The mix of businesses around the table may have been eclectic, but the HR professionals representing them found a great deal of common ground.
The discussion, entitled ‘Retooling for recovery’, was organised by the Centre for High Performance Development to discuss the challenges faced both on industry and organisational levels and specifically by HR; and pinpointing HR’s responsibility to help their businesses get through the rest of the downturn and prepare for the upturn to come. Helen Williams picks out the highlights of the debate.
Centre for High Performance Development (CHPD)
Group people director,
HR director UK and Ireland,
Tina St Leger,
Vice-president global organisation development,
Head of leadership change delivery,
Group Organisation Effectiveness,
Senior client partner,
Client solutions director,
“These are interesting times for financial services, and particularly for RBS, not least getting to grips with having a new major shareholder – the government. We have some businesses performing extremely well, and some up for sale, or being wound down. That throws up issues around leadership, maintaining the value of assets, motivation, and retention of people.
“How do leaders lead in the new world? This question does not apply just to financial services – the things coveted in the past, such as short-term delivery, may not be the key attributes we need for leaders to retool ourselves for the future.”
“The past 18 months have been challenging for us. Yellow Pages was spun out of British Telecom in 1999, bought by private equity, and floated in 2003. Our challenges are firstly the recession – anybody in the business of selling advertising, be it ourselves, ITV or newspaper groups, are finding it tough; and secondly managing structural change. It’s nowhere near as simple as putting Yellow Pages online – it’s a new product. We have high levels of engagement, but staying engaged is a challenge.”
“Chief executive Stephen Hester [who joined RBS from developer British Land in October last year following the part-nationalisation of the bank] has led a systemic strategic review of the businesses and signalled a shift in culture. He said to each business: go away and think about how you can exist within the new group. Is it a profitable business that could be best in class? Is this something that fits quickly and easily into the operational infrastructure of the organisation? Very sensible commercial decisions have been made, and made quickly, so people at least know where they stand.”
“We didn’t say to a function ‘you must lose X% of your people’, but rather ‘go away and look at your organisation’s cost base – you know the situation and challenges we are facing, so come back with sensible proposals’. The fact we did it that way was something the trade unions appreciated.”
“I think people are taking a much more inclusive approach this time round, and not just taking the axe to the workforce to get costs down. Also, lessons have been learned that you can lose good people through voluntary redundancy programmes. There is more pragmatism in looking at where other costs can come out.”
“These times are a real opportunity for HR practitioners. I think CEOs are looking at us now and saying, where do we go when we come out of this? With every downturn there’s always an upturn. I think you are going to see top talent come through these times – those that adapt to it very well, and those that are really struggling.”
“Our research shows companies that continue to invest in their people are the ones that are able to make that transition seamlessly from crisis to recovery, and most effectively, thus becoming first movers in the marketplace on recovery.”
LONG-TERM LEADERSHIP STRATEGIES:
Tina St Leger
“A lot of drugs are going off patent in all the large companies over the next three years or so, so there’s a race to see who is going to replace their pipeline first. The agenda for big pharmaceutical companies is aggressive growth, acquisition pipelines, emerging markets, and also cost reduction. So the situation in our industry is not necessarily survival or massive cost-cutting; there’s a longer-term nature to our cost reduction.
“We are looking at what capabilities it takes to deliver on this sort of strategy. That is quite different to the type of leadership that was rewarded and recognised in the past; it is one where excellent execution capabilities are required, and about how can we speed up some of these timelines that we have in place. Rather than select individuals out, it’s more: what do we need to develop now?”
“We are in the same boat. Our share price has halved, but we are still doing quite well. There is a lot of innovation in the company, we are making big acquisitions and investing a lot in research and development – 10% per year. But the NHS, our key customer, will soon start looking very differently at the way it spends, so we are looking to accelerate plans to organise ourselves more closely around the customer.
“We have long-serving leaders in the organisation that have worked very well within the existing system, and all of a sudden we are asking them to do something different. It’s a challenge. Getting people on the bus is really hard.”
“The additional challenge of getting people on the bus is the fact that the leaders at the top are struggling to know where the bus is actually going, because of how fast-moving, complex and challenging the environment is.”
