Author Archives: Simon Jones

Machiavelli and Macho Management

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Originally posted October 2013

As a young HR professional, I cut my teeth on what were known in those days as “industrial relations”, and spent many a happy hour (well, many an hour anyway) locked in negotiations with trade unions. Big industrial disputes (like big hair and shoulder pads) went out of fashion by the end of the 1980s, so it was with a mixture of professional interest and nostalgia that I watched how the Grangemouth dispute last week played out.  (If you missed the story, the background is here).

Depending on your viewpoint, it was a classic case of old-fashioned politically motivated trade unions attempting to resist change by an employer, or bully-boy tactics by a company using a pretext to drive down workers terms and conditions. Either way – and there seems to have been elements of both extremes at work – the dispute reached a head when Ineos announced that the plant would close with the loss of 800 jobs; the next day the union accepted the company proposals; and the following day the company said the plant would in fact stay open and that £300m would be invested in it.

A resounding defeat for the unions and a victory for macho management? I don’t think so. A wise old manager once told me “even if you’ve won your point, always give the union something to take back to their members. Trying to humiliate them will just lead  to resentment and they’ll look for an opportunity to gain revenge at some later date”. In fact that view goes all the way back to Machiavelli, who – although he advised Princes to kill or banish their opponents, since being merciful and magnanimous in victory would lead to a constant fear of plots and rivalry –  also counselled against trying to rule people (which in this case means the employees) by fear to the point of hatred.

So I’m going to indulge in a bit of crystal-ball gazing.

Grangemouth will reopen with the staff on worse terms and different work patterns, and Ineos will begin its investment. But as staff begin to resent the things they conceded “at gunpoint” the plant will be characterised for the next few years by “low level” industrial disputes, not necessarily formal action or even make the news but those which take up a lot of managerial time and effort. At some point, when the union feels on much stronger ground (probably after the investment is completed, or the economy is stronger), there’ll be another big dispute. Ineos will then be faced with a choice: play the “nuclear” card of threatening to shut the plant again (and risk looking like the boy who cried wolf); back down to the union demands; or decide to cut their losses and sell a troublesome plant to a competitor.  Whichever they chose, their significant investment won’t yield much of a return, and I wouldn’t fancy being one of their shareholders over the next few years.*

 

(*Note – this blog is not intended as financial advice. Shares in Ineos may go up, down, loop the loop or defy the ground. Past performance is not a guide to the future, as any football fan will tell you).

 

The £15000 question

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Originally posted October 2013

Here’s an interesting fact for those running a small business. The current adult minimum wage (£6.31ph) equates to an annual salary of roughly £13125 for a full time employee. When employment “on-costs” are added (National Insurance, Employers Liability Insurance etc.) this takes the figure closer to £15000.

Is there anything else you spend £15000 on in your business?

Whether the answer is yes or no, spending that level of money would normally be classed as a significant capital investment. You would spend time deciding exactly what was needed, compare the market for the best deal, and maybe seek specialist advice. You wouldn’t necessarily expect a return immediately, though you would over the longer term; and you’d spend time and money ensuring your piece of equipment was well maintained. What you almost certainly wouldn’t do is throw it away after 6 months and go and buy another at the same price.

Yet when it comes to staff, too many small organisations do the opposite. They recruit quickly, based on “gut feel”; expect the new employee to hit the ground running and produce the goods from day one; don’t bother with looking after the person (which can be as simple as giving constructive performance feedback); and if the person doesn’t seem to be working out they’ll terminate during the probationary period and go out and recruit someone else.

Is frittering away £15000 good business sense? Is it likely to lead to long term success for your business? And is a reputation for “hiring and firing” going to make you attractive to customers and clients, let alone potential recruits?

So stop thinking of employees as a cost. Start treating them as an investment decision, and you’ll suddenly find that hard headed business decisions and “touchy-feely” people stuff go hand in hand for business success. And if you think you need help doing this, why not check out our services page and get in touch?

You Got an ‘Ology

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Originally posted October 2013

A few months ago I was asked to speak to Psychology students at Liverpool John Moores University about HR as a career option. An understanding of Psychology is often seen as one of the key knowledge areas for HR since it gives us a good insight into individual behaviour and personality. But after a debate last week on Twitter it seems that to be an effective HR professional you also need a good knowledge of

  • Law – the legal framework surrounding the employment relationship, whatever country you live in, is essential for setting down the basic ground rules.
  • Sociology – as we focus on individuals and their behaviour, we often forget we also need an understanding of wider power relationships and organisational structures. And then of course sociology’s close cousin
  • Social Anthropology – to help us understand the importance of culture, ritual and narratives (for example, why it is often harder to change tea breaks than undertake a major redundancy exercise)
  • Economics – an understanding of how labour markets work, skill shortages and wage rates, helping us to plan recruitment. While Behavioural Economics helps to explain why a performance bonus may often have the opposite effect to that intended.
  • Statistics – if 10% of employees return a staff survey, how confident can we be that the answers reflect the workforce as a whole? And when we talk about “average” wages what do we really mean?
  • History – if we’re embarking on change, do we understand why things are the way they currently are? And are the factors that created that still around?

