Page 4, interview with David Stephenson

engineering changeProcess review can enable the elusive ‘more with less’ p14

rethinking the recession Future-proof responses to the economic downturn p18

tune up your workforceBetter workforce planning can bring productivity rewards p10

HR&BUSINESSNOVEMBER 2010

Peel off the labelHow to look behind frequently misleading cultural labels to see the true nature of an organisation

LINKING PEOPLE, PLANNING AND PRODUCTIVITY

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hr&Business / novemBer 2010 3

Published by grist 21 Noel Street, Soho, London, W1F 8GPPublishing director Mark Wellings editor Sarah Coles Art director Andrew Beswicksub-editor Jonathan Lalljee Commercial director Andrew Rogerson Telephone +44 (0)20 7434 1447Website www.gristonline.com Advertising and sponsorship Ian Carter ([email protected] / 0844 858 4852)

if you would like to discuss any of the issues raised in this publication please contact Andrew Mayo on +44(0)1727 843424 or email [email protected]

hr Society is a network of senior HR professionals, academics and others involved in value-added HR strategy. Our aim is to lead thinking and share good practice in the linking of

people, planning and productivity, and provide a network forum for professionals working in this area. Our activities include holding events to share knowledge; offering educational master classes; and facilitating and distilling research and disseminating knowledge. For more information visit www.hrsociety.co.uk.

This is the second edition of HR & Business and I hope you will fi nd it of interest and pass it on to your colleagues. Our focus as a society is about the ways in which HR supports business goals through planning, people strategies, metrics, productivity and partnership.

In these straightened times, these are essential contributions from HR professionals, and they need the knowledge and skills to be able to play their part. Public sector organisations, in particular, are having to rethink their deliverables and processes, and seek productivity improvements. A mutual partnership between line operations and HR is essential for the necessary resource re-planning within a nervous employee relations environment. HR must be outward-looking to the business, not immersed in its own agenda.

Do keep an eye on www.hrsociety.co.uk for our news and events, which include workshops in many business-related HR subjects. The Society is currently developing an attractive membership proposition to encourage more members and broaden the networking opportunities, on- and offl ine.

I hope to meet you personally at one of our events in the near future.

Andrew MayoPresident

welcome

This publication is printed on paper from sustainable sources using a chlorine-free process.

UpfrontNews, views and events from the HR Society, together with some of the latest developments in the industry.

The trouble with cultural labelsLabels of organisational culture can mask systems of great complexity but there are approaches managers can take to see the richness beyond the label, says Naomi Stanford.

Shift workforce planning into a higher gearCreativity and innovation are essential as organisations adapt to the economic downturn. George Blair shows how a fresh approach to staffi ng can bring productivity dividends.

Engineering a process changeProcess engineering is a different way to analyse business activities for businesses that need radical change to allow them to achieve far more with far less, says Kees van Haperen.

Recession brings radical thinkingResearch has revealed that organisations have been responding creatively to the recession, using new strategies that should stand them in good stead for the future, says Peter Reilly.

Forward thinkingHR professionals in the public sector must not become absorbed with redundancies. In this environment, they have a key role to play as business partners too.

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As the consultation on plans to scrap the default retirement age (DRA) conclude, it looks increasingly likely that it will be phased out from April 2011, with serious implications for workforce planning.

The consultation, from July to October 2010, proposed scrapping the DRA, which allows employers to force staff to retire at the age of 65. “With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age,” said Employment Relations Minister Edward Davey.

There is every sign the proposals will be implemented, and that the DRA will be phased out between April and October 2011.

This will have massive implications for workforce planning. John Cridland, Confederation of British Industry deputy director-general, said: “For employers, these proposals could make workforce planning

News

What are your key challenges at the moment? The sector is facing the challenge of a fall in mail volumes, because of the economic downturn as well as new technology. While this offers opportunities in new areas it also means the business must adapt and redesign. Changes in regulation mean there is more competition, with competitors able to use our delivery networks much more cheaply.

Another OD challenge is to balance the tension between the need to modernise the business and become more efficient, yet at the

same time become more agile and innovative in meeting future needs.

How do you keep staff engaged in a challenging time?A few months ago we reached an agreement with the unions and that has given us a positive opportunity for us all to work together to improve the business.

It’s always important to be straight with people and that’s no less important during challenging times. You must never underestimate the need to communicate.

It’s important to understand what is driving people’s engagement and how that might

be changing. Each individual goes through their own change experience, so we must recognise the importance of individuals. Like most organisations, one of the key relationships is with their line manager, so supporting managers is vital.

What tools work well for you?We have a very proud, loyal and passionate workforce, and tapping into that works well. That can be everything from local incentives such as ‘watch and win’, which allows staff to benefit from spotting business opportunities, to local problem solving schemes to make us more operationally excellent. Coaching and supporting people through change is also key.

Workforce planners must prepare for the end of the default retirement age

and providing some employment benefits, such as critical illness cover, next to impossible.” He claimed it would raise complex legal and employment questions which would create uncertainty for employers and their staff. He concluded: “A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future.”

The Managing an Ageing Workforce report from the Chartered

Management Institute (CMI) and the Chartered Institute of Personnel and Development (CIPD) found that only 14% of workplaces are ready to accommodate a changing workforce age profile.

Andrew Mayo, president of the HR Society warned: “This change makes workforce planning more complex, as the ability to predict requirements is now potentially difficult. Early warnings of employees’ intentions will be needed.”

All the latest news, views and events from the HR Society and its members

MeMber Spotlight David Stephenson, group head of organisational development, Royal Mail Group


Return on investment is key for HR professionals

HR professionals are not driven to identify their return on investment (ROI) by organisational edict, but because they feel it is an essential weapon in their professional armoury, says Professor Andrew Mayo, president of the HR Society.

Speaking after his annual Essentials Series workshop on the subject, he said:

“It is a professional responsibility to be able to demonstrate that we have spent money wisely and delivered value for it, and this year there was a clear recognition among participants that knowledge of ROI is a basic requirement for any professional.”

The workshop explores the theories behind ROI and helps participants put them into practice. It goes through setting objectives, devising the formula for ROI, addressing the difficulty of measuring intangibles and explores specific cases.

