Editors Blog

The prospect of a recession appears to be quickly turning into a certainty. But should we not get used to low or no growth and the effects it could have on employment?

Anyone watching Newsnight on Wednesday night will have seen an interesting report about whether global economic growth and the fight against climate change can comfortably coexist.

We recycle our wine bottles (shipped half way around the world) and turn the heating down 1 degree in favour of donning an Aran pullover and we smugly believe we’re doing our bit for the environment. But it seems unless we start making our economics green too, we might as well not bother.

In the current media frenzy over the threat of a recession, HR must brace itself for redundancies in the coming months.

But are we all over-reacting? Are we convincing ourselves of impending doom so that it becomes a self-fulfilling prophecy?

Any downturn in 2008 is likely to mean a squeeze on HR budgets. But as the credit crunch feature in this week's Personnel Today shows, when the going gets tough, HR can choose to be either a victim or part of the solution. Perhaps it's time for the profession to stand firm against calls from the top for a headcount review and possible recruitment freezes.

So what did I learn last week? Forgive me for sounding morbid, but I learnt that sometimes life reads depressingly like an act out of Samuel Beckett’s masterpiece Waiting for Godot: "The more things change the more they stay the same," he said with an expression of deadening repetition.

So the rich get richer and those on top kick those at the bottom... as I read to my horror last week how a gangmaster, accused of "shocking abuse" against migrant farm workers, lost his licence for exploiting 50 Polish and Slovakian workers by deducting pay without any explanation and forcing them to pay to use company transport.

So for those people struggling to make ends meat, they get a nice dose of exploitation for their troubles.

Also in the news - Banks, like Merrill Lynch, Citi and UBS, continue to close, amidst the reality and spiralling effect of the credit crunch. Despite this fat cats continue to scoop the cream off the top at the expense of others. Northern Rock recently announced that chief exec of the failed firm, Adam Applegarth, was entitled to a termination payment equivalent to a year's salary, or £760,000.

We were also told last week to feel sorry for estate agents, by estate agencies, of course. OK hang in there guys, after years of silky suits and Cheshire cat grins, agents might have to cut down on their tie shopping.

The recession is now in full swing, and people are already looking for the light at the end of a tunnel, that seems to be so familiar. Why bother, when you can see your way out in the dark?

"We are all born mad. Some remain so." - I agree Mr Beckett.

Demanding a pay rise in line with inflation used to be the very least you might expect from your employer.

But research by our sister publication IRS has found that just 6.1% of pay awards are now worth more than the headline rate of inflation (retail price index inflation), which rose to 4.3% in May.

At the same time, fuel tanker drivers have been on strike, demanding a 14% pay rise and forcing some opportunistic petrol stations to raise the price of petrol to £1.99 a litre.

Whatever happened to the notion of compromise? We're all faced with rising fuel prices and constraints on our household budgets, but few of us expect our wage packets to increase significantly in the current economic climate. You could argue it's a good time for HR and reward managers to get creative and look at what they can offer staff beyond purely financial incentives.

Do this, and once the economy picks up again who knows? You might be in for an inflation-busting wage hike.

For those of you slightly bemused by the relationship between wages and the effect it has on inflation, my colleague Sheila Atwood on XpertHR's Employment Intelligence blog gives a good explanation.

Chancellor Alistair Darling reiterated his call for pay restraint earlier this week, and with inflation running at an 11-year high of 3.8%, workers and unions will be demanding higher pay deals.

But as Sheila points out, the next big round of pay deals is scheduled for January 2009, with inflation widely expected to be on a downward curve by then.

Writing exclusively for Personneltoday.com, Jim Savege, the lead on pay at the Public Sector People Managers' Association, said this week's public sector strikes demonstrated a real need for pay modernisation in local government and beyond.

But while trade unions are determined to make their point over low pay for their members, the immediate challenge is settling this year's disputes before employers can even contemplate looking ahead to 2009.

People are undoubtedly beginning to tighten the purse strings as the UK economy moves ever nearer to recession.

High street retailers have been feeling the pinch for a number of months now as consumers cut their spending on all manner of purchases, from eating out to electrical goods. The rising cost of food and household bills means there isn't much choice to do otherwise.

A report by PricewaterhouseCoopers out today predicted it would be "a survival of the fittest" among retailers and leisure operators as consumer confidence plummets and fears over job security rise.

If that indeed is the case, then the fast food retailers, ironically, seem to be shaping up as the fittest of them all.

McDonald's has revealed plans to hire an extra 4,000 staff over the next three months - its biggest recruitment drive since the turn of the century. And sales of Dominos pizza have rocketed as more people choose to eat at home rather than dine out.