Of course, I’m talking a good basic understanding, not degree level knowledge of each subject. But two questions spring to mind – is there any other business area that requires such a breadth of knowledge? And are there any other areas that HR professionals need to understand?

Quantum Physics and Refuse Collection

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Originally posted July 2013

At the moment I’m reading and enjoying Daniel Pink’s “Drive”, and have just reached the point where he describes companies who have introduced a system called ROWE (Results Only Work Environment) – where so long as the objectives are achieved, there is no monitoring of whether an employee is in work, or if they are  actually working at a particular time.

It sounds innovative and radical, but it reminded me of my days working as an Industrial Relations Officer for a local council in the late 1980s. There, the refuse collection department was seen as a hotbed of labour disputes. One of the particular problems from a management perspective was a working practice called “Stint and Finish”, where once the days bins were collected, the bin men could finish work. So although contracted to work between 730 and 430, with an hour for lunch, the men (and they were all men in those days) would – by agreement between themselves – cut short their break and aimed to finish as early as possible – usually by 230 and earlier on a Friday.

At the time, the government were introducing “Compulsory Competitive Tendering”, whereby Councils had to tender their direct services and where – provided minimal quality standards were met – price was the only determining factor. “If the staff can finish that early every day, then they must not have enough to do – and maybe we need fewer staff” ran the logic. “If we can cut costs, the in-house service has more chance of winning the tender”.

So off were dispatched the Council’s Work Study team (or as they grandly titled themselves “Industrial Engineers”) with their stop watches and clipboards, along with the Safety Officer to make sure that the staff were following proper procedures. And what did they find…? Without any apparent dawdling or shirking, each daily round was completed exactly as specified and the vehicles arrived back promptly at 430. It was almost as if, like sub-atomic particles, the very act of observation had changed the behaviour of the employees.  And on the days the study was being carried out, residents’ complaints about late collection of the bins rose.

What we had was the classic trade-off between efficiency (keep costs to an absolute minimum and work staff as hard as they can be) and effectiveness (provide a service residents are happy with, give staff the freedom to organise the work as they see fit within a defined cost base). Where does your organisation lie?

(Oh, and if you’re interested, the in-house team won the competitive tendering bid)

 

One Way or Another

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I went to see Blondie this week, and about 3 songs in Debbie Harry said the words that send a chill through most concert-goers’ hearts: “We’ve got a new album out, and we’re going to do some songs from it”. It’s not surprising that after 35 years the band don’t just want to play “Atomic” and “Heart of Glass” all the time, but that’s what the audience want. It set me thinking that it demonstrates one of the fundamental work dilemmas – as managers we want our employees to be creative, innovative and adaptable, yet in many cases our customers are quite happy with the existing product and don’t want change.

So what’s the solution? It seems to me that there are three approaches

Firstly, there is the Scott Walker approach. He famously walked away from being one of the biggest stars of the 60s and now produces music that satisfies him creatively but which provokes some extreme reactions. Essentially it’s about abandoning the mass market and instead do something where the employees are fully satisfied. Lots of customers may be lost but those that remain are loyal and “buy into” the exclusivity.

Secondly, there is the Dexys Midnight Runners approach. They still perform their old songs but in a different style to their heyday (here’s their biggest hit) and market carefully (their last tour was billed very explicitly and repeatedly as “performing their new album, followed by some old hits”). This is a much more evolutionary approach – it keeps the employees creatively satisfied but also keeps the customers happy.

Finally, there’s the Squeeze approach. This is to reform periodically to play the Greatest Hits, and then with the income generated the two main songwriters are able to develop their own music (often separately). In this case, it’s about protecting the core brand while diversifying into (hopefully profitable) other markets.

What it all means of course is that the way that we run and manage the people in our organisations depends very much on what our business strategy is. From an HR perspective, it shows why it’s essential that we know and understand business objectives while from the management side it demonstrates why involving your staff is integral to business success.

Oh, and the new Blondie songs? They’re ok, but I wish they’d played “Sunday Girl“