Every so often people get into a “moral panic” and become fixated on a “bad thing”, about which “something” must be done. In HR/Employment Law the current “bad thing” is zero hours’ contracts.
These are employment contracts that don’t provided any guarantee to the employee of any number of hours per week. Hours can vary and in some cases the individual may not be required in any particular week – hence the Zero Hours name.
Various politicians have in recent weeks queued up to suggest reforms – from banning “exclusivity clauses” (i.e. ones which prevent an employee on a zero hours contract from working for someone else) to forcing employers to give a guaranteed number of hours after the individual has worked for them for 12 months. As a number of employment lawyers and other commentators have noted, both of these are easy for unscrupulous employers to get round if they want to.
It’s worth remembering that current estimates in the UK of people work under zero hours contracts vary from 600000 to 1.4 million. Out of a total workforce of 30 million, even at the upper end that’s less than 5%. And not all of those are unhappy with the arrangement – some surveys show that the majority who have them are happy to work under a “zero hours” contract.
As is often the case, those who are critical of these contracts are focusing on the symptom not the cause. There are two issues. Firstly, in a labour market during a recession, employers have plenty of staff to choose from so can drive costs down (wages can’t fall below minimum wage, so terms and conditions go instead). Once the economy picks up, individuals will move to more secure employment if they wish and employers will either face constant turnover of staff or have to improve their offering. It’s all about the balance of power in the employment relationship.
And secondly, our expectations as consumers are forcing employers to adopt these more flexible practices. Fancy a book from Amazon for next day delivery? Moan about the fact your train is cancelled because the driver is off sick? Expect not to wait in Costa for your coffee even though 20 of you have turned up at once? Companies don’t have banks of staff hanging around on the “off-chance” that there might be a surge in demand, but our expectation that our order will be fulfilled immediately means they need to be able to call on people at short notice for varying hours.
One very good example of this is a charity I’ve worked with who provide a personal shopper service for the elderly and housebound. They don’t know if Mrs Smith will need her groceries on a Tuesday or a Thursday, or not at all in a particular week. Hence the staff are employed under zero hours contracts by the charity.
Whatever the legal employment framework, “bad” employers will always bend the rules to their advantage and exploit individuals. One of the current mantras in HR is “don’t make rules for the 95% of decent employees based on the bad behaviour of 5%”. The same should apply to the legal restrictions on employers.
Category Archives: HR Thoughts
Comments or posts about contemporary HR discussion topics – probably of more interest to HR professionals
Are our workplaces designed to fail?
I’m a big fan of economist Tim Harford, and recently read his book “The Logic of Life”. In one chapter he deals with an economic idea which offers an explanation of the reasons both for high executive pay and office politics – Tournament Theory.
The argument – supported by some statistical evidence – runs like this. Modern workplaces reward relative performance, not absolute performance. Good performers are defined, not by specific targets, but by being better than other performers. So work becomes a series of endless tournaments between ostensible colleagues – if one wins, another loses. And with victory comes reward.
Now just like in the current World Cup, victory can be obtained in various ways. You can go all out to achieve success, putting in lots of discretionary effort – the equivalent of playing free-flowing, attacking football. But there are equally successful strategies that will win you the match without necessarily benefiting your employer. You can be risk averse, blocking anything new and sticking to the tried and trusted, stifling your more innovative opponent – the work equivalent of “parking the bus“. Or you can go out of your way to discredit, disrupt and stab your colleague in the back – the equivalent of trying to kick your opponent off the park. Your tactics are determined by doing not what is best for the organisation but what will work for you – and just like the group stages of the World Cup will be decided not just by who your current opponent is but also what your other colleagues are up to.
In this model, the prize for getting to the next level has to be sufficient to make it worth competing at all. So if you earn £20000 pa, the prospect of a promotion to a salary of £25000 is a big jump. At £70000, an increase to £75000 will have far less effect but an increase to £90000 may well incentivise you. Chief Exec salaries of say £500000 aren’t designed to reward the individual in the role, but to act as an incentive to Directors below them who may be earning a “mere” £300000.
Of course, it’s easy to spot problems with this theory from an HR perspective. For example, it makes no allowance for intrinsic motivation, despite increasing scientific support for this playing a major part in the way individuals behave in the workplace.
But what the theory does do is to explain why many of our HR initiatives fail. If our organisation structure and pay and benefits system is set up to reward relative performance, it will inevitably encourage people to behave in the way that tournament theory predicts. No amount of family friendly policies, team building exercises, empowerment or innovative recruitment strategies will change this if we have designed systems that work against what we are trying to achieve. So while OD and “compensation & benefits” are seen as the less ‘sexy’ end of HR, maybe they are the ones we should be paying more attention to if we really want to change the world of work.
The Balance of Power
Originally posted March 2014
The sudden death of union leader Bob Crow this week has thrust industrial relations back into the business and political spotlight. Both political allies and foes immediately began the process of mythologising him (as an aside, the way in which we continue to elevate the recently dead to saints and gods in the manner of the ancient Greeks and mediaeval Catholic church would make an interesting blog post, but this isn’t it)
The general consensus is that Bob Crow was a successful union leader because he took his personal principles into his professional life and refused to compromise them. I never met Mr Crow – though I have in the past dealt with his union, the RMT – but the most frequently cited evidence for his success is the position of his members working on London Underground. That to me suggests that the key to his achievements was not his personal values (though I’ve no doubt he had them) but his understanding of power relationships in work.
