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The only independent strategic HR publication

I've never made a career choice on the basis that the job looked easy

HRD INTERVIEW: Tony McCarthy HR Director - British Airways


Issue 70

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Also featured in this issue:

Roundtable: Shared services Complexities of HR underestimated, resulting in lax planning and execution Benefits survey Reveals 91 percent of businesses changing benefits ­ how will that impact on engagement? Succession planning It must be an end-to-end process, but is homegrown really sustainable? CSR Survival is the main focus, is CSR still relevant as an employee value proposition? Outsourcing What next for HR outsourcing in light of recent changes in the structure of the sector?


HRD Issue 70



Issue 70



On the cover...

This issue we interview Tony McCarthy, HR Director at British Airways. We take a look at his time at Royal Mail and BAE, and find out what fuels McCarthy's determination to put BA back up where it belongs. There's a lot more arguments to be had... there's a lot more difficulties to get over... and there's a deal to be done


Editor's welcome 06 Legal updates and movers & shakers 08 Main interview: Tony McCarthy

This issue we interview Tony McCarthy, HR Director of British Airways. In HR terms, a post that's as tough as it gets


38 40 42 44


Volunteering ticks a lot of boxes

All the evidence points to great experience gained from volunteering

Opinion: Brushing CSR under the rug

With survival the main focus, does that mean CSR is now off the agenda?

The employee value proposition

No CSR agenda, no index to an organisation's moral code


Roundtable - Shared services:

How can shared services step up to the challenges that HR faces today, and how can outsourcing strategy be best managed?

CSR + HR = PR?

CSR is not an option for good headlines, it is essential to the heart of business


24 26


Global benefits manager... who me?

Stepping up to the plate managing benefits on an international scale


46 48 49


What next for outsourcing

What are the HR implications of the changes in the outsourcing market?

Survey: Reward ­ a new chapter

80 percent of businesses have made changes to their benefits in the past year

Outsource and prosper?

It may look good on the bottom line, but what price service quality?

Plugging the gaps

General down-sizing of HR departments is leading to internal skill gaps where no-one is an expert


28 30 32 34 36

Succession planning

FYI: Mind the skills gap

Ability and expertise are not qualities that guarantee good leadership 50 51

Overseas overlooked

Overseas call centres have received negative press, but is it justified

Opinion: Trouble with talent

The struggle to manage the demands of disruptive but talented employees

Survey: What's driving outsourcing?

Expected levels of savings are not being met by outsourcing?

More process... less engagement

Why are levels of engagement in many organisations currently at an all time low

Is organic sustainable now?

Internal succession planning must be an end-to-end process

52 54

To the point

Scorched earth - 300,000 public sector jobs and an estimated one million job cuts

The tomorrow people

Succession planning is a critical strategy in weathering the economic storm

Events calendar

Upcoming conferences, workshops and roundtables

32 Engagement in many organisations is at an all time low

38 Evidence points to great experience gained from volunteering

48 Outsourcing - at what price?


Editor's welcome

HRD Issue 70

editor's welcome...

Welcome to



Founder and Managing Director Peter Banks

HRDIRECTOR ­ the only magazine dedicated to HR directors.


Attitudes, perspectives and expectations can change, depending on circumstances. Consequently, many businesses will have acknowledged that certain decisions, made under certain conditions, can create problems later. And so it is with benefits. HR leaders are being held to account for benefits decisions made and strategies set, that have proved unsustainable during recession. The backdraft and aftershocks associated with this are happening now; promises not met, hard decisions made and the consequential effect on workforce morale. There is nothing worse than a broken promise. Businesses that have stripped their workforce down are seeing holes in the operation and re-resourcing to fill them. Fraught with potential litigation and strategic complication, but is outsourcing crucial aspects of the business the answer? The jury is certainly out, but meanwhile, organisations are faced with this dilemma. What are the economic issues with outsourcing, does it de-sensitise crucial aspects of the operation, is there a risk of decentralising control and command? Politically, apart from the Green Party manifesto, environmental issues are almost completely wiped from the radar. That is an awful state of affairs and suggests that such issues can only be comprehended when money is no object. Frequently, high street names and worldwide brands that we all buy from, are taken to task over how products get to the shelves and, ultimately, into our homes. This is not something to be proud of. Yet corporate and social responsibility is, by its nature, about making people feel proud and consumers confident about their choice. Where are we with CSR in the depths of recession, what does the future hold and what is the likely outcomes for business that ignore their responsibilities? It is often said that anyone can manage when in good times, but when the going gets tough, the true leaders step up to the plate and the bad leaders, if they're lucky, get an early golden handshake. We must have learnt some very important lessons about how leaders are ultimately responsible for the mess we are in, and so it is fundamental that this qualitative information take centre stage, in the quest to identify and prepare the next generation of leaders.

Editor Jason Spiller [email protected]

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ISSN 1754 0224

ed panellists

Carolyn Dyer Human Resources Consultant Standard Life Investments Anthony Hesketh Senior Lecturer & Deputy Director of the Centre for Performance-Led HR Lancaster University Management School

Jason Spiller


Richard Higginson Reward Manager Towry Law Ian Iceton HR Director Skanska Makbool Javaid Partner Simons Muirhead & Burton Linda Thompson European Director of Operations Gallup Graham White Director of HR City of Westminster Andrea Winfield People & Organisation Capability Consultant Microsoft International

Printed on environmentally friendly paper

Regency Satin is an FSC Mixed Source Material, is totally recyclable and biodegradable, ECF fibre.


Legal updates and movers & shakers

HRD Issue 70

legal updates

from theHRDIRECTOR Editorial Panellist, Makbool Javaid, partner, Simons Muirhead & Burton. They comprise employment law and diversity briefings, both of which provide the latest legal information affecting business.

movers & shakers

This issue we report on some moving & shaking across a broad range of sectors, with new posts in the fields of; finance and assurance, energy services, recruitment and HR services.

Angela Williams

Group HR Director

Angela Williams, group HR director at Land Securities, has been appointed HR director for British Gas, starting on 1 July. She will be responsible for the design and delivery of the people strategy across British Gas for its 27,000 people, working with and leading the broad HR team. Williams, who has led the HR team at Land Securities since 2005, has also held senior roles at Electronic Arts and QXL Ricardo.

employment law

In Henderson v Connect (South Tyneside) Ltd, the EAT holds that where third party pressure is applied to dismiss an employee, such a dismissal may be fair for some other substantial reason, if the employer has done everything that he reasonably can to avoid dismissal by trying to get the third party to change his mind and, if that is impossible, by trying to find alternative work for the employee, but has failed. In Samuel Smith Old Brewery (Tadcaster) v Marshall and anor, the EAT holds that a tribunal had erred in deciding that it was unfair for an employer to dismiss before hearing the employees' appeal against a related grievance. It had substituted its own view in this regard since only in the rarest of cases would a decision to go ahead with a disciplinary hearing in such circumstances be outside the range of responses of a reasonable employer. In Zentralbetriebsrat der Landeskrankenhäuser Tirols v Land Tirol, the European Court of Justice rules that a right to paid annual leave accumulated during a period of full-time employment, and which the worker has not yet had the opportunity to exercise, could not be reduced pro rata upon the worker changing to part-time employment. In McWilliam & Others v Glasgow City Council, the vice-president of the Scottish Employment Tribunals ruled that while an employee must have the benefit of independent legal advice for a compromise agreement to be valid, the advice need not go as far as enabling the employee to make an informed decision as to whether to accept or reject the proposed settlement.

Gareth Beynon

HR Director

Multi-sector recruiter Smart Solutions Recruitment has appointed Gareth Beynon as HR director to head up all its internal and external recruitment. Beynon has previously worked for the former Gwent TEC as a business advisor and Hawker Siddeley as HR manager. Nathan Bowles, chief executive of Smart, says: "Gareth will provide guidance and advice from both a strategic and operational perspective and will develop HR strategy, processes and applications for the company as we continue to expand."

diversity updates

In McFarlane v Relate Avon Ltd, the Court of Appeal refused Mr McFarlane permission to appeal against an EAT decision that he had not been discriminated against on grounds of religion. The EAT had correctly analysed the legal position and the appeal had no prospect of success. Furthermore, a particular viewpoint will not be protected by law simply because it has its basis in a religious principle. In Chief Constable of South Yorkshire Police v Jelic, the EAT held that the swapping over of a disabled post-holder with another post holder can be a reasonable adjustment, and if the employer fails to give it consideration there is bound to be a finding of disability discrimination. The right to request `time off to train or study' now applies to all employees in businesses with 250 employees or more and will extend to cover employees in all businesses from 6th April 2011. While the right has been publicised as to `time off', the actual wording means that a request can be made purely to fund study or training outside of work hours ­ it does not necessarily have to involve a request to take time off work. On the 40th anniversary of the Equal Pay Act, the Equality and Human Rights Commission has called on organisations to do more to close the pay gap between male and female employees.

Christine Millar

Human Resources Director

Crawford & Company UK has announced the appointment of Christine Millar to the position of Human Resources Director. She brings to the role extensive experience in the financial sector, including in insurance and banking, and has occupied a wide range of posts during her career, from project management to financial services regulation and compliance. She joined Crawford four years ago as manager of UK Training Programmes, and two years ago was appointed manager of People Development.

Lynda Brennan

Head of Human Resources

LaSer UK, the leading provider of credit and customer marketing programmes, has appointed Lynda Brennan as its new Head of Human Resources. She joins LaSer UK, a company owned by global investment bank BNP Paribas and leading retailer Galeries Lafayette, from Sitel, and international business in process outsourcing, where she was Vice President of Human Resources (EMEA) Previously, Brennan was Human Resources Manager for Client Logic, which merged with Sitel in 2007. She brings considerable experience in the development of human resources strategies.

To see full updates, movers & shakers and much more, please visit our website


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HRD interview

Tony McCarthy, HR Director British Airways


As HR director posts go, few HR seniors would envy Tony McCarthy's at British Airways. Whichever way you look at it, it has been a tough, rough and rocky road as the former "world's favourite airline" struggles to get back up where it belongs. Jason Spiller interviews.


Tony McCarthy, HR Director Tony McCarthy is HR Director at British Airways. He was interviewed by Jason Spiller and photographed By Gary Batchelor at BA's Waterside HQ at Heathrow.

I'd become stale and bored, believe it or not. And I felt that if I didn't move on and take a challenge at that point in time I never would

Tony, do you ever wonder why on earth you went in to HR? Well, it was a long time ago when I did a degree in Business Studies, and the main reason for doing that degree was... I hadn't got a clue what I wanted to do. I managed to get a placement for just about a year working for GEC, in Sheffield, and got a placement in the HR Department. And I absolutely loved it. Maybe it was that they were ahead of their time, but they seemed to me to be right at the centre of what was going on in the business. And they were influencing what was going on in the business, union issues, people efficiency, and that made my mind up really. I got a job at what was British Aerospace, and I started as a graduate trainee in British Aerospace, and worked my way through all sorts of different areas of the business and and ended up as Group HR Director of what had become BAE Systems. So on that journey, I'd worked in industrial relations in the early years, and in the later years it was all about talent succession, mergers/acquisitions and culture change. A massive workforce and unrest and strike action, during the Thatcher government years, this must have been valuable experience, dealing with unions? In 1990 we had a hundred and 47,000 people and lots of strikes. Eighteen weeks was the longest allout strike that we had, that I was dealing with. I left in 2003, and probably in my last five years, my interactions with the unions at BAE systems, not because I was avoiding it, would be once a quarter. Most of the interaction with the unions was carried out at local level, which is where it should be. We had a consultative body, it was once a quarter, and that was it. What that was saying is the business had moved on, the unions had moved on massively, but we were running the business and they were a party to running the business. My main focus at the end was all about culture, succession, talent development, merger and acquisitions and absolutely at the heart of the business. In the late `80s and early `90s, the business was a conglomerate, essentially a fourlegged stool: cars, military aircraft, civil aircraft and construction. And the view was that any one of those at any one time would dip into recession but the other three would keep the stool standing. And after the Gulf War in '91, there was a recession, and the whole lot went. So from '91 to '93 we went from a hundred and 47,000 people to fortythree thousand people. So my job, at that time, was within a division that was cutting to the bone and improving efficiency, getting to the restrictive practices. We consolidated on core business, we knew that what we wanted to be was an aerospace and defence company. And that's what we'd done, we'd got rid of everything else that wasn't aerospace and defence and the one problem was, aerospace and defence is a global business, but BAE was a British company and it had to grow globally, tap into the US market, tap into other markets. Unions were supportive of the strategy and my job then switched from what had been slash, burn, cut, redundancy and so on, either in divisions or in the corporate centre, through to growth, development, culture and organisation which was so refreshing from the adversarial industrial relations which are so sapping. And that's what we did. Wind forward from 1993 to '99, British Aerospace had got itself into shape, both with its people, its leadership and its financial state. It bought Marconi Electronic Systems, which was then GEC basically, and doubled the size of the company in '99. And that gave a huge foothold in the US. So a success story, so why on earth did you decide to leave and join Royal Mail? Allan Leighton called and said, do you fancy coming to work for Royal Mail?" And that's a big decision, twenty odd years at BAE. But to some extent, I'd become stale and bored, believe it or not. And I felt that if I didn't move on and take a challenge at that point in time I never would. So I went for it. In 2003, Allan had been asked by the government to take up chairmanship of Royal Mail and run it, with privatisation in mind. The business was losing a million pounds a day. But had almost a total monopoly 98 percent of the UK market. There were more union and restrictive practices than I'd ever experienced, and we set on a journey, that was just a really simple journey, and it was about turning the business around, and we focused on customers, the finances and people. The latter of which was straightforward get them onside, by demonstrating that we were going to do the right thing there was a lot of mistrust of management within the business and it takes a long time to work your way through this. There's a myriad of reasons why, prior to the new set up, there was a very strong union against very weak management, and a history of senior management overturning local mangers' decisions. Staff would walk out and senior management would say, "Get them back"! That had to change, and it did. Once we'd defined the lines of behaviour, built up trust by communicating effectively and being straightforward, and we turned the business from losing a million a day to making a million a day, in three years. Employee opinion surveys were improved, customer satisfaction improved massively, efficiencies were having an effect. During that period we let thirty thousand people go as well, changed a whole load of working practices, the whole thing. And you continued to have some disputes at Royal Mail though. Did you fear that HR wasn't having an impact? The big dispute was in 2003, and we put a huge communications campaign around this dispute in 2003 and we actually won the ballot, which is the first time in history. And yes I was concerned HR wasn't having an impact. In some senses HR was confused as to what it was there to do, and predominantly the safe haven was get it into industrial relations, work in IR. The unions were always kicking off, the management didn't like handling it, so HR dealt with the unions. The


HRD interview

Tony McCarthy, HR Director British Airways

second was there were too damn many HR personnel, 3,700 people, I mean, it was a business in its own right! Presumably it wasn't just a drastic reduction in headcount that achieved that? We had to skill up. We had some great facilities for training, but there wasn't a culture of learning and clearly we had to have a completely different focus to industrial relations by involving and engaging people rather than the focus on adversarial industrial relations. And that was just the tip of the problem... there was nobody in the organisation that was responsible for remuneration and benefits, for example. There were key aspects of the HR function completely missing and the culture was to move across functions, and there were very few trained professionals doing the HR activities, and this was the biggest employer in UK. Nobody was doing any work on culture, and I could go on, but you get the general idea. This is where effective line management comes in, surely? Were you thinking, `I used to deal with people that built military aircraft'? HR is everything to do with fixing the basics and everything to do with the biggest strategic issues affecting the business... that's what makes it such a challenging sector. But you're right, you can't spend the whole time worrying about fixing basic hygiene issues. I needed to completely refresh the approach. We created HR business partners. We had shared services where we looked over shared services together. The majority of that 3,700, put them all together, put them under one leadership team based in Sheffield. Experts, as I say, there were none, and there was no talent management. So we recruited, trained and developed to work within newlyset parameters. In many ways, it was things that I'd forgotten fifteen years earlier. We put huge emphasis on professional skills, professional development, essentially the Dave Ulrich system, and got Dave over to advise. There comes this point, when you clear the brush away and green shoots start to show, improvements become apparent and you sit back now and you say, well, `why wasn't it obvious before'? It's not a three box model it's a four box model, and the fourth box is line management. So it's true line management is critical to HR strategy? You've got to create a culture in which everybody's clear about what everybody's roles are. What we've also always tried to do is make sure that the responsibility for fronting things up, develop and take things forward is actually with line management, but you can't force line management to do stuff they don't want to do. You've got to bring them along, and that's HR: develop, improve efficiency, reduce cost base,

develop talent and so on. And if one of those things that we have to do is to deal with the union issues, then that's what we're paid to do. I think what we try and do all the time is be fair about it. Royal Mail was in a much better place, and then you got the call from British Airways. Five years at Royal Mail, bringing in the most ground shaping changes in its long history was tough and challenging, an understatement to say the least, but I was starting to get the feeling that I needed to move on, time for somebody else to have a go at it.

