In an effort to inject a little clarity into an area that has been known to generate more heat than light, MT got together in the summer with Investors in People to host a lunchtime debate for a carefully selected gathering of entrepreneurs, business leaders and some of the country's most senior HR executives. Their brief was wide-ranging and the result was a thought-provoking, insightful and, at times, controversial discussion of life in the frontline of the talent war.
RS: Investing in people is the most important aspect of any modern business. UK Plc simply must improve the way businesses invest in their people.
We are currently looking at an £88 billion productivity gap. More than 36,000 companies work alongside Investors in People (IiP) and as a result 88% of them have become more productive.
We've carried out research into 1,600 organisations and found that their net value increased by two and a half times once awarded the Investors in People Standard. The average annual profit increase per employee for IiP organisations is £505 compared with £197 for non-IiP organisations.
We need to remember that though IiP costs time and money, they are well spent. The question should not be how much does it cost to do IiP, but how much does it cost not to. In order to achieve the productive potential of the country, what alternative is there? As Charles Darwin said: 'It is not the strongest of the species that survives, but the one that is most adaptive to change.'
Change is happening fast and on a big scale. In the 1980s, people could expect to change what they did dramatically two to three times during their life. By the 1990s this had increased to five times; today it has increased to seven times. This is a huge issue for employers. In a changing world, we need to think ahead. We need to create time and space in organisations for creativity. We need to recruit people with the right attitude, not just for their skills.
MG: Recruit for attitude. Richard Reed, what do you look for at Innocent?
RR: We look for a sense of initiative, and we do recruit for attitude, not skill. Our best sales person was a professional snowboarder. People have to care and want to learn. If we can recruit people with the right attitude and the right skills, we will, but if not, we will recruit people with the right attitude.
MG: Gary Crouch, same question, bearing in mind that Unilever has 234,000 employees.
GC: Whether you're a big or a small organisation, you still want to get people who will thrive in the culture. We recruit to a competency model in all areas and have defined competencies. What we're looking for are people interested in results and stretching themselves, people who are never quite satisfied and are always looking for something extra.
PN: Recruiting the best personnel is tough. These days, good people have the opportunity to select the company they want to work with. You have to sell the company and show that you are investing in them and their future. If potential employees can see how much the company is willing to invest in them, they will be attracted to work there. I have been with Lloyds TSB for 35 years and people know we are a learning organisation that will invest in them.
MG: But if you invest so much in developing your people, how do you cope when those expensively trained people leave?
DJ: Whenever you train, you know you will lose some people. Short-sighted small businesses can use this as an excuse not to train at all. Something we are not good at as a nation is the provision of training in middle management.
We're also not good at giving bad news. For example, if a manager wants to get rid of an inadequate employee, on checking the file, he may find that all the appraisals are adequate. If we are assessing skills on a tick-box mentality, that is OK, but if we are assessing attitude, the tick-box mentality is inadequate.
MG: Getting back to retention ... Peter Meier, Channel 4 is well known as a trainer of people. Do you have difficulty with people leaving to work elsewhere after being trained?
PM: Channel 4 recognises that it is a trainer for the industry. People who leave Channel 4 will come back because we are prepared to train. We've got too few inspirational leaders in this country. Where leaders set good objectives, it really stands out. People go into the organisation knowing its values and objectives.
HS: I agree with the McKinsey attitude. If you treat people well, you will end up with fans all over the industry, who then bring you business at a later date. For me, attitude is crucial. In 15 years, Happy Computers has never asked for a qualification when recruiting.
IG: When I joined my company (MTM) 10 years ago, it had accumulated losses and I had to turn the situation around. At that stage, everybody knew there was something wrong, but nobody knew what. At my first briefing session, the truth came out and people began to rally round. I now work with the same management team, but they manage people better.
My first instincts in the job were survival, and I knew that I could not do it on my own. We had good people with no training or qualifications but who had the right attitude, and we have a good retention rate.
DJ: A word of caution regarding recruiting for attitude: five years from today, 80% of jobs will require Level 2 skills or above. Ten years from today, a person will not be able to find work if they are not skilled. So you can't ignore skills.
IG: We have spent a lot of time, money and effort on training both in-house and externally. We would rather take on people with the right attitude and train them than take on people already trained (with the wrong attitude).
DJ: The Learning and Skills Council (LSC) spending for post-16 education (not including Further Education) is £8.5 billion per year. How much do you think the private sector spent on training last year?
CB: £28 billion?
IG: £40 billion?
DJ: The private sector spending on training in the workplace last year was £23.5 billion.
