Strikes, Strictly and Brexit

I heard an interesting theory put forward recently (by comedian Frank Skinner) that Strictly Come Dancing led to Brexit. In the 2008 series, journalist John Sergeant was possibly the most hopeless contestant to ever appear on the programme. However despite the  frequent condemnation of the dance judges, the public voted week after week to keep him in the show. Skinner suggested that it was perhaps the moment that people realised they could ignore “experts” and get the result they wanted through voting in sufficient numbers.

In common with every other area of business, HR professionals are currently grappling with the implications of Brexit. Much of the debate surrounds employment law (will it change or not, and if so how?), recruitment (what will be the rules on recruiting EU nationals, will they be required to have work permits), and skill shortages (will we still be able to employ existing EU staff, and if not how will we fill the skills gap?).

However, one overlooked area is that of Employee Relations. We’re currently seeing a wave of industrial disputes – railways, airline staff, Post Office workers, airport baggage handlers, Weetabix factory workers. While some suggest this is some wave of 1970s style union militancy, the fact is that the majority of these disputes are over ‘old-fashioned’ pay and conditions matters, and they are overwhelming supported by affected staff in secret ballots. Perhaps the Brexit vote has convinced ‘ordinary workers’ that they can change things by voting?

What it has also revealed is the poor approach of management in most of these situations. It may be arrogance – a belief that management proposals can always be implemented because the employer wants to, irrespective of the views of employees. Or it could be a refusal to believe that people will do something so ‘stupid’  – they won’t vote to strike and lose pay before Christmas (just like they won’t vote to leave the EU or for a dancer as poor as John Sergeant). Mostly however I suspect it’s a lack of competence – managers, including many in HR, just don’t know how to negotiate on a collective basis. It’s interesting that several of the disputes have been quickly solved when expert negotiators from ACAS have become involved.

So perhaps that’s another Brexit issue for HR people – the need to brush up on, or even gain in the first place, the knowledge and skills to manage employee relations. As someone who cut their HR teeth in this area, I’m looking forward to some full and frank discussions with trade union colleagues in the coming months and years!

Doing the Deal

Recently, I’ve been attempting to read “The Art of the Deal”, published in the 1980s by a New York businessman called Donald Trump (wonder whatever happened to him?).  While it doesn’t contain any dramatic new insights into deal-making, it shows that the author does understand that to be successful in business, it is necessary to negotiate.

When the book was published, most HR professionals would have seen this as a core skill. Negotiating with staff, whether via unions or not, was a day to day occurrence and something that was an integral part of the job. HR people understood that the interests of employers and staff were not always aligned and that there needed to be an element of give and take on both sides. Hardline confrontational tactics might be used on occasion, but normally only if a red-line had been crossed (or if there were some hidden agenda at play).

These days, negotiation skills are very much a lost art. “Employee Relations” means, to many HR people, the ‘nuisance’ of dealing with an individual grievance or a disciplinary matter. If workers aren’t completely sold on the company’s mission, it’s due to a failure of our employee engagement initiatives and we need to redouble our efforts to get our happiness scores up.

The problem of course is that when a serious dispute occurs, HR professionals have no idea how to deal with it. Managers at Southern Rail decided that the best way to resolve their dispute was to troll their staff on social media in an attempt to bulldoze their position through. After a prolonged period of deadlock, the junior doctors dispute was only resolved when the arbitration service ACAS helped both parties to negotiate a deal (unfortunately, attitudes had become so entrenched by that point that the deal was later rejected, despite being recommended by the union).

So here are my “Negotiation 101” tips for any HR practitioner – before you even start a negotiation.

·         Understand that the other party has different objectives to you. What may seem a ‘logical’ argument to you may cut no ice with them

·         Be clear about what items in the negotiation are tradeable and what are not (your ideal, realistic and fall-back positions). You can’t have your cake and eat it!

·         Anticipate what the other party may want, and the arguments they may use – and then develop counter-proposals

·         Aim for a win-win – something which allows the other party show they have gained something for concessions they may have to make.

And when you get there, listen. Half the skill of a negotiation is understanding when the other party might be willing to discuss a tradeable item.

It may be a little more time-consuming than the current approach of what “management says goes” but it will be far more effective. Just ask Donald…

What if all Employment Law were abolished?

I’m sometimes told that business life would be much easier if “employment laws were abolished”. But would that be the case? I’ve worked in an industry in which all regulation was abolished and the consequences for business were mixed, to say the least.

In late 1986, the bus industry outside London was completely deregulated. Prior to this, buses were controlled and run by the public sector, and operated as localised monopolies. Routes, fares and all other aspects were set by local authorities or other similar regulatory bodies, the industry was heavily unionised with various national and local agreements governing terms and conditions. Unprofitable routes could be, and were, subsidised either through profitable ones or from more general taxes (usually local authority rates).

Overnight (literally) this changed.  Anyone who satisfied very minimal safety standards could set up their own company, run on routes and frequencies they decided, and set pay and conditions as they wished. With only a few exceptions, the public sector could not subsidise unprofitable routes – and where they could, this was subject to a competitive tendering process.

