Importance of culture in organisations highlighted in FSA review
March 30, 2009
How much does the culture of an organisation affect its success or failure? A review of global banking regulation by Lord Turner; the chairman of the Financial Services Authority (FSA) has highlighted that organisational culture and behaviours have a very big impact on the way a company operates.
The report has looked at many different areas of why banks across the world have collapsed or fallen into crisis; and also reviewed whether high salaries and huge bonuses, which have been the subject of high profile controversy in the media, can be to blame for the excessive risk taking that led to the credit crunch and subsequent recession. It was found that the remuneration practices that have been so heavily criticised could only be blamed for a small part of the problems that have occurred due to the way banks and other financial institutions have been run. According to the CIPD (in People Management Magazine):
“Many top executives of the banks that suffered huge losses during the financial crisis … were large shareholders in their firms – voluntarily and through the pay policies”
This shows that trying to stop similar risk taking occurring in future by linking reward to performance more clearly will not work on its own, as it did not stop it this time. The FSA review makes it clear that the culture of risk taking – and the behaviours that arise from this – were a major factor in the demise of the financial sector, and recommends that in the future HR has a big job in moulding the culture of these organisations to avoid a repeat of such failures.
The culture of an organisation is set and determined by the very top level management – and this is where HR should focus when looking to influence and develop organisational culture and behaviours. As the FSA review highlighted – sometimes HR may have to become unpopular by telling management things that are difficult to hear, as well as becoming more intrusive in departmental activities to ensure the appropriate culture is being developed. This is all part of the job, but it isn’t an easy part of working in HR, and is something many professionals struggle with – especially in organisations where HR does not have a formal role or recognition at senior or board level; however this is something HR must overcome, especially when the right culture can be the difference between the success or failure of a business.
Team building events
March 27, 2009
Many organisations at the moment are feeling the negative effects of an economy in recession within their workforce; there may be a sense of worry, or panic, if the company is struggling to make money, or depression if there have been countless waves of redundancies, benefit and training reductions, or other necessary cost cutting exercises that have had an effect on the morale within the company. So the organisation has done all it can to weather the financial storm; and what it needs now is an injection of enthusiasm, drive and above all positivity, otherwise the business is not going to continue to survive in the face of the recession, and more negative activities will become inevitable. So what are companies doing to boost morale, encourage the kind of team spirit that drove the company before the credit crunch struck, and increase their chances of survival through improving the behaviours of their staff?
One option is a company event; such as a day out or even an overnight event. This might sound like a strange idea given the need for most companies to cut costs at the moment; but it needn’t be an expensive activity to plan. There are loads of free and low cost activities to do across the country, and there may be untapped creativity within the company that can be channelled into a really positive event. In a previous role of mine, one of the major activities for me each year was to plan and implement a two day team building event for all staff, and the budget was always very tight. Staff would always request activities such as rock climbing or canoeing, but the budget just didn’t stretch to that, and I also felt that these were not the sort of activities that would encourage team and employee interaction. Activities in the trips ranged from working in teams to create a live advertisement for one of the company’s services (for some reason most teams went down the superhero route – you wouldn’t think there would be so many men willing to wear knickers over tights and a makeshift cape!), to complex puzzles in which the only way to solve the mystery was for each team member to take a section each and then really work together and listen to each other to get to the answer. The accommodation was really cheap and we even had a function band for evening entertainment that was made up of a group of employees.
Other cheap activities could include orienteering if you have a lot of employees that like the outdoors (there are lots of ready-made courses in national parks or country parks) or something more creative if you have more arty types; such as re-creating a famous piece of art with a varied range of materials. The old saying of ‘thinking outside the box’ was never more appropriate than for this kind of activity.
There’s so much scope for a morale-boosting event for staff; and even if it doesn’t cost a lot it shows the organisation that whilst times are tough, and finances are tight, the need for a strong team of people that work well together and are enthusiastic about what they do is still really important within the business.