Mayo says: “We offer practical solutions and discuss the experiences of all the participants in some detail. As ever, as part of the process, the participants were able to use examples of successes to offer solutions to one another as well as bringing some of the theory to bear on their own projects.” Andrew Mayo will run another workshop on Measuring ROI

in 2011. Visit www.hrsociety co.uk for more details.

As part of its mission to help inform members and disseminate the latest thinking on issues affecting them, the HR Society has launched an expanded document library on its website, www.hrsociety.co.uk.

The library is split into a number of categories including: workforce planning, employee engagement, people strategies, HR metrics, human capital management, employee demographics and HR business partnership.

The documents available range from introductions to the topic, to articles written by HR Society council members and useful diagrammatic representations of concepts. There is also a facility to enable member feedback on the articles.

Andrew Mayo, president of the HR Society said: “This library offers useful insights into the topics for HR professionals who want a more detailed understanding of the various subjects. Over the coming months and years we will be adding to the breadth and depth of the library and introducing services for members only.”

hr society document library launched

HR Society diaryn e t W o r k i n g e v e n t s

jaNuaryMasterclass: Understanding organisational DevelopmentChris Nutt, an experienced organisational development leader, facilitator, consultant and vice president of the HR Society will lead this practical masterclass designed to offer insight into how to improve your organisation. It complements conventional, structured thinking with a mindset that enables you to intervene more effectively in the flows of the real world.

It avoids reducing organisational development to statements of grand theory, and takes its task as understanding why, what and how you can learn from past experience and make an effective, practical difference in your current context.

Participants will explore the cultural characteristics of their organisation and their preferences for the way they work to change and sustain it for the better. They will also gain insights into organisational development as a philosophy and a toolkit; and discover how to live with the complexities, to be shrewd and practical as well as professionalDate: 10.00-4.30, 25 January 2011 Location: One Whitehall Place, London SW1A 2HEFee: £320 (& VAT) for members, £395 (& VAT) for non-members.

februaryPresidents Forum: Current issues for Hr in the Public sectorThe session will be lead by Angela O’Connor, chief people officer at the National Policing Improvement Agency, where she is head of profession for police HR and learning and development staff in England and Wales and lead on police learning, development leadership, and people strategy.

She will share the benefits of her experience including as director of HR for The London Borough of Enfield and heading a national HR team determined to ensure the Crown Prosecution Service became a world class prosecuting authority.

Among the many awards she has received are for HR Director of the Year 2007 at the HR Excellence Awards, and positions is in Human Resource Magazine’s top 10 most powerful people in HR list, and in Personnel Today’s top ‘power players’. Her HR teams have been the recipients of numerous awards.

She is a board director of Skills for Justice and has been elected the vice president of the CIPD Police Forum.Date: TBC February 2011Location: One Whitehall Place, London SW1A 2HEFee: £190 plus VAT for members of the HR Society and £275 plus VAT for non-members.

For more information visit www.hrsociety.co.uk.

to book any of these events contact Lara Roberts, programme administrator Tel: 01264 774004 Fax: 01264 774009 Email: [email protected].

if you have suggestions for events, subjects or speakers please email HR Society president Andrew Mayo at [email protected].

All attendees at their first Hr society event will receive one year’s complimentary membership of the Hr society


Following his seminal research on national cultures at IBM between 1967 and 1973, Geert Hofstede was asked: “Between the time that you were first analysing this data and now,

has your definition of culture changed?” His answer was: “No, not really. Of course, you have to realise that culture is a construct. When I have intelligent students in my class, I tell them, ‘One thing we have to agree on: culture does not exist’. Culture is a concept that we made up which helps us understand a complex world, but it is not something tangible like a table or a human being. What it is depends on the way in which we define it.”

People tend to define the culture of an organisation in terms of a label, as if it were a tangible, as in Apple being described as having “created a culture of secrecy”, and Walmart “an austere culture built by old man Walton” or Unilever’s CEO, Paul Polman, wanting to develop “a culture of accountability”.

These labels are a fact of organisational life. Think of your own organisation – what label do people attach to its culture? Common ones are a culture of innovation, a culture of collaboration or a culture of teamwork. A rather more vivid label appeared in The Economist (31 July 2010), which talks of Pimco, one of the world’s largest bond-fund managers, having “a culture of constructive paranoia”.

Labels are a fact of life because they serve several useful purposes: they are identifiers, much like a luggage label on a suitcase; they act as flags for waving and mustering behind (or tearing down and attacking); they are a quick and easy-to-use form of shorthand or sketch that people can recognise or picture; they are yardsticks for measurement or comparison; and they can act as a defence.

Shallow and misleadingThe first problem with labels of culture is that they are shallow and confusing. The painting of a pipe by Magritte labelled “Ceci n’est pas une pipe” (this is not a pipe) is a good example of this. The confusion lies in labelling something that looks like a pipe as ‘not a pipe’ because, in fact, it is not a pipe but a two-dimensional representation of a pipe. Similarly, a label of a culture is not the culture itself but an abbreviated verbal or written definition. Labels do not represent the pervasive, implicit, nuanced, subtle, complex and dynamic ways of community being that might be generalised across an organisation, but are experienced individually and subjectively.

the trouble with cultural labelsLabels of organisational culture can mask highly complex systems, but there are approaches managers can take to see the richness beyond the label, says naomi stanford.

Dr Naomi Stanford is an organisation design, innovation and culture consultant with clients in the private, government and non-profit sectors in the US and Europe. She helps develop adaptive, open and innovative organisations. She is the author of: Organization Design, The Collaborative Approach, The Economist Guide to Organisation Design and The Economist Guide to Organisation Culture.Email: [email protected]


Second, labels imply something fixed in the way that a flag is fixed. The flag of a country does not change beyond recognition – the Union Jack or the Star Spangled Banner have been the same for decades. An organisation’s culture, however, is always moving and fluid. Toronto-based academic Gareth Morgan’s definition states: “[Culture is] an active living phenomenon through which people jointly create and recreate the worlds in which they live.”

teamwork trapThird, labels do not invite the creation of a shared meaning. When Richard Fuld took over as chief executive of Lehman Brothers in 1994, he was determined to establish a culture built on teamwork >

the trouble with cultural labels

Culture is not something tangible like a table or a human being. What it is depends on the way in which we define it.”

orgaNiSatioNal culture

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because this, in his view, would lead to “the best business decisions for the firm as a whole, and paying employees in stock helped reinforce that culture. I wanted them all to think and act and behave like owners.”

