economy | change-effect

Are we out of the woods yet?

One of the reasons I’ve always hated the comparison between business and sport is that whilst one has a very clear beginning and end, whether that is the geographical distance of a race, the length of a season, or the number of points that need to be achieved – the other is entirely open ended. There is no finish line, no final whistle, no countdown clock – we go and we go again.

Which is why I’m starting to feel slightly uneasy about the last twelve months of self congratulatory indulgence about how well organisations have navigated the pandemic. Because, I fear what is to come is going to be way harder for most leadership teams and that in a few years we’ll look back at the pandemic as a walk in the park. Don’t get me wrong, I”m not smug – in fact I sincerely hope I’m wrong. But the economic clouds that are gathering, suggest I might not be.

I was speaking at a CIPD conference a few months ago and in amongst the inevitable discussions about hybrid working, the great resignation and the new found freedoms that “every” employee has. I talked about spiralling costs, industrial unrest and the prospect of business collapse and significant redundancies. But this time, with no furlough, no Government support and no immediate economic bounce back. Suffice to say that I was as popular as being sat next to “that uncle” at the Christmas table. In fact, it reminded me of a session in London in 2015 that I wrote about here. I’m at risk of never being invited again and that would be entirely fair.

Talking with my son yesterday, who is in his early twenties, I was explaining the housing repossessions of the 90s and how for many in their thirties and early forties this would be a completely new experience to them. The combination of cost inflation, not being matched by wage inflation and increasing rises in interest rates is a heady mix of trouble for every single customer, employee and of course for the majority of organisations too. At a team meeting last week, someone made the point that jobs and recruitment were regularly in the news these days and even on the news at ten. I’m sure I’m not the only person that is old enough to remember the charts every evening of the number of job losses that were announced that day.

We live in a truly global economy and whilst there are certain things that we can organisationally do to influence the macro economic environment, I don’t intend to go into those right now for the fear of being even more unpopular, the reality is the most important thing we can do is to think ahead and plan for our own businesses and organisations. I don’t foresee any circumstance where we will be able to totally avoid the pain, but we might be able to reduce it – making decisions now that make things better for our employees in the future.

You think the pandemic was hard? Just wait and see what comes next.

WFH? Think about the bigger picture

Posted on June 7, 2021 by Blog

I’m cross with myself for even sitting down to write this, there are so many important things that I could or should be worrying about, that getting dragged into a debate about where people work seems indulgent and frivolous. Yet the consequences of not speaking out, seem staggeringly dangerous to our culture, society and economy. Less than 40% of the UK workforce can actually WFH, yet their actions have a greater reach and impact then is regularly part of the debate.

In making the arguments that I’m going to put forward, the obvious, simple rebuttal is to say – well you would say that wouldn’t you? You’re the establishment, a person of power, a vested interest. The great irony, however, is that because of all of these very attributes I could be seen as one of the people that could personally benefit from the freedom to work anywhere – I could buy a big house by the sea, live part of the year abroad, move to one of the most beautiful parts of our country and avoid the slog of the daily commute.

And yet I don’t. Not as a point of principle, not through some dogmatic belief, but simply because as leaders our obligation should be to make decisions for the greater good of society, never more so than when it goes against our personal self interest. I don’t have megalomaniac desires to oversee the every movement of my workforce either – this isn’t some Taylorian obsession. So why do I think the arguments being put forward for remote working are such a bad thing for us all?

The wages argument

There have been countless headlines about employees willing to take a pay cut in order to work remotely and maybe that’s true. But it is one thing saying it and it is another when it comes to be. Most of us that work in the profession of HR have a broad understanding of how compensation packages are developed and that takes into account the local market conditions. But what do we mean by market conditions, the town the city, the country, the continent, or the world? Don’t believe that business won’t have recognised the opportunity to put downward pressure on pay, even if they aren’t going to do so now, they absolutely will. In the same way that so many that have made declarations of flexibility have also been easing themselves out of their real estate obligations to aid their ailing bottom lines. These aren’t Machiavellian tendencies, they’re just the reality of business.