line people in the early 1990s, when we were going through all that massive change, what we called cell managers. One cell manager looking after a cell, say a manufacturing cell, that had fifteen or twenty people in it. At BA we've got ratios of managers to frontline people of one manager for a hundred and eighty people, and all my learning said, get beyond twenty and you start to get a problem. And that's what I found at BA, made worse by anyone who had some sort of supervision responsibilities at the front line, tended to be bargained for by the union, which was looking after the front line people as well. And it seemed to me that there's a whole raft of reasons as to why the industry has developed like that and why these businesses develop like that. Some of it may go back to the impact of 9/11, cost cutting, taking out layers of management and all that, which needed to be done, but not necessarily thinking about where the management should be. Some of it is to do with the fact that we've got a remote workforce, and how do you manage a remote workforce on a 1 20 ratio, that doesn't overcomplicate rosters of people flying all over the world? The net of all that is, if you want engagement, involvement, productivity improvement, cost reduction and innovation from your frontline people, which is the majority of the workforce, then they've got to be led, managed and motivated by somebody they respect and know. And the key for me is, you only get improved productivity and performance through being engaged. The model is plain and simple: understanding realms of responsibility. Do I know what I have to do and where I have to do it and what's my performance criteria? How do I feel about the company as a whole? How do I feel about the team that I work in and what is the team's expected to achieve, how is the team's achievements measured, and am I feeling part of the team? And finally, do I respect my manager? And engagement is crucial if you are customerfacing, especially at 35,000 feet, dealing with tired and/or emotional passengers? Customer satisfaction is directly linked to profit and the connecting glue is engagement. That's the journey that we're on now, and we're starting in the areas that we know are more accessible, in places like the ramp, which is baggage handling and aircraft movements. It's important to be able to demonstrate success to the whole business. As I said, we're reorganising the business into teams of no more than 20, giving them clear areas of responsibility. How has your progress been affected by the wellpublicised difficulties; disputes, strikes, the

At BA we've got ratios of managers to front-line people of one manager for a hundred and eighty people, and all my learning said, get beyond twenty and you start to get a problem

So what attracted you to BA, another big challenge? The predominant thing was the massive opportunity for growth.. BA had a foothold, a base, but it had to fundamentally change the culture of the organisation to be more involved, more engaged, and to move beyond the record ten percent profit, which had just been achieved in 2008. That was the hook, and it was to draw on everything that I'd experienced before the difficult union relationships, the growth bit and turning the organisation into a global business, the culture change and so on. Plus the sector was facing the necessity for merger and acquisition and massive changes in operating in a global market. So you opened up the HR Airfix model kit, and realised you would have to create your own instructions? From the people aspect of the business there's two answers to this. I found, and still find, that we are very centralised, very finance driven and controlling, and there's nowhere near enough empowerment and skills development and utilisation at the front line, in particular front line leadership. I mean, at BAE, we were putting front line, empowerment and skilling up front


difficulties with T5? It's tough, very tough, and everything affects you. I've been at BA for three years, within the first few months we hit record profits... great! Then followed the opening of T5, which was a disaster. We then had something that hadn't happened for years, we had an aeroplane that landed short of the runway. And then we had the recession, the banking crisis, oil going up to a 147 dollars a barrel increasing annual fuel costs of a billion dollars. Then with the banking collapse, our main business route, New York London, was hit massively. And despite all this, an airline must carry on with seamless reliability, service and safety. It comes back to the same thing, do the right thing for the business, the customers and the people that work for you. And if you can truthfully say you're doing the right thing for those three groups, all the time, and you believe that what you're doing is fair, then all you have to do is make sure that you've got a clear picture of what you're trying to achieve. Under normal circumstances is one thing, but the problem with BA is, so many things keep coming up whether it's an internal issue or an Icelandic ash cloud it is one obstacle after another, and it can be easy to get punch drunk with all the relentless hits. And to draw on another analogy, it's also easy for everyone to be madly chasing the ball, heads down like young kids playing football, forgetting formation and strategy. Anyone reading this will admire your resilience, have you ever thought about walking and, I don't know, being an ice cream man? Ha ha, it's a nice thought, but no! BAE, Royal Mail and BA... I've never chosen a job because it looked easy. You've got to keep saying and reminding yourself that this business deserves to be world class status, the best at what it does. It's going to be a better business and subsequently a better airline, it's going to be a more efficient business, it's going to be better for the customer, and the people that work for BA. I keep those three things in mind and it helps you get through it. Is it frustrating to be constantly reacting to and defusing situations as opposed to being strategic? That's life isn't it? You set yourself a direction, you keep that strategic goal in mind, but quite often something happens that knocks you off track for the shortterm, but longterm you keep going. That's life. It's not always that straight forward. But your main task is the motivation and the engagement and the wellbeing of the staff and, as an outsider, that's not apparent? No! My main task is to help this business become more cost efficient, more productive, and deliver a better customer service.

But one goal can't be achieved without the other. As you've said delivery is through engagement. That is my mantra, I will never deviate from that path. So, on a scale of one to ten, where would you say you were, in terms of full engagement of your people? Three out of ten and a long way to go it's taken a long time to get us into the state we're in at the moment. We're making some progress, we've had a lot of hard knocks, but there are signs that we're finally, properly on the way now. Cabin staff is a crucial focus to get right. But behind the scenes we are making tremendous progress in engineering and ramp. We've adopted a very forwardthinking, holistic approach to people management, a clear understanding that we have to continue, in order to improve productivity and reduce costs, whilst creating a learning environment, creating a thirst for knowledge and development. It sounds like there are some positive things happening. But I think the problem, from an outsider's point of view is your customers, obviously it's a big issue of trust... shall I book with BA? Yeh, absolutely.. but I truly believe that empowered managers, leading and communicating with their people, that cadre of skilled managers, are on message for what we as a business are trying to do. It sounds really simple but it's not. Crucially, it's about an employer that's being straight and honest, if we say we're going to do something we do it, and if we say we're not going to do something then we explain why. What would you say is an honest opinion of the average mindset of your average worker at BA right now, what are they thinking? There's isn't a Mr or Mrs Average in the company. They're all very proud of the brand and they want the business to succeed and they feel proud of wearing the uniform. But a lot of what's going on is coloured by cost cutting, which is essential, and we've still got an awful lot of costs to cut out of the organisation, for productivity to improve. It's coloured by cabin crew dispute, without question. But the flipside is, we've got thousands of people who volunteer to train as cabin crew, to work during the strike. And they're typically Unite members. Now some of them are volunteering because they love the brand, some are volunteering because they support the company, some are volunteering because they wouldn't mind doing a bit of flying, it's better than sitting behind a desk for a while. Wouldn't want to do it permanently but, you know, there's a whole raft of reasons. But the core is, people are proud of the brand. Are they proud of the company? No, I don't think they are. I think there's mixed views. But fundamentally, it comes back to this service profitchain, engaged people deliver better customer service.

It's tough, very tough, and everything affects you. I've been at BA for three years, within the first few months we hit record profits... great! Then followed the opening of T5

It's a tragic situation. There's no winners in this whatsoever. No, no winners. And like you say, a business that capitulates on a point it does not agree upon is an untenable position. I think the first thing is, we understand, accept and value the fact that there are unions in this business and will always be in this business. And the second one is that our people have the right to join a union or not join a union, that's their call. Third one is that we've got agreement with the unions about how we bargain and so on, and we're not going to break any of those. But we've got a business that needs to turn round. We're losing money big time, and we've just had a second year of losses. We've got to be careful around what we do this year, when the upturn comes, and how we catch up. And what we must do is reduce the cost base of the organisation and that means structural change. What do you think is the at the heart of the real problem? I think that over the years, this


HRD interview

Tony McCarthy, HR Director British Airways

particular group have been used to getting everything they want, and when they threatened to strike they got more, and when they threatened a ballot they got more and when they took a ballot they got more, when they got the ballot result they even got more, and if they went on strike they got more still. And what we're saying is there's no more to give. This is a group of people who are, without question, the best paid in the industry, they've got fantastic conditions, and they are good at what they do, but there's so many restrictions. We can remove some of the restrictive practices, we can move some of the processes that really don't have an awful lot of effect on the individual. The one big effect on them, if it is a big effect, is taking one crew member off the aeroplane, which is what we've done. And the reality is, it's not had a massive effect on our people. It's basically asking the customer services director on board to be part of the service. The majority of crew onboard are not affected. That is what this is all about.

business? It's not done yet, it's on its way, and it will be positive. The industry is consolidating massively. We look around and see what Lufthansa is doing, which is sweeping up lots of companies all around the world, including the UK, and getting bigger and bigger. Air France and KLM joining together, the American carriers joining together, forming big global businesses is what they're looking to do, and we've got to be part of that. So we're either part of it and continue to merge with others, or we get taken over. What that does is give us a great opportunity, a positive backdrop. Do you think that will be a positive if it goes through? It has to be, it will be financially, it's bound to be a positive. Culturally I think it will be difficult, as all mergers are, particularly international mergers. But the good bit about it is you can learn from each other. So in many ways, it's going to be hard, but in a lot of ways it's going to be a massive advantage to us, but it is only one step on the journey. Do you wonder if the Union is really determined to fight to the bitter end, whatever the outcome? Well I think it's much more complex than that. There is a phrase that an organisation gets the union it deserves. And this union is acting on its membership's demands. The management are who they are because of their experiences and so on, and the demands that are put on them. So there's so many different factors. The reality is we are where we are. I do really seriously believe that you get the union you deserve. This business has got through by the growth of the market, and I think there's been many instances over the years where situations should have been addressed in terms of productivity, cost, efficiency and, customer service, that haven't been addressed but have been masked by growth in the market. We haven't got that to hide behind now, and haven't had it for a sustained period. The fact is we have no option, we have to do the things we're doing. Now do we want to do it in conjunction with the unions? Yes, we do. Do we want to water it down so that it has no effect? Absolutely not! So, do you end up in exactly the same place that you started as a management? No, I don't think you do. And I think if that's how you set out and intend to carry on then you've got a problem. Should you adjust it on the way and develop it, but have the overall goal in mind? You absolutely have to. You have to consider their views they've got as many ideas as we have. If you can get them to see that we've got a problem, got an issue, we've got some things to deal with, in my experience, they quite often will tell you. So what you're suggesting here is making a greater ally of the union? What's needed is a superordinate goal. What's the superordinate

goal for the organisation? And that's where we move them to in BA. Show that what we are trying to do is right and proper. Sure the unions must challenge the management and viceversa, it's right and proper that the management should run the business, and that the unions should challenge aspects of that. But also, at the end of the day, we all work in the same company, we all want a successful business, we all want a good living out of a successful business. And if working together to that superordinate goal, then surely that's a better way forward. The Acas recommendations have been turned down by Unite. Is this your darkest hour? In this current dispute, I think there's a lot more arguments to be had. I think there's a lot more difficulties to be had and there's a deal to be done if they want to do a deal. I can't say whether it's the darkest hour ever, but there's a spirit within the organisation generally that says we've got to get through all this, but we've a hell of a long way to go. If you were in an empty aircraft hangar and you invited every single member of BA... what would you say? This company is worth fighting for and what we do is worth fighting for, and the brand is worth fighting for, but we've got to work together. And too much of this has been about fighting each other, and meanwhile the competition's laughing their heads off and taking our business. And so we've got to get in a place where we start working together, trusting each other, developing innovative solutions to problems that we've got to deliver the best customer service ever, and that will be the securer of all our futures. But basically it's getting people fully involved and fully engaged in what we're trying to do as a business . I know I keep coming back to that, but I firmly believe that is the key to turning this business around. Customer service, cost reduction, productivity improvement, puts a hell of a lot of pressure on that front line manager but that's where it is. It's a journey worthwhile because this is a brand and a company that's worth going through the pain and anguish for, but it's going to take us five to seven years.

There is a phrase that an organisation gets the union it deserves. And this union is acting on its membership's demands

And, at the end of the day, we have to continually improve, we have to continually reduce our costs, we have to continually improve the service which we provide for our customers. We're in a recession, we're losing money and we need to make sure we've got a strong and healthy business for the future. We've also said that we're going to start recruiting new crew on market, plus ten percent conditions of employment, without all the restrictive practices and so on. And in doing that, provide protection for the existing crew, so that we're not giving all the work to the new crew. But again, the principle is really trying not to hurt the people that are currently here. But unfortunately, for whatever reason, some people seem to want to throw a spanner in the works. And yet the business is pressing on commercially, news of the Iberia deal, must be a positive for the

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Roundtable: Shared services

HRD Issue 70

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I think everybody automatically assumes in a recession we've got to focus on costs, reducing costs and do more for less. That's important, but it's talent, we've got to think about talent

Jason Spiller: The phrase "doing more with less" succinctly describes what this recession has meant to HR and the wider business. Contextually what has been the HR experience from our various sectors? Simon Lloyd: As an organisation, Santander is very focused on cost but we're equally focused on business imperatives, such as customer service. And we are very much a people business so there's a number of different issues we need to be involved in, from the recruitment to development of our people, which is critical, but also the basics such as paying people correctly. Jason Spiller: The police force is a target in George Osborne' budget plans, what is the impact going to be at the Met, if you are going to be reduced in number? Paul Madge: It's unlikely to be good news for any public sector and I think HR has to be on the front foot in terms of making sure we can enable the organisation to do that. There are reputational issues to manage and we are now charged to provide soft landings to some pretty heavy messages. There is an upside to this as well. In terms of HR, our shared service centre is actually the kind of project that's been held up to the rest of the organisation as the sort of project we need. Jason Spiller: David, as a customer-facing business that's publicly very much embraced outsourcing and shared services, what are the challenges that you've come across with regards to Virgin Media? David Long: In terms of cost savings per se we're on a journey to expand shared services, and bring more into it where it makes sense to do so, so in shared services, costs may increase but overall for the company we will achieve economies of scale. Jason Spiller: Reduction, consolidation and change - it's not the time to be short-handed in HR is it? Martha Desmond: Self-service, or manager self service, is something that we would like to invest more in. We employ a lot of engineers with specialist skills so we have to think what is good use of their time. Ian Lithgow: I think my experience of it is that the portal is almost the front end or one of the interfaces for employees and managers. The portal needs to be sticky. So people go on it and want to return to it. Take policy on absence; you start reading it and it's HR speak, too complicated. David Long: That's a very important point, we use brand and communication to help significantly with the wording and look and feel. We talked to

Introducing the Shared services roundtable delegates...

Rachel Anderson Head of Shared Services - Northern Rock Robert Bull Corporate HR Manager - Bechtel Limited Chris Dale Head of Employee Services - EDF Energy Martha Desmond Director of HR Operations - BG Group Caroline Dyer Human Resources Consultant - Standard Life Investments Diane Field Manager, HR Customer Services - Ford Simon Lloyd HR Director - Santander David Long Director of Shared Services - Virgin Media Paul Madge Director of HR Operations - Metropolitan Police Force Michele Martin-Taylor Head of Employee Services - Virgin Media Ian Lithgow Partner - KPMG Mark Williamson Head of People in Change team - KPMG Chairperson: Jason Spiller Editor - theHRDIRECTOR

Roundtable Shared services

Shared services has often promised much, but equally often failed to deliver. As a result HR shared service centres are used to a much lesser extent, or exist as an expensive overhead, with little ongoing investment.

There is a realisation that the shared service centre concept itself was not the problem. More often than not, the complexities of HR were underestimated, resulting in lax planning and execution of a kind that was not seen in other transformation projects. So a new approach is now emerging that acknowledges the complexity of HR. It is based on deep understanding of the roles and service drivers within HR; using technology, shared locations and third-parties to truly optimise the HR service delivery.


HR about the content they wanted and also asked employees their views through engagement groups. Ian Lithgow: It's the employee centricity which is important. It's my life, my career, however you want to badge it and brand it. That actually, I think, improves employee engagement as well and means employees will use the portal more often. Mark Williamson: I think the big mistake that we learnt is that you don't actually want to technology enable everything and that managers and your specialist employees are actually there to add value to the organisation in quite different ways. Creative use of technology combined with shared services is often the answer for this. Ian Lithgow: I think one thing that is emerging , from discussions with HRD's and CEO's is that talent is going to be the biggest thing that we need to start focusing on and getting a talent pipeline and succession planning organised. Now, in the time of recession, people might be saying, 'It's about cost control.' Looking forward, it's around talent and identifying your next top performers and high performers. Rachel Anderson: I don't think talent and cost are necessarily mutually exclusive. If you spend a bit more to get a higher level of capability, actually you get so much more out of it; you avoid duplication, you have business partners that trust the shared services to do it, rather than doing it themselves. Ian Lithgow: We've got to think about recruitment and what's the future of our organisation in 15-20 years time?' Simon Lloyd: I agree and back to the system piece, there seems to be a view that to do succession planning properly, people think that you need a system. Whereas I believe you need to start by assessing the talent that you've got, which, from my point of view, is for HR and business departments work together on.

Ian Lithgow: It's the culture of the organisation. It's very similar to performance management. We want to make sure that we keep the right people in place and get rid of the poor performers or manage the poor performers to the right outcome, whatever that may be. As a consequence, we've got a performance management process. Here it is, there's your process, go use it. Jason Spiller: There is no guarantee that a system will work? Diane Field: Ten years ago we centralised the Ford of Britain Shared Services for salaried employees. We pulled in personnel, bringing good experience from various areas, rather than looking for specific skill to match the service required. Jason Spiller: And in more recent times, have you had to adapt the HR structure in order to cope with the extra pressures and challenges which the recession has brought on? Diane Field: The main pressures for me personally have been the separation of companies that previously came under our umbrella and have been sold off to best position Ford for future success. We integrated them into our systems and now we've been heavily involved in the separation process. Jason Spiller: But that's very typical of the fact that all businesses are prone to change on a regular basis. So that poses the question, how can you be sure that what appears to be the solution will be flexible enough to change? Mark Williamson: The recession from HR's point of view is quite a multifaceted challenge depending on what organisations you're in. So the demerger situation again is not unusual for many organisations and actually trying to split shared services out, trying to split the HR technologies out, even deciding which employees stay and which go is a huge process from HR's point of view. So I see those challenges, I see the talent challenges we've been talking about. Clearly in

some parts of the private sector now we're getting more merger activity, so that's happening, and we've got all the challenges that Paul talked about from a public sector point of view. So I think it's a myriad of challenges for HR functions; probably more at this point in time and a broader range than I've seen before. And from a structure point of view, my feeling on this is pretty unequivocal. If you've got real clarity about what your people strategy is and therefore what your HR strategy is, then you base your HR structure and your HR operating model on that to deliver on your strategy. Ian Lithgow: I think the other aspect to consider is that often shared services or a service centre is set up and people are put into it. Often all you have is group of people, for example a recruitment team, a performance management team. In my view you actually haven't really put a service centre in; you've put in model that has resources grouped and more centralised. What hasn't happened is some of the multi-skilling, process change and improvement as well as driving flexibility in terms of people being able to move from one type of HR transaction to the next. Michele Martin-Taylor: Flexibility comes with time. I think when you have to set up your operating model, you need to build something that has a common framework in terms of both your contact and transactional strategy. You have to do your administration and you have to be able to either answer the phone or manage the email traffic and it's essential that your model is flexible enough to add additional services within that same framework. Robert Bull: We set up a centre in Arizona and that's the centre of the shared service universe and actually it's the only facility we have in the entire company that has no contact with the business. It's not their fault, but to me, educating the people who work in the service centre, whether they're in finance, HR or IT, its about what the business purpose is.