If, as in this case, there is no concerted effort to create a shared understanding then simply making the statement is a recipe for disaster. It makes a number of assumptions: that Fuld’s notion of ‘teamwork’ is the same as each employee’s; that employees have a common view of what ‘thinking, acting and behaving as an owner’ is (and that they want to be an owner); that people are motivated by the same rewards – in this case shares; and that ‘teamwork’ leads to the best business decisions.


> Fuld’s main action to develop a culture of teamwork was to link compensation to the overall performance of the firm through equity awards (Fuld himself being awarded colossal sums, somewhere between $350 million and $484.8 million between 2000 and 2008). When Lehman Brothers filed for bankruptcy during the financial sector collapse of 2008, it became clear that the culture of teamwork was one based on greed, lack of oversight and accountability, and blame. These are not the characteristics commonly associated either with teamwork, or with well-run owner-managed businesses.

American organisational academic Edgar Schein’s definition of culture reinforces the notion

that the creation of shared meaning is the key factor. He defines culture as “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems”.

unpack the labelGiven that labels of culture are a fact of organisational life, and also that they have severe limitations, there are approaches managers can take to see beyond the label into the richness of what it stands for.

Visualise a suitcase with your name and address on the luggage label. From the name and address a certain amount can be assumed: someone might judge that you live in a good neighbourhood, or that number 3A implied a flat rather than a house. But the assumptions would have to be based in prior knowledge of addresses, and assumptions are not always correct. You might have borrowed the suitcase and forgotten to take the original owner’s label off.

However, the act of unpacking the suitcase is going to give a lot more clues about you. The clothing, toiletries, possibly books, medications and documentation will all tell a story. It is the same way with organisations. Unpacking the thing that

If there is no concerted effort to create a shared understanding, simply making a statement about culture is a recipe for disaster.”

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These questions use the first two parts of the O’Reilly/Chatman definition:

• What are your shared values?• How do you know these values are

shared? What is the evidence?• Why are these shared values

important (in terms of achieving your business strategy)?

• Who shares these values? Are they shared by everyone or just some people?

• Where are these values shared –

across the whole organisation or in pockets?

• When are they shared/not shared? In other words, what circumstances or contexts foster sharing values?

• What is important to the organisation?

• How do the shared values help define this? You need evidence here.

• Who defines what is important and thus fosters the values? Or do the values foster what’s important?

• Why do the values need to define what’s important? Do they do this or is there a disconnect between what’s important and any values demonstrated or stated?

• When does the link between defining what’s important and shared values come into play – in what circumstances?

• Where in the organisation is it obvious that shared values help define what is important? What can you learn from this?

Questions: unpacking the label


is labelled allows you to tell the story and see the patterns and themes that are referenced in many of the definitions of culture.

Define cultureThe first step to seeing beyond the label is to take a definition of culture that appeals to you. There are many beyond the ubiquitous “the way we do things round here”. A definition that works is from CA O’Reilly and JA Chatman, authors of Culture as social control: Corporations, cults and commitment (1996), which suggests that culture is “a system of shared values, defining what is important, and norms, defining appropriate attitudes and behaviours, that guide members’ attitudes and behaviours”.

After definition, the second step is to identify the label, for example: “We have (or want) a culture of innovation.” The third step is to unpack that in terms of the definition by asking a lot of questions (see box). Questions can also be developed to delve into the norms, attitudes and behaviours, guiding members’ attitudes and behaviours with regard to the aforementioned definition. The questions should be asked of a random sample of the organisation (or part of it that is under study). It is likely to generate a surprising variety of answers, but several common themes will emerge.

current cultural influencesThe next step is to look at what should be kept and why, and what should be shaped or changed and why. Then look at what is currently shaping the culture. Often it is performance measures, reward systems, job designs, work flows and other infrastructure elements that form boundaries. Much as the choice of suitcase shapes packing strategies and the amount of stuff that can be fitted in, so changing the infrastructure changes the possibilities.

A change of culture is not an overnight switch. John Chambers is in his seventh year of changing Cisco’s culture. Lou Gerstner took a similar amount of time at IBM, and Alan Mullally at Ford is in his fourth year “with a long way to go”. These leaders recognised that they could label the culture they aspired to, but that getting to it takes patience, persistence and a detailed understanding of social and infrastructure nuances, complexities and relationships.

Naomi runs a popular Essentials session on Organisational Design for HR Society members every summer. Details will be available closer to the time at www.hrsociety.co.uk

orgaNiSatioNal culture

book oFFer

organisation Culture: getting it rightNaomi Stanford’s book Organisation Culture: Getting it right (The Economist, 2010) provides a concise guide for managers, analysing how to harness the power of culture, how to understand an organisation’s culture and how to harmonise it with a business strategy.

Complete with advice on how to avoid common mistakes while making cultural changes and on maintaining a healthy culture in the long term, the book includes real-life examples from such major and diverse companies as IKEA, Google and Procter & Gamble.

Offer details: HR Society members can receive a 20% discount (RRP £12.99). Telephone or email Emily Orford at Profile Books (020 7841 6300/[email protected]) and quote “Organisation culture – HR & Business offer”.


many organisations adopt a Jeremy Clarkson-style attitude to workforce planning: they just put their foot down and hope for the best. It is a no-nonsense

approach that can feel quite appealing. In reality, however, using the careful planning and teamwork of a Formula One racing team will win the top place on the podium.

This is because improving productivity and innovation is central to workforce planning when suitably supported by a regular inflow of fresh talent, as well as a culture of questioning and continuous improvement. Successful workforce planning is therefore positioned at the crossroads between operations, finance and human resources.

