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I feel enormous solidarity with HR managers'


Prolific writer and head of The Work Foundation Will Hutton has personal experience of the kind of challenges HR managers face, says Stefan Stern

There must be days when human cloning seems quite an attractive option to Will Hutton. The morning we met he managed to fit in an interview with Human Resources magazine after his daily run and before a two-hour drive to an important meeting in Birmingham. This is in addition to doing the publicity rounds for his new book, The World Were In, leading his recently relaunched organisation, The Work Foundation (formerly The Industrial Society), and, with his wife, bringing up three teenage children (who, to judge by the revision notes posted up on doors and walls around the Hutton household, have had to face some pretty daunting exams this summer). Everybody wants a piece of him, but there is only so much Hutton to go around.

Last year was crazy, he admits. I took all my holiday bar five days to work on the book, I worked almost every weekend, and did extra long days at The Work Foundation to free up more time for writing. Surely the EUs Working Time Directive, supported by his organisation, was introduced precisely to prevent this sort of behaviour? But Huttons colleagues confirm that their hyperactive leader is almost tireless. Just occasionally you might be working late, says one of them, and you send him an email at 1am, and hell reply straightaway, saying, Why are you still up?

Its always difficult to align idealistic theory with real life. But even in the face of occasionally withering criticism, Hutton has kept up a prolific output in recent years. Most HR professionals will be familiar with the Hutton analysis of how we do business, whether from reading his Guardian and Observer columns, seeing or hearing him in one of his frequent media appearances, or studying his views at greater length in his 1995 best-seller, The State Were In.

Most famously, it was his theory of stakeholding an inclusive approach to business which for a time was trumpeted by Tony Blair (in opposition) as the Big Idea for the New Labour government that confirmed Huttons reputation as one of Britains leading commentators on work and business. Unrealistic, impractical and soft are some of the gentler terms thrown at him by his critics and opponents.

All of which means that Hutton has a particular insight into the challenge facing senior HR managers. I feel enormous solidarity with HR managers, Hutton says, because I find myself in a similar position to them all the time. In my writing I have consistently argued for stakeholding, for partnership, for information and consultation, and taking the organisational side of business life really seriously. But when Ive done tough things, either at The Observer [where Hutton was editor], or at The Work Foundation, immediately the shout goes up, Youre a hypocrite.

Youre entirely compromised, he continues, because obviously your critics feel you cant believe in the people side of business, the HR side, and do tough things. Im characterised as being either anti-business or hypocritical hanged if you do and hanged if you dont. I absolutely understand how HR people feel and the only thing you can do is take the criticism, keep saying what you believe in, keep arguing it, keep doing it, and hope that by example and by evidence and by practice people sit up and start saying, You know, this might work.

Huttons idealism helps sustain him when hes getting bad press. It is almost certainly the right approach for anyone leading a campaigning organisation such as The Work Foundation, where persistence is probably the key virtue. But Huttons faith in the potential of businesses and organisations to run their affairs more effectively stems from a straightforward analysis of how successful businesses function.

I think its comparatively easy, he says. I think successful business organisations are just that successful business organisations because if the organisation doesnt work, the business doesnt work. This is where HR has an opportunity to assert itself more powerfully, Hutton says. The challenge is to make it clear how much the organisational dimension of the business is being completely neglected.

But the paradox remains: On the one hand, anyone who argues for the people dimension and the organisational dimension of the business to be taken seriously almost defines themselves as being in the soft part of it, Hutton says, and they are characterised by their critics as incapable of being hard. Apparently the hard part of business is about macho things, masculine things, if you like, to do with the bottom line, buying cheap and selling dear, taking tough decisions, making people redundant, as if these were two mutually exclusive paradigms.

I think this will be resolved when those of us who believe passionately that the organisational/people/social capital side to business is fundamental to success, show that they are not paralysed into never having a restructuring, never laying anybody off, never making a tough decision. But when you take those tough decisions you try as far as possible to respect the integrity of the people involved. The only way to go forward is to demonstrate by example that these organisational questions have to be got right for long-term success.

This is the premise on which Huttons new book, The World Were In, is built. And it leads Hutton to take a very critical look at the current US (or Anglo-Saxon) dominance of business and finance, predicting trouble in store for America, and hailing the European approach to business as being the better option for Britain.

It is an unashamedly proselytising work. With a wealth of statistical evidence Hutton attempts to show that, far from being an efficient and effective economy, the US is beset with difficulties. And far from being sclerotic and sluggish, Hutton says, the consensual European business model has proven itself to be a highly successful long-term method of creating wealth in a socially beneficial way. Hutton questions the so-called productivity miracle of the US and highlights the lack of social mobility and growing inequalities in US society.

The implication is clear. In the long-standing British debate over the geopolitical destiny of this country not just about the single currency, although Huttons in favour of that too Britain should embrace a European future and move away from an illusory and untenable middle ground between the US and Europe. The British are so fixated with what happens across the Atlantic that they cannot see the merits of what is happening across the Channel, Hutton writes, and how it might be adapted to deliver the productivity growth that business, government and society want and need.

