The recession lesson: Reed research findings

In his introduction to the results of the 2009 survey, James Reed, chairman of the global recruitment firm and founder of the Keep Britain Working campaign – which aims to promote innovative ways of preserving and creating jobs – says that a sea-change has occurred in the UK workplace. He refers to a new, widespread “spirit of informed co-operation”, and talks in positive terms of how employers and employees alike have tackled the recession with new-found flexibility.

Reed makes much of the benefits the recession has laid at HR’s door. Leading their employers’ response to this recession has ushered HR professionals to centre-stage, some way from the admin-based function of the 1990s.

But it’s not all sweetness and light. Re-emerging skills shortages are expected to be an even bigger threat to long-term recovery than after the 1992 recession. The survey suggests that, come the upturn, skills shortages will open up quickly, and organisations need to ensure that they are well-placed to win the inevitable war for talent. Regions which have seen the biggest staff cuts will be the hardest hit when it comes to overcoming skills shortages as the recession lifts: Greater London, the South West and Wales, the Midlands, East Anglia, and the North East and Yorkshire.

To counter the shortages, employers are rethinking their training provision – 29% of respondents have increased their training spend. As one said: “Staff turnover has decreased within the company, so training has been instrumental in keeping hold of the good eggs.” Another reported that his company has begun training staff across functions, making it easier for them to move between departments.

Commercial focus

A participant in the 1992 survey claimed that the recession meant those in less senior roles had, for the first time, taken an interest in becoming commercially aware – something that had hitherto been associated primarily with more senior staff. This change is reflected in the increasing commercial focus across roles, perhaps most noticeably within the HR function.

In 1992, employers aggressively cut away the dead wood, dismantling hierarchies and removing, often permanently, entire layers of management. In sharp contrast, the organisations of 2009 went into the recession already leaner and fitter – job cuts have been across the board, with no one level of seniority suffering more than the next. Underlying staffing structures have remained relatively intact.

Attitudes in the workplace have changed almost beyond recognition. The aftermath of the 1992 recession signalled an end for rigid role demarcations and expectations of a “job for life”. Today, the relationship between staff and managers is more informed, equal and collaborative – employers realise that people are central to their success, and have made this the basis for their strategic response to the recession. In contrast to 1992, employers today are taking care to manage and explain necessary job losses. They have focused on retaining staff, while making efficiency savings through changing working terms and conditions.

Almost a quarter (23%) of respondents have increased their focus on flexible working, 15% on job-sharing and 11% on home-working. Staff have responded positively to the changes, accepting cuts in hours, benefits and pay in an unprecedented way.

How 1992 paved the way

  • Dispensed with traditional hierarchies
  • Ushered HR centre-stage
  • Encouraged more collaborative working relationships
  • Ended “jobs for life”.

  • Impact of recession

    The impact of the recession has varied from sector to sector. The manufacturing sector has been hardest hit, with two-thirds (66%) of manufacturers surveyed forced to reduce staff numbers. More than half (57%) of companies within the business services sector were forced to make job cuts, ahead of sectors traditionally seen as being vulnerable, including sales and marketing. While more than 40% of HR and recruitment companies had to let staff go, almost a quarter have actually increased staff numbers.

    The IT and telecoms sector has remained largely unscathed – just 19% of organisations have cut jobs, and 35% have increased staff numbers. While in 1992 the internet played little part in the UK economy, today’s organisations have been transformed at every level by technology. Continued investment in IT and communications support is now seen as an integral part of cost-cutting and efficiency, rather than a burden on hard-pressed budgets.

    But the general feeling about the state of the economy is negative. Asked what measures would be necessary were the situation not to improve, respondents predicted site closures and redundancies. Also on the cards, they said, is an end to outsourcing, a reduction in benefits, and delays in awarding bonuses. And opinion on when the recession will end was mixed. While some participants believe that the upturn has begun, others remain convinced that an end to the recession is between a year and 18-months away.

    HR leads the way

    Asked what HR has done to help organisations emerge from the recession, respondents, said:

    • “Retaining staff with key skills to build for the future, utilising the quiet period to upskill staff”
    • “Continuing to push the positive aspects of operating efficiently, making it a permanent change in mindset”
    • “Ensuring that the HR strategy is aligned with business needs and capable of amendment as business needs alter”.

    Real creativity

    Both the 1992 and 2009 downturns saw real creativity in how organisations tackled the challenges facing them. Asked for examples of effective responses to the current recession, participants spoke of greater internal communication, more flexible takes on working hours – for instance, offering sabbaticals or additional unpaid leave – and changes to shift patterns.

    The survey finds the HR function the least affected by job cuts, which contradicts the August 2009 Monster Employment Index’s findings that the HR jobs market declined at a faster rate than average across all sectors.

    According to respondents to the Reed survey, falls in staffing levels have hit just one in six HR departments, compared to almost one in three administration and operations functions. Similarly in 1992, the then ‘personnel department’ was the least affected of the business functions analysed, but still cut in 17% of participating organisations. According to Reed’s findings, the HR function has made excellent use of the years since the last survey, taking advantage of advances in IT and proving the profession’s worth in terms of responding to ever-increasing levels of employee legislation. The findings also indicate that HR has established itself as a business partner, at the heart of organisational strategy.

    This survey, of 655 organisations, was carried out in July 2009 by Reed on behalf of the Keep Britain Working Campaign.

    Survey findings












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