The outsourcing argument

Some people will have the skills that mean they can work at the very top of their profession, anywhere. But not many of us or in fact the vast majority of us. And without exclusive skills, our competitive advantage in the labour market is driven by either availability or by price. If I want to hire an accountant in Louth, there are a limited number in that market with the skills and that determines the price. But in the whole of the world? If location isn’t a factor, then I can broaden my labour market, reducing the cost and effectively outsource the work. No office overheads, maybe cheaper labour market terms and a greater pool of skills. If the only contact is via video conference, what does it matter? The choice then is to obtain exclusive skills, or compete in a pricing race to the bottom with people in countries that have significantly lower overheads.

The housing argument

One of the biggest arguments you hear by the proponents of change is the ability to live in cheaper and nicer areas of the country. Notwithstanding the point about wages – being paid a City salary but choosing to live in the highlands of Scotland is a temporary situation- there is a greater point about cost and availability of housing. The data already points to significant changes in the market, as availability of housing stock in some of the most sought after rural areas diminishes and prices increase exponentially. But what about the people that are born and raised in those areas, that chose to work locally maybe as a nurse, a teacher or in one of the 60% of roles that can’t work remotely? What happens when they can’t afford to buy a house locally and every planning application for affordable housing is rejected because of complaints from the new influx of residents?

The fairness argument

As I’ve said before, at the heart of this is fairness. The last year has amplified the unfairness that exists in the workplace, with women, young people and ethnic minorities more likely to have had their employment or income impacted by the pandemic. Those that have seen less impact have been those in industries less touched by the economic impact and with the ability to work from home. They’re disproportionately located in the affluent south of the UK. The mantra that working from home is de facto more inclusive just doesn’t stand up to scrutiny under pressure. Is this one factor going to remove all the bias and prejudice that exists in our employment practices? We’re kidding ourselves if we think so.

The infrastructure argument

Whether we like it or not, our national infrastructure is built around the geographical make up of our population over hundreds of years. The transport, education, health, utility networks are all designed to meet the needs of the population as they stand today. And we know that sometimes, even with the best intent, they can be creaking at the seams to do that. With train travel at its lowest level in 150 years and TfL on its knees, the Government has stepped in to ensure that services continue, but that can’t and won’t happen indefinitely. All of these things could be corrected over time, but that takes thought, planning, investment and significant management. In the meantime, when you want to pop from your rural retreat back into London to go for dinner, the restaurants are going to be shut, there will be no cabs and don’t even think about going to the theatre. And that’s before we talk about school places, the quality of roads or hospital capacity in sought after areas.

So what?

The thing is, and this is the one thing I’d like you to take away, work is a part of the fabric of our society. It does not and cannot exist in isolation and significant changes to work have consequences, often unintended, on society. That’s why zero hours contracts and the uberfication of the workforce where so passionately debated, but this time the people holding the decision making sway are some of those that are most likely to benefit themselves – at least in the short term. I could make countless arguments about productivity, creativity, innovation, collaboration and team work. But those things are about organisational performance and I’m not going to try and run your organisations for you – well not without a decent fee. What brings us together should be the interests of the country, for now, for tomorrow and the longer term. As I’ve argued for a long time, the most sustainable answer to this issue is to move work across the country so people can live and work locally, affordably and the broader community feel the benefits too, but that also takes time.

Finally, I want to talk again about the concept of choice. I’ve seen a number of companies talk about the neoliberal flavour du jour – that of personal choice in their decision making. It has a wonderful appeal, doesn’t it? What has less appeal is consequences that are often not built into the original equation. And the issue with individual choice is that sometimes the consequences are felt by the person themselves, sometimes they’re felt by the wider community. This last year or so has, in many ways, been an existential debate about individual choice versus collective responsibility. Remember staying at home to save lives and protect the NHS, mask wearing, foreign travel? Maybe it is hopeful to think we might hold onto something from that debate when personal self interest once again comes to call, but one thing I do know, choice is a theme that has a track record of only playing out well for the fortunate few.