Carolyn McCall, chief executive of Guardian Media Group, and David Robinson, chairman of hi-fi retailer Richer Sounds, join the CIPD's director of research and policy Linda Holbeche to speak about how companies can cope with uncertain times.

I'll be covering the speeches live - feel free to add your comments at any time, from 4:30pm today.

As the City begins to resemble Gomorrah, as the fat-cats make a quick exit saying 'Sodom... Sod 'em all' as they run off into the sunset with their fat wads, leaving twitchy traders to talk themselves (and the rest of us) into a recession, it seems its all the fault of one, unfeasibly powerful, all-knowing überbeing.

But while God undoubtedly moves in mysterious ways - and not just because He's got a bad case of haemorrhoids - it is not that non-existent deity that is dictating events and leading to the biggest haemorrhaging of jobs in the history of jobs.

The 21 October issue of Personnel Today has the theme of talent management running strongly through it. The phrase may mean many different things to many different people - 4,380,000 search results on Google is testament to that - but its importance to the HR community is inescapable.

The grim reality of the economic situation means that recruiting, keeping and motivating the best employees has never been more crucial.

Our special report on talent management provides an overview of best practice and current thinking in the field of talent management; this week's Viewpoint article is written by Microsoft's interim HR director, outlining her company's distinctive approach to the challenge; and our feature on the difficult beginnings of the National Policing Improvement Agency shows just how tough it can be to integrate and develop new staff into a unified workforce.

The thread that ties all this together is how HR professionals approach talent management as the world enters a recession. In the good times, it is far easier to get that new training programme or reward scheme signed off, or devote the time necessary to have those conversations with management and staff.

Lord Mandelson's 'efforts' to cut red tape for firms will only serve to add to the feel-bad factor we're already experiencing as we spiral into recession. Business secretary Mandelson is making a huge faux pas if he decides to delay the flexitime reforms approved at the Labour Party conference last month.

HR professionals know only too well that the business case for flexible working is a well-proven argument, and many employers have, for some time, been granting requests to work flexibly and reaping the benefits of increased staff satisfaction as a result.

Alistair Darling's plans to slash HR spending to pay for his Pre-Budget Review giveaway are ominous for practitioners in all sectors.

The UK's most powerful accountant seems to reckon he can do away with a few thousand HR professionals to find the money for a 2p-in-the-pound cut in VAT.

If you are one of 20 HR administrators serving one small public sector employer, it may be time to sharpen up the CV. You would be far from the only person in the UK searching Google for tips on writing covering letters.

No-one would suggest that all HR practitioners should be safe from the chop at a time like this - but let's just hope the profession doesn't suffer excessively.

If chief executives across the UK follow the chancellor's lead in January then we could see HR departments stripped to the bone as organisations struggle to stay afloat. If ever there was a time to prove your worth to the business, this is it.

There is more than a glimmer of hope, however, as our senior reporter Louisa found out at the CBI annual conference last week. Three hugely important business people spoke to her about the importance of the HR profession during an economic crisis.

Print off the article and include it in your team's Christmas card to the chief exec.

How will the HR profession look back on 2008? For many it will be remembered as one of the toughest yet, as the global credit crunch hit the UK hard, affecting the day-to-day operations of UK employers and the day-to-day lives of their employees.

Skills secretary John Denham used Personnel Today's first issue of the year to call on employers to make 2008 'the year of skills'. In fact, you could say 2008 has been more like the year of redundancies, with training taking a back seat and many HR teams focused on keeping their organisation afloat.

No doubt many practitioners will look to their Christmas break as a well-deserved rest, somewhat battle-scared by the events of the previous 12 months. But when looking back at 2008 later in their careers, they may well reflect that this was the year they really proved their worth to the business and earned their stripes.

Dragons' Den entrepreneur Duncan Bannatyne - the Scot with the scary voice and even scarier stare - has provided his top 10 money saving tips for employees surviving the credit crunch.

Quite why Bannatyne thinks he has the answers is another question altogether, and the tips here make me think the UK is about to enter a nuclear winter and not just a recession. Here they are:

1. Do a household audit for the New Year. It's worth going through all of your household bills - you may find there is an opportunity to save money
2. To reduce electricity and gas bills, look at them with the children and tell them you'll spend half the savings of the next bill on taking them out for a treat
3. Focus your charity donations using the Workplace Giving Scheme (why is this third on the list?) 
4. Plan a week's worth of meals, make a list of ingredients, and shop for these items only - that way, no food will go to waste and you'll be less tempted by unnecessary goodies
5. Use supermarkets' own brands for the basics rather than their premium ranges

Redundancies are difficult for employers, and one mistake may result in severe consequences, financial or otherwise, for the organisation. 

