"PEOPLE ARE OUR MOST IMPORTANT ASSET." (LIKE HELL THEY ARE!)
Case studies on treatment of employees by Glaxo Smith Kline, Coca Cola, the NHS, Superdrug and a global media organisation.
The rapporteurs of these cases are known to the author, who can vouch for their veracity.
Employee recruited into a national management training scheme.
Employee reports that the scheme is well designed, lasts three years and provided excellent experience.
Progress is good; most six - monthly formal appraisal ratings are "Exceeds Expectations".
As the end of the traineeship approaches, employee starts to ask about permanent placements. No response from employer. In last weeks of the three years, employee receives a letter stating that there is no job available and that he is dismissed forthwith. Employee distressed but assumes that employer can dismiss people at will, so simply plans to leave. Just before departure date, he mentions his dismissal to a relative who is an ex-HR manager. Relative checks the story and drafts a letter stating that the dismissal is without cause and is actually a redundancy, especially as the company appears to be treating other trainees in a similar fashion and winding up the training scheme.
Nothing heard from employer - on advice, employee speaks with lawyer, who writes to the company, threatening legal action and negative publicity.
Response almost instant, company offers:
- Full redundancy
- Lump sum to compensate for notice period + holiday payments
- Good references
- Bonus for previous year's performance
Company then takes six months to finalise the Compromise Agreement with ex-employee's lawyer and pay the money.
Employee hired into very demanding new business development role. Has employment contract, but no written description of scope of the job or performance criteria. He develops positive relationships with boss and peers, and believes he is making good progress in developing crucial new business line. No hint of any criticism from above, despite the fact that complications emerge due to change of specification of the product.
Suddenly, his boss calls him in and tells him that they are hiring another person to work alongside him, on an equal or possibly superior level. When asked why, boss says "They (upstairs) want to get the job done quicker".
When employee asks what is wrong, boss becomes impatient and states that he doesn't care how the employee feels, he cares only about the business and getting the job done quickly. When told that this action is likely to cause confusion and slow things down, shouts that employee and new person had better sort out any problems between them - and that's the end of the matter.
Employee consults lawyer about his rights, just to be on the safe side.
Employee hired into job which stretches him, but after a year, he feels that he is getting on top of it - his boss agrees and he gets a good appraisal rating. After fifteen months, he is told that he has not made sufficiently rapid progress and that he should plan to leave immediately. He is offered his notice period of three months as a lump sum.
Employee takes legal advice and requests the reasons for his dismissal in writing. His boss eventually explains that they have been offered a promotion providing that there is a successor in place, and as the employee was not ready to take the job, he would have to leave, as no other suitable vacancies were available.
Employee's lawyer advises that the situation amounts to unfair dismissal and he should pursue compensation.
Eventually, the HR department offers one year's pay as a lump sum, plus an excellent reference if the employee will sign a Compromise Agreement, guaranteeing non-disclosure of the incident.
Employee works for another three months to finish projects and leaves to another job with greater responsibility.
National Health Service - the antics of which in ruining junior doctors' training and blighting their careers have been well-publicised.
Here is one actual case.
Employee is a doctor, with top-rated medical and academic record.
After his Junior House Officer spells, he takes some time out of medicine to gain wider experience. After three years, having worked as a manager in a private sector company, he reviews his experiences and decides to apply for a return to medicine, as at the time, the NHS is asking for returnees.
He is rapidly verbally offered a traineeship with a top London teaching hospital. A month goes by, no formal offer is received. He is told that the HR department is finalising the paperwork. Two more months go by, employee complains bitterly, and is told that the contractual arrangements are almost finalised. After two more weeks, employee offers to go and work in the hospital for no pay - this offer is turned down. One month later, he is advised that he can start work.
Employee works for the training period and then is successful in gaining another training contract of six months in a second teaching hospital - as this traineeship comes towards its end he is turned down by another London hospital after hostile interviews about why he took time out of medicine. A friend enquires of top doctor whether there is hostility to returnees and is told that some senior doctors do not accept them.
Employee jobless, decides to move to another part of the country and soon has another hospital contract - towards the end of this, the employee runs head on into the total shambles surrounding junior doctor recruitment and is told that if he is not offered his first choice job, he may have to wait a year before he can apply for another established job. Eventually this condition is withdrawn and the employee is offered his first choice job anyway. Now can settle to a new more senior job on a three year contract.
Employee was within weeks of deciding to emigrate. Is this a good way to treat expensively qualified high-flyers?
Senior manager became pregnant and told her employer that she wanted to return after maternity leave. During the leave period, she continued some projects voluntarily. Towards the end of the maternity leave, she was called in and told that 'someone else' was taking her old job and she would have to work for the new person. Employee asked what the new job content was and eventually found it to be vastly less responsible than her previous work. She was then told that she would have to take a pay cut on return. Employee took legal advice, and was assured that employer's action neither legal nor ethical.
Her manager refused to discuss alternatives and advised her to knuckle down and accept new situation. Local HR department said that they could do nothing.
On advice, employee, backed by her lawyer, got in touch with Corporate HR director and after a month was offered full redundancy plus her contractual notice paid as a lump sum and an additional sum apparently as an inducement for her to sign a Compromise Agreement. Corporate HR director privately confessed that it had all been a 'cock-up', explaining that everybody was under great pressure.
Some months later, she was contacted by the company asking her to return, as her replacement was not satisfactory and her old department was falling apart. She naturally refused to consider it and has a better job in another company.
WHAT CAN WE DRAW FROM THESE CASES?