The traditional approach to an economic downturn is to focus on reducing staff costs by such means as freezing vacant posts. This weakens organisations, as these are often the very posts where competition for talent is strongest. In addition, the workforce’s average length of service creeps up, which can mean that innovation is likely to be in short supply when it is required the most; the current way of doing things is likely to be seen as best. Yet doing more of the same will only give you more of the same.

use the downturn productivelyA downturn is the time, and opportunity, to find ways of doing things differently. For example, workforce planning can reduce staff costs while introducing fresh blood by encouraging part-time working and sabbaticals, although this needs to be approved on a case-by-case basis, so that it does not adversely affect the organisation. It is also a great time to recruit graduate interns because managers can ensure they can make a valuable contribution to the organisation before offering them a permanent position.

This has been used to great effect in the past couple of years when many unions have negotiated pay sacrifices to preserve jobs. For example, BA pilots worked for a month without pay, while the financial services firm KPMG introduced flexible working with a maximum reduction in base salary capped at 20% per individual. Nearly 80% of KPMG’s 11,000 UK staff applied to work a four-day week or take extended unpaid leave.

Shift workforce planning into a higher gearCreativity and innovation are essential as organisations adapt to the economic downturn. george blair shows how a fresh approach to staffi ng can bring productivity dividends.

George Blair is managing consultant of Shared Solutions Consulting. He has extensive consultancy experience in the UK and overseas, including Eastern Europe, Africa and the Middle East. He is joint author of two books on organisational change, and often speaks at conferences and workshops to senior managers and postgraduate students. He has been an expert witness to the House of Commons Health Select Committee and adviser to the King’s Fund in workforce planning and development.Email: [email protected]


Business performance can be improved by matching staff composition by age, gender and ethnicity more closely to customers. One building society found that their most successful staff were the older ones who were closer in age to many of their customers. So why do more car dealers not go out of their way to recruit and train more female service managers, given the proportion of women who make car-buying decisions yet who may feel patronised, or even bullied, by male-dominated sales staff?

beware of burnoutMany employers attempt to improve productivity by reducing headcount, while expecting the same outputs. However, this usually leads to poor-quality service and outputs from demoralised staff because

Shift workforce planning into a higher gear

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workforce plaNNiNg

Freezing vacant posts means innovation can be in short supply when it is required the most.”

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Workforce demand• Which activities should staff stop

doing, or do less often, because they add little value?

• Which activities should be kept in-house and which should be contracted out?

Workforce supply• Could you reduce your workforce

numbers through the offer of part-time working arrangements and sabbaticals that may prove to be attractive to some members of staff?

• Could you benefit from using interns so that you are sure of staff before you appoint them?

• What benefits would you see if your workforce better reflected your customer profile?

• How could you increase the number of secondments within your organisation and with your suppliers?

Productivity• What traditional customs and

practices should you challenge?• What could you learn from other

industries? • Do you measure quality from a

customer perspective?• Could you gain more business

by targeting customers who are trading down and therefore increasing your earnings per employee?

• How could the use of IT and the web be maximised to reduce costs and improve your services to customers?

Questions to address during a recession


they have to cut corners and risk burnout from working longer hours. The resulting loss of business can easily outweigh any gains from staff costs.

A much better approach is to eliminate waste. This is done by reviewing how staff spend their time and eliminating or reducing the amount of time spent on activities that do not add value to customers or the organisation. Process engineering becomes a core tool here. Question how much time is spent answering emails, many of which may be of little importance. Equally, a constant stream of emails can

reduce the quality of thinking, because concentration is interrupted to check the latest missive pinging into the inbox. Advise staff on the use of emails and, if appropriate, implement email-free periods.

Map out processesIt is a good idea to map out processes and procedures to see if they could be done with fewer steps. Another source of waste is the poor layout of workplaces, which causes staff to walk about needlessly. This can be rectified by mapping where staff go and then relocating facilities. Budget airlines improved productivity by squeezing extra flying time from their expensive aircraft by using unnumbered seating to reduce passenger boarding times. There are no doubt long-standing customs and practices in all organisations that could be questioned.

Creativity makes all the difference to improving productivity, so it is important to focus on new revenue opportunities rather than just cost reduction. A recession is a great opportunity for low-price operators to attract more upmarket customers by enhancing their offering. Thus, McDonald’s attracted Starbucks customers by introducing lower-cost

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Reduce the time staff spend on activities that do not add value to customers or the organisation.”

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Wendy Hirsh, independent consultant and researcher and member of the Hr society

Like many others with practical experience of workforce planning, I see it more as a mindset than a set of particular techniques. So faced with an organisation seeking to ‘do more with less’, how might a workforce planner’s mind run? Four issues come immediately to mind.

First, we need to ask what the ‘doing more’ is really about. Is ‘more’ about quality, such as reducing manufacturing waste? Is it process efficiency rather than volume, like reducing waiting times in the NHS? Or is ‘more’ really about higher levels of productivity and activity, for example teaching more students in higher education with fewer lecturers? Sometimes we need to identify which work is central and cut out tasks that add little value.

Workforce planners think about costs as well as heads. The ‘less’ is often really less money. It is vital to know what different groups of people cost (not just their salary but full cost) and to be able to track savings as workforce changes are implemented. This means having people and jobs well coded by type and level of work, matched to financial data.

On the workforce supply side, we think about skills as well as numbers of people. This is about the right mix of job types and also about having the people who possess the right skills for those jobs. Planning in terms of job families and key specialist skills can be more illuminating than planning by business unit or cost centre alone.

Workforce planners always see the short-term against the longer-term backcloth. We seek to ‘do more with less’ in a way that positions the business more strongly for the future, in terms of the quality and demography of the workforce. This has implications for recruitment (keeping some going, especially of younger people) and for leavers (managing voluntary severance with care).

Workforce planning in action


Fairtrade coffee. This increased income and profit per member of staff.

Seeing old problems through new eyes can be encouraged by creating secondments either within the organisation or with suppliers. This is particularly important for staff who have been in the same job for many years.

use the webIT can be either a financial drain or a source of business advantage, depending on how well it works in practice. A well thought out website can reduce the number of telesales staff needed to answer queries, as well as administrative costs. For example, customers of courier companies can track the progress of their consignments over the web. Those who can see their purchase records on the web are also more likely to use it for repeat orders.

Innovation often comes from copying organisations in quite different industries. That is why so many different organisations have copied Amazon’s facility that shows customers what others with the same purchasing habits have bought.

