This month Quentin Colborn addresses the issue of the employee relations legacy that is being built for the future.
In the news this week, we read of BA staff apparently rejecting a deal that would have resulted in pay cuts as part of the plan to get BA onto a firmer financial footing. They are not the first to do so, many motor manufactures and the like have already gone down this road. But where will this lead to in the future? What is likely to happen when (if?) the upturn comes?
Understandably, pay and conditions is a very emotive issue. Any prospect of a diminution is met with horror – understandably in some situations. However doesn’t this reflect our unrealism on many occasions? You poll 100 people and ask them if they think that price reductions are a good thing and probably at least 95 will say ‘yes’ – the remaining 5 may be economists! However rephrase the question and ask if the individual’s price (i.e. their pay rate) should fall and the figures are likely to be reversed.
So why is it built into our culture that wages (and associated conditions) should only ever increase? As far as individuals are concerned surely what should matter is their purchasing ability – although I grant that different individuals have differing spending patterns. Incidentally we have a similar approach to housing, any decrease in value is ‘a bad thing’ as we see houses as investments, probably more than their value as some where to live.
Perhaps more than in previous recessions we are seeing employers and employees negotiating about reducing pay as an alternative to reducing employment levels. Hence the ongoing discussions at businesses such as JCB, motor manufacturers and now BA. Added to this, there has also been a news report about a CBI suggestion that employees could be placed on what was effectively a holding position for up to six months whereby they receive an amount twice the Job Seekers’ Allowance but technically remain employees.
These are all good alternatives to redundancy and give both employees and the employer some reassurance over the future. Employees want to see some light at the end of the tunnel, while employers hope to retain a skilled workforce for when things pick up.
But what happens when things ‘get back to normal’, what ever ‘normal’ is? Within the BA context there have been clear signs from the union that the short term reduction in terms and conditions will have to be repaid at some time. I believe that BALPA, the pilots’ union, has agreed an arrangement that means remuneration will be reduced short term while providing some form of share ownership for the future – presumably on the basis of looking for shared rewards in success. All well and good, but why only now? Surely one of the lessons to come out of the current recession is that there needs to be a new sense of participation in business success – as well as failure and this means risk-taking?
Why have we allowed the concept of annual increases to continue, almost regardless of the external world as if it is almost a right to have an annual pay increase. To my mind the key determinates of pay should be individual performance (i.e. reward individuals for what they do), the market (must pay enough to keep the good people and maintain motivation) and the ability of the employer to pay (there’s no use trying to get blood out of a stone).
Too often we forget these criteria and fall back to the position of rights and expectations. Now of course sometimes applying these criteria means increases less than annually, equally I have seen occasions where employers have reviewed, and increased, pay on a six monthly basis.
Today the focus is naturally fixed on getting through, and perhaps surviving, the short term. That has to be the case, but let us also look up to the horizon and see what’s coming when the green shoots are blooming. Let’s take the opportunity to have a new approach that is affordable and rational in the years ahead.
Quentin Colborn is an independent HR consultant based in Essex who advises management teams on operational and strategic HR issues. Quentin can be contacted on 01376 571360, www.qcpeoplemanagement.co.uk or via [email protected]