Firms announce big profits but prices are still increased and jobs are still at risk
July 31, 2008
Today British Gas has seen quite a lot of negative press and consumer anger after announcing huge price hikes yesterday, followed by Centrica, the parent company of British Gas, announcing massive profits today. I’ve also just read in the paper that Cadbury has announced pre-tax profits in the first half of the year of £223million. This has been achieved by increases in profits in chewing gum, throat sweets and dairy milk chocolate. However this doesn’t mean that employees of the confectionary giant are safe from job losses, as the company announced that it will be reviewing staffing numbers as part of a cost cutting exercise, because of an expected 6% rise in the cost of commodities, i.e. ingredients etc.
It just shows that even in organisations that appear to be doing well, times are still challenging and companies are still likely to look at redundancies as a way of keeping costs down when facing difficult conditions in the future. Cadbury has growth targets to achieve despite the economic conditions, so even though the profits announced look strong, the company still has to look strategically across the business to ensure the expected financial performance is reached at the end of the year.
Beware of LIFO!
July 30, 2008
Recently I wrote about an age discrimination case relating to a redundancy that was quite complex. Another age issue relating to redundancies is the ‘last in, first out’ (LIFO) option that many companies resort to when handling this situation.
There have been many cases concerning the LIFO option, the outcomes of which have often been contradictory, however it was until recently widely felt that this is a safe choice when making redundancies. Now though, it must be remembered that the youngest employees are much more likely to be dismissed due to this reason, because they have had less time in employment to build up a longer length of service. Companies will probably only be at risk of a discrimination claim if it is clear that the profile of the workforce means that most LIFO victims will be younger workers, however LIFO should be applied with caution.
Another reason to only use LIFO if there is absolutely no other option is that when you are losing a proportion of the workforce, you ideally wish to keep the most effective and promising employees, and these may be the last ones in. Clearly, the most appropriate way to handle redundancies is to look at what is needed strategically, find a fair way of measuring this with more than one measurable, and apply the formula properly. This will leave the company with the best workforce to carry the business forward, and will also give the fairest treatment to those losing their employment, which will in turn mean that the ones left behind will have more faith in the employer going forward.
New working hours for French workers
July 29, 2008
As we know, employees in the UK can work up to 48 hours per week under the Working Time Regulations, and may also opt out of this maximum number of hours by signing an agreement with their employer. This has been something that many employers and employees have been keen to protect under pressure from the EU, as many workers benefit from higher earnings from the opportunity to work a lot of overtime, and provides employers with more flexibility to manage times of increased workload.
In France this has traditionally been very different, with a strict maximum 35 hour working week. This has been popular with many people, but some small companies have been trying to change this policy for a while, obviously for the same reasons small employers in the UK benefit from the opportunity of a longer working week. Nicolas Sarkosy, the French President, has felt for a long time that the restricted working week has impacted negatively on the French economy, and pressed this view quite strongly when he was campaigning to become the President.
The new law means that employees and employers will be able to negotiate longer working hours up to 48 hours maximum, with the extra hours worked paid at an overtime rate that is higher than the standard rate. This is a huge step for France, and it will be interesting to see how many companies take advantage of the new legislation.
What’s your opinion of the maximum working week? Do you think the UK’s opt out gives us an advantage in the economy? I know people who would be crippled financially if they lost the opportunity to work the overtime hours they rely on, does this affect you or anyone you know?
Dealing with extended leave requests
July 28, 2008
I’ve had some requests recently for extended periods of leave. In particular this seems to be happening with those who are planning a wedding, either their own overseas wedding or one for a close family member who lives on the other side of the world. As with most organisations, the maximum period of annual leave an employee can take in my organisation is two weeks, which can be extended at management discretion. Allowing longer periods of annual leave can cause difficulties for organisations when trying to cover the workload of the employee, especially when they work in a small team, or even worse, if they are the only employee that carries out a certain role. However there is also the desire to be able to accommodate employees’ wishes in terms of their aspirations and lifestyle outside of work, and an employer offering this kind of flexibility is more likely to gain the sort of loyalty and commitment needed from employees if they are to succeed and excel as a business.
There are considerations when approached with a request for extended leave that go beyond the obvious workload issues. If the employee is allowed to use their annual leave entitlement for the period of leave, how many days will they have left when they return? The links to work-related stress, which may lead to increased sickness absence, need to be considered. A very long period without a break once the employee returns from extended leave, or beforehand if they are saving holidays up, is likely to put a lot of pressure on them, and they are also more likely to under-perform.
Additionally, the accrual of holidays needs to be considered. A long-standing employee may be allowed to use a lot of annual leave days that have yet to be accrued on their extended leave, but what happens when, as in my case, the employee is still in their probationary period or first year of service? The way I have managed this is to let the employee take all the days he has accrued up to the point of the leave as paid holiday, and the rest unpaid. This also means that when he returns he will still have an appropriate number of annual leave days to take before the next holiday year. This will mean he has more time off overall, but I feel this is a fair option that also looks after the health and safety issue.