Dismissal of Senior Executives (2)
March 26, 2009
In my last article (dismissal of senior executives) I discussed the issue of major organisational failings, and whether the most senior executive in the organisation can be held accountable – and dismissed – for those failings, as was the case with Sharon Shoesmith of Haringey Council after the Baby P case, but was not the case for Sir Fred Goodwin of the RBS, who retired on a six figure pension after the bank’s demise. Shoesmith is now taking the Council to tribunal for unfair dismissal and sex discrimination – so where do organisations stand on the dismissals of senior staff in these situations?
The statutory rules on dismissals relate to following a fair process. Although the statutory dispute resolution procedures will not apply in a few weeks, the ACAS code of conduct that replaces the procedures will still require companies to behave in a fair and justifiable way in dismissing an employee.
As usual, the paperwork is important in showing fairness in a process and a decision to dismiss. If it says in an executive’s contract that they have overall responsibility for a function or organisation, and it is clear that the overall success of that unit will be used to measure the individual’s performance, then it may be possible to show negligence on the part of the person involved. Other documents that might also support this could be job descriptions and appraisal or other performance management paperwork.
What about when an executive cannot be held directly responsible for a failing (as is often the case) but it is felt that something needs to be done in order to repair some of the damage to the reputation of the employer? This is possibly the case in the Haringey Council example, and it is often in the news that very senior staff have resigned from their position after a major disaster has occurred; but Shoesmith did not do this. The company would have to make a convincing and justifiable case that it needed to separate itself publicly from the executive in question in order to protect its reputation. Evidence, as usual, is really important.
In any case involving a publicly viewed failure in an organisation where the dismissal of a very senior employee is possible, it is always advisable to seek legal advice before taking any action.
Dismissal of senior executives
March 23, 2009
There has been a lot of publicity recently about Senior Directors’ roles in the failings of organisations, and whether they should take responsibility personally for what has taken place.
There was outrage across the country a few weeks ago when it became apparent that Sir Fred Goodwin, RBS Chief Executive had retired on a six figure salary when his bank had come close to collapse and it was felt it had contributed to the current economic circumstances which is leaving millions of people jobless and even homeless. People could not believe that somebody that had overall responsibility for the bank and its success or failure could not only ‘get away with’ the massive failings but was essentially rewarded for it by being able to leave quietly on a small fortune. This has led to calls for new measures so that the FSA can stop these kinds of huge ‘rewards for failure’ in the future.
On the other hand is the case of Sharon Shoesmith, the former head of Children’s Services at Haringey Council was sacked without notice for the failures of the council to protect Baby P from repeated horrific abuse – after a damning report on the council’s failings was released. This is possibly the kind of action the people who were so outraged at the RBS outcome would expect a senior executive to face after such a catastrophic disaster. However Shoesmith made a claim to the Employment Tribunal for unfair dismissal, and has recently added sex discrimination to her claim – a total that could amount to over £1million in compensation if she is successful. This will be a fascinating case to watch, because of the huge publicity surrounding the case of baby P but also because of the implications of how the dismissal was handled at such a high level?
So what’s the answer? Should organisations be able to find those in ultimate charge guilty of gross negligence or misconduct after a failure as critical as those of RBS or Haringey Council? More on this in the next article!
Vouchers for carers
March 19, 2009
As I’ve written about in the past, there is a government scheme called childcare vouchers through which a parent can save money on their childcare costs by purchasing vouchers through their gross salary payment which can then be redeemed for childcare from their registered nursery, childminder, after-school club etc. The employee saves money on this because the taxable part of their salary payment becomes less and they therefore pay less tax and National Insurance. This scheme saves parents across the country a fortune each month and is a great thing for industry as it helps more people to afford to work when they have childcare needs, keeping more skilled and experienced people in the workforce and labour market.
Now, a group of high-profile employers has called to replicate this scheme for people who have caring responsibilities. Companies involved in the group, which is called ‘Employers for Carers’ include BT, John Lewis, IBM and HSBC. The group wants to see employees who care for someone who is ill or disabled to be able to access the same tax incentives as parents. In a report brought out last year, the Department for Work and Pensions recommended this development and asked the government to look into it with a pilot scheme; but nothing has happened yet, possibly because of the recession.
The development of the childcare voucher scheme into one which includes employees with caring responsibilities would follow the general development of legislation relating to these two groups. For example, the right to request flexible working is now applicable to those with responsibilities for caring for an adult, as well as parents of a child.