A colleague recently commented on the fact that more and more people were experiencing unsettling experiences at work and seemed to feel that their futures were determined not by their achievements, performance or commitment, but by 'something up there' - the sense that top management were becoming increasingly uncaring and driven by anxiety to be seen to act decisively and quickly - in other words, they were not to be trusted to care for employees.
In effect, these highly educated and quite senior employees had been treated as dispensable non-people, to be got rid of as cheaply as possible when it suited the companies. Only when they threatened legal retribution and the possibility of negative publicity became apparent did the organisations offer monetary compensation in return for a Compromise Agreement, which stipulated secrecy and was in effect a gagging order. In the case of the NHS, the collective power of the junior doctors and the BMA forced the organisation to redress the disaster. The cases make a good argument for collective organisation and action and certainly for strong employment legislation.
These perspectives, which were accompanied by the observation that there seemed to be 'more and more organisations from hell' is maybe borne out by the following:
CIPD - Employee Well-being and the Psychological Contract.
Prof. David Guest from King's College London has conducted a survey for the CIPD into a variety of facets of workplace commitment since 1996. It is thus possible to track trends. Guest has in the past been critical of reports that employees' attitudes to work and their employers were worsening, but has now expressed concern at the rapid changes reported in employees' experience of work.
Two things stand out from this survey
- There is a marked gap growing between the public sector (except for central government) and the private sector. Guest et al comment on the fact that public sector employees report that the experience of 'providing a useful public service' provides positive motivation, whereas private sector employees report a decrease in satisfaction from their ability to give a good service.
- The dimensions that show the greatest decline (usually from about 2000/2001) in the private sector are:
- Trust in employers (big drop) since 2001
- Increased intention to quit (big increase since 2001)
- Overall work motivation
- Perception of fair pay (big drop) since 2002
- Commitment to the organisation that work for.
- Feelings of autonomy in deciding how to do work
- Work satisfaction (big drop) since 2001
'Front line' public sector employees reported positive changes in all of these dimensions since 2000.
Private Equity "Means a bad deal for staff". Heather Stewart, Observer.
(Report titled 'Inside the Dark Box').
When private equity investors swallow a company, they tend to sack staff and depress the wages of the rest of the workforce, according to a new report by the think-tank the Work Foundation, which calls for closer scrutiny of the controversial industry.
Venture capital firms have spent more than £75 billion investing in 22,000 UK firms over the past 20 years, but until recently there has been little transparency about their impact.
According to the Work Foundation's research which studies evidence from more than 1,300 takeovers, 'management buy-ins', in which investors back an outside team of executives, tend to be particularly painful for staff. They result on average in a 20% cut in employee numbers over six years - and leave workers £231 a year worse off.
Will Hutton, the Work Foundation's chief executive, says: In some cases, private equity ownership may be inconsistent with the principles of 'good work': fairness, job security, the ability of individuals to have a say in their working life, manage stress and be able to communicate effectively with senior management appear to fall down the list of organisation priorities.
The similarities with the CIPD/Guest findings are interesting, as is the fact that 'People who run large companies' are mistrusted by 80% of a YouGov poll respondents.
It would appear that the experiences described in our 5 mini-cases are becoming commoner, and that large companies are treating many employees in a cavalier manner if they can get away with it.
A spiral of distrust
In recent years, the relationships between many larger companies and their employees has changed markedly. As the pressures have mounted from investors for ever-increasing year-on-year profits, so have customers, employees and the very fabric of the business become dispensable items to be sacrificed to keep the short-term profit line moving upwards. We have seen property sale and leaseback, outsourcing, offshoring and large-scale staff cutbacks as the panaceas to improved performance. What is not yet so obvious is that each of these strategies, overdone or badly executed, has the opposite effect - that performance progressively deteriorates, driven by poor customer service, staff de-motivation, decreasing investment and a degradation of the infrastructure of the organisation.
See FTSE 100
Here's what has been happening to the relationships between many large companies and their employees:
Company increases pressures on employees-----pressures mount for employee protection-------governments pass employee protection legislation-------employees use legislation to take legal action against employers---------the relationships between employees and companies become increasingly legalistic-------Human Resources functions' roles degenerate into keeping companies out of court --------- employees use lawyers to interface with their employers-----managers refer all employee relations issues to HR--------trust between companies and employees breaks down irrevocably.
That is what happened in our cases.
In the background, the CBI and some politicians carp about increasing legislative burdens.
What is a business for?
To get a feel for the underlying reasons behind all of this, consider the differences between the first two statements below and the third:
The overriding purpose of private equity deals is to maximise returns to a small group comprising equity shareholders, the managers of the funds and corporate managers.
It is axiomatic that the primary goal of a UK listed company is to be run in the long-term interests of its shareholders....Central to this goal is the need to create a financial surplus. (Hermes Pensions Management).
The happiness of its members is the Partnership's ultimate purpose, recognising that such happiness depends on a satisfying job in a successful business. (John Lewis Partnership).
In the first two examples, the primary reasons for a business are to satisfy distant financial owners with no emotional stake in the enterprise and the well-being of its people.
In the third, there is a close alignment of interest between internal stakeholders and customers - in the words of Sir Stuart Hampson, now retired John Lewis chairman: " Our shareholders meet our customers every day", because the shareholders are the 65, 000 Partners who work in the business and shared £155 million in bonus between them last year.
The John Lewis Partnership is one of Britain's most successful businesses, with growing market shares, excellent financial performance and good employee commitment. A look at the Partnership's constitution and employee conditions show that John Lewis's secret is that it really does place employees first.
Hopes for the Future
Let us hope that more companies can behave like John Lewis in the future. Let us look forward to better times when the bulk of employees are no longer fodder for the gross enrichment of a few. Let us aspire to return capital to its proper place as the servant of people and healthy sustainable enterprise.