This can be a tricky situation to handle, especially as it’s difficult not to set a precedent that may be problematic to uphold next time there’s a similar request. For certain situations, such as a marriage, you always want to accommodate the employee as much as possible. I think the best thing to do is that each time a request is granted or refused, the reasons are documented and kept on file so that if there is a complaint or query, the employer is able to show that they were fair and reasonable when dealing with all requests.
Lee’s not the only CV fraudster!
July 25, 2008
Remember the recent victory of Lee ‘THAT’S WHAT I’M TALKING ABOUT’ McQueen from The Apprentice, and the embarrassing way his embellished academic achievements were exposed by the interviewer that had phoned up his university, to find that he had only spent about 4 months there! Now an in depth study has found that occurrences of candidates lying on their CVs are increasing. Powerchex, a pre-employment screening company analysed thousands of applications submitted in one year to financial services companies and found that 17% of applicants had made something up on their CV. This figure was 4% higher than the previous year’s figure.
The study seemed to suggest that applicants felt that their academic background would be a big factor in their success, as candidates with degrees from lesser known or lower ranking universities were much more likely to embellish facts than those who graduated from one of the top 20 universities. Indeed, in Lee’s case, it was his academic background that he felt let him down so much that he needed to lie, and this led to the embarrassing and uncomfortable situation he faced when he was found out. However, Lee’s dishonesty didn’t lose him the opportunity to gain the role with the 6 figure salary at Sir Alan’s company. I think that Sir Alan could understand Lee’s reasons for mis-representing himself, and felt that Lee’s work experience and performance on the show were much more important factors to consider than his poor academic record.
Personally, I’m not really concerned which university a candidate attended, or even if they have a degree at all, as long as they can prove to me that they can do the job in question. Of course, in other industries academic achievement is much more imperative to certain roles, and some employers would argue that even if a specific qualification isn’t required, the fact that a candidate has completed a degree shows a certain level of application, commitment and ability. I would agree with this to a certain extent, although I don’t think that it means that someone who decided not to go to university is automatically less able than someone who did. There is a perception that lots of employers do think this however, and I can therefore understand why candidates sometimes feel they have no choice but to fabricate some facts on the CV and risk being caught out (I don’t think it’s right though!)
Employers worrying about candidates telling fibs on their CVs need to find ways of investigating this without it taking an unnecessary length of time. It’s not practical to phone around universities and colleges for every candidate coming through, so instead those people selecting new employees must use their questioning skills effectively at the interview stage. Effective questioning and probing can draw out the detail of what a candidate has achieved or the knowledge they have gained, and it will expose CV cheats if this is done well. See my article on effective questioning in interviews for more information on techniques and interview structures.
Some candidates will always push the boundaries of what is honest and proper when job hunting, and lots of them probably get away with it due to the relaxed attitude and approach of the employing organisation. A lot of the time this may not really matter as long as the person comes in and does a great job for the company, but there will be times that poor candidates slip through the net because they embellished facts and nobody found out. It’s these candidates that employers need to fear, and this is why effective recruitment and selection processes are very important.
Focus on non-financial benefits in difficult times
July 24, 2008
Yesterday I was commenting on the likelihood of pay increases being squeezed by organisations in the current difficult economic situation, and the probable backlash from employees in the face of this as their personal finances take a hit from each end with rising living costs such as food and fuel. Salaries are a very emotive subject and this often has an effect on staff satisfaction and retention (although it’s rare that salary is the sole reason for an employee jumping ship as it’s only one in a multitude of motivating/demotivating factors). So what can organisations do to ensure they retain their key staff and still attract new talent in the difficult times, when at the same time they’re under pressure from shareholders/the board to cut costs due to falling sales or rising outgoings?
If an employer is struggling to stay competitive on salaries, then perhaps one option is to concentrate on other aspects of the employee experience. As well known motivational theorists have told us, pay isn’t the most important factor keeping employees happy and committed to their organisation. The opportunity to develop and learn new skills, autonomy and the chance to work with inspirational leaders and within innovative teams are all reasons for employees to feel satisfied with their jobs. In terms of the package available for employees, introducing less costly benefits that have shown to be proven winners such as flexible working options or purchasing/selling annual leave can have as much of an effect on job satisfaction as a big pay rise or bonus.
It doesn’t all have to be doom and gloom for organisations faced with the task of cutting expenditure and even those dealing with redundancies; as long as the remaining employees are given a clear message; that the organisation still has a clear and positive goal, that the employees are a valued contributor to this goal, and that any financial issues leading to cuts are shared fairly across the company. In other words, it’s no use telling everyone that salary reviews or bonuses are going to be a lot less this year when senior executives are clearly receiving huge pay outs, which is something you read about quite a lot in the news. It’s no wonder people get hacked off with their employers when they see this happening when at the same time they’re struggling to pay for the fuel to get them to work!
Hope you’ve checked your passport!