Having the right key performance indicators for employees is also essential. Call centre operations often get this wrong. They encourage staff to maximise the number of phone calls they answer by minimising call duration. This is a great way to lose customers, who often need to call again to get what they want. This contrasts with the likes of telephone banking company First Direct, which has a loyal customer base because its staff focus on meeting customer needs, regardless of time taken. Thus, at least one performance indicator should measure quality from a customer point of view.

contracting outAnother consideration is to review which functions to keep in-house and which to contract out. This should be based on demonstrable advantages drawn from detailed analysis, not wishful thinking. For instance, some NHS hospitals have contracted out their non-urgent pathology tests to highly automated, commercial laboratories with low marginal costs.

A successful HR function needs to be heavily engaged in improving productivity and never more so than during a recession. Workforce planning is the way to achieve this by engaging operational staff at all levels in creative approaches to how work is done.

HR Society eventsnet Working e vents

essentials series employment demographicsManaging consultant at Shared Solutions Consulting, George Blair, runs regular sessions on the landscape of employment in global businesses for the HR Society.These sessions address themes such as future employee age profiles, classes and locations, labour market statistics, skills and learning organisations.Each session is tailored to the needs and challnenges of attendees.Details: For news of the next session, visit www.hrsociety.co.uk, and click on the events section.

Masterclass

Workforce planningProfessor Andrew Mayo runs regular sessions on workforce planning for all HR practitioners who need to work with resource planning, especially HR business partners and planning specialists. They provide the business case for effective workforce planning, and offer practical tips for the most effective approaches. The workshops are illustrated by practical exercises and case studies. Participants can take away a workbook to apply to their own organisations.Details: For news of the next session, visit www.hrsociety.co.uk, and click on the events section.

workforce plaNNiNg


in the current political and economic climate, public and commercial organisations are forced to achieve greater value for money. The traditional view is that this should be achieved through

cost reduction and productivity improvement. Yet a more powerful argument can be made for taking a less linear approach and a more holistic view of the way organisations operate. It makes more sense to look at what organisations should be doing, rather than concentrating on what they are doing. HR departments control many processes that consume their time and that of managers, so process engineering is a key skill for them. They have as much a part to play in seeking organisational efficiency as anyone and need to analyse all their processes.

Process engineering is a different way of analysing businesses that can bring radical change and improve overall business performance. Often, the need for change in a business is triggered by the introduction of new ideas, prolonged growth or the need for sustainable development.

Today’s business environments are more complex and uncertain than ever. Decision makers must cope with a rapid pace of change while making sense of messy challenges. Organisations often fail to embrace a holistic approach for fear of undertaking too much and losing sight of what needs to be achieved. However, a better understanding of organisational systems and processes can help to create different ways of working and exploit the full potential of the organisation’s information.

improving processesFor today’s organisations to sustain, or even deliver, higher performance over time they need to ensure that business processes become more mature. Michael Hammer, one of the founders of the theory of business process engineering, says organisations should consider this process of maturity holistically and according to two important interdependent characteristics: process enablers (aspects such as design, performers, owner, infrastructure and metrics) and enterprise capabilities (leadership, culture, expertise and governance). Although it could

engineering a process changeProcess engineering is a different way of analysing business activities that can bring radical change and enable businesses to achieve far more with far less, says kees van Haperen.

Kees van Haperen is managing director of Koios Group Ltd a consultancy specialising in strategy, change and programme/project management. Koios Group is a member of the CMC Partnership consortium for the Buying Solutions Management Consultancy and Accounting Services framework agreement. He has been a member of the HR Society Council since 2006. Email: [email protected].

agreement. He has been a member of the HR


be argued that his concept is arbitrary, his analysis model gives a good insight of the intricacies of tackling organisational improvement.

We work in systems all the time – our work, home, social life and hobbies are all related to various systems that all interact with each other at some stage. The concept of process engineering offers ways to improve the systems within organisations, as well as to look across organisational boundaries into the wider environment. However, working in systems is not a linear activity: step two does not necessarily follow step one.

well-oiled machines?Traditionally, organisational and management scientists have seen organisational systems merely as complicated machines. In other words, organisations, economies and even societies behave in a linear manner, with outcomes directly related to input. Therefore, organisational behaviour is predictable. Since this behaviour can be understood, it can be effectively controlled by well-designed external interventions. This view is based on facts derived from objective dispassionate observations from a single external position by policy makers. Thus, it is appropriate and efficient to separate organisational design from actual implementation. Moreover, if the diagnosis is correct the remedy will be straightforward.

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There are, however, significant problems with this type of approach. Although it works well in tackling difficulties, when applied to complexity it results in unintended consequences, creating vicious circles of ever-more complex rules and frameworks. In turn, this could exacerbate the problems and lead to distrust and miscomprehension within an organisation. It could even result in a decline in the legitimacy of the process and decision making itself.

thinking in systemsComplex situations tend to be characterised by a high degree of uncertainty. The existence of significantly different perspectives on the problems at hand contribute to this uncertainty. In such circumstances, change becomes piecemeal and evolutionary because there is little agreement on the nature of the problem, let alone the most appropriate solution. Furthermore, causality is indeterminate and many factors are interconnected or even interdependent.

In this context, ‘systems thinking’ adopts a different strategy to simplifying problems. Rather than breaking down problems into smaller components that can be analysed, it goes up a level of abstraction and discards some of the detail. This means that in analysing organisational issues, connections between the components of problems can be maintained. The late Russ Ackoff stressed that a ‘system’ is a whole consisting of two or more parts that satisfies >


> To give some tangible shape to such organisational wisdom, the principles of one particular systems-thinking approach can be used: soft systems methodology (SSM). SSM is a structured way to establish a learning system for investigating complex messy problems. It aims to improve areas of concern by activating continuous learning in the people involved in the situation. Learning takes place through the iterative process of using systems concepts to reflect upon and debate perceptions of the real world, then take action and again reflect on what is happening using systems concepts.

