And today I focus on some research provided by er...us, VaLUENTiS as reported by Personnel Today on Friday. There is a full press release available.
My blog today is to provide some interesting insight into this headline and to focus on some real issues lurking behind this statement.
Thus my blog today is in three parts:
1 The economics
2 The HR function/profession risk
3 What can we do about it?
1. The economics
Let me first deal with some facts.
We use 'intelligence' to provide forward thinking. Forearmed is forewarned as they say. Seeing ahead means that you can take action now or that you won't get surprised. This is not about doomsday scenarios or about being gloomy - it's trying to make sense of market data and thus being aware of it. I see absolutely no sense in being in 'denial'.
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Thus on to the economic data......
The present economic signs are not good. Those thinking that this would be a short sharp shallow dent in an ever-upward march are very, very wide of the mark. There seems to be a collective denial until very recently that just maybe this downturn isn't going to be superficial. Now, I'm not going to bore you with the main ecomomic data as there is enough comment already. For an example selection amongst many, try -
Top Economist: UK will enter recession this year
Where's this long awaited recession?
Soros: Britain cannot escape US recession
And to all those who (falsely) think that we can talk our way into recession - think again
So enough on that. Most erroneously think that the last recession 1991-1993 (in the UK) was caused by high interest rates (this is a favourite of the Government and the BBC) and they would be wrong.
The sharp hike in interest rates were a factor but people forget that we had high interest rates for most of the 80s and they also soon came down again (after ejection of EU). It was driven by a loss of demand (consumption) due to the excesses of the late 80s. A real estate bubble appeared (remember the scramble because of the loss of MIRAS), some debt overhang, increase in inflation, cut in available spend (exacerbated by unemployment), oil, Iraq (part 1) and a few other variables.
Fast forward to 2008 - we have a real estate and other assets bubble, massive debt overhang, increase in inflation, severe cut in available spend, high taxation, high oil prices (it was 40p a litre in 1990), Iraq (Part 2/3), Afghanistan and Iran. And higher food/commodity prices..............
So we modelled the available data from varius sources including ONS and ran through the historical data with current employement numbers.
If, we are on the recieving end of another 1991-1993 style recession the numbers suggest that unemployment could rise by 1.5 million (taking us back to 2000-1 levels). What this means is that actual numbers in employment reduces by this amount over those three years (2009-2011). The figures are subject to some variation due to the mix of part/full-time and temp. For example, part-time was c.8% and actually increased in number during the 91-93 offsetting total full-time loss. This time around we have c. 14% part-time so it can go both ways. There's lots more data but not for here.
Our estimation of overall probability of similar style recession is currently High.
2. The HR risk
Trying to get a fix on exactly how many work in HR related jobs both functionally and as supply to the market place is notoriously difficult because nobody keeps a record.
However, by triangulating and adjusting the macro employment data (excluding self-employed) and using current HR FTE ratios provides us with a figure of around 200,000. The HR supply industry is difficult as data lurks and is hidden. For example, there are about 100,000 in the recruitment industry (REC). This number though is changing (see Hays recent announcement of job reductions last week).
Various estimates have put numbers as big as 500,000+ including those self-employed. We used a variety of data and came up with a 1 for 1 par basis (law of big numbers). In the scheme of things the headline perhaps isn't that shocking.
The big problem is whether the modern HR era, post 93 recession, (remember CIPD came into being in 1995 with ITD/IPM merger and 75,000 members) has really made any difference to HR roles - being related to numbers employed rather than any definitive value contribution no matter the circumstances. On this one we are certain that the answer is NO.
My concern is that HR staff are just more vulnerable than last time due to the number of non-jobs that have been created in HR's name. The phrase I hear most often from senior HR executives is the lack of capability in their teams. So here's a very good way to do some purging....or call their bluff.
When we first set out we thought that people management evaluation was a surefire way that the HR function could ensure its value proposition and capabilty (and execution). The fact that we are not the size of Oracle (yet) tells you another story. But we believe it leaves the HR function wide-open.
We will be very interested to see how all of the modern 'HR PR schemes' to get names in lights sustain their appeal? We will be glad if the coming downturn recession gets rid of all of the useless froth that's appeared in the last decade.
3. What we can do about it?
As a HR practitioner, make sure you're focused on employee engagement, productivity and performance in their many guises - preferably all three. If you're not - get yourself focused on them. Time to also to look at your individual competency/capability. Time maybe for upgrading your capability like the HCMI for example.
As for the HR function, undertaking people management evaluations would be a good pro-active start. I have been very concerned with some recent conversations that show no inclination or understanding of what this can do. Its like Finance Directors dispensing with the annual accounts and all of the daily reconciliations.
And I wish those who are proactive and smart the very best. To the rest, time will tell of course.......... But the era of Human Capital Management is upon us. 'HR is dead. Long live HR.'