Here are some top tips from jobs board Monster and Insala, talent management software provider, on tackling redundancy situations.

• Establish an objective plan and identify your talent - first review your business goals and document why redundancies are needed for genuine operational reasons. Establish an objective plan for targeting positions to be made redundant. Determine the skills required within your workforce, then work with managers to identify areas where redundancies make the most sense, ensuring that top performers are identified, retained, and redeployed if necessary
• Know your legal obligations - review your selection criteria ensuring they are objective and non-discriminatory to protect your organisation from unfair dismissal claims. Make sure employees are terminated because their job is no longer needed versus other reasons such as personality, conduct, poor performance, or a disability. Consult legal counsel to ensure your redundancy plan is in compliance with labour laws
• Offer career transition services - make arrangements early in the process for outplacement consultancy support to begin immediately upon termination. Such services assist employees with determining skills/strengths, writing CVs, sourcing career opportunities, networking, interviewing and negotiating opportunities. Offering such support communicates a powerful message to both the redundant employees and those staying - that you care about them

With the recession biting, managers may be considering cancelling their office or team Christmas party. However, according to the Institute of Leadership & Management (ILM), it is more important than ever to invest in motivating and rewarding employees.

The ILM's top 10 tips for employers on holding a Christmas party on a budget are:

1. Have a 'kids style' Christmas party (and save yourself staff embarrassments as well as cash by banning alcohol for the afternoon) - bring in some sandwiches, crisps, cakes and jammy dodgers along with party games. You can always move onto the pub for a few drinks later
2. Have an eco party - instead of asking people to cough up for secret Santa have a swap-shop (don't just swap clothes - do books, CDs or any gifts you've received that you'd rather pass on to someone else!)
3. Take some time out of the day to celebrate success - talk about what the team has achieved and share out a big box of chocolates
4. Use your office as the venue - festoon a meeting room or boardroom, order some buffet food from your local supermarket or café and - as a special twist - get managers to serve their teams
5. Book a function room at your local pub - find a venue where they don't charge regular customers for room hire and then negotiate a deal on house wine. This will offer the team a change of scene and guarantee your local landlord a healthy bar spend
6. Remember that if you really do need to hire a venue, choosing a midweek date will reduce your hire costs as well as the food and drink prices
7. Hold a team lunch in a bring-your-own-booze restaurant and save yourself money on the alcohol spend
8. Go to www.officechristmas.co.uk and search according your budget, number of guest and location to find Christmas party offers around the country from £16.50pp
9. Team up with other organisations in your building (or teams within your company) to share costs and finally talk to the people that you usually only say hello to in the lift
10. Manage your budget by going all inclusive - they're often a little more expensive, but at least you'll know what your bill will be at the end of the night.

The gloomy message that survival is the name of the game for the HR community in 2009 is reflected by this week's special issue of Personnel Today.

Barely a day goes by without one company or another announcing job cuts or calling in the administrators. Predictions from leading HR thinkers, employment lawyers and senior practitioners all point to the fact that, first and foremost, this year will be survival of the fittest for many employers.

With so many redundancies expected in the coming 12 months - and HR staff are just at risk as other employees - many experts are sounding a warning that employment tribunal applications will go through the roof.

My colleagues at XpertHR - the leading online information provider - have been busy recording a series of short videos which look at the labour market, economic and employment law outlook for HR professionals in 2009.

In the latest video, XpertHR's group editor David Shepherd and pay and benefits editor Sheila Attwood discuss forecasts for pay trends in 2009, and examine the main influences on remuneration, including recession, competitive pressures, rising unemployment and falling inflation.

Sheila also found time recently among her frequent media appearances to visit the Bank of England to brief the bank's economists about what is happening on the UK pay scene.

The video starts with David asking Sheila to share with viewers what she told the Bank of England.

CIPD doom-monger John Philpott now reckons it's a "dead cert" that unemployment will rise above three million before the recession is over.

That's a disturbing prediction bearing in mind the official figures show that, as of December 2008, a small matter of 1.92 million people were out-of-work.

Philpott was responding to GDP figures which confirmed the UK economy is officially in a recession. "The speed and size of the contraction is heart shattering. Any relative optimism about the outlook for jobs this year and next has all but evaporated," he said.

Gordon Brown this morning warned against pessimism, but in the case of Philpott's comments I think it's a frightening dose of reality; the job cuts just keep on coming, with thousands more announced this week.  