July 23, 2008
Today sees yet another strike in a long list of recent industrial disputes, this time in the passport service. Almost 3,000 workers in offices across the UK will stage a three day walk out, which may affect up to 60,000 people waiting for passports to be processed. So if you’re waiting for your new passport to be delivered so that you can go on holiday, I hope you’ve sent it off in good time.
The passport office workers are protesting about a poor pay deal and proposed cutbacks to the service which will see the closure of at least the Glasgow office and possibly three more. Staff were offered a 2.5% increase, but not all employees were included in the deal, which meant that some of the longest serving employees have not had a pay rise in 5 years; a move that Mark Serwotka, general secretary of the Public and Commercial Services Union that represents the workers, has described as ‘disgraceful’. However a spokesperson for the passport service said that the employer was keeping within government guidelines and felt the offer was fair. Of course, I don’t know the full details of how the deal was worked out, but 5 years without a pay rise doesn’t sound that fair to me.
This is just another example of the kind of problems the UK will probably see more and more in the next few years. The worsening state of the economy will mean that employers have to cut back in many areas, and pay increases are likely to one of the first areas feeling this effect, so it’s likely that more and more industrial action will take place in response to this as employees feel the pinch at both ends of their finances.
ECJ ruling has major implications for discrimination law
July 22, 2008
A European Court of Justice (ECJ) ruling in what has been described as a ‘landmark’ case has created huge implications for the handling of potential discrimination situations in the workplace. Coleman v Attridge Law has been in the news for quite a while now as the dispute was taken to the highest court possible to be resolved. Sharon Coleman worked as a legal secretary for the law firm and was subjected to less favourable treatment as well as harassment because she has a disabled son, five years old. In the UK, disability discrimination legislation relates to the individual who works for the company and is disabled, but by taking the case to the ECJ, this opened up a debate as to whether the European Equal Treatment Directive means that employees with association to (i.e. who are related to or are a carer of)
a disabled person can be unlawfully discriminated against. The ECJ found that ‘associative’ discrimination is covered under the Directive and therefore ruled in favour of Coleman.
The UK’s discrimination legislation must comply with the European Equal Treatment Directive, and this means the law in the UK might need to change to reflect the ruling if associative discrimination cannot be interpreted from the existing law. This could mean that in the future employers will need to ensure that all employees with ‘association’ to someone in a group protected by discrimination legislation are not treated less favourably because of this association. In reality, the ruling in this case means that employers need to ensure this with immediate effect rather than wait for the legislation to change, because this high profile case will be used as a benchmark for similar cases. This will bring challenges in terms of monitoring and enforcing the rules within organisations. As usual I would recommend seeking advice from an employment law advisory service or expert when handling this new aspect of the law.
Bad news for HR consultancies
July 21, 2008
Recently I was discussing how the economic downturn could mean more jobs available for HR practitioners due to the increasing need for skills such as change management and redundancy handling. However it has been reported recently that the financial situation of the country will have quite a dramatically negative effect on those working for HR consultancies as they struggle to cope with the tight economic conditions. A study has found that 44 out of 307 consultancies in the UK are at risk of folding in the next 12 months, with 15% running at a loss. These companies will need to take radical action to keep their heads above water and it’s likely that a reduction in headcount is a major part of this in order to reduce outgoing costs. This follows the pattern of many industries across the country, with an expected rise in unemployment of 300,000 over the next year, according to a survey by the British Chamber of Commerce.
Confusing age discrimination case
July 18, 2008
A recent tribunal case involving John Wooster, a former employee at Tower Hamlets Council, has some complicated aspects relating to the Age Discrimination Regulations (2006). Wooster was made redundant shortly before his 50th birthday, which meant that he missed out on a number of financial benefits that he would have received if he had been 50 at the time of dismissal. He had previously been at risk of redundancy but had been seconded to East End Homes, a housing provider, as an alternative. At the end of this secondment he was again at risk of redundancy, and although East End Homes offered to pay his salary until he was 50, Tower Hamlets refused and dismissed him by reason of redundancy.
The council didn’t follow the statutory procedures when they dismissed Wooster, and admitted to automatic unfair dismissal in the tribunal, but denied age discrimination. The HR Director stated that it was right to refuse to extend a notice period simply to allow an employee to benefit from additional benefits, but the tribunal said that there was no doubt the employee was dismissed because of his age and therefore had been discriminated against. Tower Hamlets is to appeal against the decision but if the Council is unsuccessful it could be looking at a £1million compensation payment.
I find the legislation relating to discrimination and redundancy quite confusing – if Wooster was chosen for redundancy above another employee because there was a reduction or cessation of available work, and the selection criteria (which surely wouldn’t have included age?) was fair, then shouldn’t it really make no difference at what age the redundancy was made? Maybe the deciding factor was that there was work available because the company Wooster was seconded to offered to make work available for him but this was not taken up by the Council.
It’s all very confusing to me. If anyone can shed any light on this situation I would be delighted to hear from you!