Roundtable: Shared services

HRD Issue 70

Caroline Dyer: I would echo that - working in an investments company where HR services and shared services, sit in the Life and Pensions company, at critical times in the employee lifecycle you're trying to necessarily attract people from financial centres around the world.

Robert Bull: Businesses are very much the kings, and so the platform for our shared services is entirely a business efficiency model based on, in our case, SAP and Oracle. And that was the entire platform for doing this. But there is a limit to how much the businesses can take because they naturally want to control everything. Mark Williams: Have you got a dual technology platform both for SAP and Oracle? It's more how your shared service centre runs if it's got dual technologies that it's utilising. Chris Dale: We too have a dual technology platform. EDF Energy acquired British Energy about 18 months ago and inherited an Oracle platform, whereas we're SAP by history. Part of our challenge is running a parallel shared service offering, depending on which part of the business you work in and which platform you work on. Jason Spiller: What are the key failings in delivery from an HR perspective? Chris Dale: Business units are king. We have five business units that have their own separate MDs and HR structures. We have three or four different expense systems as a consequence of just accommodating the businesses' requirements. But for me, it's about getting out of that and saying actually what's right for the business in totality and recognising people. Ian Lithgow: I'm more struck on people talking about HR BPs. When I was an HRD I'd sit there and say, 'What does an HR business partner do?' and, 'What is different about them?' You often just find somebody has been rebadged as a business partner. How do you make an HR business partner substantially different from what they may have been doing before, which is an advisor or a generalist? Rachel Arnold: I think for me it's the pro-activity. A business partner is going out to the business, looking for what the business needs, rather than

reacting to, 'This is the question I got this morning.' And again, that's a different profile of individuals. Martha Desmond: I interact most of the time with our senior executives and my direct reports sit as part of leadership teams who are discussing, not only the day-to-day matters, but the longer term strategic issues. For me this makes them genuine business partners. Mark Williamson: What are the boundaries between HR shared services and the rest of the HR organisation? Quite often I see the boundary role being something around what we might call operational HR or case management type roles. And whether that sits within the wider HR organisation or within shared services is quite important. And I think as you develop your models it's an important debate to have with the organisation. Clearly there are pros and cons for either and it depends on the organisation. Jason Spiller: Do you think fundamentally it may be the fact that HR has broadened its remit to such a great extent that it's actually diluted its impact? Mark Williamson: Possibly. Where I think this can be the case is where business partnering has been poorly executed. And yet I think that is the area of most opportunity for HR really to add value to the business. In pushing into business partnering has HR potentially taken its eye off the ball for some of those ER type areas? Yes, I think it has. Ian Lithgow: Some of the blame lies with HR because what we said to the business is, 'Right, we're going to be aligned to you. We're doing to be HR business partners. We're going to be able to provide strategic input. People in HR sit there and think, 'What about the transactional activity' `Are we going into a servicecentre'? Often the belief is that they end up working in a call centre. Consequently their reactions are that they don't want to be involved with working in such an environment - that's not what they came into HR for.

Flexibility comes with time. I think when you have to set up your operating model, you need to build something that has a common framework in terms of both your contact and transactional strategy

Martha Desmond: I think it comes down to the calibre of people that you're recruiting. It isn't purely an administration job. You do need people who understand the business context and have a more commercial approach to HR. Robert Bull: I would agree, we're ten years into this now, and the reason for going to Phoenix, Arizona, was lower cost and a flexible workforce in US terms. However we found we should have recruited more skilled people. Jason Spiller: Would you say that HR is the motivator to actually come up with a better solution?


Martha Desmond: One of the things we've managed is to create progression opportunities for our HR. Individuals come into the business as HR administrators, but quite a few of them are able then to move into the advisor roles and then move on from there. Chris Dale: Pivotal parts of getting this right is having the HR community on board with what you're doing as an organisation and the move to shared services. Because the people who bring it down and reduce the castle to rubble will be the HR teams, if you don't get them on board straight away. Diane Field: That's a decision that we made a few years ago that we would not include graduates in the HRSC as part of their individual development within HR. Jason Spiller: It does sound as if HR has painted itself into a corner, or certainly opened itself up to some questions. Is it something that HR needs to address? Ian Lithgow: I think on that point HR for a long time, has focused on how many people have they got? What's our ratio of FTEs to HR etc as well as costs. That's very useful information but it doesn't tell you whether the quality of service is any good? Furthermore, what does it mean to the business? What does the business want? Simon Lloyd: It's what levers you can really pull to drive performance; that's the key piece. In terms of metrics and benchmarking, there is a need for care. Robert Bull: From a business HR perspective, I've been on both sides and you almost resent the shared service telling you how good your department is, in terms of the interface, when actually it's probably not that good in terms of the interface, and it's actually your problem, not the shared service. Jason Spiller: How do you introduce structure in order to accommodate the operation and do all the transactional activity, combining shared services with centralised HR? Mark Williamson: Business partners, case managers, shared services and technology must be embedded in the context of the business. Rachel Anderson: I also think you need a certain amount of stability in the service centre, and people need to know the policies and then bring that capability, rather than move on. Diane Field: At Ford, graduates rotate every six months as part of their rotation and development process, as they're working to achieve their CIPD

qualification. I agree that you need stability in a shared service but I think it is useful to have different skill sets within the team, and therefore it would be useful for a graduate, for personal development, but also for the skills they bring to the Shared service. Martha Desmond: My experience is that at my previous company, we had a similar set up, where our HR graduates did a number of placements during a two year period. We tended to put them into the shared services on their second placement. Diane Field: Shared services are a totally different environment from HR core business. When I moved into the shared services environment seven years ago, I was surprised at the operational side. Jason Spiller: Do you think that's because HR's moved away from transactional duties and is more strategic-thinking? Diane Field: HR has totally evolved over the last 20 years, as HR professionals we are now placed in a more strategic role within organisations. Robert Bull: I have a different take on it - most people in HR I really believe are generalists. Some obviously rise to the talent top, maybe because they have extra special skills in comp or in development, but most are really what I would call generalists. And I'm not sure today whether the HR service centre professionals are part of that family. David Long: I make sure that as far as possible people understand the whole end-to-end and they're not there to just do admin; they're there to advise the business on how their processes could be made more efficient. I think it's very easy for people to fall into the trap of saying, 'Well, shared services is just an administration and support centre". Ian Lithgow: A lot of people do put graduates into the shared service - let's call it the front line, the first point of call, whether it's a true shared service or a service centre - after they've had a role in the business, a front-line role. Because they better understand some of the business issues, so when somebody calls in, rather than asking a question by rote, they can actually ask the right question. I have experience of situations where individual's might call in with a question, however the questions is not related to their real underlying problem. It's the person at the end of the phone who actually has to ask the right type of questions to provide the right answer back to the individual. Martha Desmond: The other thing for me is about making HR processes fit for purpose, there

is a tendency to over-engineer things and spend an awful lot of time agonising over small details. David Long: I'm probably going to be completely irreverent here but from a finance background one of the things I've noticed with HR is often people take quite a long time to come to a decision compared to the way we operate in finance.

It's about making HR processes fit for purpose, there is a tendency to overengineer things and spend an awful lot of time agonising over small details

Robert Bull: On a positive note, this makes you think a lot. As we've gone on this journey and we're almost being a little too negative, the positive side is just think what we've achieved now in terms of our employee self-service. In our case, it's mine but I'm sure everybody around the table has something similar where you've got your online payslips, your benefits information, your training transcripts. It's just a fantastic step forward. So we actually can't go back! We can improve, but we can't go back. Ian Lithgow: We can improve. I think what's really interesting is when something like this model is implemented, the first time customers might say, 'That's fantastic - I've got the information back, it's taken me five minutes; before it used to take me 25 minutes.' Those that have been successful have ensured strong change management as part of the implementation. One successful change approach has been the concept of a day in the life of; This describes what's it like now? And compares to What's it going to be like in the future? This is useful because many line managers say to HR, 'Well, all you're doing is you're giving me your administration to do.' The counter argument is currently people have got to fill in forms. You're just going to complete them electronically now. David Long: I think the key for us is that we didn't previously have a formal contact centre for HR administration. The number of heads that we put in there is not particularly significant; the cost is actually a minor part of this overall service


Roundtable: Shared services

HRD Issue 70

offering and for that small amount of cost we've all of a sudden given 13,000 people an extremely powerful place to go and get help.

There's a difference between the process and the technology that supports that process. You don't need to have, one system to support the process. What you want is an endto-end process that, should be streamlined

Jason Spiller: I imagine the most important thing is equality of access to shared services - how do you guarantee that all of your people have pretty much equal access to those shared services? Chris Dale: We've got people that lay cables in the streets and then we have trading and sales guys who deal in energy globally and buying energy in multimillion dollar deals. So dealing with those in a service centre is a very different approach, and part of the growth of the individuals inside the organisation is understanding that actually, you're providing the same service. Michele Martin-Taylor: I also helped set up HR Shared Services at TFL, so if you can imagine we had train drivers and station assistants etc and it's

about having the flexible contact strategy; so not insisting that everything comes in through selfservice, highlighting that it's okay to pick up the phone, and having the relevant hours of opening. HR shared services had extended opening hours eight until six because, we felt that was appropriate at the time. Ian Lithgow: And there's actually language variations as well, people for whom English isn't their first language. Mark Williams: It's about making sure that you're lining those up with the needs of the customers in this overall. And if you do that effectively, you are going to be able to hit the vast majority of the customer base. You're actually reflecting their needs as opposed to what you think their needs are and you're then designing something that's going to deliver the service for those needs. It won't necessarily give you the cheapest solution, but most of the time it will give you the most valuable solution with the highest cost-benefit. Simon Lloyd: We're about to harmonise all our terms and conditions, and will write to people individually, because if you publish on the Internet alone or send an email, there is a good chance a number of people will not see the changes. Something like this is so important for a number of reasons, to accept some extra cost to ensure that you communicate properly. Jason Spiller: What is the merit of discrete packages of activity? Ian Lithgow: There seems to be a trend around things like discrete process outsourcing if you look at it in terms of shared operation and HR operation, it's easier to get your hands on. It's almost a case of `rather than trying to boil the ocean', doing a big HR transformation, although I think you do lose a lot of the benefit of end to end processes, because HR, in my view is something where you don't pull a bit out, it's not modular. One piece has an impact on another

process for example recruitment will impact performance management. Rachel Anderson: I've seen an example where a company went from an end to end outsourcing, to an RPO. And particularly in the RPO space, that was to get that specialist knowledge that we really can't get. I think recruitment in terms of access to talent pools, knowing how to get the right talent to meet the business requirements, you can't get them an end to end transactional provider as well, as much.. Ian Lithgow: We've got SAP, we've got Oracle, we've got SAP and Oracle and everything in between. But a lot of organisations are still looking at best of breed application. And I'm not saying Oracle and SAP are not best of breed, but best of breed point solutions, and then gluing that together with middle ware. And that's a very technology enabled approach. Jason Spiller: Is that not a modular solution to something which, you've said, isn't modular? Ian Lithgow: I think there's a difference between the process and the technology that supports that process. So you don't need to have, necessarily, one system to support the process. What you want to have is an end to end process that, in theory, should be streamlined. Ideally, you want to standardise, simplify, automate and eliminate unnecessary aspects of the processes, but have something end to end, which flows through. Martha Desmond: When we first implemented SAP we had an aspiration to have all our HR process hosted on SAP. We have now moved in a different direction. We realised that there are some very good stand alone systems which offer us more flexibility and fit our business requirements better. Robert Bull: We have gone on to that. We introduced SAP HR, for all the transaction and financial reasons that we're all familiar with, and



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Roundtable: Shared services

HRD Issue 70

over time it's proven to be a good input tool, but an inadequate output tool for our organisation. We have what we call the bolt-ons, which we've lived with for the last ten years, and so our major investment, which we're just going through at the moment, is to consolidate all of those into one product. Michele Martin-Taylor: From a shared services set up perspective, one of the key things is getting the workflow management/CRM tool to work for you. Organisations can either choose to adopt SAP or Oracle CRM, or you can go down the bestof-breed route. We've gone for a best-of-breed bolt-on with an interface from Oracle, because it just allows you so much more flexibility. Chris Dale: Employee self service and manager self-service using SAP back at the end of 2009, and we're already in conversation with alternate providers for bolt-ons. Jason Spiller: So does that mean there's a sub provider that's specifically looking at ways of integrating with existing systems. Is that the route forward? Chris Dale: Yes, it sounds like Success Factor's broken the mould for doing something like that. Robert Bull: They out-performed SAP in the evaluation. I wasn't personally involved, but we intuitively wanted to extend with SAP or take more of the output services that they provide but they we not successful in winning the contract. Jason Spiller: If you're in a situation where the business changes quite quickly, what is the best way to make sure that you've got a system in place that's going to integrate with changing needs? Simon Lloyd: I guess luckily we had the same provider. Slightly different systems, because Alliance & Leicester had Oracle and Santander had Peoplesoft. But we do have other systems that sit

outside Peoplesoft, and to me, the critical issue is how the systems talk to each other and interface. Jason Spiller: Don't you just wish you could just wipe the slate clean and start afresh? Mark Williamson: You can't wipe the slate clean. I've been around in the systems area, as well as the HR area, for probably more than twenty years now, and certainly in the early part of that, there was an element of saying, well, we must be able to just define what the requirements are going to be, build the systems for them, and then that will be fine. And that, actually, was something that was pervasive for quite a few years. I think there's also an element in the systems world, of trying to make things neater; I wouldn't say simpler, but neater in terms of the application architecture. I take a different view. I take the view that the important things are the services that are provided by the systems, and how they are used to add value within the organisation, and how it's used to deliver for the customers of your organisation. Jason Spiller: So if you were all to collectively be either side of a whiteboard, Rachel, from a business that's been through a great deal of change recently, what would be your ideal solution? Rachel Anderson: I think it is something that gives you the flexibility and I think for me, to go back to where we started right at the beginning, don't get distracted by thinking a technology implementation is going to fix your problems, it's better to get the best out of what you've got. Jason Spiller: And what about educating people who are coming into shared services? Rachel Anderson: I think for me it's key that actually, they see the service as an holistic piece, and to me, putting modular service in is quite dangerous because it gets people to think in that blinkered way, which is not really where I think HR ought to be.

Jason Spiller: Is that possible, a more organic or holistic view? Rachel Anderson: I think so; the main question is what is the role profile that allows you to do that, while delivering an administrative and transactional service. Robert Bull: There are a lot of people round the table that obviously have more in a shared service environment than I'm used to, but if we take the transactional part, HR is a bit more complex than that, but the transactional part, we've come a long way on that, and it's almost you can't go back. Jason Spiller: Paul, would you agree with that, you're currently dealing with decreasing numbers in terms of HR on the ground? Paul Madge: What we've got to do is try and build resilience at the centre and one of the things that concerns me is the more cellular approach, doesn't help that situation. Also I think, in terms, of if we think about career pathways and things for members of that workforce, I think it will also make it much more difficult. Martha Desmond: One of the things for me also is also consistency. Rather than tweaking, we often go for full scale re-modelling. For me it is important to leave HR processes in place for a period of time so that line managers and employees can get used to them. The business appreciates the fact that you're just making minor changes or improvements. Jason Spiller: It seems to be that there's an awful lot of fragmentation across the piece? Mark Williamson: Going back to one of the points from earlier on, which was around people strategy, HR strategy and HR operating model. If you've got that defined effectively then I do believe you can plug services into that to a certain extent, be that software as a service, be that the RPO type routes etc. The key thing is you


need to be absolutely clear on the service you're delivering to your customers. Simon Lloyd: I agree, and I think there is a continuum that says, where do you draw the line between HR and HR shared services, or is it actually all part of HR? In my view it's all HR, because the business does not care. Mark Williamson: I think in your role as an HR director, it is around that integration of service that HR delivers to the organisation. And then it's your decision then, Simon, as to where do I source that service from, but it has to be a united and consistent front and service for the organisation. Jason Spiller: Has the perception of what HR is expected to deliver significantly altered, or has HR made a rod for its own back? Simon Lloyd: At the end of the day, the business still wants HR to deal with a number of its people problems. As long as it does that, then you have the opportunity to do more. Jason Spiller: How can activities such as case management can be provided differently? Mark Williamson: I think this was at the nub of how the boundaries or the perceived boundaries between shared services and operational HR work and our initial conversation there. In my experience, I've seen case management within shared services, within operational HR units within the business and within the business partner role, e.g. `junior business partners'. So there's a whole variety of ways. Ian Lithgow: The question to ask is, when is a case a case? Because a request might come in, which is, "it's the fiftieth time we've had this request, for example when am I going to get paid, because it's Christmas - what day is payday?" Is that a case? No, not really in my view. But other people might say it is. Then you've got, at the other extreme, a business unit manager, for example, wanting to have a project which is related to people related to how he can increase the pool of potential new recruits in a certain function and a certain skill. Is that a case, and who deals with that? Michele Martin-Taylor: There are two different terminologies for this, are we talking case management, as in queries and pieces of work, or are we talking about discipline, grievance? If we're talking about case management discipline, grievance, etc., at the end of the day, they are end-to-end processes. It starts with someone doing something and it ends with a particular action, and there are a series of steps that you go through.

