The state of people strategy: HR directors invest in talent but fail to predict staff grievances
David Woods, February 24, 2012
Uncertainty around the business environment has increased by 50% over the last two years, resulting in higher levels of stress, workforce discontent, absence and presenteeism (working whilst ill) among the UK workforce, according to Speechly Bircham and King’s College London.
The State of HR Survey 2012: the age of uncertainty found he issue of uncertainty is greatest within the NHS, with respondents reporting 'moderate to great uncertainty' about both the current climate in which they have to operate and the size of workforce needed for the forthcoming two years.
Longer working hours due to leaner workforces remain a serious problem. Smaller, stretched workforces are driving higher levels of stress, presenteeism, employee disengagement and staff turnover.
The situation is exacerbated by a persistent shortage of talent in key business areas, which has increased again with 40% of organisations now reporting this as an issue, a rise of 7% based on last year's survey and up 29% on 2010's results. Almost half (46%) of organisations have invested more HR time and expenditure on managing high potential employees, while 49% have done so for senior employees and 72% have done so for poor performers.
Conversely, 57% of organisations invested less HR time and expenditure on high performers and 79% invested less in non-permanent staff. Correlations show that HR resources reallocated away from poor performers and senior staff to high potential and high performers has the potential to increase employee engagement and lower levels of absence within organisations.
HR professionals are failing to predict staff grievances accurately. Grievances by employees in relation to bullying and harassment; relations between staff and management; pay and conditions; and stress have all increased year on year since the first HR survey was conducted in 2008. In spite of the sources of grievance remaining constant, it is evident that there is a mismatch between what HR professionals have expected and what has actually happened in practice.
The 2012 survey has found that 62% of organisations reported grievances filed by staff regarding their line managers in 2011 - much higher than the 45% expected by HR professionals in the 2011 survey.
Presenteeism has emerged as a serious HR issue. As more employees feel compelled to come to work when ill due to the uncertain economic climate and fears around job security, 25% of organisations have seen presenteeism increase in 2011, while 41% anticipate it will increase again for 2012.
Nearly 70% of the organisations surveyed reported that employee engagement is their single biggest HR challenge for 2012. Despite 65% of organisations citing this as the key issue in the 2011 HR survey, there has been a sharp fall in initiatives designed to drive engagement. For example, the 2012 survey has found that organisations trying to enhance employee participation in management decision making has fallen from 70% in 2010 to 50% in 2011.
But in a further blow to levels of employee engagement, over 33% of respondent organisations cite employer branding as a major issue, compared to just 31% who highlighted the health and wellbeing of staff as a key priority.
Despite the introduction of the Equality Act in 2011, more than 50% of businesses surveyed do not have any plans to monitor the gender pay gap. But this is an improvement on 2011, when the figure was 75%. In addition, only 2% of respondents stated that they have signed up to the Government's gender pay reporting initiative.
Over 40% of businesses have indicated that they plan to increase their use of temporary workers in 2012, despite the introduction of the Agency Worker Regulations in October 2011. In order to avoid breaching the regulations, employers have indicated that they will reduce the length of agency worker assignments and increase the use of fixed term or zero hour contracts.
With the introduction of the default retirement age, nearly 50% of organisations expect their workforce to age, yet less than 20% currently provide training and development for older workers.
Organisations are just beginning to see HR metrics as adding genuine value potentially helping them to understand workforce complexity and make better informed management decisions. While still in its infancy, it is apparent that organisations have a real appetite for credible, valuable people metrics that inform senior leaders and wider management.
Robert Thomas, employment partner at Speechly Bircham and co-author, said: "We were hoping to see improved confidence, increased recruitment and greater employee engagement signalling the start of a genuine recovery. Unfortunately, uncertainty about the business environment has increased and we are seeing leaner workforces, longer hours and even higher levels of stress, absence and workforce discontent. Employers ignore this cocktail at their peril. It is a sad sign of the times that redundancies no longer appear to affect employee engagement. After four years of cuts, employees seem to see this as part of their normal working life.
"With an ageing, more diverse workforce, businesses do not seem to have grasped the significance of recent changes in legislation - the removal of the default retirement age and the new agency workers regulations in particular. In addition, there still appears to be little real understanding of gender pay inequality and a lack of appetite for the government's voluntary gender pay reporting initiative or for training older workers. Organisations need to wake up to these issues if they want to avoid sleepwalking into a storm of discrimination claims.
"If there is to be a recovery, it is crucial that we have a focused, engaged workforce. Employee engagement remains the biggest single HR challenge for 2012. It is disconcerting to see that organisations are failing to deal with the disconnect between management and employees - the biggest source of grievances, closely followed by bullying and harassment. These tend to be bellwethers of employee discontent. There is also a striking mismatch between what HR perceives to be the major issues and what actually happens in practice. There is clearly a need for management, and for HR in particular, to move closer to their workforces."
Stuart Woollard, director of King's Management Learning Board and co-author of the survey report, added: "Organisations are running significant risks with their employees in allowing higher workloads to erode wellbeing. This is both counterproductive from a productivity, quality and service perspective, but is also a serious driver of employee disengagement and withdrawal. The rise in workloads and employee absence, presenteeism and stress should worry all leaders, managers and HR teams. Yet, we are seeing that initiatives to drive employee engagement have fallen significantly this year and that employee health and wellbeing is considered a lower priority than many other HR challenges. This is a potent mix and one that suggests that business and HR strategy is not focused enough on these key areas, undermining any ability to create a highly engaged and sustainable workforce that can leverage competitive advantage.
"On a more optimistic note, it is evident that talent strategies are becoming increasingly embedded and sophisticated. Findings suggest that differentiating HR resources between different employee groups can make a difference. However, HR seems to be spending a disproportionate amount of effort on both senior staff and poor performers, when ROI is more likely to be higher through focusing more on both high performers and high potential staff.
"In terms of ROI it is interesting to see the emergence of HR metrics and analytics as a true value-adding activity to organisations. This has the potential to fundamentally change perceptions of how effective HR strategy and people management can be, and refocus management activities on strategy and interventions that are better informed, relevant and appropriate for their own organisation."
A questionnaire was distributed, in November 2011, to senior HR professionals in a cross-section of sectors and organisational sizes. Over 350 responses were collected, and the data was analysed by Stuart Woollard and Mike Clinton at King's College London.