London Underground is a closed rail network (or rather a series of them) which operates separately from the rest of the UK’s railways. It is relied on by millions of Londoners to carry them to and from work. Consequently, a withdrawal of labour can cause massive inconvenience, and brings media and political pressure onto the organisation. The unions representing the workers in that business are therefore in a very strong position to maintain and improve conditions for their members because they have power on their side.
Contrast this with last year’s Grangemouth dispute (about which I blogged here). In that scenario, all the power was with the management who could and did threaten to close the plant if their demands weren’t agreed to. Interestingly, the resolution of the dispute – which involves £130m of investment in the plant – has arguably pushed the power back towards the workforce.
There are also historical examples – the success of the miner’s strikes in the early 1970s, compared with their failure in the mid 1980s, is simply that power had shifted from worker to employer.
Power relationships don’t always have to involve unions. An individual employee with key technical, managerial or other skills can always extract a better deal from a company because the consequences of losing that individual have a damaging effect on the business overall. And in some areas of professional services, it’s not uncommon for an entire team to move from Company A to company B.
There’s a tendency these days for HR people to assume that all the power is with the employer, and that their task is to “align” employees with the employer’s objectives. But effective HR people need to understand where the power lies within the organisation – and plan and manage accordingly. Bob Crow is a good example of how to do that.
The Two Kinds of HR
Originally posted February 2014
It was legendary jazz musician Duke Ellington who famously said “There are simply two kinds of music, good music and the other kind”. I think that’s pretty much true of HR as well.
All very well you might say – but what do we mean by “good HR”? It’s worth looking at the second (and much less quoted) part of what Duke Ellington said: “… the only yardstick by which the result should be judged is simply that of how it sounds. If it sounds good it’s successful; if it doesn’t it has failed”
HR is – whether some like it or not – a management function. It’s not some internal mini-ACAS trying to look after employees within a corporate structure (there are organisations that do that – they are called trade unions). So ultimately good HR is making a significant and identifiable contribution to the success of the organisation it is located in – however that organisation defines “success”.
The way in which good HR does this is to create the conditions for the employees of an organisation to achieve. That can mean ensuring that talented employees are recruited; that they are remunerated adequately; and they are given opportunities to maximise their own potential. Importantly good HR works to create these conditions not because it’s morally a “good thing” (though many would argue it is) but because time and again studies in behavioural psychology and neuro-science show that it is the most effective way to manage. Good HR is not about clinging to the ideas of defunct management theorists.
Good HR recognises that it cannot make employees motivated, enthusiastic or empowered. But it can do things which encourage this behaviour, even when all around are sceptical or negative. Just like Kevin Costner in Field of Dreams, good HR believes that “if you build it, they will come”.
So when I see HR giving itself “tags” like Commercial HR, Social HR or Brave HR I ask why? There are only two kinds of HR – Good HR and the other kind.
Which do you practise?
Away from the Numbers
Originally posted February 2014
I’m going to let you into a not-so-secret secret. HR people don’t, on the whole, like numbers. We might do stuff with them if we really have to (“You want sickness absence statistics, Mr Finance Director? Ok, if we must”) but deep down we’d much sooner be dealing with people, whether it’s developing systems and processes or analysing their interactions.
Don’t get me wrong – people matters are very important and if HR didn’t do them no-one else in business would – but, while avoiding numbers, one of the things HR people do is agonise endlessly about why the senior team/C-Suite/top table don’t take them seriously. Perhaps the two are not unconnected.
We talk a lot in HR about effective communication and talking in appropriate and meaningful language. Usually however it’s in the context of talking “down” to employees – we rarely consider it in relation to talking “up” to Directors.
So if you want to be taken seriously by business leaders, you need to be able to explain things in their language. And that means understanding the numbers and being comfortable discussing them. It’s no wonder that HR lacks credibility when I read a debate on LinkedIn (about the CIPD’s recent survey on zero hours contracts) in which a CIPD qualified professional stated that a survey of 456 out of 1000000 wasn’t significant and that the findings (which he disagreed with) could therefore be discounted. As anyone with a vague knowledge of statistics could tell you, a sample that size is more than 95% certain to give a true reflection of the total population – indeed you could be confident of the findings with a smaller sample size. Similarly when discussing salaries, it amazes me that many in HR don’t know the difference between mean, mode and median when they talk about “averages” – or could explain which one is used and why. And too often we quote meaningless figures as having some authority; one I spotted recently on Twitter was that “HR spends 2% of time on recruitment and 98% on dealing with the consequences of poor hires”. Is that meant to suggest some sort of relationship between those 2 figures? If so, what, and how?
I’m not suggesting that to work in HR you need to be a maths genius – simply that to be effective in HR it’s one of the many skills you need a working knowledge of. Wilfully displaying our ignorance damages the authority of the profession.