Chris Dale: Issues filter in and become cases. Basically, that's how it works, the day-to-day grievances, the complaints and it's just a case of working out how that can be processed. Michele Martin-Taylor: The other side is the case management tool, which manages all your queries and work, but again, disciplinary or a grievance is just a more complex piece of work. Carolyn Dyer: I personally would be reluctant to give up what I would call cases to a shared service environment, because everything is inter-related. Martha Desmond: It isn't about keeping you out of the loop, it's about making sure that you've got the information you need about the various areas of the business. Jason Spiller: So are you suggesting that the relinquishing of control is a concern, in terms of giving case management to outsourcing? Martha Desmond: I guess my personal view is I wouldn't tend to outsource disciplinary/ grievance activity. I would put it into shared services, but not with an external provider. Rachel Anderson: I would question that there's a difference between shared services and outsourcing. Why would you be comfortable putting it in shared services and not comfortable to outsource it? Michele Martin-Taylor: I think it depends on who your outsourcing partner is, where you're proposing to outsource it. A number of companies have outsourced that kind of activity, then brought it back in-house, because of the rigidness around the service that's been provided. Chris Dale: Looking at our service provision, we've adopted a `biting off small chunks' approach. One of the areas that we've got employees ringing in about was conflicting information from field HR on maternity/paternity/adoptive leave, and parental leave, which we now provide from shared services. Jason Spiller: What is the best methodology and tools required for consolidating, disseminating and reporting various sources of data? Robert Bull: As a data management officer for my organisation, it's kind of a job that you get, and you wonder what it means and what the exposure is. In my experience, if you have the right systems, processes and subject matter experts, it seems to have passed fairly innocuously, over the years. Ian Lithgow: In some respects, we need to look at it from the point of view of different levels of data. For

example there will be employee specific data, and there's basic HR data which is held in the system. Then you go to the other end of the spectrum, which is what management information is required, and what are some of the key management information drivers and outputs, that will drive the business and allow leaders to make decisions. It's really understanding this. It goes back to the point that Mark was saying earlier on today, which was if you've got your business strategy and you've got your people strategy and then your HR strategy, from there you'll get a line of sight between. Then appropriate management information can actually start showing you the link and impact on business strategy of different actions. So if we do various things from an HR perspective, we can see how that impacts the business strategy.

A number of companies have outsourced that kind of activity, then brought it back inhouse, because of the rigidness around the service that's been provided

Rachel Anderson: I also think it's about HR shared services having a broad understanding of what HR does outside of the immediate sphere of shared services; so they'll know, for example, performance data might come from a different area of HR, but they understand what there is and where to get it and it's importance to the business. Jason Spiller: Does that go back to the situation of it not being in a cohesive place, that you can't actually bring all the strands together? Rachel Anderson: I almost think by definition it's never going to be in one place, even with a fantastic SAP system, there are always going to be things that are somewhere else. Michele Martin-Taylor: I think the data can be in different sources, however if you're designing your shared services model or transforming it, it's about making sure that you have a team that has the ability to pull all those data sources together and then present that one picture to the strategic business partner.


Roundtable: Shared services

HRD Issue 70

Diane Field: I agree with that and that's one thing that we're improving on continuously, in the HRSC. We have the ability to pull together from different sources a complete dossier of individual's employment with the company. dashboards of service levels etc. I still think we're on a journey with reports, but we now have the infrastructure in place within the organisation to handle the majority of requests.

Martha Desmond: We've moved to Business Warehouse as well, where managers can go in and they can pull out their own reports. We've got a suite of standard reports which are easily available and this saves us having to run loads of individual reports. Jason Spiller: If you could all start with a clean slate, how would your shared services set up look? Rachel Anderson: For me, it would be skills and talent, but it would be about having a higher level of talent of administrators who are capable of multi-skilling, who understand the business needs, who can think about that MI, how can I drive business performance, rather than just provide information? So for me it would be about the profile of the individuals. Michele Martin-Taylor: I think for me, every organisation's different, so and the culture of every organisation's different, so I think the model must be adaptable. I think there is a common core framework that, in terms of your contact strategy, you have to have a contact centre, you have to have your administration, and then it's about the value add services that you have within that. Robert Bull: I think as a process company, as a six sigma company, I would have to agree with everything that's going to be said in terms of quality and process, but what I also concentrate on is the 20 percent and the 80/20 rule, that is applicable to HR issues. Carolyn Dyer: It's an interesting one to reflect on, thinking about the dynamic between business partner and HR shared services. If I were to write the script it would certainly be about the talent and about raising the profile of people in HR shared services, so that they become more integrated and familiar with what happens in the business. Martha Desmond: I think it's that human side about maintaining that pragmatism; you've got processes and policies but we are dealing with human beings. It's not just about transaction, there is an emotional connection. Paul Madge: I think without having heard the output of the budget, I'd start off with something fairly fundamental. I'd like us to be able to give the organisation the service that it actually wants and needs, rather than the service that we can afford to give it, and I think that's how things, particularly in the public sector, have shifted recently, and I suspect more so as of today. It will be a compromise, and that's what concerns me. David Long: Well, I suppose the key thing for me is customer services really, that's the most important

thing to think about. Coming from a finance background, you're often focused on delivery to a smaller subset of the internal community. But with HR shared services this is about delivering a service to the whole company, not just to HR, but to every single person in the company, and you really need to understand what they want. Jason Spiller: Is there a danger of being too close to the detail, should we not stand way back and look at the whole picture? David Long: You don't go into a board meeting with a great big strategy which says, I need to spend five million pounds over the next ten years and build a great big service centre. Chris Dale: The pivotal part is what the HR model should look like, and people buying into it and having the governance structure around it - this is what we do and this is how we do it. Then tying that in with the fiscal and financial accountabilities that we should carry as an HR community which I'm not sure we do all the time. Diane Field: Just driving continuous improvement, really, and raise the profile of the HR service centre within the organisation. I think we've got the right tools and team. But I'd like to see further improvements going forward. Mark Williamson: The operating model for me is the key. Have clarity on that. But I think on the point around what does good shared services look like, then, to have the flexibility to be able to add services is important. If you are successful with your shared service delivery you will be asked to add more services to it. So, for me, that's the key. Get it founded in the needs of the business and then have the ability to expand the services that it provides. Ian Lithgow: I think it's something around HR scaleabilty [ph] and being very allied to the business. I was just writing some things down here being allied to the business so at the end of the day the business says, that HR service is fantastic, and the business partners' are brilliant, and I want another one, and I'm willing to pay for them. So actually, rather than sometimes being seen, as I have heard before HR is a tax an internal tax HR is not seen as that. It's actually, you are giving such a great level of service, you are driving the business strategy that we need more of you and we're going to pay for it. Because you're really driving change here, and you've fundamentally altered the way we think, and you've got the right people in place, and you've helped us devise our people strategy for the next five or ten years.

If I were to write the script it would certainly be about the talent and about raising the profile of people in HR shared services, so that they become more integrated and familiar with what happens in the business

David Long: It's a balance between centralisation, which is a good cost saving initiative and helps you with your strategic road map, versus, we just want to do some simple reporting, please. Chris Dale: I've got a team of eight who are dedicated to reporting out of SAP and Oracle, using Business Warehouse as a tool. And they provide over four thousand reports on a monthly basis, most of which are standard, but even then you get a bit of bespoking. So we have the reverse situation.


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Benefits: Introduction

Matt Pawley, International Benefits Consultant - Mackenzie Taylor

Failure to comply with legislative requirement and regulations is often cited as the biggest threat to a business' global reputation. This is also a potentially huge issue internally, especially during period of change

Global benefits manager... who me?

Twenty years ago the delivery of global human resources was a problem that only the huge multi-national organisations had to deal with. Small and medium sized enterprises are now seeing that to remain competitive there are monetary advantages in having a multi-national presence.

The challenge of controlling and understanding the risk of providing benefits internationally is far more complex than managing a domestic programme. Running an international programme presents key risks to a business: Reputational risk: The failure to comply with legislative requirement and regulations is often cited as the biggest threat to a business' global reputation. This is also a potentially huge issue internally, especially during period of change such as acquisition and merger activity. In the context of benefits, the inability to attract and retain key workers can be seen as a barrier to the company achieving its business goals. There are also many examples of localised disputes over pension provision (typically final salary closure, but not always) that have caused disruption to the running and profitability of a business. Financial risk: This is the risk of losing control over benefits spend or the risk of having to make good any financial loss caused by improper benefits provision. An example might be offering four times salary in a contract of employment for an internationally mobile worker and then finding out they are not covered under the domestic plan whilst abroad. Whether a business has operations in the UK, USA or Uzbekistan, the issues that can potentially contribute to the risk of a multinational business are the same. Tax implications: Are each of the countries offering benefits that are tax efficient? How does a HR professional keep up to date? It is hard enough understanding complex tax laws in one country, but trying to understand tax laws in five different countries is almost impossible. Taxation problems more often occur with pensions and

Kofi Annan former UN secretary said: "Arguing against globalisation is like arguing against the laws of gravity." Matt Pawley, International Benefits Consultant at Mackenzie Taylor, looks at how he got to grips with an international benefits responsibility.


life cover arrangements. Imagine a situation where an employee dies and the widow expects a £500k life cover payout, but only receives the payout net of tax! Social Security: How well does the programme fit with the social security benefits provided by the state? The structure of the social security system often dictates the types of benefit offered and the levels of coverage. For example, because of the NHS system, private medical insurance is viewed as a `perk'. Whereas in the US, where they have no state healthcare, Private Medical coverage is core to the benefits package. Legal obligations: Are all of the benefits programmes legal? Every country has its own legal framework for benefits. In a highly regulated benefits environment as such as the UK, it is still common to see companies breach their obligations through age and sex discrimination. An employer could suffer financial and reputational risk if a benefits programme is deemed to breach any local requirements. Language: It may sound obvious, in order to understand the benefits provided in a foreign language, a HR professional needs to be able to translate the documentation. Similarly, in English speaking countries such as the US, there are fundamental differences in interpretation. In the UK we often refer to `pension schemes', in the US `scheme' means scam! Local expectations and cultural differences: As UK businesses move further afield in their constant search to profit from globalisation, the cultural issues become greater. A company needs to strike a balance between what is right for the local employees and what is in line with the global benefits strategy. E.g. In Indian health insurance, parents can also be classed as dependents for insurance purposes. Local benchmarking: Are you offering the right benefits to attract the right people in each location? How well the business achieves its goals will, in part, depend upon how well it meets or exceeds the employee expectation for benefits. If the business wants to attract the best people globally, does every benefits package facilitate this policy? Often, benchmarking exercises highlight the lack of cohesion across borders. Cost: How much is the business spending on benefits globally and in each location? Is this good value for money or could the benefits be sourced more cost-effectively? When asked, can the global HR professional demonstrate that the costs are reasonable? Reporting: The financial crisis only added to the pressure for transparency, good governance and control. Few global organisations have

sufficiently robust reporting systems or procedures to manage global benefits data efficiently. Local advisors: FD `We have just bought ABC inc. They are based out of Malaysia, I need you to sort out your side'. This is a nightmare scenario, no time, no preparation but the expectations are high. Faced with this situation most small and medium-sized companies retain the local advisors or appoint in haste. In this situation, the business has just inherited a benefits programme without any due diligence work. When a company opens a new office or acquires a business in another country, they often rely on the judgement, knowledge and integrity of a local advisor. There is an inherent risk when placing so much responsibility and trust in a single organisation, without first understanding the local country and then testing the advice given. Global benefits structure - centralised or local? The starting point for any global benefits review is to establish real clarity about who is making the decisions. Is a business going to make decisions centrally, locally or a combination of the two? The centralised approach does lend itself well to facilitating a global strategy and potentially offers greater financial control. The problem with a centralised approach is that it is rarely feasible and increases risk to the HR professional and the business. If a business has a global presence of more than two countries, then this approach tends to increase risk to the business, rather than decrease risk. A `hands off' approach where each local office uses their own judgement to make decisions is the most common approach, may seem to make the most sense. The local HR professional understands the country, are closer to the issues and have a stronger understanding of the local economy and the workforce. The downside is that by using a number of advisors across the globe, the business loses any consistency or parity across the countries. Decisions that could potentially be detrimental to the global business are being made 000's of miles away without any failsafe. An alternative option is to run a hybrid of the two. The business has a clear global benefits strategy that is monitored out of HQ. Within the global remit, each country should establish a local strategy which is clearly benchmarked and administered with an advisor who has passed a due diligence test. There should be clear reporting lines back to the global HR representative covering off economic and legislative changes that may impact the benefits provision. Caution! Centralised and overbearing HR can undoubtedly cause mass paranoia and needs to be managed properly, aka `Big Brother'.

In a highlyregulated benefits environment as such as the UK, it is still common to see companies breach their obligations under age and sex discrimination

Ten basic principles for developing an international benefits strategy

Every situation is different, but below is a brief checklist that might aid discussion about the international benefits programme:

1 Be clear about what you are trying to


2 Be sure that the global strategy will add


3 Make sure that you have senior

management support

4 Establish a clear set of principles that are


6 7 8 9 10

flexible enough to be adapted to local conditions Concentrate on the common ground between countries rather than the differences Communicate Establish a system of governance to ensure principles are followed Be pragmatic and compromise Be patient. Some aspects may take a long time Make the strategy flexible enough to evolve over time.

Many HR professionals in the UK are Global HR professionals by default. The key to running a successful global benefits programme is having a global strategy, understanding the risks to the business, identifying areas of weakness and making best use of the resources available. Don't be put off from tackling the issues, global benefits is a growing and exciting sector to work in and the opportunities are huge.

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Survey: Benefits

Claudia Canavesio, Reward Information Consultant - Hay Group

Survey: Claudia Canavesio

Reward - a new chapter

A survey of 147 companies across different sectors and organisation sizes, presents a telling view of the reward situation in UK businesses. Claudia Canavesio, Reward Information Consultant at Hay Group, summarises.

Over the last year, many businesses have taken an increased approach to reviewing benefits and survey results corroborate this: over 80 percent of participants have made changes to their benefits in the previous 12 months and 91 percent are planning to make changes in the next year. Changes in cars and pensions were the most popular and they also rank as the most expensive for employers to provide. When considering the cost of benefits to employers such as pensions and cars and the high value placed on them by employees, it makes sense that companies have been, and are continuing to, concentrate on making changes in these areas. results. They often present the results to senior management as evidence to support their reward decisions, particularly as reward has risen up higher management's agenda, due to the recession. Maintaining a competitive benefits package helps with recruitment and retention. Employees understanding the value of their benefits and how it contributes to their total package and helps maintain employee engagement. Encouragingly, 99 percent of organisations in the survey reported they were using a range of methods to communicate their benefits packages to their employees through handbooks, emails and the company intranet. as a result, are not making entirely informed decisions about how, and how much to reward their staff. None-the-less, it is not surprising that such a large proportion of employers have made, or are planning to make, changes to their benefits ­ with the aim of being as cost efficient as possible. The results indicate that although organisations may not have been in a position to offer their staff pay rises, they are still striving to offer an attractive reward package. The report published by Hay Group reveals that 39 percent of companies across the world have, or plan to, increase the proportion of variable pay in their employees' pay packets. However, with new bonus prospects comes a renewed focus on performance, with 47 percent of companies surveyed also stating they have increased or are planning to increase, performance thresholds. The main reason cited for changing variable pay programs is strategic, with 61 percent of companies saying that the most important driver for the change was better alignment of variable pay programs with the business strategy. This is closely followed by improving organisational or team performance (40 percent). The report reveals that variable pay has become a board level issue with 55 percent of organisations indicating that the board has become more involved in the decision making around variable pay. Increased attention is also being paid to the effective communication of reward programs with almost 60 percent of companies changing the way they convey these to employees. Yet, some companies are still falling short: just over half (58 percent) believe their variable pay schemes are understood by employees and only a third (34 percent) believe their schemes are communicated effectively by line managers.

Organisations are increasingly wanting greater visibility over total reward spend and are looking more at total remuneration rather than just total cash

Reward can account for 80 percent of a company's operating cost, so streamlining current offerings to gain greater efficiency and `doing more with less' makes perfect sense in the current economic climate. The survey also discovered that 40 percent of organisations do not benchmark total remuneration, which leaves them at risk of not having the most accurate data to best form their reward decisions. Benefits can account for around 30 percent of an employee's total package, therefore, by not taking total remuneration into account when benchmarking, companies are at risk. Sixty percent of organisations are using total remuneration when benchmarking so there may be a discrepancy between the way competitors are carrying out their benchmarking activities, with the consequences that, 40 percent not understanding their competitive position in its entirety. Many organisations that did not consider total remuneration in the past, and have recently started to, are surprised at the difference in The global research, called `Changing Face of Reward' also shows that organisations are increasingly wanting greater visibility over total reward spend and are looking more at total remuneration, rather than just total cash. In the UK, there has been a trend towards companies increasingly benchmarking total remuneration, whether they have been severely affected by the recession or conversely, have found it an opportunity for their business. Reward professionals are recognising that they must be vigilant in remaining as competitive as possible. If a company finds that their market position is slightly below where they would like to be, due to economic circumstances, two key strategies they are adopting to make the best of the situation are, reviewing benefits and communicating the strengths of their benefits packages to employees. The results of the survey give an enlightened view of the current reward landscape. It is surprising that such a large number of organisations are failing to benchmark their total remuneration and,

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Introduction: Succession planning

David Pardey, Senior Manager, Research & Policy - Institute of Leadership & Management

The reasoning by HR departments seems to be that technical proficiency is a necessary condition for managing other people in that area. What may not be fully thought through is that this is not a sufficient condition

Mind the skills gap

Just because somebody "knows their stuff" doesn't naturally mean they will make good leaders. David Pardey, Senior Manager or Research & Policy at Institute of Leadership & Management, reports.