This reflection and debate is structured by a number of systemic models. It is important not to lose sight of the fact that these models are holistic, idealised types of certain aspects of the problem situation rather than accounts of it. As a matter of fact, these SSM-derived models become analysis frameworks that address a variety of organisational problem dimensions. At this stage, it is important to understand that the focus of the enquiry is on what the organisation is or ought to be about and not how it operates.

the process perspectiveEmbracing the process perspective makes it much easier to investigate the detailed functioning of the organisation and to scrutinise its activities. This is described as the perspective of ‘how’ the organisation does what it ought to be doing. To enable this, it is necessary to adhere to a few important principles. In the recent past, some of these principles have been incorporated into the ‘lean systems’ approach made famous by Toyota.

First, a process has a starting point and an end point. The process could also have a defined owner, group of actors or users and should convey a purpose or desired outcome and comprise some form of decision making. There should be rules that govern the standard or quality of inputs throughout the process, alongside a recognition that the process under review is usually linked or connected to other processes. In using the process frameworks to identify and analyse issues, one should consider a range of questions including: whether the activity is being done and how; who is doing it; what the issues are; and what could be improved.

While answering such questions, the process review should attempt to count how many steps are involved, whether there are hands-off handovers and how many. Total process timings should be addressed while capturing the approximate time taken for each step and between steps. The investigation should identify whether there are queues or waiting lists,

Dr Mark Pegg, director of the Leadership Centre at Ashridge business school and member of the Hr societyThe strength and depth of the credit crunch means everyone is doing more with less. For the private sector, the change has taken place over the past couple of years, so this is now business as usual. The public sector tends to lag behind because of the way spending plans work, so it is only just embracing the idea.

Our advice is to ‘never waste a good crisis’. If you think you can get where you want to go just by squeezing more productivity out of the system, you will be disappointed. You need to take the opportunity for a major redesign of how you provide services. Risk aversion has to be put aside and you have to innovate.

If you want a radical solution, you need to build radical into the system and think differently about how you do things.

Spot your innovators and look after your mavericks. In the past, they may have been too radical and they needed to be managed. Now they need to be given more freedom because they can make a real difference.

Sort out the people at the top. If your leaders don’t do radical things, how can you expect the organisation as a whole to do them? You need a new kind of leader who can let go and trust people to do more and to build ideas. In this crisis, power needs to be devolved.

You also need to encourage boundary-less behaviour. The temptation is to dig in and focus on your own priorities, but we need to work better together through sharing and collaboration.

“Don’t waste a good crisis”

five conditions: the whole has one or more defining properties or functions; each part in the set can affect the behaviour or properties of the whole; each of these parts is necessary but insufficient for carrying out a defining function; the way that each part of the system affects its behaviour or properties depends on (the behaviour or properties of ) at least one other part of the system; and the effect of any subset of essential parts on the system as a whole depends on the behaviour of at least one other such subset.

Soft systems methodologyIn brief, a system is a whole that cannot be divided into independent parts without the loss of its essential properties or functions. When the performances of the parts of a system, considered separately, are improved, the performance of the whole may not be (and usually is not) improved. In fact, the system may function less well, or even be destroyed.


or whether ‘parallel processes’ could be identified. These tend to be the main causes of delay – common examples are administrative processes involving such things as letters, records, and so on.

understanding variationLast, but not least, when work takes place in single places, such places may become ‘bottlenecks’. ‘Queues’ (for example, waiting lists or cancellations) can occur because demand exceeds capacity, or there is a mismatch between the variations in periodic demand and periodic capacity.

Systems thinking and lean process approaches encourage a better understanding of the variation that occurs in all processes. It is particularly important for managers to understand the causes of variation in a process if they wish to predict its behaviour and act to improve it. As variation is intrinsic in all process, improved processes will exhibit reduced variation as output becomes more predictable and costs are lowered. However, it should be understood that without knowledge of variation, managers may well, with the very best intentions, take action that actually makes things worse.

barriers to change It should be noted there is often a breakdown in communication between groups or departments, which inhibits process performance. Such breakdowns pose significant challenges to the management of change or process improvement initiatives. In fact, success will largely depend upon discovering and analysing these disconnects. It is also prudent to highlight that successful organisational change requires senior management involvement and support. Organisational change specialist John Kotter explains that transformations often fail because firms fail to maintain a sense of urgency for change. They may suffer from the lack of an aligned leadership coalition or an unclear vision/strategy that engages employees all levels.

Experience has shown that problems occur at interfaces between organisational units. This is often due to a lack of understanding between units or to differing opinions about objectives held by members of different organisational units. The result may be that no one has a complete picture of how the end-to-end chain of activities in a single process actually works, with managers tending to concentrate on their areas of responsibility without considering the effect on the total operation of the process or the system as a whole.

The potential benefits of a process view can be measured in terms of cost savings, schedule

gains, quality improvements, organic capability improvements and lasting changes to organisational culture. Additional benefits could be realised through the capture and distribution of detailed process knowledge among geographically dispersed units. In an information context, process maps could be used to determine the impact of an organisation’s information resource on the major operating scenarios of the enterprise and to provide an implementation-independent specification for human system interactions.

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HR Society eventnet Working e vent

essentials series Process engineering Kees van Haperen brings more than 15 years of experience in organisational analysis, risk, crisis and business continuity consultancy roles to this session on systems and process concepts for improving organisational performance. The session aims to introduce a different way of thinking and of analysing businesses, covering topics including systems thinking, the difference between a process and a system, matching capacity and demand, and the benefits of process mapping. A range of tools and techniques used to design and improve organisations will also be reviewed.Date: 7 December 2010, 10am-4.30pm Location: One Whitehall Place, London Fee: £320 (& VAT) for members; £395 (& VAT) for non-members.To book: www.hrsociety.co.uk/index.php/societies-activities/essentials-series


research from the Institute of Employment Studies (IES) shows that organisations responded to the recession by developing new strategies that should have beneficial

long-term impacts.The 2009 recession resulted in a sharp drop in

economic activity that was greater than that seen in the previous two recessions. But perhaps less widely known is the fact that employment fell by much less than during the previous recessions. During the downturn of the early 1990s, companies quickly downsized to contain labour costs. This time, it appears they have responded differently.

