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February 13, 2012 1:20 pm

Power to the people

By Brian Groom

Companies that learn how to make the most of their human capital are likely to be the winners

There is no greater challenge facing the corporate world than the need to unlock the productive power of people. Consumer power, globalisation and technology intensified by stalled economic recovery in the UK and Europe are forcing organisational changes in the way goods and services are provided, and those companies that learn how to make the most of their human capital are likely to be the winners. Today, more than ever, we hear talk of leadership, talent and engagement. The old, 20th-century, hierarchical style of management is dead at least in theory. And while companies have sought to become more people-centred in their approach, the switch has been harder than many expected. Charles Handy, the management guru, predicted the death of the regular job in the 1990s. Before very long, he wrote, having a proper job inside an organisation will be a minority occupation. Mr Handy forecast that people would become portfolio workers, or independents serving various employers. What has happened? In the UK, 80 per cent of workers remain on permanent contracts, little changed from three decades ago, though more of them work part time than before. Self-employment has risen slightly because of the recession, to 14 per cent, while

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temporary workers make up the rest of the workforce. The job for life was always a bit of a myth, outside a minority of occupations. Average tenure in a job has remained stable in recent times at about eight years, according to The Work Foundation, the employment think-tank. Some things have changed. Higher skill levels are required. Occupations such as managers, professionals and personal services have grown, while manual trades and unskilled jobs have declined, as has membership of trade unions. There is more flexible working on offer, such as flexi-time, job shares and term-time working. The divide between work and home life has also become fuzzier, encouraged by the rise of the BlackBerry and iPhone. Some people work from project to project, such as those who install information technology systems or film makers. But all this change has, so far at least, simply been grafted on to a model that was created in the industrial revolution. Competitive pressure has forced employers and employees into a more agile environment, says Jeffrey Joerres, chairman and chief executive of ManpowerGroup, the recruitment company. You have to engage very quickly and get people on board meaning a shared vision, accountability, clear directions and expectations. As with other large corporations, Mr Joerres is trying to encourage disciplined entrepreneurship among his 32,000 staff in 82 countries something that was once the preserve of smaller companies. That means focusing on communication, dialogue and team work. The pace of change is being driven by the consumer, Mr Joerres says, adding that it is immensely uncomfortable for both employers and employees. He cites the example of General Electric, the US conglomerate that, having transformed itself into one of the worlds leading financial institutions, reverted back to its roots in manufacturing over the past few years. That degree of organisational adjustment requires big changes in skills. Lynda Gratton, professor of management practice at London Business School, says the workplace is changing faster than at any time in her 40-year career. The relationship between employer and employee has become less paternalistic and more adult to adult, or more of a negotiation. She sees a greater use of flexible working, and praises those companies, such as BT, the telecommunications group, that have encouraged it. Besides benefits to productivity, flexible working can cut costs for companies while providing the variable arrangements sought by baby boomers, the large number of people born immediately after the second world war who are approaching retirement, as well as switched-on 20-somethings.

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Yet while this new world will create opportunities for skilled workers, things are likely to get tougher for the semi-skilled and unskilled. This is going to be very hard for a generation of people who are not going to be as well-off as their parents, Prof Gratton says. According to Denis Pennel, managing director of Ciett, the international confederation of private employment services, the number of people working independently or on short-term projects will grow, creating a need for intermediaries to manage relationships. Employment companies can fulfil the role, he says, as can trade unions, if they are focused on services to individuals rather than workplace bargaining. Associations of college alumni is another option, as are web-based talent networks such as Elance and oDesk, which hire out freelancers for tasks such as preparing presentations. The world will be divided, Mr Pennel believes, between ever-larger corporations and networks of independents, perhaps working with other freelancers at offices provided by companies such as The Hub, a supplier of flexible office spaces. He foresees intermediaries becoming like medieval guilds, providing health and unemployment insurance, as well as help with finding work. To make this happen, benefits attached to an employer need to become portable. And employers will need new ways of ensuring loyalty if they have a less direct relationship with workers. Alistair Cox, chief executive of Hays, the recruitment group, says that what happened in the UK labour market during the recent recession when companies held on to more staff than in past downturns, and in return workers accepted shorter hours, pay freezes and cuts could provide a template for a more mature relationship. Companies need the quality and flexibility, attitude and cost base of the people they have got, and employees enable that to happen, he says. Individuals, meanwhile, have to provide the right skills and flexibility at the right price to maximise their employability. Mr Cox says the war for talent the term coined by McKinsey, the management consultancy, in 1997 to describe the global competition for skills will get worse. And while it may be winnable for some, there will be many losers. Already there are not enough engineers and technology specialists, and healthcare professionals could be next on that list. Even companies that think they have the right skills could find their needs changing rapidly. The downturn is affecting the employee/employer relationship in two ways, says Ben Willmott, head of public policy at the UKs Chartered Institute of Personnel and Development. On the one hand, it has prompted companies to prioritise employee engagement and to stress leadership at all levels in order to encourage people to go the extra mile for the organisation. At the same time, workers are under increasing pressure, salaries are being squeezed,

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work intensity is increasing as people are asked to do more with less while, for many, prospects for promotion are receding. According to CIPD research, stress is now the number one reason for long-term absence. MBA qualifications do not put enough emphasis on people-management skills, Mr Willmott says, though the most successful companies are likely to be those that consult and listen to their staff. He cites EDF, the energy group, and GlaxoSmithKline, the pharmaceutical company, as organisations that promote psychological wellbeing as well as engagement. In many workplaces, however, a gap remains between employers rhetoric about liberating staff to show leadership and initiative, and workers perceptions. A study by The Work Foundation revealed that workers feel they have less control and influence over their careers than they did 20 years ago. It will be the employers that best harness the skills of their employees that will succeed.

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