Huttons rejection of the US model is almost total. He writes: Corporate America now no longer principally seeks to innovate, build and marshal resources over time to create value; it tries to extract value by financial engineering. Wall Street, always an uneasy ally of US business, has become its master. Hutton holds up European success stories Nokia, Michelin, Volkswagen as examples of businesses (and theyre not soft, cuddly companies) that have rejected what he regards as a short-term, stock-market approach.

Shareholder value has long been in Huttons sights as the biggest single obstacle to good HR practice and the building of healthy organisations. With the rise of shareholder value, and all that is implied by that, everything internally starts organising itself around that overriding principle, Hutton says. HR practice becomes utterly about cost minimisation and contingent [that is, short term] contracts; marketing becomes driven by the need to get urgent hits; research and development becomes extraordinarily geared to the short term; the whole organisation gets tilted.

If youre in HR in that environment, to argue that to make this business work weve got to think in terms of the whole organisation, weve got to think medium-term, weve got to think people is so against the way the organisation has to drive itself to meet these other short-term injunctions, that you inevitably end up with a discontinuity, a tension, Hutton says.

HR could bang another drum, Hutton believes. But first it has to be heard. And in the stock-market driven world of business, HR struggles to win its case. The kind of companies that do well the sort of companies described in the Collins and Porras book, Built to Last are not built around these sort of short-term goals, Hutton says. This book should be mandatory reading for the HR community. The chief characteristic for what they call visionary companies and most boards and CEOs want to be running visionary companies is that they have what the authors call an organisational reason to be, Hutton says. This reason to be is about more than quarterly financial performance. It is territory that HR could define and occupy.

Growth may be relatively slow and unspectacular, Hutton argues. Quick fixes are probably no such thing. So it is not surprising that merger and acquisition activity also comes in for the Hutton treatment: I think it is self-evident now that most hostile M&As fail, he says. The figures are devastating. KPMG reports that 83% of M&A deals either add no value or lose shareholder value, and the reason an M&A fails is that marrying two organisations requires that the organisational aspects are taken fundamentally seriously.

You find that when company A is acting as a predator of company B, there is a lot of talk of synergies, of how the share price will rise, Hutton says. But the voice at the table which says, Unless you get the human aspect of this right, unless you get the organisational aspect of this right, this will fail, is never heard. And its only when it is heard that mergers succeed.

I am really against the hostile takeover, Hutton continues. Not that he is arguing for permanent corporate stasis. The notion you can freeze a commercial or industrial company without restructuring is obviously ridiculous; there has to be merger, there have to be acquisitions, people have to divest themselves of businesses, thats going on all the time in any kind of capitalism.

Its the hostility bit that I think you have to be wary of. If you divest yourself of a business and the people in it are unwilling to go, or if you take somebody over and the organisation that you take over is unwilling to be taken over, youve got problems on your hands, Hutton says. The only way that you make restructuring work is if all parties to the restructuring subscribe to the notion that somethings got to happen. And if you dont get that commitment its always going to go off unsatisfactorily.

And meanwhile HR is left to pick up the pieces. So many HR directors feel that they are dragged along in the wake of strategic decision-making, he says. They are the people who find out only after these decisions are made, who are left to implement the decisions, whatever they may be getting rid of people, restructuring about which, frankly, they have their doubts or, if theyd been part of the strategic decision, would have argued that it could have been done a very different way. So their self-esteem is hit, the esteem in which they are held by others is hit, and the whole thing becomes a self-fulfilling prophecy they feel marginalised, ghetto-ised, and it all goes off badly.

Hutton is speaking as someone who, as a manager, has had to drive through significant change, both at The Observer and now at The Work Foundation. Does he actually enjoy management, and leading an organisation?

I do enjoy it. But it is much harder than I thought it would be, Hutton says. Its difficult because theres no limit to it. Youve never done enough. Youve never done enough communicating, enough talking, enough engaging with the organisation. People have very high expectations of him, based on the work he has done on business management, he adds sometimes higher than the expectations that he has of himself. That [is a] mismatch I find difficult.

But I do believe that HR has to tackle the hard questions, he continues. Most CEOs that I talk to are desperately aware that if they could just enlist the motivation of the people who work for them they could raise their organisations performance, but they are at a loss as to how to do it.

The Government may be at a loss too. But as a sign that Hutton is now edging back into Labours big tent, the announcement at the end of May that The Work Foundation is to co-ordinate a 12-month commission of enquiry for the DTI into Work and Enterprise was striking. It is an ambitious programme of research and debate designed to crack the enigma of Britains disappointing productivity. Corporate supporters of this commission include Lloyds TSB, Microsoft, AstraZeneca, Eversheds, Tesco and Manpower.

Hutton is determined that The Work Foundation is going to make a major contribution to this ongoing debate. The only thing you can do in boardrooms is to continually argue your case, he says. And what were going to do at The Work Foundation is try to put the evidence together over the next two or three years.

That is Will Hutton energetic, intellectually restless, something of a hero to his admirers, infuriating to those who disagree with him. One fact remains unarguable: life is a lot more interesting with him around.