HR professionals must embrace volatility and see ‘crises as catalysts for change’, according to CIPD chief executive Peter Cheese as he opened this year’s Festival of Work conference.
In his keynote at London’s Olympia, Cheese outlined how organisations are going through an era of exceptional change, characterised by geopolitical instability, accelerating digital change, the impacts of the pandemic and environmental concerns.
“Add to that the current economic crisis,” he said. “We don’t know what’s going to happen next. Inflation is having a huge impact on the cost of doing business. Many predicted the end of the pandemic would create huge unemployment but now we’re at a point when many of us are not able to recruit the people we need.
“We must take learnings from the pandemic – for example around flexible learning – and see these crises as opportunities to create better ways of working.”
At the same time, he added, employees have changing expectations of what organisations can offer, creating a “new deal” between employers and their workforce.
In the coming months, it would be up to managers to gain a greater understanding of productivity in a hybrid working world; how they measure output versus counting how many hours someone was in the office or in front of a screen.
“This is so fundamental to making flexible working work, rather than judging people by what we see them doing,” said Cheese. “CEOs saying ‘I want you back in the office’ just shows that your leader doesn’t trust you.”
Understanding output better could be a catalyst for increased take-up of a four-day working week – something that is currently being trialled by around 70 employers as part of a government pilot.
He added: “If we understand output and measure it as 100%, maybe we’d be more comfortable allowing people to do that in 80% of the time. [Economist] John Maynard Keynes predicted that by around 2030 we’d be working 15-hour weeks. Some of us are working 15-hour days.”
“People are at the centre of it all. If you want the best profit, best performance, you have to look after your people.”
Inflation and wages
Paul Johnson, director of the Institute for Fiscal Studies (pictured), explained the current economic context in which HR professionals are operating.
“This is a stand-out period in terms of inflation, which is at its highest level since 1980. Yet we have the sharpest drop in real earnings since the 1970s if you take into account inflation,” he said.
One of the biggest challenges for the government this year will be balancing public and private sector earnings, he added.
“This is the most difficult conundrum facing the government this year. Public sector earnings did better than the private sector during the pandemic, but have fallen dramatically behind in the period since,” he said.
“Pay review bodies are proposing a 3% rise despite inflation being at 8% or 9%. But faced with a competitive labour market and a decade of public sector pay falling behind, these pay decisions will be tricky for the chancellor and his colleagues.”
A further issue is rising economic inactivity among older workers, a large proportion of whom have exited the labour market since the pandemic. “What happens next? The inactivity rate matters for employers and public finances, and is one of the big unknowns,” said Johnson.
This year’s Festival of Work is the first hybrid version of the annual conference, with delegates able to access sessions in-person or online.