PM: There's a huge desire among staff to have training. At the National Training Day, we asked all our suppliers to run taster training courses for free. Over half of Channel 4 personnel took part.
DJ: A pilot scheme was run whereby an employee could attend paid training for three hours per week at the workplace, and do another three hours unpaid. The training was pitched at basic skills such as reading and writing.
The demand was overwhelming. It is wonderful to see, but staggering to see the pent-up demands of people who felt that the opportunity for even basic learning had passed them by.
MG: Gary, your organisation was a classic place in which to learn in order to get into the industry. Unilever wrote the book on marketing.
GC: It is inevitable and healthy that while we are employing the best and most talented people, they will want to move on to other things.
With regards to training and learning that is not directly job-related, you employ the whole person, and the more they learn the bigger they become.
I recently attended a prizegiving at Lowestoft at which 150 prizes were given out, some of which were for Basic French. This is all part of people growing.
MG: With regards to arts and business, Gary, your company won an award in 2003 for its sponsorship of the Tate.
GC: We have a programme called 'Catalyst', which involves working with arts organisations to unlock creative thinking. It requires a leap of faith, because often you do not relate to the events and you are not sure where they will lead. In my experience, you suspend disbelief and trust in the project. Seeing this unlocks a side of people you did not know existed, and perhaps neither did they.
DJ: The challenge for secondary education is to get kids to play a musical instrument.
GC: Yes, and it is also about unlocking confidence. I spent the first 10 years of my career in the 1980s negotiating at loggerheads with union reps in smoke-filled rooms. Collaboration and partnership, problem-solving and treating people with respect and confidence actually does work, and means that more is achievable than in previous years.
MG: Richard, pulping fruit for your smoothies may give you a different perspective. Has your company experienced classic growing pains or a major shift in employee attitudes?
RR: Our company is still young. Five years in, we have gone from nought to between £15 million and £16 million turnover this year. We have not experienced major growing pains yet. We have gone from three to 43 employees.
We've managed to find brilliant people and keep them. We have a 0% rate of employees leaving. Our talented, hardworking, passionate team have led to the success of the business.
MG: Are you saying you have not made a single mistake in the last five years of recruiting?
RR: No, I am saying that no-one has left.
PM: After five years, having the same team may not be a problem, but after seven years it could be. Channel 4 employs commissioning editors on two to three-year contracts because sometimes it needs to refresh them. If the employee is still doing a good job, we may renew the contract, but we may need to make changes.
RR: Yes, we may need change, but we are not complacent. Acquiring a skill is 90% down to the person's attitude, whether they want to learn. We will not give training to someone who does not try. I hate it when people say: 'I can't do that because I have not been trained.' I like people to try first and see how they do, and then we will assess training needs.
DJ: I see a challenge for Innocent. The person who is good at setting up the business, the person who is good at running the business, and the person who is good at floating or selling the business all have different sets of skills. At what stage will the setting up of the business be overtaken by the running of the business?
RR: We do think about that and we are now at the beginning of stage two, running the business. I am rubbish at running companies, but between the three partners we have a wider spread of skills. We have a shared vision of where we want the company to go, but different skill-sets, and the average age of our employees is only 26 years.
MG: Phil, do you envy the intimacy of Richard's organisation? As the operations director of Lloyds TSB, presumably you don't get the opportunity to talk to and engage with everyone face to face.
PN: No, but I started out at the grassroots and interfaced with the customer - an approach I attempt to maintain, particularly since it enables me to gather feedback.
A large organisation has a more structured framework and set processes than a small one, and people believe in the structure more. This can be constraining. However, I feel empowered within my company to do what is right for it, irrespective of the rules. But in many cases a large organisation is more constrained by its structure, and rapid change can be difficult.
MG: What about rapid change when it comes to call centres and jobs going to the developing world? How do you reassure people here?
PN: You have to learn to treat people as adults. Previously, managers would talk down to them. We should talk face to face and bring them in to understand business decisions and why they have been taken. We recently established a call centre in India and closed one down in the UK. We explained the rationale to people on the ground and redeployed people.
DJ: The biggest driver of change in the workplace, particularly in the past five years, has been the increase in the skills base of the economy.
This has meant that the employer has had to treat the employee better, otherwise they simply go elsewhere. Previously, we had a society of unskilled people. They could be exploited because they were a commodity; therefore, they needed a union.
Currently, because of adult illiteracy unions are still needed. The challenge for the unions is that skilled workers do not need them because they can leave their jobs and get employment elsewhere. We need unions that add value instead of just getting more money for workers.
MG: Unions are in a bad place at the moment. Henry, you're not unsympathetic towards trade unions. Are your employees members?