During the last quarter of 2009, the IES visited four organisations – KPMG, Jaguar Land Rover, Norton Rose and the BBC – to find out how they

had responded, whether their strategies were different and whether such initiatives might have longer-term beneficial impacts on employment relations. These case study organisations were chosen because they had implemented innovative cost-saving programmes in an attempt to minimise headcount reductions. The IES also looked at existing literature on the use of cost-saving measures during the recession, aimed at helping organisations think through their responses to business change.

clinging on to key personnelFour broad themes emerged from the research, Learning from the downturn: key messages from an employer perspective (2010): retaining skilled employees in preparation for recovery; recognising employee engagement would be affected during any change; protecting the employer brand image; and minimising the hidden costs of redundancies.

First, organisations seemed to have been keen, when choosing their cost-saving approaches, to retain key staff in preparation for recovery. Having won these employees in the war for talent, they were not going to let them go easily. In previous downturns vital skills, such as in IT, had been lost thanks to the use of crude ‘slash and burn’ tactics that had no regard for protecting scarce capabilities or future needs. This time, companies seemed to operate on the basis of expecting a V-shaped recession and so put more thought into workforce planning.

recession brings radical thinkingResearch has revealed that organisations have been responding creatively to the recession, using new strategies that should stand them in good stead for the future, says Peter reilly.

Peter Reilly is the director of research and consultancy at the Institute for Employment Studies. He joined IES in 1995 after 16 years with Shell where he held various HR posts. At the Institute he leads its work on the HR function and significantly contributes to the Reward and Performance Management theme. He has given consultancy support to organisations on issues in this area and is a regular speaker.Email: [email protected]

Peter Reillyconsultancy at the Institute for Employment Studies. He joined IES in 1995 after 16 years with Shell where he held various HR posts. At the Institute he leads its work on the HR function and significantly contributes to the Reward and Performance Management theme. He has given consultancy support to organisations on issues in this area and is a regular speaker.Email:

to the Reward and Performance Management theme. He has given consultancy support to organisations on


Second, the research showed evidence of greater awareness that a badly conducted downsizing exercise could have an adverse effect on the employees left behind. The development of employee engagement has been a more explicit aim of organisations who believe it leads to better organisational performance.

employer brand imageThird, how an organisation handles cost savings also has an impact on its brand image and employee value proposition. Organisations did not want to be sullied by the way they were perceived to have handled their response to the recession. Some even seem to have sought to enhance their employer brand in the way they handled change.

Finally, in the 1990s, companies became aware of the enormous hidden costs associated with redundancies. Some of this expense arose from the left hand not knowing what the right hand was doing – for example, laying off staff in one part of

the organisation, only to be hiring others in another part. Previous downturns had also demonstrated that it takes considerable time to recruit the right quality candidate once the market improves and the new people also have to be fully trained and inducted, which leads to more time and expense.

five main strategiesThe IES research shows there have been five main routes to putting these four goals into practice: pay reduction exercises; flexible working practices; paying attention to people processes; developing a strategic approach to business decisions; and fostering a ‘shared destiny’.

To illustrate how widespread the pay-focused approach was, a survey of 1,600 UK workers, conducted by Keep Britain Working in the summer of 2009, showed 54% had experienced a pay cut, a reduction in hours or a loss of benefits since the recession began. A 2009 survey report published by the Towers Perrin consultancy (now Towers Watson), called Cost-cutting strategies in the downturn – a delicate balancing act, also found that the most common cost-cutting approach was a salary freeze.

However, the extent to which salary freezes in the private sector over the duration of the recession have really been absolute ‘freezes’ has to be questioned. Incremental and developmental pay increases, hot skill payments for professional staff, and pay increases and bonuses for high performers all seem to have continued to operate in the absence of a general pay award. The use of other cost-saving strategies, such as overtime restrictions, has reduced levels of total earnings for employees at some companies.

Organisations did not want to be sullied by the way they were perceived to have handled their response to the recession.”

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> implementing flexible working practicesThroughout the recession, there has been a greater use of temporal flexibility (that is, varying working hours to achieve a more effective deployment of labour to meet business requirements) to help avoid headcount reductions. Employers have implemented flexible working patterns, such as flexible working weeks, short-time working and reduced hours to temporarily reduce time inputs.

According to joint Chartered Institute of Personnel and Development (CIPD) and KPMG research, Labour market outlook, in February 2009 some 19% of companies were making greater use of flexible working during the recession. Four months later, the CBI’s Employment trends 2009 - Work patterns in the recession found that more than two-thirds of organisations had increased flexible working or were considering doing so. Two of the case studies IES used for its research showed an increased appetite for flexible working among employees.

attention to people processesThe research evidence also suggests that employers have made efforts to maintain employee engagement during the downturn, in the belief that engaged employees keep companies afloat during the hard times, and help them recover and thrive when business activity levels rise.

Employers have also recognised that the way in which they manage the workforce during the downturn affects not only the wellbeing and productivity of the remaining employees, but also

the external presentation of the company brand and reputation. Therefore many employers have been focusing on more intangible factors, such as timely communication and promoting honesty and trust within the organisation. They have been especially careful to recognise that fairness in change processes and the demonstration of ‘procedural justice’ is important to secure the support and understanding of ‘winners’ and ‘losers’ in the workforce.

Strategic decision making Another key message to emerge was that any cost-saving strategy beyond compulsory redundancy has to address the key enablers of business performance to make it effective in avoiding headcount reductions. This requires an organisation-wide perspective and has a number of dimensions: focusing on the long term as well as the short; targeting the cost pressures faced in different areas of the organisation, rather than adopting a blanket set of measures; seeing issues from a corporate not business unit viewpoint; and not allowing narrow, sectional interests to prevail.

Actions have to be anticipatory and based on considering ideas from, and consulting with, a range of stakeholders about responding to present and future pressures. The process requires corporate endorsement of local action, but not simply the spreading of equal pain everywhere. Rather it is targeted action to deal with specific cost/income imbalances. This allows the organisation to protect investments in business areas that are critical to its long-term strategy, such as research and development and marketing. Cost savings in these areas can reduce a company’s ability to capitalise on new demand when growth returns.

fostering a shared destiny approachAn important theme emerging from the IES case studies that flowed from sensitivity on employee engagement was a determined attempt to create a sense of a ‘shared destiny’ in facing business problems. For example, cost-saving measures were often launched among the most senior staff before staff on lower grades. Salary freezes were applied to executives as well as employees. Job cuts did not affect only one group of staff, such as those at the bottom of the pay ladder.