“The success of HR depends where it is positioned in the system. If HR is seen as a strategic partner with the business, then it works really well. If HR is seen simply as the provider of HR services and products, then the ability to be able to shape the ‘what now?’, even if we do know where the bus is going, is severely limited. If HR can get itself into that position, we have the best chance of influencing and using the added value we can bring.”
“If you are emerging from the downturn and you aren’t a strategic partner with your CEO, I think you have lost your way. There’s never a better time to raise the profile of HR in the organisation. Yes, do the basics and the operational piece brilliantly, but be seen as that go-to person and true strategic partner. I think that sometimes HR want it to happen, but don’t put themselves forward.
“HR is a business operation if you are not talking in the same language then you are going to isolate yourself. Virgin works really hard to create its culture, and work with its employees and create empowerment, but it is a business. If I just rock up to my group CEO’s office and offer a fluffy reason why we should do something, then he is simply not going to listen. It’s about what is the output, return on investment, and sound commercial reasons why.”
EMERGING FROM A DOWNTURN:
“CHPD sees four things that business leaders need to address be able to come out of a downturn most effectively.
- The first is around strategy.
- The second element is about innovation, and not letting it slip during times of crisis so that you are ready to come forward as a first mover in a recovery.
- The third element is quality – maintaining the quality of your product or proposition so you are ready to go
- The fourth element is managing yourself during the recession so you are the predator not the prey, so you are still around and can move quickly from recession to recovery.”
THE MOST PRESSING CHALLENGES FOR HR:
“Delivering on your brand. Anyone can come up with a sexy brand, do a great advertising campaign and get people through the door, but if there’s no honesty or clarity through that selection process, then you are going to have high turnover.
Make sure the consumer and employer brand are aligned. For example, one of the Virgin brand values is innovation. If we didn’t give people freedom to innovate, or to have their voice heard, then we would just be paying lip service.”
Tina St Leger
“There are 300 critical roles in the organisation, and every single one of them needs to have clear succession. There is an individual approach, leaders are expected to spend a significant amount of their time on talent identification and development. That is being explicitly stated, and it feels like a real change in the last year.”
“Honesty has been crucial within RBS. We could have kept quiet that we were selling businesses, but we have not taken that decision, because it creates the turmoil of people speculating about their future. Having that honesty at the front rather than death by a thousand cuts is a brave thing to do.
“We are looking again at the cornerstone people who make the business run. You tend to spend the money on the highly talented people and those with potential, but in a market like this where you are trying to drive organic growth and get a little more out of what you have got, cornerstone managers are crucial.”
“It’s about being honest with your talent. Sometimes, when your organisation changes, that high-flying superstar might not be the right person for you anymore at that time. It’s about having that honest conversation. We do take people back, which is a really good message.”
TOP PRIORITIES NOW:
“My top priority is our reward and talent strategy, given the economic climate, and ensuring it continues to attract, retain and motivate. Given an upturn is ahead, we need to ensure we retain our top talent.”
Tina St Leger
“I have three clear priorities in no particular order. One is around simplifying our business, creating a culture where there’s less bureaucracy and more simplification, with pragmatic values-based decisions and solutions. The second is around empowerment and how we continue to develop that in the organisation. And the third is around strategic capabilities.”
“One of our goals, and we measure it a lot, is ‘I can be myself at work’. My other challenges are getting everybody on the bus! We have a great opportunity to organise around the changing customer. I also need to have a very defensive position on retention. Our best people are being targeted on almost an hourly basis. So the third goal is to get better at doing the high potential and succession piece of the talent process.”
“The first priority is training ourselves to sell business leads. The second is hanging onto the top 10% of our sales people. These are the two things that really can make a difference to the bottom line over the next 18 months.”
“For us it’s how do we support clients in HR in being part of the solution, and leading the solution, as opposed to implementing something that’s given. It’s about keeping HR at the forefront and leading the change and recovery, as opposed to being something you implement afterwards, and maximising and supporting business strategy. It’s not a nice to do, it’s essential for the business.”
“There’s no question that good times are just around the corner. I think these times are building personal and professional capability in ways that few people have seen before. This is a once in a generation kind of challenge that we are facing. It’s difficult to do what we have to do when it involves letting people go, but how we do it presents challenges that will make both us and our organisations a lot stronger.”