This is one to watch in the next couple of years, and it’s likely the development will happen in the future if the Employers for Carers group continues to campaign. As Iain Mc Math, a member of the group said in People Management Magazine:
“employers know that even though we are in a recession, the need to retain their talent is key’.
This is the reason that campaigners will still call for the vouchers to be extended to carers even during the financial downturn, so we may see more news about this coming out in the next few months.
First time parents - do they know their rights?
March 17, 2009
One of my friends is expecting a baby in about six weeks, and whilst I’m trying to think of the nicest present to get for their alternative baby shower (just basically a big knees up), probably the best gift I can give my friend at the moment is advice on her employment rights as she is becoming a parent for the first time.
What has struck me is the fact that my friend is not completely aware of her rights, and this is probably the case for employees in many companies. My friend is a teacher and she told me that she wants to go back to work part time after her maternity leave but that the college has indicated that they will not let her because she’s in a management level role – but they will probably invite her to come back into a lower grade position if she wants to work part time. My friend had almost taken this as the final word on the subject until I informed her of the right to request flexible working regulations – and the process that needs to be followed to have a constructive two-way conversation regarding the different options and their implications. I explained that as a parent of a child under six years of age (soon to be extended to 16 years) she had the right to request flexible working by writing to the employer – and the employer has an obligation to consider the request and either grant it, negotiate another option if it reasonably believes the option she puts forward is unfeasible, or refuse the request if there is a genuine reason that means it cannot be granted (reasons might include higher costs or it having a detrimental effect on other staff, customers/clients or service quality). I asked my friend if she thought it is reasonably possible for her to work part time and still achieve the needs of her job – and she said it is, so I advised her to put the reasons she believes this is possible in her request – then the onus is on the employer to argue the opposite.
Another thing my friend said is that her employer has asked her to give back her company laptop during her maternity leave; and again I have advised that this is not really correct under the recent changes to maternity legislation. In October last year an amendment was made to the law which means that women are now entitled to their full contractual benefits during ordinary and additional maternity leave – and these benefits are likely to include a company laptop, especially if, as in my friend’s case, the employee uses the laptop for personal use at home as well as for work.
It’s easy to see why companies might not inform employees of their full rights under maternity, paternity and adoption law, if they feel that the provisions they will have to make will have a detrimental effect on the company. However legally, and ethically, I feel that it is important to make sure employees know where they stand and what options they have as parents. This could be in the form of a booklet or a section on the company intranet – as although the information may be found in the employee handbook, if there is just one dusty copy up on a shelf somewhere, employees becoming parents for the first time, or even those who are becoming a parent again but for the first time since legislation has moved on, may not have seen the relevant sections.
Would additional paternity leave be such a burden for companies?
March 16, 2009
This time last year I wrote about proposals to revolutionise parental leave rights so that fathers would be entitled to take up to 6 months paid additional paternity leave (APL) instead of the mother taking additional maternity leave (Maternity Leave for Men! 25th March 08). I think this legislation is a really important step in family-friendly rights as well as helping to create more equality for women; through the destruction of the myth that employing women will cause later employment problems when they get pregnant and take loads of time off (see Alan Sugar’s famous comments from last year).
Lord Mandelson’s call to postpone any new legislative changes to avoid any further financial burden on companies in the recession means that although this change was due to be introduced by the end of the current parliament, it looks like it might not happen at all or for a long time if Lord Mandelson’s recommendation is adopted.
I’ve just been reading an article in which the pros and cons of introducing the change are examined, and I may be being naive, but some of the comments about why it would be difficult to manage the new laws in organisations seem a little unreasonable if not completely unfounded.
The first difficulty raised in the article is the need to gain confirmation from the mother’s employer that she is returning to work at the end of ordinary maternity leave so that the father can take over the allocated additional leave, and perhaps this would add another level of administration; but would it be that much more that it justifies not having the provision at all? Surely it’s a matter of a few template letters and forms that are sent out by a certain date, and if the other employer does not confirm within a scheduled timescale (an appropriate amount of time to enable the employer to arrange cover for the father), then the father simply cannot take the leave?