Here's the scenario: You've just spent £¼m on a new piece of technology. The supplier tells you that it needs expert maintenance so you recruit a technician to look after it. There are three applicants, each of whom is highly experienced ­ one is a chef, another is a nurse, and the third a hairdresser. You hire the hairdresser because she comes across well at interview, is keen to take on the new responsibility, and seems to have the potential to be a good technician. What's more, she seems eager to learn about the equipment and you can always get her trained once she's settled into the job.

Would you do that? Probably not, but if instead of technology, you were looking at a team of 12 people at an annual cost of at least £¼m, and the maintenance technician was a new manager, that's precisely what is likely to happen! Companies may claim that `people are our most valuable asset' but most employers expect the people who manage that asset to do so with little or no training, usually after a 15 year career doing something completely different. Unpublished research conducted by the Institute of Leadership & Management in 2008 revealed that most managers will take up their first managerial role when they are in their mid to late thirties, after a decade or two in a non-managerial, technical role. Once they have proved themselves to be good at doing something, they get promoted to manage other people doing it. The reasoning by HR departments seems to be that technical proficiency is a necessary condition for managing

other people in that area. What may not be fully thought through is that this is not a sufficient condition. Most people choose to move into leadership and management because this is the only way to develop their career, as they have hit the progression buffers in whatever their previous role offered. Interestingly, around 60 percent do so quite reluctantly, if they could progress doing what they used to do, they would far rather do that. For various, quite logical reasons, employers are reluctant to provide training for potential managers before they are appointed. They worry about potential problems over equality of opportunity ­ after all, selecting people for training implies preference for posts when they emerge. Equally, by training people, employers may appear to be promising promotion, and if someone is trained but not promoted, they may feel aggrieved and threaten to take action, and that's not to mention the money wasted training people for roles they don't occupy. Either way, employers are caught, hence the strategy of generally only training managers post-appointment. From then on it tends to be a catch up strategy, training someone up to their current job and then, if they perform well, promoting them to the next level. Furthermore, managers are appointed on an unplanned basis, frequently as a result of another manager leaving the organisation, not something that can easily be predicted. This makes it difficult to ensure training is available at the point when it is most needed; external courses are likely to occur at fixed intervals through the year, and internal courses need a minimum cohort to be viable. These are the kinds of practical factors that impose real constraints on HR managers. Of course, there are other, more flexible delivery models for developing leadership and management. Primarily this will involve some for of e-learning or the use of paper-base learning resources. Nevertheless, they have limitations unless they are accompanied by some form of tutorial support and are not always appropriate for developing some of the skills and coping with the personal challenges people face when taking up a new leadership and management role. Putting all this together it's not surprising that skills gaps occur and why a `lack of experience' coupled with `recent recruitment', is the most common reason for skills gaps, across all occupational areas, according to the 2009 National Employer Skills Survey (UKCES: 2010). Given the likelihood that newly appointed managers will have received little or no training prior to taking up their role, the following comment about the incidence of training for managers starts to make a lot more sense: "Almost 2.1 million managers receive training ­ more than

any other occupational group... However, relative to the numbers employed in each occupation, managers are among the least likely to receive training (49 percent)" (UKCES: 2010). This is the paradox of leadership and management development ­ it is widely available, and is a major expense for most employers, yet the combination of the number of managers and the fact that it is (almost uniquely) provided only for people already in post, ensures that it is often too little, too late. In most skilled occupations initial training is provided before entry into role, or there is a system of intensive initial training (increasingly as part of an apprenticeship programme). It is also likely to be fully or largely funded by the Government. By contrast, most leadership and management development activity is also most likely to be funded by employers. Not surprisingly, many new managers tend to be controlling, adopting a fairly autocratic management style and not allowing others to make decisions, because they are now accountable for those decisions. Alternatively, other new managers may prove to be overconsultative, checking everything with anyone remotely affected, in a different but equal reaction to their lack of certainty about their role. Consulting others is good, but not if it's a way of avoiding making decisions, or if it's based on the assumption that agreement is always going to produce the best result (as opposed to the least threatening to others affected by it ­ a `lowest common denominator' strategy). This lies at the route of the leadership and management skills gap ­ not just the lack of early training, but the extent to which its lack causes people to develop bad habits and then struggle to unlearn them when they do receive training.

applied (this is one of the reasons why e-learning and other resource-based delivery models are limited on their own).

Not surprisingly, many new managers tend to be controlling, adopting a fairly autocratic management style and not allowing others to make decisions, because they are now accountable for those decisions

Training needs complimentary support strategies to help managers apply what they have learnt. A simple, on-demand set of learning resources is a valuable way of addressing development needs. The full training support suite is also ideally propped up with other strategies (such as tutorials, action learning sets or coaching) if they are have a real impact on performance.

Knowing ­ doing ­ being

Managers' behaviour is the result of two underpinning drivers ­ their knowledge about principles, concepts and practices (what good leadership and management is ­ `knowing') and their personal set of attitudes, beliefs and values (their `being'). This `knowing-doing-being' triad is critical to understanding why managers behave as they do, and yet the doing bit, their behaviour, is the only bit we can see, the visible bit of the iceberg. In many ways, the knowledge dimension of the leadership and management role is most easily defined, developed and assessed. However knowing a lot of theory is not the same doing it well. The transfer of knowledge into practice, is impacted by a range of factors, one of which has already been mentioned: the emotional state of the person at the time. Additionally, if training is available it's difficult to ensure what is learnt is

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Opinion: Succession planning

Judith Germain, Founder and Principal - Dynamic Transitions


Trouble with talent

A common dilemma that companies face is struggling to manage the demands and aspirations of disruptive but talented employees. Judith Germain, Founder and Principal of Dynamic Transitions, explains how mavericks can bring real, change and challenges to organisations.

When the most productive employees make up 20 percent of your workforce and are causing 80 percent of the problems, you realise that management of talent can become problematic. These individuals can often defy existing Talent Management strategies due to their natural ability to think laterally, break rules, belief in brutal honesty (often causing claims of harassment or intimidation in the process) and their need to challenge the status quo when they believe that existing work practices do not enable the company to reach its stated goals. Having an extremely low boredom threshold and an unerring self belief, these individuals usually find themselves in a situation where their manager finds it difficult to turn their talent into something positive, and can often be intimidated by their behaviour. dogged determination and can be fairly blinkered, causing disruption and where other people are concerned disharmony. The maverick can be harnessed by aligning their objectives to the company's. Believe in them and give them your time to help them succeed. Mavericks will do anything to avoid looking stupid so will often ask you lots of questions at the start of a new task. Great leaders use their personal influence rather than positional authority. Mavericks are highly-influential people although, when they are not lead properly, this influence tends to become manipulation. When mavericks manipulate they need to be provided with a compelling reason to change. Without this change in their behaviour they will likely be disruptive and destructive. And good leaders are versatile in their approach, thinking and in their implementation. Mavericks can take this to the extreme and are often versatile when it comes to bending rules, cutting corners and understanding boundaries. Ensure that the maverick has the appropriate level of autonomy and that they have clear guidelines to work within and are not constrained by unnecessarily rigid rules. Trying to micro manage a maverick will lead to disaster! Leaders rely on their expertise and reputation to get the job done. Mavericks tend to rely more on their determination, expertise and persuasive powers than their behavioural reputation. Whilst guarding jealously their reputation as an expert in their field they often care little about whether the fulfilling of their tasks hurts or inconveniences others. It is extremely important to recognise mavericks, if they are not recognised for their ability; they will become disruptive, thus ensuring that you recognise them for something! Ultimately, reputation and credibility relies on a union of trust, character, competence and track record. Many leaders find it hard to harness their difficult talent, but that is usually because they are trying to fit their Maverick into an existing and often outdated process. It can seem difficult to manage mavericks without damaging their performance and standing within the organisation.

When the most productive employees make up 20 percent of your workforce and are causing 80 percent of the problems, you realise that management of talent can become problematic

The advantage to harnessing this talent is the knowledge that in reality the maverick is the `canary' in the organisation. Miners used to take canaries down a mine shaft to check whether the air was alright to breathe, the maverick is the manager's early warning system. Due to their nature, they will highlight organisational problems, flaws in processes and poor leadership ability, which is a good thing and vital to the success of the organisation. If a manager learns to lead a maverick correctly they will be able to improve the performance of the whole organisation. Get it wrong and within a year, perhaps even longer, the issues that were highlighted by the maverick will become apparent within the company which can cause catastrophic problems. In the meantime, your maverick will be trying to warn you of impending doom (as they see it); this often translates into very challenging and disruptive behaviour. The model we have adopted represents that establishing and leveraging reputation is a key component in leadership. All the leadership characteristics effect and are affected by it. Reputation, credibility and integrity are essential traits for leadership. All good leaders have a healthy dose of determination, the will to succeed. Talent has a high degree of

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Feature: Succession planning

Stuart Walkley, Director - Oakridge

The "brightest and best" supposedly identified in succession plans, do not feel any greater sense of engagement than the `largely ignored' who do not make it through the process

Engagement in the bag

Levels of engagement in many organisations are currently at an all time low. Whichever survey you consult there are indications that 40 percent to 60 percent of the workforce feel disengaged and are actively seeking to change where they work within the next year. Stuart Walkley, Director at Oakridge, assesses the challenge.


Succession planning may be one of the most uninspiring and unproductive preoccupations of your organisation. It often operates in a vacuum, detached from the organisation's strategy or current needs and is driven by an over-reliance on process and a total failure to create a challenging and engaging dialogue between organisation and individual. As part of a strategy for retention, engagement or performance it is often deeply flawed and poorly implemented: a costly waste of time and money.

If anything, survey figures of disengagement will increase as the recession eases and the availability of new employment opportunities increase. Succession planning, which gives the nod to the most talented individuals in an organisation should really improve levels of engagement at least for the chosen few. Yet the figures show that the "brightest and best" supposedly identified in succession plans, do not feel any greater sense of engagement than the `largely ignored' who do not make it through the process. In fact the recent surveys show that more than 25 percent of the most talented individuals, those on the Succession Plan, intend to leave their organisation within one year. Moreover, 40 percent of them have little faith in their peers and even less confidence in the senior team who have identified them as potential successors. The process of being identified as "high potential" may actually increase the feeling that there are better prospects elsewhere. High Potentials often know their own worth, to current and future employers, and do not feel they owe organisations a lifetime of commitment simply because they are part of a dubious line of succession. They neither feel grateful nor more connected. The anointment itself is simply not enough if they do not respect the leadership, their peers, or the organisation's values and mission.

Being selected may be deeply traumatic. Expectations raised are not always fulfilled for either the organisation or the individual. The promotion opportunities simply do not arise and there is no discernible difference to the job they are doing or their prospects. Simply dropping people into the talent pool from a great height does not mean they will swim. Performance is embedded in the context where we work (the resources, the people, the environment) and talent does not simply transplant. That potential may be flawed, identification of promise may have come too soon, or as Macbeth succinctly put it "Vaulting ambition which o'erleaps itself / And falls on th'other side..." (Act 1 sc 7) Surveys show that upward of 40 percent of internal job moves involving identified high potentials end in failure. Now, I am not a statistician but if 25 percent of those on the Succession Plan are planning to leave, 40 percent have little respect for their peers or their leaders, and more than 40 percent make a mess of the new assignment given to them then at best there is only a one in three chance that those on the Succession Plan are going to fulfil their own potential and meet the needs of their organisation. This is a costly and clumsy investment in the "human asset" of highpotentials for a very uncertain return. What message does succession planning give to the "largely ignored", those who are neither identified to enter the process in the first place or who fail during the process to show the necessary talent? Even in a well-run organisation which is transparent, inclusive and diverse, there is a risk that however well crafted the official response `we value you all' the underlying message is that `you are not of the chosen few we see taking us forward'. Acceptable for those who hold no wish to be part of the succession route, but for so many, a major preoccupation, is where they fit in the great scheme of things, how they are regarded by peers and by line-managers, and how secure their careers will be. Succession planning can undermine confidence and commitment and lead to a sense of personal insecurity as well as jealousy and resentment of others. Other opportunities in other companies must begin to look singularly attractive. Who would choose to be an HR or L&D specialist entering the lion's den and expecting to walk out unscathed from such an intervention? Where does it all go wrong and what on earth can we do to address the issues at such a critical time? Far too many succession plans are written in isolation from the business need. At some time

the Board sat down and recognised the need for succession planning. But in too many organisations the responsibility was then handed down to the HR or L&D team, which have steadfastly continued the process without really going back to see what it is all meant to achieve. It has become an HR process rather than a leadership responsibility. Frankly, if succession planning is not owned and driven throughout by the leadership team from inception to completion then there is no hope of success, and once it becomes the annual ritualised exercise for the HR team then it is worthless. The role of HR is to facilitate the succession planning process not to own it: additionally, they should hold leaders accountable and shame those who abdicate their responsibility. Too many of the plans lead nowhere: they may raise expectations but cannot deliver to that promise. Bright-eyed, high potentials, still blushing with pride at their selection, wander around, attend feedback-sessions on their leadership potential, begin to meet more senior leaders and start to discuss the bigger issues of the day in high-level workshops. But then what? All too often they simply continue in their current posts waiting for the next mini-bite-sized morsel of development or sit as inert spectators observing the work of others. They are neither given new challenges nor expected to put that leadership potential to the test. They seldom are exposed to demanding situations in front of their peers and they may appear to be molly-coddled. Talent needs to be stimulated and challenged, testing their capability, and to be held accountable for their performance. Whether taking on a promoted post, or leading a demanding project, or simply being exposed to some of the tougher issues inside the organisation those who are part of the succession plan should immediately be stretched in key operational or organisational roles. There must be an element of risk to justify the rewards. Sadly, succession planning tends to perpetuate current mediocrity within organisations. All too often the competence framework and appraisal system leading to selection simply asks for people in the image of the current leaders. Looking for people in our own image, who voice the same attitudes, display similar characteristics and behaviours is a sure fire way of finding people in our own image. That may work for the complacent organisation, in terms of its recent past or current challenges, but it is not likely to work for the future of the dynamic organisation, where there are new challenges requiring new solutions.

Succession plans are risk-averse - they seek to replicate current leaders for what are future challenges. It is such a pity that gut feel, instinct and that flamboyance of a hunch for the future plays so little part in our staid selection criteria. Small wonder that little new thinking, creative or innovative ideas, or risk taking is encouraged. Choosing potential successors should rock the boat of current leadership, not provide a simpering endorsement of the present culture and compliant behaviour supporting the status quo.

It is such a pity that gut feel, instinct, and the flamboyance of a hunch for the future, plays so little part in our staid selection criteria. Small wonder that little new thinking, creative or innovative ideas, or risk taking is encouraged

Succession planning has become an inexorable process that takes on a life of its own and replaces imaginative content, human judgement, calculated risk and challenge. Far more is invested in the planning process than in the implementation. Meeting time-lines, critical planning dates and target numbers, becomes the overriding concern. Over-planned and under-inspired, our current approach to succession planning fails to take on the spirit of the age. We are engaged in a redefinition of organisations and indeed, of the whole meaning of work. Our conventional beliefs are called into question, our assumptions about business are challenged, and our trust in organisations and their leaders seriously damaged. We do not know the way, we have no clarity on what needs to be done and no longer can we simply draw out a plan and implement it.

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Opinion: Succession planning

Clive Wilson, Chairman - Primeast


Is organic sustainable now?

Succession planning must be an end-to-end process; identifying and preparing suitable employees or external candidates, mentoring, training and job rotation, in order to replace key individuals within an organisation. Clive Wilson, Chairman at Primeast, asks, what's best home-grown or brought in?