HS: Approximately one third are. We encourage it. But elsewhere there are managers who don't get it. If you talk to people about their workplace, you will not find many praising the quality of the management.
PM: It's not correct to say that people are no longer exploited. The larger organisational policy is fine, but how is it interpreted down the line?
Employees are disciplined for genuine sickness, because departments may interpret policies in different ways.
MG: Have we not inherited some of the harshness of the American model?
DJ: There is a middle way. We should be able to get the best of both worlds.
This is the price to pay for inherent flexibility in the labour market and great employment figures. Nineteen per cent of the private-sector workforce are union members and 63% of the public-sector workforce. Trade unions will end up doing down the people they are trying to protect.
Nissan is fully unionised, and the union has done everything to be more constructive. The behaviour of trade unions in the public sector is against change. Public-sector unions are a block to reform.
MG: Gary, what are your feelings? Is it all upside, or are there problems that we are not address- ing truthfully?
GC: With regards to relationships between employers and trade unions in the private sector, you reap what you sow. In the private sector, it is easier to generate a shared objective. The route to effective partnership is to recognise that it is all about working together.
DJ: The private sector is less ideological. In the public sector, ideology always comes into play: should there be reform? Should people be sacked?
We've got a Labour chancellor now who wants to make 40,000 redundancies in the civil service, and I agree with Gordon Brown's view. The world has changed. Public-sector trade unions are not on the game.
HS: Half the workforce in this country work for small businesses of less than 50 employees. Managers do not know how to treat people.
RS: Trade unions are relevant to the modern workforce with regards to health and safety, protecting the individual and ensuring employability.
They may not represent the majority of workers. They may be a dying model, but where unions and employers work together constructively they are still relevant.
PN: Trade unions have to adapt to justify their continuing existence. In principle, industries should have active involvement with trade unions. They are ensuring that we are developing skills and employability.
DJ: They still have a contribution to make, but they are irrelevant to a great section of society.
PM: That is the same as media companies saying that the CBI is irrelevant.
DJ: But we don't ask for government funding. We don't request changes to the law.
IG: Of those I have met who run trade unions up and down the country, more have given constructive than unconstructive dialogue.
MG: AT MT, we have championed flexible working issues. How important is flexibility to an organisation?
IG: At MTM, we work to create a work/life balance, although as an organisation we had no title for it and were unaware that we were doing it. Initially, MTM was inflexible; one man operated one machine. Now we have a minimum of three people trained to do every job. This gives us more flexibility. We now have 38 people running 27 machines.
This solution works and is not an administrative nightmare. We encourage dialogue with employees and want them to feel able to put forward ideas.
If someone wants to change their hours, they will be asked to work it out with their colleagues and present a solution. It is very informal and probably not strictly compliant with the regulations.
PN: Work/life issues need to be well understood. Some people will look for obstacles and use these as excuses not to support them. They won't stand back and see the bigger picture. It works better in a head office environment than in a front-line environment. There is still work to do, but offering flexibility is an easy way of retaining staff.
IG: Making sure that cover is available is key, and therefore multi-skilling is essential. Flexibility works both ways. In the public sector, I was surprised to find when talking to the Government Office for the East Midlands that although it was implementing work/life it did not realise that its organisation was supposed to be seeing benefits from it.
MG: But you can't just leave it to people to sort it out with their colleagues in a large organisation.
GC: Actually, it does work in pretty much the same way for us. You ask people to suggest how the job will be done and to agree this with their colleagues. Employees have a life outside work; they are consumers and citizens as well. Relationships with employees transcend the business relationship.
PN: It's about treating people as adults, and trusting them. I have more people offering to work from home now.
IG: I agree. I have a graphic designer who found it hard to work in a factory environment. She now works from home. People are important assets.
You need to invest in and employ whole people. Sometimes you have to deal with non-work-related issues in order to invest in the whole person. By doing this, you will get a whole person back.
RS: We will be launching a revised and updated version of the Investors in People Standard in November. This will strengthen the standard's role as a business improvement tool for employers and ensure it remains relevant and attractive to organisations of all types and sizes.
MG: Thank you all for coming. I hope we will be able to do this again.
RUTH SPELLMAN CEO, Investors in People UK
MATTHEW GWYTHER editor, Management Today
GARY CROUCH HR director, Unilever UK
PETER MEIER HR director, Channel 4
PHIL NUNNERLY operations director, Lloyds TSB
IAN GREENAWAY managing director, MTM
HENRY STUART CEO, Happy Computers
RICHARD REED founder/managing director, Innocent Drinks
DIGBY JONES director general, CBI