Early estimates suggest that football clubs spent a record on player transfers - like Robbie Keane's move back to Spurs from Liverpool - during the January transfer window - £160m - up about 6% on 2008.

Spending between Premier League teams over the past four weeks made up about £105m of the £160m, according to consultants Deloitte. It added that the total spending by Premier League teams in the January window had "again far exceeded that in other European leagues".

All this in the middle of a once-in-a-lifetime economic downturn. The huge sums prove once again that football populates a different economic reality to the rest of business and commerce.

Top clubs - by that I mean the 20 that make up the Premier League - are seemingly recession-proof at the moment. A monstrous international TV rights deal, bumper crowds and lucrative sponsorship deals all add up to lots of cash floating about the beautiful game.

With the Retail Prices Index falling to just 0.1% in January, now is the time for the government to consider freezing the pay of public sector workers.

That's according to John Philpott, chief economist at the CIPD. A controversial view and one not likely to be welcomed by the public sector unions.

RPI is usually the measure which unions base pay claims upon, so it will be very interesting to see what effect this has - suddenly a 2% pay increase - derided by union chiefs last year - doesn't look such a bad deal.

Philpott says: "Near zero inflation on the headline RPI measure is not only an extraordinary occurrence. It also changes the rules of the game of pay setting. The RPI remains the principle inflation benchmark used by employers. Although pay is normally 'sticky' during economic downturns - i.e. doesn't fully adjust downwards in response to lower price inflation - a zero or negative RPI presents employers with an intriguing dilemma.

"Zero or negative inflation makes it easier for employers to present pay freezes as a reasonable option to staff and indeed increases the need to introduce freezes in order to curb upward pressure on real pay and real pay costs.

"Consequently, in the context of a deep recession and a sharp rise in unemployment a zero or negative RPI could result in the equally extraordinary occurrence of average pay increases also falling toward zero."

As the chill winds of reality continue to bite, it's interesting to see that the world of HR is gearing up for a good old bunfight over the idea of pay freezes in the public sector.

The idea that pay freezes are a good idea would come easily to a beancounter, of course, so it should come as no surprise that the CIPD's chief economist John Philpott sees the current economic malaise as the perfect opportunity for the public sector to cut costs.

Meanwhile, the unions and the head honcho of the HR in the public sector, PPMA head honcho Stephen Moir, think that pay freezes in the sector would be demotivating at a time when staff need a boost as more and more people use public sector services on account of being without work as a result of the recession.

The moral argument would suggest that Philpott is probably in the right, as to take a pay rise when colleagues are being shown the door smacks of double standards and demonstrates a distinct lack of integrity.

That's not to say Moir's position is immoral in any way, but it does have a public-sector-tinted pair of spectacles attached, and surely now is the time to be thinking of the greater good, rather than the motivational, not to say pocket-lining, needs of the few who still have jobs to go to.

But who is right?

Setting aside the green-eyed monster view of the unions, and stopping short of a TV Burp-style fist fight, perhaps Philpott and Moir should get together to discuss the matter in a mature and sensible way and try to come up with a unified way forward that all organisations - including the union dinosaurs - could buy into.

Having said that, perhaps it's time for Philpott and Moir to take off those glasses, put up their dukes and get Harry Hill to adjudicate.

FIGHT!!!!!!!

As a man of the media I always cringe slightly when a "media storm" begins.

Unless you are one or are married to one, you're unlikely to like fat cats. It's no big deal. Why the surprise?

The storm surrounding ex-RBS chief executive Sir Fred Goodwin's massive pension feeds off this hatred.

I don't think Sir Fred deserves his pension. But rather than saying "that's disgusting" or "grotesque" when hearing he's earning £13.3k per week, we need to answer some pretty tough questions...

With figures out today that show inflation stands at zero (surely, that should just be 'flation' now?), workers across the public and private sectors have to face the fact that pay freezes or cuts are likely.

Up until now it's been those in the private sector that have felt the most pain, with numerous companies implementing freezes in wages and even cutting pay and working hours just to try and ride out the recession.

But political and public pressure is growing for the public sector to share some of that pain and ease the burden on the public purse. It will be a brave government that makes that call with a general election on the horizon.

CIPD chief economist John Philpott thinks the latest inflation figures set the scene for the most unusual pay round for half a century.

"For millions of workers this will be a spring and summer of pay depression as pay rises give way to widespread pay freezes or pay cuts. This is an exceptional experience. When the UK last entered an annual pay round with zero RPI inflation, Elvis was still in his pomp, Cliff Richard was still hip and the Beatles were still unknown."