Traditionally, large blue-chip organisations used strictly governed, clandestine schemes, designed to ascertain the best people to take over the top jobs. These individuals' career paths were carefully planned to provide the essential range of experience necessary for them to become a suitable successor. The schemes fulfilled their role adequately in an environment where structures were fixed, and careers long-term. However, due to changes in the business landscape in the 1990s this type of succession planning gradually declined. Organisations felt it was impossible to make a long-term plan for a position that might not exist in a few years time, and this led to more people from external companies being given the top roles. These days, mention succession planning to most people in large organisations and they often think of secretive systems in the tight grasp of the HR department, which plan for every eventuality associated with key positions. It can smack of red tape, bureaucracy and divisive thinking. And the chances of it being done well and kept current are often slim. This is the eternal challenge with solutions that are systems-based and controlled by disciplines outside the line management of the organisation. Such systems rely on a lot of reporting, policing and maintenance, which can be costly and prone to failure. and meaningful. Recognising, valuing and developing everyone's unique talents to deliver the organisation's objectives needs to be established as the cultural norm and the key to prime performance. An important component of any programme designed to deliver this goal, is leadership development. Managers must become great talent facilitators. This begins first by them recognising their own talents and understanding how these add value to the business, then putting in place a development plan and committing to adding value from the things they do best. Another part of the manager's critical role as a talent facilitator, is to identify - from their team or elsewhere - at least one person whose natural talents can be developed into clear strengths that will one day enable these potential successors to do their job even better than they do themselves. This is also part of the continuum, whereby the manager is also developing themselves for greater contributions to be made in their career. Yes, we're talking about every manager developing themselves beyond the scope of their current job and these same managers developing others to do their jobs better than they can. `It's like asking turkeys to vote for Christmas' I hear you say. Well yes, it is. And it takes a very special and confident organisation and management team to do this. Asking each manager to "recognise, value, develop and use" their talents unlocks significant value and the potential for them to succeed others. In just two days exploring this concept, managers will be ready to make significant value-adding commitments to the organisation, simply from playing to their strengths. So, once organisations make genuine use of the unique talents of their people in the delivery of their objectives, it can become a cultural norm for everyone to look for more challenging roles that enable them to be their natural best. And talent-spotting, development and career planning becomes inevitable. In most cases, succession takes care of itself. Of course, the simple task of making sure that everyone in a key role plans for growth and continuity is an essential back-stop. And taking corporate stock of this for hyper-important jobs is probably a good idea too, as part of contingency planning and risk management.

Organisations felt it was impossible to make a long-term plan for a position that might not exist in a few years time, and this led to more people from external companies being given the top roles

Modern succession planning

During turbulent periods, it is crucial to know where the talent is within your organisation, and how to develop people in a way that will enable long and short-term business goals to be met. The economic downturn has therefore, led to organisations placing increased emphasis on talent management, and by association, succession planning. By making succession planning part of the wider development of a talent-centred culture, it puts the process right into the life-blood of the organisation. It is arguably more effective than the old system and cannot be anything other than current

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FYI: Succession planning

Karen Bull, Product Strategy Manager - MidlandHR

FYI: Karen Bull

The tomorrow people...

In the current climate, succession planning is a critical strategy in weathering the economic storm. Karen Bull, Product Strategy Manager at MidlandHR, takes a look at the key role that succession planning plays in protecting your organisation during the challenges ahead.

Why is succession planning rising in priority? Who would have thought that in these tough times organisations would be contemplating a strategic practice that was once reserved for the elite within the organisational structure? Succession planning, along with performance management, is arguably key people strategy priorities for 2010. Interestingly, the business drivers for this differed. depending on sector and circumstance. The recession has seen workforces slashed, external recruitment halted and central services cut. At the same time though, a more driven need for organisational excellence is needed to create competitive advantage ­ key to survival in these times. This causes enormous churn in the workforce; roles have to change, there is a far greater emphasis on performance and complete re-evaluation of an organisation's core skill time', could not be more imperative than when determining the next organisational visionaries and leaders. In a climate where growing skills shortages and confidence in the existing workforce's leadership potential is lacking, succession planning is experiencing a strong revival. Retention research indicates that individuals tend to stay longer in organisations where they are experiencing personal and professional growth. It follows then that internal career development programmes are critical in retaining talented employees, while at the same time, ensuring greater control over the succession planning process. Furthermore, it's no secret that employees actively involved in their personal development have a greater job satisfaction and tend to stay with the organisation for longer. So, today's succession planning requires a symbiotic approach where employers proactively partner with their employees, aligning career direction with company goals, in order to improve retention rates. To be effective, succession planning must be more than just preparation for when top level associates move on. It must be interwoven with the organisation's overall training scheme, allowing today's leaders to cultivate tomorrow's successors, while concurrently sustaining organisational growth. Businesses that can demonstrate a clear succession pathway which engages, secures and develops critical personnel for the next step, obtain a clear competitive advantage over those that fail to plan ahead.

Today's succession planning requires a symbiotic approach where employers proactively partner with their employees, aligning career direction with company goals in order to improve retention rates

Some of the reasons for the increased focus on succession have been subtle evolutionary shifts in labour markets as well as deep change in the way the HR function itself operates. HR has moved from a Personnel Model during the 1980s where the main focus was on payroll, contract management and other administrative tasks through to the late 90's organisations which adopted a more `strategic' HR approach where learning systems, competency frameworks and employee development came to the fore working as `Business Partners'. What we see now is Human Capital and Talent at the top of the agenda with full business integration and ownership in the hands of line managers. This means that managers no longer have HR to fall back on to manage their big people decisions about discipline, grievance development and promotion; they are now expected to fulfil a complete people manager role. As with most evolutionary changes, they go little noticed until some catalyst stimulates a re-focus. Most recently, the recession has been just that catalyst for succession planning. requirements are undertaken. Add to this the need to engage an insecure and often disillusioned workforce and we have the perfect backdrop for some serious succession planning.

Succession planning and career development ­ part and parcel

Succession planning is one of the core talent management strategies and it has two key objectives: to identify key positions and core activities within an organisation and to identify potential successors to fill positions. It is understood that Human Capital Management (HCM) strategies, talent management and succession planning place an organisation's talent as a key competitive advantage and the main drivers of organisational performance. With people accounting for up to 70 percent of an average organisation's cost, it makes sense to invest in those people strategies that will provide the best environment for this human asset, ensuring the maximum return on investment. The old adage, `the right resource at the right place at the right

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HRD Issue 70


Introduction: CSR

Andrew Wilson, Director - Corporate Citizenship

A cynical reader might well jump to the conclusion that volunteers who have invested time and effort are highly likely to claim their time has been well spent and they have learnt from the experience

Volunteering ticks a lot of boxes

Given the continued squeeze on finances, something which ticks a lot of boxes and achieves a myriad of good outcomes, has to be worth looking into. Voluntary activity really does support development of employees' skills and competencies, and gives a great return on morale and engagement.

New research, carried out by Corporate Citizenship, on behalf of the City of London Corporation, tracked the learning and development of 550 volunteers in sixteen bluechip companies (including Aviva, Bank of America Merrill Lynch, Deutsche Bank, Ernst & Young, Nomura and Santander). One of the major findings of the research is that volunteering does help employees learn and develop a wide range of business relevant skills and competences. The majority of volunteers (between one half and two thirds) report skills development in three areas that are strongly related to their personal effectiveness: communication skills; coaching skills; and their adaptability. More than four in ten employees also report developing a set of competencies more closely related to their managerial effectiveness. These skills include; influencing and negotiating; team working; leadership; planning and organisation; and problem-solving. It is important to note that this process of skills development took place across the board. Volunteers involved in the research are drawn from all levels, from graduate recruits to vice presidents and partners. A cynical reader might well jump to the conclusion that volunteers who have invested time and effort are highly likely to claim their time has been well spent and they have learnt from the experience. However, it is vital to stress that this is not simply a self-reported gain in skills. The research asked the line managers of employees if they too had observed the skills development claimed by the volunteers.

Voluntary activity not only helps develop your people, without adding to the already stretched training budget, it's a morale booster and is great for corporate reputation. Andrew Wilson, Director at Corporate Citizenship, explains.


The key finding is that 86 percent of line managers feel that volunteers do gain useful skills from their volunteering experience. In addition, HR managers in these same companies were asked whether the skills gained by employee volunteers are of relevance to the business. Again the response was overwhelmingly positive. Companies reported that they are currently investing significant resources in training to develop these same skills and competencies in their staff. The importance of these results for HR Directors increases as one considers the way in which volunteering helps people develop. Participants in the research identified four major factors that are strongly influential in the skills development process: Being exposed to a new environment, having the opportunity to interact with a wider group of people, being required to take on a leadership role and developing empathy and understanding. The overall message is clear, it is the experiential nature of learning that is so powerful in developing skills. Volunteering requires employees to step outside their normal working role and build relations with people who have a very different world view from their own. Employees report that moving outside their "comfort zone" in this way is extremely useful in both developing their skills and transferring these skills back into the workplace. One very simple but direct way of illustrating this point is the quote from an employee volunteering in a local school who said, in a rather understated way: "Presenting in front of thirty bored teenagers sharpened my presentation skills and improved my ability to interact with people." Anyone who has ever faced such a challenge will appreciate the developmental potential of such a situation. The fact is that volunteering assignments offer a route to skills development and transfer that no traditional form of classroom-based learning could ever replicate. In addition, volunteering offers employees a chance they might not get in their day-to-day work to adopt a leadership role and learn from the process: "Volunteering gave me the opportunity to work within a team of people that were senior to myself and showed me that I did have all the abilities and skills required; and more in some cases! I learnt how to apply and assert them - and have the confidence to become a team leader in a safe environment which built and increased my self confidence no end." An important lesson to draw from the research is, that if companies are to harness the power of volunteering as a route to learning and development, they need to manage the process properly. There needs to be a clear link and strong working relationship between the leaders of the HR function and those responsible for corporate social responsibility (CSR) in the business.

In particular, the findings underline the importance of integrating volunteering activities into mainstream HR processes of appraisal and development. There are two distinct aspects to this. First, prior to starting the volunteering, it is important that the employee is made aware of the potential opportunity for skills development. This will involve a proper briefing on the aims and objectives of what the company is expecting to achieve through the volunteering assignment, for the charity partner, for the businesses itself, and for the volunteer in terms of skills development opportunities. The second aspect of integration involves a formal appraisal and evaluation process after completing the volunteering assignment. The research shows that among those whose volunteering activities are part of the appraisal process, the majority agree that the experience has helped them perform better in their job. In other words, there is a virtuous circle in explicitly making skills development part of the volunteering process at the beginning and end of the assignment, which reinforces the learning potential. So, if volunteering is really able to offer these learning and development benefits, the question becomes, what is the potential cost of this approach to skills development? The research goes into some depth to calculate expenditure on volunteering programmes in terms of management time, additional costs such as brokerage fees in setting up partnerships, the expenses of volunteers ­ so on and so forth. In summary, the average cost to run a volunteering programme among the sixteen companies participating in the research was £381 per person per annum. In contrast, data from a UK survey on training costs shows that the typical training spend per employee can be as much as £1,400 per person per annum. On this evidence a very strong case can be made that volunteering assignments are a highly cost effective method of developing a range of mainstream, business relevant skills and competencies. However, as well as the financial benefits flowing from the learning and development potential of volunteering, it is important not to discount the wider business benefits of these activities. The first thing to note is that the majority of respondents reported that their experience of volunteering made them feel more positive across a range of measures including self-confidence; a sense of well being and happiness; and pride in and commitment to the company. Specifically, as a result of their volunteering experience, between two-thirds and three-quarters of respondents report: Greater commitment to the company, increased motivation, more pride in the business and higher job satisfaction. The following quote is typical of many that highlight how engagement in volunteering increases loyalty towards and appreciation of the company:

"Only a few of the top companies do this sort of thing. With my skills, I could work for any company, but I would choose one that ran this sort of programme. It sets my company apart as one that is doing its bit for society".

Being exposed to a new environment, having the opportunity to interact with a wider group of people, being required to take on a leadership role and developing empathy and understanding

In addition, it is not just the individual who benefits from the intrinsic value of helping others. Several respondents reported that this "feel good factor" transfers positively into the workplace. "No matter how bad a day you are having, once you have visited the school you come back much happier and can have a more productive afternoon's work". It is also important to recognise the reputational benefits for the business associated with volunteering. We all know that in today's environment a company needs to be seen as a good corporate citizen. Investing directly in the local community in which the business operates is one of the most obvious ways of demonstrating commitment to CSR.

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Opinion: CSR

Anne Herman Director & Research Consultant - Kenexa Research Institute


Passing fad, thirty years on...

Today, particularly after the global financial crisis presented new challenges to organisations, you could be forgiven for imagining that CSR programmes would have been stopped in their tracks. But Anne Herman, from the Kenexa Research Institute, describes how CSR is still proving its value.

Perhaps surprisingly in the circumstances, the opposite has happened and many organisations have actually ramped up their CSR initiatives. Data from the Kenexa Research Institute shows that the percentage of organisations that were classified as having strong climates of corporate social responsibility actually increased between 2008 and 2010 from 47 percent to 49 percent. This data shows that many organisations that had set forth with CSR programmes attempted to keep at least bits and pieces of them moving forward even through the difficult times. The organisations that kept their CSR programmes in place, even in the lean times, are much more likely to be experiencing outcomes that are more positive at present than those organisations that either dropped their initiatives and/or didn't even start them in the first place. their senior leaders' effectiveness and ability to deal with upcoming challenges. They feel they have a clear picture of where the organisation is heading. Moreover, the overall employee confidence that workers in strong CSR climates have about their organisation, and their personal career situations, is much higher. This indicates that these employees believe their organisations are more competitive, more likely to meet customer needs, and they feel they have a promising future within their organisation. The relationship of CSR to these more favourable opinions is important for organisations to take note of because other research has linked CSR to aspects ranging from high performance, employee engagement and employee confidence to better financial performance in terms of diluted earnings per share, total shareholder return and annual net income. The benefits realised by the organisations that have stronger climates of CSR are not limited to employee perceptions. Employees in strong climates of CSR ­ compared to those in weak climates - are approximately three times more likely to stay at their organisation. Furthermore, employees in strong climates of CSR are between 25 and 30 percent more likely to indicate that their organisation's reputation and overall performance have improved whereas those who work in weak climates of CSR are four times more likely to indicate that their organisation's reputation and overall performance have declined. The research study also indicates that organisations that genuinely engage in CSR activity will outperform those who do not, in revenue terms, by approximately 10 percent. Organisations that engage in creating strong climates of CSR realise benefits relating to stronger employee opinions toward engagement, high performance and employee confidence. We know that this makes a difference in important business outcomes for which many organisational leaders are likely to be held accountable. Additionally there is now evidence that shows direct differences in the financial performance of those organisations that have committed to CSR initiatives relative to those that have not. It appears that investing in corporate social responsibility is not only a `good thing to do', but it is also something that directly benefits the business.

Employees working in organisations with strong climates of CSR are more favourable towards their senior leaders' effectiveness and ability to deal with upcoming challenges. They feel they have a clear picture of where the organisation is heading

Over the last three years, research has demonstrated that organisations with strong climates of CSR have employees with far more favourable opinions about their work. These employees are much more engaged, and therefore are more likely to put forth discretionary effort in their organisations, because they feel a stronger sense of pride and an extreme sense of satisfaction about working for their organisation. In addition to a more motivated workforce, employees working in strong CSR climates are also more likely to have favourable opinions of their organisation's high performance culture and senior leadership. This is evident in stronger customer orientation, a greater emphasis on quality and improvement, better training for employees to be able to serve clients, and a climate of involvement and belonging. Furthermore, employees working in organisations with strong climates of CSR are more favourable toward

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Case study: CSR

Julie Saunders, Executive Director - Pepal

CSR and the employee value proposition...

When survival is the main focus, can CSR become a powerful element of a company's employee value proposition? Julie Saunders, Executive Director, Pepal in collaboration with the London School of Economics, investigates.

CSR can become a powerful element of a company's employee value proposition. For example, Standard Chartered Bank's collaboration with the International Agency for Prevention of Blindness has led to important work in the field of eye care, whilst allowing the bank's employees to benefit from a wide-range of volunteering and fundraising opportunities. Companies can also use CSR to help attract and retain new talent by creating a distinctive and positive employer brand which reflects their values. Less well appreciated is the role of CSR in developing employees. To thrive in a globalised market, companies need to develop leadership pools that are diverse, flexible and innovative, creating managers that can work across cultures, appreciate different perspectives and respond to rapidly-changing environments. These are precisely the characteristics that non-profit leaders have always relied upon and CSR can provide a way of tapping into and learning from these skills. Some businesses have already caught on to this: PriceWaterhouseCoopers' Ulysses global leaders programme, for example, includes an assignment with a social organisation in a developing country. Meanwhile, in the non-profit world, there is also a clear opportunity for private-sector thinking to make a contribution. Donor agencies, including the UK Government's Department for International Development (DfID), have ambitious plans to achieve the United Nations' Millennium Development Goals, such as halving global poverty but, in most cases, these goals remain elusive as agencies struggle to work effectively with developing world governments and nonprofit organisations. Government bureaucracies are challenging to work with and non-profit organisations are often run by entrepreneurial and visionary leaders who know how to reach vulnerable communities but lack the management skills to grow their organisations and scale up their impact. Lynette Lowndes of the International HIV/AIDS Alliance comments, "One of the challenges we face is how to provide the right support to the (developing country) organisations we work with. As these organisations grow we need to help them develop their leadership and management skills." In response to the corporate need to engage and develop its talent through meaningful work and the public sector's need for a business perspective Pepal was formed. In 2009, Pepal - together with INSEAD, (one of the world's leading business schools) and the International HIV/AIDS Alliance piloted an initiative to bring the private and nonprofit sectors together. Managers from the private sector were paired with skilled individuals from Non-Governmental Organisations (NGOs) in developing countries to work together on community projects. The partners were supported by management training provided by INSEAD. Pepal's aim was to provide the participating companies with a powerful way to engage and develop their employees, offering an out-of-thebox learning experience which would help them to hone the "soft" skills that more traditional programmes tend not to reach. The intention was to create equal partnerships between the NGO and private-sector participants, to install lessons learned platforms, using bespoke INSEAD training to put them on a level playing field, despite their different backgrounds. The partnerships ran for up to a year, long enough to experiment and to achieve results but with sufficient flexibility to allow busy managers to maintain their existing work commitments. The results of the pilot were interesting. Of the


