despair.

“Creativity has always been a long hard slog, slowed down by corporate obstacles, spiked by saboteurs and smothered by indifference. But I’m not sure this is any worse now than it has ever been.”

So why the despair?

First is the sadly common mistake of mixing the terms innovation, entrepreneurialism and creativity. I’d argue these are very different skills and very different mindsets.

There is a pervasive “old world” business approach and mindset to the blog. A lot of the comments refer to creativity taking place in small start-ups that are later bought by the corporate giants and therefore the lack of creativity in those corporations, and hence a passive outsourcing of thinking.

I’ll come back to that point later.

However, most depressing is a focus on a very limited segment of the economy. And here it brings me great pleasure to introduce to you, the creative industries. That’s right, there are business out there that have as their core, as their raison d’etre, a creative purpose. Film making, gaming, television, design and yes….publishing, to name but a few. We, in Britain, are incredibly lucky to have a ridiculously healthy creative industry. And it isn’t small, the creative industries in their entirety are as big, if not bigger, than the financial services sector. We have the biggest creative industry in Europe and, pound for pound, probably the world.

More so, this is an industry that is growing and growing, despite the current economic climate.

Is there a lack of creativity in UK plc? No. Really, no.

Rick and those that commented are talking about one or two specific sectors of the economy, they are confusing entrepreneurial flair and innovation with genuine creativity. The UK economy is thriving with creativity, but it is lacking the focus and investment that other, less profitable and, dare I say it, less future proof industries receive. If Government is serious about growth then it could do far worse than focus on the creative industries as the keystone of recovery.

Now, to come back to the point about passive outsourcing. Business is changing, the face and structure of business is in an evolutionary stage. Small businesses, sole traders, bedroom ventures are all bursting with innovation and entrepreneurial endeavour. Many of them are niche, many of them don’t grow, many of them don’t want to grow and ultimately some of them do sell out to corporate monoliths, before then going on to their next endeavour. Is there anything wrong with that? I honestly don’t think so. That is at the heart of entrepreneurialism.

So, to answer Rick’s question, “Is there a creativity crisis?” No. Are our established corporations designed for entrepreneurial flair and innovation? Also no.

But the two questions are not the same.

Our creative industries are thriving, they are full of truly creative people, not bureaucrats, working to make world-class products and develop leading edge content. They may be quiet, they may sometimes be unseen, but they are an economic force to be reckoned with.

Overlook them at your peril.

Frugal HR

There was a time when the newspapers were full of the “end of DIY”. We were all so cash rich and time poor that it was much easier to get on the phone (or increasingly the internet) and get someone to come and do it for us. Broken gutter? Kitchen door not working? Skirting board looking a bit 1960s? And within a click or a call we were all good…disposable income spent, time saved, work carried out.

The thing is that underlying this apparently virtuous circle of events was a slightly darker reality. We were slowly becoming unable to carry out these relatively mundane and low skilled tasks. Why learn to do something, when it is quicker and cheaper to call someone in to help? Why bother debasing ourselves to these menial tasks, when we have so much more important things to focus our minds on? Like which of the 96 TV channels we are going to watch an American import on this evening.

But wait. What is this? Is this some attempt at a social critique of our times?

No, not really. Just a cack handed metaphor for the way that I see the HR profession developing. You see, back in the early days of my career, when livestock filled the street, we were all obsessed by the pending devaluation of the florin and Cliff Richard had just had his first number one hit, HR people had to do fairly much everything for themselves. So we weren’t called HR then, but that is another story and one that I don’t have time or space for here.

External consultants were few and far between. Ok, you might pull in a Compensation or Remuneration specialist to help you with your pay strategy, benefit review or a bit of job evaluation, you’d have a Recruitment Advertising Agency that might advise you on your copy or your “house style” and of course your legal advisors to tell you what you shouldn’t do, but not what you should do (there are a range of options…..). But that was fairly much it. The rest, you used your internal knowledge, your external networks and if you couldn’t get the answer, you researched and created.

Of course, that was after the last recession and budgets were tight. But as young HR professionals we learnt to turn our hands to a number of things. We might not have been experts, but we knew a bit about fairly much everything.

L&D? Check. Resourcing? Check. Employee Relations? Check.

And here is a thing…..we used to represent the company at Tribunal ourselves.

Over time I’ve seen things shift. Partly because the economy picked up and we had more “disposable cash” in our budgets, partly because we were being constantly bombarded with articles and case studies about companies that had implemented x, y and z (the organisational equivalent of keeping up with the Joneses) normally instigated by the suppliers with the sole aim of showing their wares in the market place and drumming up more business and partly because of the shift to the Business Partner model which led HR generalists to think that they were too strategic and important to sully their hands with the likes of practical HR solutions when they could be sitting in meetings talking about……stuff.

Rather than reskill the profession, which is what many would like us to believe, in many cases we have instead deskilled the profession. There is only so much room for strategic thinking within human resources. So what value is being added by the others?

In the same way that many of us have to learn to tighten our belts at home, to rediscover lost skills for cooking, sewing, mending, fixing, creating….the current economic situation offers an opportunity for HR professionals to really hone their skills and to become proper generalists. There will always be a need for external support and guidance, but that will never beat the learning of new skills, the development of our own abilities and the broadening of our own talent profiles.

There is time to think about the greater bigger issues of the workplace, there is a need to consider the greater strategic issues of the day, but a good HR professional also knows what great looks like and how to deliver it themselves. Being practical, being hands on, these aren’t bad things. The sooner we get the balance back in our professional lives the better.

And given the economic environment that we’re in there is no better moment to start than right now. And who knows, we might all have a little bit of fun in the learning process too! Now who could argue against that?