One way in which shared destiny was emphasised was by involving employees in making the tough

Sceptics may say companies have made temporary changes but business as usual will resume after the recession.”

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decisions over how to bring about savings. Just under half of the respondents to the Towers Perrin survey actively brought their workforce into the problem-solving process during the downturn. This is in keeping with the trend for increasing employee involvement in business processes, which can drive engagement and help to build a two-way collaborative working relationship.

will co-operation survive?Sceptics will dismiss many of these research results as pretty ephemeral. They will believe that companies will have made some temporary changes to get through the hard times but business as usual will resume after the recession. Thus this mutual approach to flexible working will disappear as employees will push for more scope for adjustment on their terms and employers will respond to greater demand by sweating their assets to the maximum degree possible.

Cynics will suggest that some of the ‘solutions’ to resourcing problems highlighted by the research, especially those involving working time, are all very well for professional services firms, but are no use in manufacturing and retail. The preoccupation with the employer brand goes with the same territory – some might see it as nothing more than window dressing.

More reflective commentary has also suggested that there will be a pay-back for the wage restraint that employees have accepted as part of the recession. Trade unions will insist on making up lost ground once the profits begin to flow and/or the labour market tightens. Even those not covered by collective agreements will seek to exploit their market position, especially as the new, leaner organisations may be more vulnerable to unexpected resignations.

May i have some more?There are also fears that the cost-cutting measures will not stretch far enough if there is a double-dip recession. One case study had already experienced the challenge that actions taken in good faith had proved to be inadequate. The HR director described going back to the employees “Oliver Twist-like, to ask for more”.

Under these circumstances, it is hard to retain employee engagement. Uncertainty, especially, leads to deteriorating morale. So those organisations that are trying to avoid redundancy need to have strategies

for dealing with an unexpected worsening of the business situation or else their well-intentioned efforts will fail.

This research suggests that organisations approached the 2009 recession with a planning orientation and a desire to protect their people assets in a way that they might have not done before. They have been innovative and engaging in the way they have sought to retain and motivate their workforce, but there are still challenges to face as the UK has not yet returned to a sound economic footing.

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HR Society eventnet Working e vent

research briefing What have we learned about change during recession and cuts?Led by Peter Reilly, director of research and consultancy at the Institute for Employment Studies, this session will describe the Institute’s research on HR issues with regard to how organisations faced the recession. Themes to be discussed include how lessons learned might be applicable to the public sector, which practices and strategies will survive and whether businesses will just return to their normal routines.Date: 17 January 2011, 2pm-4.30pm Location: One Whitehall Place, London Fee: £190 (& VAT) for members; £275 (& VAT) for non-members.To book: www.hrsociety.co.uk/index.php/events/83


the Gershon report (2004) was one of many past efforts to reduce inefficiencies in the civil service. He introduced the concept of productive time – defined as time spent delivering front line services.

This is of course a variation of the direct vs indirect ratios that have their origins in manufacturing.

In the present scenario, it could not be more relevant, as governments seek to maintain as many services as possible with reduced resources. It is indeed a key ratio in workforce planning; which should always start with the resource needed for front line activities and then work backwards by ratios to different lines of support. Those ratios will need to change in the coming months.

When it comes to HR, it is more important than ever that they are closely supporting the operational strategy and business needs of public departments. They will have plenty to do regarding redundancies, but there is a risk that this becomes all-absorbing. The need for close business partnership – supporting operational managers in their objectives – is paramount.

We can start with systematic workforce planning. Each business scenario must be analysed for the resources needed and balanced with the supply available – knowing that recruitment will be a politically undesirable activity (even if sometimes inescapable). Although many public organisations paid attention to this in recent years, few developed robust long term methodologies. The availability of finance seems to call the tune, whereas the resources needed to deliver an outcome should. Compromise may be necessary but at least one knows the price that will be paid for it in non-delivery.

Clearly productivity initiatives and process re-engineering should be at the forefront of change. Expertise in these areas in a civil service environment is limited. We would argue they are very much areas for involvement for HR. It will lead

Public sector cuts have fi nally been revealed. Departments have had time to consider their options, but plenty of planning is still needed.

Andrew Mayo, president of the HR Society, mulls over the impact of the Comprehensive Spending Review for HR professionals within the public sector

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to job and organisation redesign. One of Ulrich’s original key roles for business partners was that of change agent. This means more than dealing with individual people issues in the course of change – professional organisation development practitioners should be expert in all aspects of change.

And there is much more for HR to contribute. Undoubtedly leaders need new skills. For the past 15 years the task of leading in public services has always been challenging, but it has been a period of rising expenditure. We know from the private sector that few leaders are effective in both downsizing and in times of growth. So attention must be paid to leadership effectiveness, and

the challenges of maintaining engagement in tough times. This is a time also when HR should sharpen up its expertise on return on investment of programmes and initiatives: they will all need to show a viable outcome and the often woolly and soft objectives that have sufficed in the past will not be acceptable. Indeed the whole arena of measurement in HR relating key people measures to performance will have a greater significance.

This is a demanding agenda for HR professionals, and will involve knowledge and skills that will be new to many of them. Prior to the spending review training and consultancy were as good as banned in most departments. There is no doubt help will be required in the coming months and it should be sought and used wisely.

Email: [email protected]

There is a risk that redundancies absorb HR attention, but the need for close business partnerships is key.”

T h i n k F i r s t

The mission of the HR Society is to lead thinking and share good practice in the linking of people, planning and productivity. In so doing, we provide a forum for senior professionals working in these areas.

We meet our mission by:

• building a network of members involved in the business edge of people issues

• organising topical events with leading speakers for debate and discussion

• offering educational masterclasses, seminars and workshops

• holding joint meetings with other professional societies dedicated to the support of organisations

• facilitating and distilling research

• developing, publicising and disseminating relevant knowledge.

Find out more about the Society, its activities and membership at: www.hrsociety.co.uk

The mission of the HR Society is to lead thinking and share good practice in the

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Page 4, interview with David Stephenson