So what happened? There were short-term and long term effects.  In the first couple of years, the existing large public sector owned companies stopped unprofitable routes and made many staff redundant. They sought ways of reducing wages and becoming more competitive – and in consequence suffered a good deal of industrial relations problems. At the same time, there was a glut of new entrants to the market – usually offering wages significantly below the existing rates – and a resulting increase in competition especially on profitable routes (something which became known as “bus wars”).

In the longer term however the situation changed and the market nationally became dominated by 4-5 big players who grew in the main by buying out competitors.  Very small companies, who could survive by being specialists, also thrived but usually on the fringes of the market.

What does this mean in the wider employment context? Well, it shows that in the absence of legislation economic factors would take an even greater role than they do now.

In a market like public transport, where there are low barriers to entry, and a plentiful source of labour, wages will fall. The market will, in this case, set a new “minimum wage” which will vary across industries and sectors.

Interestingly though, again based on the bus experience, existing employees are less likely to be affected – even though their employment rights have been abolished. Employers in the majority of cases will want to avoid the disruption to their existing workforce, especially if they are suddenly being faced by new competitors. Unless it makes them completely unviable financially, they are likely to want to retain staff to fight off competition, and facing internal “battles” over terms and conditions won’t do this. Most of the ex-public sector bus companies eventually concluded deals which retained existing staff conditions and only provided worse terms for new entrants.

Employers wouldn’t have it all their own way though – one of the other characteristics of the bus wars period was a high turnover of staff among the new entrant companies. Drivers had no loyalty to their employer and would often leave for a new employer for a small increase (say 50p an hour) in wages. In fact one of the ways the bigger companies reasserted their dominance was to pay at a rate that was higher than competitors (though lower than pre-deregulation levels).

Of course, not every industry is like the bus industry, where it is easy to recruit and train new employees. Where it is more difficult to recruit or more expensive to train people, the economic balance of power will shift. If I’m a whizz at coding or programming and sought after by several hi-tech companies, then I may well be able to name my price (this already happens in sport, most particularly football, where star players can and do receive extremely high salaries).  The economic power moves towards the employee.

And with the end of employment law, enforcing things like notice periods or restrictive clauses will become impossible for employers. An employee can, and will walk off the job, if they are unhappy with the way you manage them – and while in a recession you may be able to find an easy replacement it may be more difficult when times are good.

Moreover, for more mobile employees, leaving to work in other countries that offer better job security or protection may become an attractive option – potentially weakening the UK overall. (Indeed, a general reduction in wages as a consequence of the abolition of employment legislation would have a very negative effect on the UK economy as spending power would decrease)

Employees who are economically weak may also try to strengthen their bargaining power by forming unions. It’s worth remembering that unions originally came into existence at a time where there was virtually no employment law, in the early/mid 19th century, and there’s no reason to suppose this wouldn’t happen again.

The impact of social or cultural “norms” shouldn’t be underestimated. The fact that an employer could now sack a pregnant woman or refuse to employ anyone black doesn’t mean that this sort of behaviour would be considered acceptable by customers, suppliers or other stakeholders. It’s very easy to damage the reputation of a company, sometimes fatally, in these days of social media.

So, in the end, it all comes down to economic power. Employment legislation will be replaced by the rules of the market – which will vary from industry to industry and region to region. Existing workers may not see many immediate changes but the world would change – but not always to employers’ benefit.

Time to Worry about the Trade Union Bill

HR professionals (and indeed any businesses that employ staff) live and act within the employment law framework. Some laws are sensible, others are bureaucratic and others just plain unhelpful. So in one sense, the Government’s new Trade Union Bill is just another piece of legislation that we’ll have to live with, whatever your view of it. And since Bills are often modified before they become Acts, it’s the final version we need to worry about rather than the first draft.

However, the planned aim of the bill is one that should cause concern for the (ever-dwindling) band of HR people who work in unionised environments and who will be at the sharp end of its consequences.

Firstly, it ignores the fact that if a union is threatening a strike (something in itself which is pretty rare these days) it’s a signal that you have a serious problem in your business. You may be convinced that the change you need to make is correct but you haven’t convinced your staff or their representatives of it. Imposing your will on reluctant employees is not generally going to make something happen effectively, as anyone who’s ever tried to manage any sort of change in a business will know.

Secondly, trying to tie things up in legal knots is not a long-term strategy. It may be a tactic that you wish to employ on occasion but it’s not going to solve the underlying issue. (And if you want an analogy, the current immigration rules for non-EU workers are so complex that many companies just won’t bother to try and recruit someone from overseas. But has it solved the problem of a shortage of skills among UK workers? Not according to this from bosses’ organisation the CBI).

And thirdly, it simply sets up an environment where “low-level” activity becomes the norm. Staff won’t strike but might decide not to bother with voluntary overtime; sickness levels will go up; grievances will increase, as will issues around health and safety, while Union reps will become uncooperative when we need those “off the record” conversations with them. That may not attract the headlines or create short-term inconvenience for customers, but it will lead to a less efficient and less effective business in the long term.

One of the first things I learnt from a seasoned industrial relations manager nearly 30 years ago was “you always let your opponent take something away from a negotiation – humiliating them leaves them angry and they’ll seek revenge in the future”. It’s a mistake the miners made in the 1970s, and on a larger scale it may turn out to be a mistake made by the Eurozone in relation to Greece. To return to a theme of earlier posts like this and this, creating conditions where employers can treating employees as disposable is not a recipe for sustainable business success.