How little are you worth? Pay, the economy and a living wage

It is very rare that I hear something on the radio in the morning that makes my blood boil. Mainly because it is normally so early that I’m still half asleep and more interested on getting to the train on time than getting aggrieved at an inanimate object.  I made an exception this morning to the views being expressed by Mark Littlewood from the Institute of Economic Affairs on the National Minimum Wage.

The argument goes, and I should add that it isn’t only Mr. Littlewood that makes this argument; the minimum wage is stifling job creation. Put simply if it was lowered then people would hire more, there are bosses out there who have work that needs doing but don’t think it is worth £6.08 per hour to get it done.  It is, in his mind and many others, a simple economic argument: business will pay the least for labour that it can.  He even went on in the interview to connect the level of the minimum wage with the youth unemployment figures.

The argument is infuriating in its simplicity and appeal. It is also completely facile and ill-conceived.

So what is the problem with this?

Before we deal with the moral arguments (which are a matter of opinion) let us have a look at the more practical business arguments.  First the argument assumes a homogeneity of skills and ability, that labour is universally transferable therefore the only market determinant is price. And of course this just isn’t true.  There isn’t one labour market, there are several interlinking labour markets and massive differentials in skills and abilities.  Companies compete with one another for labour and that is why there are wage differentials.  John Lewis will pay vastly different wage rates to the likes of Argos for example, but they are both employing retail workers.  If businesses only employed at the lowest possible level, then this simply wouldn’t happen, they would all pay at the £6.08 level.

Next let us look at the youth unemployment argument.  Unless I am massively mistaken and there has been emergency legislation over night, the 16-17 year old rate and the 18-20 year old rate of the National Minimum wage are lower (at £3.68 and £4.98). So IF businesses have all of these jobs that need doing but don’t think that they are worth £6.08 an hour and IF the labour market is purely financially driven, then surely we should be seeing unemployment in these age groups dropping? Of course a flick through the recent unemployment statistics shows that not to be the case.  Tuition fees, education and skills gaps? No. The reason these guys are unemployed is the adult  national minimum wage rate being set too high.

I worked in the business services sector before the National Minimum Wage.  We employed a lot of people in very labour intensive low skilled roles for a variety of clients from big private sector names to government departments.  I can tell you that the hourly rates that were paid by some of these businesses were shocking (less than a pound an hour in some cases).  And this is where we come to the root of Littlewood’s argument, because in this labour market there is a homogeneity of skills and transferability of labour and very often there is greater supply than demand.  This is where wage rates can be pushed down.

But this is also exactly why the National Minimum Wage was introduced back in 1999, to protect the most vulnerable and to afford everyone the right to a living wage.  We’re talking about £6 per hour here – for a forty hour week that would equate to less than £12,500 before tax and National Insurance. Does that sound too much to pay someone to clean your floors, to pick your fruit, to bring you your Caramel Macchiato?

We are living in difficult times, every time we switch on the television, turn on the radio, open a newspaper or flip the cover on our iPad, there are forecasts of doom and gloom. And in these times there are people who will push ideological messages under the cover of economic messages. Littlewood has his views and I have mine, that is the wonderful thing about a democracy. But when you hear people talking about the removal of this right or that right, the reform of this or that and basing it on an economic imperative, take a moment to look under the surface of the argument and examine whether it really is as simple as it seems, or whether there is something else lurking within.

UPDATE: In the UK, you can now listen to the original interview here (the interview starts at 28m 15s in).

We can’t work it out

Another Government, another job creation scheme, another waste of time and money.

Last Friday saw the launch of the latest employment white elephant, “The Work Programme” charmingly described by Employment Minister Chris Grayling as,

“a giant employment dating agency”

The concept is to use private companies to find employment for unemployed people and incentivise them to do so with the payments for success ranging depending on how unemployable the placed people are.  There are a number of serious faults with the scheme, many of which have more than adequately been highlighted by my friends at the Work Foundation:

  • Unemployment has huge regionality – if you’re unemployed in an area of high unemployment then incentives to contractors to find you work are not going to help one iota
  • Unemployment has huge emotional, social and psychological implications. Trying to solve it through a commissioned based system is a recipe for disaster – expect to hear stories of vulnerable people being ill-advised and placed in roles that are unsuitable
  • Private enterprise will focus on where it can achieve a return, not where it can be most socially useful
  • The scheme is focussed on demand side, not supply side

And this last point is the real issue, the real area where this and other job schemes come crashing down.  Employers don’t (generally) create jobs because of Government schemes.  There may be some headline grabbing stories – generally from retailers creating part-time, low paid jobs. But that hardly deals with the issues that are driving the unemployment figures – such as tens of thousands of public sector workers losing their jobs.

If we are serious about creating meaningful sustainable employment, we need investment in the key market sectors that Britain can be strong in. We need to invest in the knowledge economy, in creative industries, in R&D. We need to learn the lessons from the financial crisis and incentivise the development of a mixed economy. But perhaps most importantly we need to understand that the burden of tax on businesses needs to be reduced.  Business creates jobs when they are growing and investing in their future, not when they are holding their own or at worst contracting.

There is no genuine, long-lasting value behind “job creation” schemes or incentives, they don’t lead to a step change in the labour market, they are political window dressing that hide the main issues of economic frailty. Within the UK, if we are serious about solving the current unemployment situation (and we should be as it is a 17 year high) then we  need to create an environment that supports business growth, entrepreneurialism and innovation.

At the same time, we need to address long-term skills shortages, through significant investment in retraining and finally to support business development in those communities that have been devastated through long-term unemployment and public sector cuts.

The “Work Programme” does nothing to tackle the crux of our unemployment problem. It is time to grow up and start discussing the real issues that lie at the heart of the matter, only then will we take any meaningful steps forward.