How the levy could tackle youth unemployment

Posted on June 22, 2020 by Blog

Coronavirus is a no win game, that goes without saying. One of the losing groups that worries me most is the young, particularly those finishing education this year and entering the world of work.

Not only are we seeing a significant rise in those that are out of work and claiming benefits, we are also seeing the number of job vacancies fall to the lowest level on record. At the same time, more and more employers are reducing their apprenticeship entry as the focus more on maintaining existing jobs. That’s a grim environment to come into the world of work, for even the most optimistic.

In response the TUC have drawn up proposals for a job guarantee scheme to support employers in creating roles for at least six months. Whilst it is a nice idea, there is something much simpler and closer to hand. The apprenticeship levy.

Employers have, for a number of years, repeatedly asked for the ability to allocate some or part of salaries against the levy in order to increase the number of apprenticeships they can offer. Governments have been reluctant to adopt this approach, for some understandable reasons, but if I’m honest, others that sound more like obfuscated fiscal management. At a time when we are facing into such significant issue, all previous rules should be put to one side.

A fixed term scheme that allowed a percentage of apprenticeship salaries to be allocated against the levy as long as it was used to create additional apprenticeship roles would have a number of key benefits:

it is simple, easy and quick to deploy. The money is already with employers anyway, so it could be stood up by September
it provides young people (and others) with an average of two years employment and training, building skills, obtaining qualifications and learning about the world of work
it provides a future workforce, ready to deploy into the economy as things slowly start to improve and rebalance
apprenticeships standards are monitored and approved, ensuring that the quality of education is maintained for all
it is regionally agnostic, wherever there are employers with the ability to employ, there are opportunities for young people
it creates jobs in the short term and puts money back into the economy through wages

I’m not suggesting that there aren’t issues that would need to be worked out, how we ensure that employers don’t play fast and loose with funding, how we make sure that the apprenticeships created are beneficial to the economy after recovery and of course how we make sure that the young people get the quality of experience that is beneficial to them in the long term.

But at a time when we are faced with challenges beyond our experience, we need ideas, schemes that bring creativity, ambition and hope. An employer driven recovery, focused on skills and qualifications for the young? It has to be worth a shot.

Increasing the divide

Posted on January 22, 2018 by Blog

A few years ago I was debating the issue of unpaid internships and the effect of this on social mobility. The common theme at the time was that paying for internships would solve the problem. It was a compelling argument because of it’s simplicity, but fundamentally wrong.

One of the biggest issues with internships is the availability and transparency of opportunity. When opportunities are only available to those that are in the know, that are connected, or that are referred, paying rather than solving the problem of access just exacerbates it. This isn’t to say that internships should be unpaid, far from it, but that it needs to be combined with other systemic changes.

There is a similar argument to be played out in relation to university fees. The simple argument goes that by charging for university you restrict the number of entrants from lower social classes. Again, it is a compelling one. But one that isn’t backed up by data. Simply, there is nothing that would suggest that free education, without means testing, would do anything that subsidise the dominant middle classes.

In 2015, when the idea was mooted, a total cost of £10bn per annum was suggested to introduce this measure, equivalent to 11.5% of the UK education budget. Which begs the question what could be achieved by investing this money in primary and secondary education in areas with the lowest social mobility?

If you are an 18 year old in London and the South East you are more likely to go to university than if you are an 18 year old in any other part of the UK, by quite a significant margin. In fact, when you start to look at the entrants by parliamentary constituency, there is significant correlation with the areas of the greater social mobility highlighted by the Social Mobility Commission.

Assuming there is a finite amount of money available to government, the evidence clearly suggests that the best bet for improving social mobility is investment in the compulsory education system in those areas where the outcomes of young people are the lowest. That’s before we consider the alternative routes into the labour market other than university, such as apprenticeships.

The idea of free university is an appealing one, but unless significant changes are made to the education outcomes of those in the social mobility cold spots, it will do little to benefit social change. Instead, it will disproportionately benefit those who already have better outcomes and continue to widen the social divide.