nine partnerships created in eight countries, eight yielded positive results and six achieved significant change on the ground. But the results were not linear: whilst 95 percent of the 30 participants reported learning new skills, few partnerships achieved what they had at first set out to achieve. Projects which started out as one thing became something different as the privatesector partners challenged and expanded the horizons of the non-profit organisations. Amongst the participants were senior and middle managers from two Johnson & Johnson subsidiaries, Tibotec and Janssen-Cilag. Berkeley Vincent took a year-long secondment from Janssen-Cilag to join the Pepal programme and work with Alliance Zambia. As a result of this collaboration, Zambia - a country with over 15 percent of adults infected with HIV - held its first national HIV/AIDS Prevention Convention in November 2009. Previously, Alliance Zambia had only considered publicising a new study on HIV transmission, however, with his background in marketing, Berkeley was able help them expand their vision. "This week will go down as one of the highlights of my time in Zambia," Berkeley wrote in his blog immediately after the convention which was opened by Zambia's president and attracted 250 delegates, "In fact it will probably remain a highlight of my entire professional career." Through the partnerships, the private-sector companies also discovered that there were opportunities to bring new ideas back to their companies but perhaps more importantly bringing the real world closer to their own proximity and as such inspire others. Berkeley comments, "My company has a big mental health portfolio and mental health is essentially untreated in parts of Africa. I would be very interested to see if we could distribute mental health medications across the continent." The Pepal pilot took its participants on an extreme learning journey and engaged them in a developing-world CSR initiative of real value, one which challenged the traditional paradigm of corporate-funded CSR programmes. In nearly every case, the impact on the individuals involved was profound and the partnerships that were created achieved not what they set out to but something bigger, more innovative and more powerful. Finally, it revealed social business opportunities for both the NGOs and companies which could, perhaps, be exploited. For Pepal, the logical next step was to build on the pilot's successes and design a leadership programme which nurtured the corporate and NGO desire to do things differently and developed leaders' ability to innovate. Struggling to find new markets and new products, many

companies were already looking to the base of the pyramid - consisting of the world's poorest to create new market opportunities. "The brands that see these (social) challenges as opportunities for innovation, rather than risks to be mitigated, will be the successful brands of the future," predicts Patrick Cescau, former CEO of Unilever. Achieving success as the base of the pyramid is enormously challenging, it requires unconventional thinking and new collaborations with people on the ground who really understand the communities - NGO partners. Together with management consultancy, Gallup, and the London School of Economics and Political Science (LSE) the Global Talent & Innovation series was launched. Each programme combines cutting-edge leadership and business model innovation training with practical experience of developing business models at the base of the pyramid. Corporate executives are partnered with skilled individuals from non-profit organisations in developing and emerging markets to work together, remotely and face-toface, creating new business models that impact on the lives of women, children and marginalised communities. They work together for up to one year, combining their involvement with existing work commitments. The programme is bookended by two interactive workshops, the first to help equip the participants with the necessary theoretical tools, the second to allow them to share and draw lessons from their experiences. The Kjaer Group put teams of the company's high potentials Professor Harry Barkema's (of LSE) business model innovation workshop. "Prof. Barkema helped show us that the best way to get through the financial crisis was to innovate. By the end of the second workshop, we could see things from a different angle; by redefining the value proposition, our managers developed 3 new low-cost business models with implementation trajectories - these were approved and integrated in the annual planning cycle of Kjaer." commented Christos Kyriakidis, Kjaer's Chief Operating Officer. CSR offers companies an opportunity to make a real difference and become a more sustainable organisation; the bigger the vision and the more substantial the engagement, the bigger the impact. Through even quite modest investments in the community, companies can show employees that they care, engage and demonstrate employer brand values. But these initiatives remain just CSR initiatives unless the company also chooses to engage its talent, creating exciting management development opportunities, making more impact on the ground and further enhancing the company values. Pepal's new generation of leadership

programmes takes it one step further still, putting managers into new and unconventional partnerships and inviting them to work with nonprofit partners to identify viable and scalable business opportunities at the base of the pyramid. It is about moving beyond philanthropy and using innovation and partnership to create sustainable "social" business. "It's `Corporate Social Innovation'", says Julie Saunders of Pepal "it's a version of CSR, but with more sustainable and ambitious objectives. Corporate Social Innovation offers today's talent the opportunity to make things happen in an unknown, high-risk environment; it teaches them about innovation, networks and partnership; it gives them the chance to make a difference to themselves, their companies and the world's social challenges."

Private-sector companies discovered that there were opportunities to bring new ideas back, but perhaps more importantly bringing the real world closer to their own proximity

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Survey: CSR

Mike Kelly, Head of CSR - KPMG

Survey: Mike Kelly

CSR... HR... PR?

Many predicted that corporate social responsibility or corporate citizenship as it is sometimes labelled, would quietly fade away as the first whiff of recession hit British business. A survey conducted by KPMG and Business in the Community has indicated that this is not the case. Mike Kelly, Head of CSR at KPMG, summarises.

Last summer around 60 senior professionals were asked a series of questions about CSR and its place on the company agenda. Perhaps surprisingly, more than 80 percent of them responded that their Boards were at least as interested in the subject, if not more so. Around three quarters of them said that there was more opportunity to actually debate what it means to be a responsible business and that there was more discussion about the core purpose of `CSR'. The survey then went further to understand what was happening to priorities, programmes and resources, financial or otherwise. Opinions are polarised about whether the recession has had an impact on priorities with no clear majority in either camp. But those that have changed their priorities said that there is now more focus on integrating CSR programmes into day to day business than ever before, with integration a consistent top priority. has led to the more savvy CSR professional working even more closely with their HR colleagues to collectively reinforce the impact of their activities for the business. Whilst such collaboration is mutually reinforcing there is still a lot more to be done before it could be said that in general CSR and HR are completely integrated. The prize to be had is a much more engaged workforce with all of the benefits that this brings in terms of attraction, recruitment, development and retention. The recent report on Fair Access to the Professions challenged us all in the professional services sector to consider how we are perceived by future employees and to think about recruiting from a wider talent pool. HR professionals working in collaboration with their CSR colleagues have the greatest potential in reaching out to their local communities and producing an innovative, sustainable and business to differentiate itself by style of CSR programme and to understand in more detail what new employees are thinking as well as how future employees will perceive the organisation. The impact on other indicators such as leadership are not as clearly understood generally but it is also worth a cross functional review of how these indicators work together and how best to respond to what one is being told. Never has there been a more opportune time to re-shape and, more explicitly, link employee volunteering with skills development. While some may view the credit crisis as a hindrance to volunteering, it may indeed, in the long-term, have far more positive benefits for our local communities than previously anticipated. This is because forward-looking organisations are focusing more attention on how to leverage volunteering to maximise the benefit to both the local community and the organisation itself. All things being equal, the volunteering opportunities produce a positive local community benefit as well as developing and employees' skills and core competencies, is a formula that should produce even greater benefits for communities than ever before. The evidence on retention is perhaps weaker than the preceding areas but if the exit interviews we all conduct were to be amended to consider how the impact of CSR might improve retention of employees then the evidence base can be strengthened. Until now, the anecdotal evidence has been from the employees who stay ­ and cite CSR as one of the reasons they do so. Far more work is needed to understand how CSR might be used to support those employees who would otherwise leave. If anything the survey initially conducted last summer only reinforces the need for these two sets of professionals to work more closely together.

Whilst such collaboration is mutually reinforcing there is still a lot more to be done before it could be said that in general CSR and HR are completely integrated

Of course, with more discussion, this has brought about more analysis and emphasis around the need for responsible business practices and programmes across organisations. As a result four out of five respondents say that they are getting smarter at quantifying the results of their CSR programmes. Such impact and outcome analysis is not the historic language of the more traditional CSR programme. Even so almost two-thirds said that there had been no cut in their financial budgets and the remainder reported that there had been increased emphasis on internal communication and employee engagement. This challenge around the business case for CSR scaleable model. This would suggest a large scale programme that starts at the primary school point and gradually sharpens in focus as pupils progress through their education. It would have the benefit of spanning the various pathways from secondary level onwards, that a young adult may take, and provide them with a variety of entry points to business. In terms of recruitment, external indicators such as various `great place to work' surveys are studied carefully by CSR practitioners in a range of organisations large and small. The information around CSR provides an opportunity to a

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Introduction: Outsourcing

Ann Bevitt, Partner & Head of Employment // Alistair Maughan, Partner & Head of Global Sourcing - Morrison Foerster

In many cases the biggest stumbling blocks to the smooth progress of an outsourcing project remain the HR issues

What next for HR outsourcing?

Ann Bevitt, Partner and Head of Employment and Alistair Maughan, Partner and Head of Global Sourcing, at Morrison Foerster, assesses the likely HR implications of recent changes in the structure of the outsourcing market and suggests ways in which the HR function can become a contributor of solutions, not obstacles, to the smooth running of outsourcing projects.


Outsourcing has come of age over the last decade, with resulting shifts in the pattern of employment. More and more organisations have outsourced both core and non-core functions to specialist service providers and, as services have passed one way, jobs and employees have passed the other way, from customers to service providers.

HR issues have always loomed large in outsourcing projects. Organisations underestimate the potential negative impact of HR mis-management at their peril. By its very nature, outsourcing involves a change in the pattern of service delivery ­ and that service delivery depends on employees, mostly well trained and experienced, continuing to do what they have always done but ideally with better management and training and an improved subject-matter skill support network provided by the service provider. If those employees are treated badly, at best they lack motivation or incentivisation, and at worst they may end up leaving their employment altogether, being made redundant or being left employed by the "wrong" employer when their actual job function has moved elsewhere. Traditionally, the task for HR professionals in outsourcing projects has been to manage smoothly the issues arising from the proposed transfer of job functions. In the UK and the rest of Europe, this means anticipating the effect of the Acquired Rights Directive and the Transfer of Undertakings Regulations, which mandate that employees whose job function is transferred to a service provider follow their jobs. Some of the issues which the Acquired Rights Directive and TUPE throw up are second-nature for seasoned HR professionals, e.g., consultation with employees "affected" by the transfer, not just with those whose job functions are in-scope to transfer to a service provider. For HR professionals within outsourcing customers, the bulk of such work occurs when a service is first outsourced, and it is

their own staff who are to transfer to the "first generation" service provider. However, customer HR teams also have a role to play on exit and in "next generation" outsourcing when one contract ends and a secondary transition of staff from one service provider to another takes place. The task on those occasions is to work with outgoing and incoming service provider HR teams to ensure the smooth transition of their staff. Over the past two years, the prevalence of renegotiated outsourcing projects over "as new" projects has meant that many customer HR professionals have found that the impacts of outsourcing have been less on their recent radar screens i.e., since any redundancies or HR issues associated with re-negotiations have tended to be for the outsourcing service provider and not for customers. This has left HR teams free to deal with internal streamlining or downsizing issues. As noted above, the emphasis in the outsourcing industry is changing and this will have consequences for HR professionals. Already, the duration and size of an average outsourcing project has become smaller ­ as companies have realised that full-scope, end-to-end outsourcing of their entire operations is unwieldy and there are more efficiencies to be had from smaller, more targeted outsourcing deals. One impact of this trend is, of course, a more rapid turnover in outsourcing projects and the need to manage TUPE/ARD issues in the next generation. It's tempting to say that the issues in such a situation are for the respective in-coming and outgoing service providers to manage. But, in reality, it's the customer's service that suffers if employees are not properly dealt with (or, even worse, if the right employees are not transferred or are cherrypicked off on to other work) so it's in the customer's interests to engage fully in the process even if only as referee to oversee fair play. If and when economies emerge from recession, the outsourcing focus is once again on offshore outsourcing. The increased prevalence of offshoring (and, especially, the presence of "mixed" teams providing perhaps onshore service delivery of front line services but backed-up by a strong offshore-based support function) also causes HR issues because, of course, TUPE doesn't apply to transfer employees overseas, or so most people believe. In fact, TUPE does apply to any outsourcing from the UK. Accordingly, if a service is being offshored for the first time, TUPE will apply and HR teams will have to inform and consult in the usual way. That, however, is as far as TUPE usually goes, as employees are treated as redundant in their UK roles and do not normally transfer across to work for the offshore service provider. This means more work for HR teams in looking either to redeploy staff prior to transfer, or manage the redundancy

process with an offshore service provider. Additionally, many companies are looking again at the option of either setting up a captive outsourcing entity or some kind of hybrid offshoring structure model ­ an approach that was in vogue in the early days of off-shoring as companies dipped a toe in the water, but which is now showing signs of a return to fashion. This will require HR teams to work out how to manage blended internal and external workforces operating the same set of services, how to supervise remotely their outsourcing service provider's HR management, or to grapple anew with the HR and employment laws of foreign jurisdictions. The current rise in prominence of BPO as opposed to ITO produces issues associated with the prolonged investment nature of many BPO deals (i.e., whereas ITO deals tend to be of the "short, sharp shock" variety with changes in the workforce taking place rapidly and at one time at the start of a deal, many BPO projects involve investment and a process of transformation which means that the HR implications are spread over a period of time and are not immediately known at the time when the outsourcing project is initiated). This means that HR professionals will increasingly be faced with more complex consultation and transition processes to manage and they need to be involved much more closely in the outsourcing process. Beyond the "big event" issues of employee transfer, the increased acceptance of outsourcing as a fact of business life requires HR professionals to adapt to "indirect" management of key service delivery teams via service providers' own HR functions. While many service providers naturally resist their customers' attempts to micro-manage their internal HR processes, there ought to be a role in the governance processes for any successful outsourcing that allows HR cooperation between the customer and service provider HR functions. Their joint goal ought to be the make sure that employees on whom the service depends are motivated, incentivised, welltrained and aware of both customer and service provider priorities. Although very few, if any, proposed outsourcing projects have been abandoned purely, because of HR issues, deals can very easily be temporarily derailed if these issues are not dealt with appropriately and at the right time. Best practice suggests that the more successful projects occur when HR teams are closely embedded into outsourcing projects throughout their lifecycle, in order to reduce current and future HR issues. What this means in practice is early engagement of HR professionals, e.g., to scope out potential "red flag" issues. Once the decision to proceed

has been taken in principle, HR professionals should be involved pre-tender to determine the agreed position on TUPE, so that it can be made clear to prospective service providers in the tender documentation what's going to happen as regards staff transfer. This will allow those bidding to factor into their bid associated staffing costs, thereby avoiding unpleasant surprises for both parties down the line.

Best practice suggests that the more successful projects occur when HR teams are closely embedded in outsourcing projects throughout their lifecycle, in order to reduce current and future HR issues

HR professionals should also help the business early on to identify key employees within their own organisation and key roles within the service provider's. HR professionals' involvement should continue during the tender process to ensure that bids accurately reflect the customer's position on TUPE. During the contractual negotiations, advice from HR professionals should be sought on some of the contractual terms, e.g. restrictions on changes to staff terms and conditions and movement of staff in and out of scope pre-transfer, and also on the appropriate restraints to be placed on service providers posttransfer. These often include a requirement to maintain terms and conditions or avoid redundancies for a fixed period after transfer. Finally, and perhaps most crucially, HR must play a key role in employee communications.

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Case study: Outsourcing

Peter Darnell, Managing Director - Chartridge Conferencing

Outsource and prosper

Pressure to improve the standards and diversity of services whilst facing fierce financial constraints. Although it was never a council's remit to be commercial, it is a trend that many have adopted. With comment by Brian Rees, Director of Procurement for Swindon Borough Council and Peter Darnell, MD of Chartridge.

Outsourcing services to specialist companies reduces the overhead to the authority, but often the taxpayer believes it results in a decline in the standards of service and provide a profit centre for the commercial sector at the expense of the taxpayer. Councils usually outsource because they don't have the specialist commercial expertise in-house to exploit opportunities to their full potential. It is critical that the contractor has the capability and experience to provide a high standard of service which delivers financial benefit to the Council and a positive perception within the community. Lydiard House, a prestigious 18th century Palladian mansion house set in 260 acres of parkland, is owned by Swindon Borough Council. Opened to the public in 1955 as a museum, the council saw an opportunity to create an extra income stream by opening it to businesses as a centre for conferences and meetings. They contracted out the running of Lydiard Management Conference Centre to a private sector organisation, but after several years the Centre was running at a significant loss. Internal pressure to maximise income opportunities eventually made the arrangement untenable for both parties, and the contract was terminated by mutual agreement. Swindon Borough Council revisited its approach to the future management of the conference centre to identify what they could reasonably expect from any future service provider. The Council also considered the option of running the facility itself, but this wasn't part of its core business. The market had matured during the life of the previous contract and they were keen to see what innovative approaches could be made to improve the service and profitability, so they invited potential suppliers to tender to operate the facility. To their surprise and disappointment the open invitation didn't generate the expected enthusiasm for a potential partnership, and the quality of response from the few companies who expressed an interest did not provide a basis to move forward. Brian Rees, Director of Procurement for Swindon Borough Council explained how they had to change tactics to achieve their objective. "We undertook in-depth research to identify organisations who hadn't previously responded and we felt might possess the synergies and experience we were looking for. Factors to be considered included their experience, track record, organisational structure, culture and alignment of business objectives. It was also critical that partners had to feel comfortable that they could work together and develop the type of relationship that would make a real success of the venture. " One organisation identified as a potential partner was the Chartridge Conference Company. An initial telephone conversation between Brian Rees and Chartridge's chairman and managing director Peter Darnell explored the possible synergy of the two organisations. After many meetings a deal was agreed and in 2006 Chartridge was awarded a ten year management contract for Lydiard House Conference Centre. Peter Darnell commented on some of the issues they had to overcome. "Firstly we had to look closely at operating costs and ways to optimise business growth. We also had to rebuild customer confidence and awareness of the services we offered. To increase our income base we undertook marketing and profiling activities, which built recognition of the venue and overcame competition from other local conference venues. One of the keys to our success is the quality of our people. We motivate their professional growth through a structured development programme that encourages participation in every area of business. We went to great lengths to ensure that the existing staff, who had worked under the previous operator, were given the opportunity to continue their employment with us. They were then integrated within our existing teams and now work together towards the common goal." Within a year of Chartridge taking over the management contract for Lydiard House, the venue became profitable and is showing year on year growth in a competitive market. Swindon Council has also seen several major benefits emerge from the partnership. The Council now receives a guaranteed rental income plus a percentage share of the net profit. It also utilises the business, marketing and organisational skills of Chartridge to grow the business. Lydiard House attracts a diverse client base and regularly receives favourable reviews and publicity both for the venue and its surrounding grounds and amenities. The Council uses the venue as the primary base for its seminars and workshops, which means that it now has use of superior facilities and obtains best value for money and return on its investment.

