The Comprehensive Spending Review (CSR) signals a period of change for both private and public sectors that will last for at least the next four years.
For the public sector in particular it marks one of the biggest shake-ups seen in recent times. Private sector organisations will also be forced to take stock of how they operate in this new age of austerity.
The spending review has been seen as a necessary evil since it was announced in May. Now it has become reality and, for all concerned, the inevitable question is ‘where do we go from here?’
The CSR does have significant consequences for the field of human resources specifically. What matters now is that organisations, and their HR teams, heed the changes and prepare themselves adequately for the challenges ahead.
It’s difficult to cover every aspect of George Osborne’s address in depth here, but there are several key areas that savvy HR managers should be considering.
Education, training and skills
The Department for Business, Innovation and Skills (DBIS) faces a 25 per cent cut to its current spending. The training and support DBIS currently offers to UK businesses will be affected. Such enforced frugality will, in turn, adversely affect employers’ ability to address the skills needs of their workforce and develop the essential management skills that are needed for economic recovery.
The challenge for the HR world is to find ways to ensure that employees are still able to access as many opportunities for skills development and training as possible. A skilled workforce is essential to the economic recovery of the UK. A cut in budgets will necessitate a more innovative and creative approach to training, but, fundamentally, it must continue.
HR managers will need to look for cost-effective training options, but they also have a responsibility for highlighting the importance of ongoing training to employers. In difficult financial circumstances, employers often succumb to the temptation to cut training budgets further. They must resist.
The Government has a role to play too. CMI’s recent Economic Outlook research, which tracks business confidence among UK executives, reveals that financial aid in the form of tax breaks for skills development is still popular with the majority of managers. Employers are crying out for more Government support. In addition it’s clear that executives would welcome greater autonomy to use what little finance there is, in whatever way they see fit.
Motivation and morale
Inextricably linked to the skills debate, is the issue of low morale and reduced motivation.
We know from our own research that where opportunities for professional development are scant – as they have been throughout the downturn – motivation suffers. Indeed, our data shows that two in five employees blame a lack of progression opportunities for flagging motivation. In combination with widespread job losses, increased workload and financial uncertainty, its little wonder staff are feeling blue.
Our Economic Outlook report showed that an extraordinary 93 per cent of public sector managers agree that morale is much worse now than it was six months ago. Feelings of optimism for the next six months are also worse than ever, with levels dropping over the past six months.
Boosting morale and overall employee engagement is one of the major challenges facing HR professionals today. Appraisals are often neglected during times of high pressure, so looking at things like whether staff members are having regular 1-2-1s is key. When the pressure is on, appraisals work better if they are more formal and less frequent. Ask yourself too whether internal promotions are being publicised and celebrated. Ensuring these things are happening is a win-win situation – both the individual and the organisation benefit.
Managing an ageing workforce
The Government’s decision to increase the state retirement age to 66 for both men and women is significant in that it will have an effect on how employers support older workers.
We have known for some time that the changing age profile of the UK workforce would necessitate a response from employers and organisations, and the raising of the state retirement age is a small part of this.
HR managers need to be prepared for the fact that older staff are likely to have different requirements than their younger counterparts. Unfortunately, CMI’s recent Managing an Ageing Workforce report reveals that only 14 per cent of managers consider their organisations well placed to cater for older workers.
Action is needed to identify the needs of workers in the 60 plus bracket and to take steps to make organisations more accommodating. Tailoring training to the individual needs of older workers and introducing flexible working solutions to enable older staff to achieve a balance between their working and personal lives are just two key considerations.
Pushing for equality
HR managers will need to take a much closer interest in the personal lives of UK workers and the pressures that the spending review places on them.
With major changes to the childcare benefits allowance making it prohibitively expensive for women, in particular, to return to work full time, female workers will be feeling the strain financially. The HR world needs to do much more to support female staff and address significant issues such as the gender pay gap which still persists. CMI research revealed that the wait for equal pay could be as long as 57 years if the rate at which female salaries are increasing remains unchanged.
HR managers need to recognise the severity of the problem and challenge inequality where they can.
Petra Wilton is Head of Policy at CMI