Another argument is that it is likely that people taking paternity leave will take a shorter period that women generally take for maternity leave, which will be harder to find cover for. How is this any different to when people suddenly go off sick for a couple of months; which comes with no warning? Companies manage to cope with this; normally with temporary secondments and other short term cover arrangements, which can actually be really good for the development of other staff if handled well. Again, whilst this may be tricky, I don’t think it’s beyond the realms of possibility that even small companies cannot be creative enough to cope.
I think the most strange comment in the article I was reading was from a (male) HR consultant who said:
“No one is suggesting people don’t take paternity leave, but APL just adds to the weight of the problem. A specialist role could mean knowledge of the company is really important, so just having one person missing can be absolutely critical, and very often complete projects grind to a halt.”
Hmm… doesn’t that apply equally to having one woman missing when she takes maternity leave? The comment above implied that it is only men that hold ‘specialist’ or ‘critical’ positions, and therefore companies that manage to find cover for women would not be able to do so for men. This simply confirms to me the reason we need to be giving men the same parental leave opportunities that women have; so that women can prove they can and have been managing the same career opportunities as men. The more fathers that take additional leave, giving their partners the chance to return to their career; the more women will break the glass ceiling and move into more senior roles, which will lead to even more fathers taking APL because their partners will be the higher earners. And that’s really what this legislation is all about; giving families flexibility to manage their work patterns in the most financially beneficial way, although it stretches way beyond that into equal opportunities and diversity in the workplace as well.
I’m open to alternative arguments on this subject; if you think that changing the law to allow APL will be a nightmare for organisations, get in touch with your views.
Business telephone systems cause problems
March 13, 2009
In one of the workplaces I currently work in, we are very lucky to have the opportunity to be on a heavy recruitment drive despite the current economic climate.
At the moment, we are recruiting for more than ten positions across a range of departments, looking for people with all different skill sets. Although there are meant to be more than two million people currently out of work, all we want are ten people or so and they are proving so difficult to find - but that’s another story!
It seems that advertising, interviewing and recruiting the people is not the only problem though. Even in the lucky position of having found all these ten people, it seems that office space is also going to be a problem because of the business telephone system in place.
Business telephone systems and network ports are proving a problem. Our network administrator has told us - at the last minute too - that we haven’t got a sufficient number of ports in the rooms for the departments and as a result we either need to install a new business telephone system or move people around the building. HR is all fun and games today…
More jobs at risk as retail group goes into administration
March 11, 2009
It may not be long before we see more of our favourite high street shops closing down due to the recession. The latest retail group to go into administration is Mosaic. The group own a number of brands on the high street including Warehouse, Oasis and Karen Millen and the recent news means that thousands of jobs could be at risk.
Luckily, a number of the brands have been sold to Icelandic bank Kaupthing, Mosaic’s main creditor. Unfortunatly though, this is not the case for them all. Principles is one brand that that remains in administration whislt a buyer is sought. This is unfortunate news for Principles which has been a well known name on the high street for a while. Principles currently have 400 outlets and over 2,300 staff.
Mosaic group have been struggling with debt for a while, up to the amount of £400 million.
British Chambers of Commerce call for freeze on minimum wage
March 9, 2009
The British Chambers of Commerce have called for the national minimum wage to be frozen in 2009. The group made the call to try and bring about economic stability and have seen this as part of a recovery plan.
The current minimum wage is £5.73 per hour but this is due to be reviewed in October by the Low Pay Commission.
The report states:
“When the economy grows, inflationary NMW increases can and should be absorbed by businesses. Freezing the NMW in 2009 would offer genuine help to businesses and support employment, with the added benefit of being a minimal cost to the government.”
The Director General from the British Chambers of Commerce, David Frost has spoken out and explained that the government needs to do it all it can to help assist businesses through the tough times of the downturn.
David has said:
“Collectively, we need to be looking at what sort of economy we want to see in the future, and, importantly, what action will need to be taken to get us there. This recovery plan should act to foster growth in the short term and lay the foundations for economic stability in the long term.”
Do you agree that a freeze should be put on the minimum wage in order for businesses to keep more money to create new jobs and wealth? Let me know your opinion on this matter.