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Survey: Outsourcing

Wanda Goldwag, Non-exec Chair - True North Human Capital Ltd

Survey: Wanda Goldwag

Outsourcing... up, up and away?

Outsourcing in the UK was originally seen as a way of reducing costs and passing clerical and low-level customer contact tasks to another company and often another country. While the practice certainly had a positive budget impact for most businesses the impact on customer service and perception was far more problematic. Wanda Goldwag, Non-exec Chair, True North Human Capital Ltd, summarises.

The next big trend was IT outsourcing­ with major businesses reducing risk, enhancing their access to technical skills and putting a difficult area of cost and project management into the hands of specialists who could genuinely add value to the decision making processes. Now many aspects of Human Resource work are also being outsourced. The first type of outsourcing occurred in businesses where large number of very similar staff had to be recruited frequently such as in 1000 people call centres where staff turnover can be 30 percent a year. The service being provided was handling volume efficiently and cost effectively ­ value added services were not really relevant. The trend in Human Resources outsourcing is now beginning to follow the IT model where what is important is to be able to access the latest methods and indepth technical expertise and outsource that to a specialist company. sensible process that filters applicants efficiently but ensures that the right people are short-listed and then incentivized to join the company. Lastly as with the IT world, business processes are changing at such a fast pace that only a professional company focused solely on the area can keep at the forefront of innovation and ensure that your company sees the best applicants. Many job roles are now only advertised online, so the first phase of review and psychometric testing is being done without any contact with a member of staff. Designing and managing this process is a highly skilled process. This is because one has to balance the need for information, with the ease of use of the site and genuine insight into the applicant while ensuring that equal opportunities and other legislative requirements are obeyed. Technological advances are also making it far more difficult for an internal HR team with many colleagues is a science in itself. The more specialist the role the more difficult it is to ensure that the right people see it and are motivated to apply. The secret is not to get 2000 responses but to get the five people world-wide who could do the role at the very top end of performance to apply. This is why recruitment outsourcing is becoming so essential for dynamic businesses.

Outsourcing trends

Datamonitor compiled a report about outsourcing showing that demonstrated that lessons were learned from past issues to do with the adoption of shared services and outsourcing, which are likely to reflect in the way the outsourcing industry will go forward. The report showed outsourcing is continuously expanding when it comes to vertical industry reach as well as geographic scope. Datamonitor further added that best-shoring is now considered the best emerging strategy for outsourcing business. The report suggests that more companies are opting to outsource specific functions to providers and in many cases locations, better suited to perform them, often for a lot less than can be achieved domestically, and this could further remove the implacability of using only one offshore location. The reported also showed that globalisation of the workforce will continue to grow and there will be a push to increase the quality of outsourcing skill sets.

Many job roles are now only advertised online, so the first phase of review and psychometric testing is being done without any contact with a member of staff

This is happening for a number of reasons. Clearly the general down-sizing of HR departments has often led to internal skill gaps where no-one is an expert on advertising, attracting or managing the candidate process. This has also been made much more difficult because as new figures have revealed on average there are ten jobseekers for every vacancy advertised in the UK. In one area of the south-east, 60 workers are available for each job. So the challenge is to construct a fair,

other priorities to win the battle for talent. It is said that 60 percent of roles are filled by some type of networking; this used to mean "the old boy network" and "the golf-club". Nowadays this is mostly via sites such as and social networking sites where professional recruiters access possible candidates and reference them before any formal approach is ever made. How to communicate vacancies in a way that attracts candidates and people willing to suggest

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Opinion: Outsourcing

Sanjeev Patel, Managing Director - CNG Business Services


Overseas overlooked...

As debate continues to rage with regards to overseas outsourcing, Sanjeev Patel, Managing Director of CNG reckons that, although the practice of using overseas call centres has received negative press, it is a mistake to completely overlook the services that these organisations can offer.

I often hear people claim that overseas outsourcing is commercial suicide, simply because all people ever hear about are negative experiences. But, this is not the true picture. Overseas outsourcing can deliver cost savings of up to 60 percent and tremendous efficiency improvements which have a direct impact on the bottom line. Positive perception and results occur if businesses take the time to choose the right company to work with and the right services to outsource. The complaint is that overseas call centre workers are too aggressive, don't fully understand their products and have poor communication skills. Another common problem that people associate with overseas outsourcing is language and in particular the accents of call centre workers based in India. Outsourced services providers should send all employees on courses to ensure that they all speak fluent English and that any heavy accents are softened to make it easier for clients to understand and engage with staff. Additionally, employees should be sent on localisation courses, to gain an understanding of geographical locations throughout the UK, so that they are better able to relate to callers. The more knowledge that can be provided to operatives, the better equipped they are to deal with customers and the better service they are able to provide. Not all outsourcing specialists go to these lengths and so it is advisable to check the credentials of your supplier. point of contact that will be available at any time of the day or night. The cost of providing 24 hour service from an overseas location might be the same as just a few hours of service in the UK. Customers understand that companies do not have infinite budgets and are willing to accept overseas outsourcing when the restricted alternative for the same money in the UK is explained to them. If you think logically about a business and what services could and arguably should be outsourced, it becomes immediately apparent that significant cost savings can be achieved as a result of offshore support. Data capture, inputting, finances and back office support are all services that can be handed to an offshore outsourcing team with no negative impact on the business. There is no need for these processes to happen in the UK, even by a domestic outsourcing provider. Many international corporations utilise such services or even have their own dedicated overseas offices purely for such functions, and because these are not customer facing, no one even pays this a second thought. Technical support and IT services are just two examples of outsourcing frequently carried out overseas. Technically skilled people are very expensive in the UK, and much, much cheaper overseas. They also frequently rely on scripted copy and frequently asked questions and answers making the process easy to transfer. The reduced cost of overseas labour, which is still considerable by local standards, means that we are able to pass significant savings back to medium and large sized corporate clients in the UK, reducing their overhead costs and increasing efficiencies. In particular during difficult economic times, businesses have had to downsize and, in many instances, make redundancies, leaving gaps within the skill set of their organisation, businesses should be looking for a services provider that supports the business function with administrative tasks, out of hours support, invoice processing, telemarketing and software development.

Customers understand that companies do not have infinite budgets and are willing to accept overseas outsourcing when the restricted alternative for the same money in the UK is explained to them

Like many companies providing a range of services, there are some areas within a business that are better suited to overseas outsourcing than others. I would never recommend that a consumer facing luxury brand outsource a customer service department, after all people pay a premium to receive very personal and often local care from these brands. However, businesses that require support services twenty-four hours a day, seven days a week, can benefit from overseas outsourcing. It makes sense for these companies to use a cost effective option that can reassure customers that they have a

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Survey: Outsourcing

Stephen Gilbert, Client Services Director EMEA - Ochre House

Survey: Stephen Gilbert

Driving outsourcing

Last year a survey of over 100 European companies found the main driver behind the outsourcing of recruitment was cost saving. But, that expected level of savings were not being met. Stephen Gilbert of Ochre House, examines whether the picture has changed in 2010.

The trend for organisations to outsource process driven elements of the HR function, and in particular recruitment, allowing their has enabled HR professionals to work more closely with line management as business partners. But how many employers are entering into such agreements because of a `herd mentality', blindly following the lead of others without a clear understanding of what outsourcing can and cannot achieve? Last year a survey of over 100 companies across Europe found that the main driver behind the decision to outsource recruitment was a desire to reduce costs. However, while the expected level of savings averaged 37 percent, the saving achieved in practice was less than 20 percent. On first reading this does tend to suggest there is something worryingly wrong with the whole idea of recruitment outsourcing. But a more in-depth reading of the research produces an altogether different, if more complicated, picture. outsource, "Price was, of course, a factor when we got to the final negotiation but it wasn't the one that got us there in the first place. Yes, you can make cost savings through outsourcing recruitment, but this should never be your major driver. Efficiency, simplification, and added value are the three areas where you make real wins and if you are focused purely on the bottom line you risk being disappointed." Back in the summer of 2009, with no real sign of economic upturn in sight, any suggestion that organisations should stop focusing on costs and concentrate on efficiencies and effectiveness was, to say the least, a hard sell. One year on, despite the ongoing turmoil in the euro zone, more and more businesses seem to taking a more realistic approach to RPO. And this is particularly true in continental Europe where RPO is still a relatively new concept and where businesses consequently tend to view it as a tool for implementing change value in the mid to long term. Second, and perhaps more importantly, businesses that enter into RPO with their eyes open also tend to realise that the outsourcing of recruitment is only part of a need to address the whole of the talent management process. After all, what is the point of creating a state of the art talent sourcing function if your recruits leave before you can get the best out of them through a mismatch between perceived and actual corporate culture, or a failure in training and development. The most significant reductions in labour costs, therefore, occur when the outsourcing partner works with their client throughout the talent management spectrum from recruitment and engagement to training, development and retention. Only by doing this can they create a joined up process rather than a series of artificially isolated silos. The key to achieving this is for both suppliers and buyers of RPO services to stop talking about working together in partnership and start making it a reality. Too many RPO providers have grown complacent in the mature markets of the US and UK and have come to rely on standard. `one size fits all' offerings. And while this approach is unlikely to satisfy the growing demands of the next generation of outsourcing projects in these countries, it is almost certain to fail in the emerging markets of EMEA and, in particular, in such sceptical environments as Germany. At the same time, organisations may need to come to terms with the idea that handing over the reins to a partner is not an admission of defeat or a loss of control, but the best use of available resources. The start point for all this will be a rigorous selection procedure which must leave the buyer with complete faith in their outsourcing partner because, in the words of Ian Ruddy, European People Services Director for telecoms giant, Telefonica, "The day you have to take the contract out of the drawer is the day you don't have a partnership any more."

Organisations may need to come to terms with the idea that handing over the reins to a partner is not an admission of defeat or a loss of control but the best use of available resources

Of all the organisations surveyed, not one of those that regarded outsourcing as either `successful' or `very successful' had rated cost saving as `very important' when making the decision to outsource. Instead the factors they ranked most highly included the desire to make recruitment processes more efficient, a perceived need to access specialist expertise and a concern to improve the employer brand. As one respondent, Simon Patton, the then HR director of Somerfield (now part of the Co-operative Group) put it, describing his own decision to rather than a quick way of shaving something off the bottom line. Ironically, the organisations that take a strategic approach to outsourcing are usually the ones that do end up making the highest savings in practice. The reasons for this are twofold; first the improvement of processes and reporting through the introduction of more effective technology, the targeting of more effective talent sourcing channels and the importation of best practice from the market, all combine to deliver financial

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To the point

Isabel Chadwick, Managing Director - CMC

to the point

Isabel Chadwick

Scorched earth...

With even the most optimistic of economic commentators anticipating the loss of 300,000 public sector jobs and many estimating a million job cuts, public sector employers now face complex restructuring programmes resulting in wide-scale redundancies. Isabel Chadwick, Managing Director, CMC reports.

With public sector employers now responsible for delivering the biggest cuts to spending for nearly a century, senior HR professionals must think through any restructuring activity carefully if disruption to public services is not to wipe out any cost savings generated. George Osborne's budget announcement, that the UK is to live within its means, has been welcomed by the markets, sending sterling soaring to a 19month high against the euro. The news that nearly all departments face losing 25 per cent or more of their annual budgets has public sector employers animated for less happy reasons. With even the most optimistic of economic commentators anticipating the loss of 300,000 public sector jobs and many estimating a million job cuts, public sector employers now face the daunting prospect of embarking on complex restructuring programmes resulting in wide-scale redundancies. As the private sector has all too painfully learned, the challenges associated with deciding which people to let go, what criteria to use and how best to maintain morale are not to be underestimated. Nor is the challenge associated with maintaining a high level of public service when employees will inevitably be more concerned about whether they will have a job this time next year than about their day-to-day responsibilities. If any initial cost savings generated are not to be wiped out by public services grinding to a halt, as employees, uncertain about their future, enter into a state of paralysis at best and organised strike action at worst, public sector HR professionals must keep their people motivated and productive during the change. Easier said than done when those leading the change are also at risk of losing their jobs. Having helped hundreds of private organisations and a number of councils to successfully deliver widescale redundancy programmes, I'm clear about three key learning points. In the first instance, HR must be aware that the scale of the proposed changes, from decisions on pensions payouts to legislation reducing the cap on civil service redundancy pay from six years to just one, will leave employees feeling betrayed. If the resulting damage to the psychological contract is not to manifest itself in lost productivity or strike action, employers will have to work hard at engaging employees to identify and rectify waste and become part of the solution. Only by lifting the lid on the scale of the challenges faced and empowering workers to find more effective ways to do things can the Government hope to achieve the change required. No matter how great the pressure to make quick savings by letting people go, cost-cutting cannot be carried out simply for its own sake. Just as there's no point in selling the family car only to squander the savings on taxis, Public sector employers must think about how to retain key knowledge and skills, not only to minimise short-term disruption to services, but also to reduce future training costs arising from bringing back `redundant' employees as contractors. At the same time, clear time-lines for any planned redundancies must be put in place to reassure employees and enable them to plan their lives accordingly. And communication should be formal, regular and transparent. Even if it's yet to be decided whether or not compulsory redundancies will be required, it's far better to say a decision has yet to be taken and when it will be made than nothing at all. Any silence will be interpreted as the worst-case scenario, causing the rumour mill to go into overdrive and fear levels to escalate, impacting negatively on morale and productivity.

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next issue



Recruitment The sector needed to reinvent itself and it has. It has asked some deep and purging questions about its placement as a service provide // Payroll In-house or outsourced? What more can payroll do? Can payroll actually improve engagement? Is payroll still what cutting-edge HR should be getting involved with?// HR planning Get out of the silo - short-termism is for short termists. Stuck in the mindset of worrying about today and forgetting tomorrow? // Alternative dispute resolution Cases of businesses caught up in timeconsuming and costly legal disputes is predicted to increase. Is ADR the answer?


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Events calendar

HRD Issue 70

events calendar



28 September 2010, London, Coaching at Work Conference

Annual Coaching at Work Conference provides an ideal opportunity for HR professionals and coaching specialists to explore the latest coaching developments and trends. Leading coaching experts and best practice organisations, the conference offers practical advice to help maximise the potential of coaching. New ideas and fresh inspiration from best practice organisations and leading experts to help tackle existing coaching challenges, how to increase employee engagement and morale through coaching. Organised by CIPD t: 0208 612 6202 // w:

29 September 2010, London, Organisation Development Conference

The definition of OD can be confusing and the responsibilities of OD practitioners hard to identify. The conference will help to clarify the key skills, techniques and tools that are essential for making OD fit into your organisation. Featuring leading practitioners and expert insight will help you to: Reinforce and develop your knowledge of the underlying OD theories and practices, assess OD skills and how they fit into organisations. Explore the latest OD strategies, tools and techniques and discover how to successfully lead major changes in organisations. Organised by CIPD t: 0208 612 6202 // w:

7-9 October 2010, Atlantic Kempinski Hamburg, 17th Annual Human Resource Summit

The Human Resource Summit is the longest running b2b networking event for the UK HR market! Held in a different European city each year and taking place over 3 days, the Summit includes informal networking, strategic seminars, business meetings and social gatherings. All business meetings are preselected by both parties to ensure they are relevant and productive. There is no `hard sell', just a focused environment that is conducive to building new business relationships and a fresh exchange of ideas. Organised by Summit Events t: 020 7828 2278 // w: www.

9-11 November 2010, Manchester - CIPD Annual Conference & Exhibition

The Annual Exhibition has thousands of visitors looking to source the latest HR solutions and keep up-to-date with industry developments. All the leading suppliers are on-hand in Manchester Central with an event buzzing with professionals getting advice and solutions. Hundreds of leading supplier under one roof providing solutions in key areas including change and OD, talent and coaching makes the exhibition the only place to find solutions. Organised by CIPD t: 0208 612 6202 // w:

24-25 November 2010, Brussels - Employment Week

Employment Week is an annual exhibition and conference focusing on the major social and economic issues surrounding employment and creating an effective discussion and meeting forum. Organised in close cooperation with DG Employment, Social Affairs and Equal Opportunities. The event attracts a wide range of individuals, businesses, social partners and government policy makers from across the EU and beyond. The event will also focus on the key EU themes for 2010 and 2011 - tackling poverty and social exclusion, and exploring the EU wide benefits of volunteering. Organised by Summit Events t: 020 7828 2278 // w: www.

9-11 March 2011, Brussels - The People Development Summit

The People Development Summit offers UK L&D professionals a unique opportunity for focused business networking. The Summit will take place for the 11th successive year between 9-11 March 2011 at the five-star Marriott Hotel, Brussels. Senior L&D professional with control of a budget of around £250k .will be well served as the People Development Summit in 2010 will be designed to improve contact and knowledge base. As a supplier of L&D products and services, what better way is there to get in front of a gathering of senior buyers? Organised by Summit Events t: 020 7828 2278 // w: www.


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