The HR leadership challenge: an ethical approach

The human resources leadership challenge: an ethical approach

A joint Prospect union and Work Foundation event was held on the  theme of “Human resources: Custodian of organisational conscience, deliverer of financial targets or strategic business leader?” Penny Vevers reports. Photos by Stefano Cagnoni

Eighty human resources professionals, trade unionists and academics gathered in London on Monday 8 December to discuss what kind of human resources leadership is needed for these times, and consideraudience good work event the value of a code of ethics.

Prospect joined forces with the Work Foundation to organise the debate on the contemporary role of human resources, asking whether HR is: “Custodian of organisational conscience, deliverer of financial targets or strategic business leader?”

The event was divided into three sessions, including lively debates, on:

  • what good work looks like and how is it measured
  • performance management – good examples and bad
  • trust in modern organisations.

An ethical charter

Lord Monks at Good Work eventLord John Monks, former general secretary of the TUC, opened by calling for an ethical charter for human resources.

He said that while good work is not that easy to define in general terms, “you know it when you’ve got it”.

Monks said he would like to see the UK more like countries on the other side of the North Sea, which have had high-productivity, high-innovation, high-savings economies, with good export records and very good public services.

This is a huge challenge for unions, companies, public authorities and politicians, he added.

He recalled the 1970s when industrial relations managers had wielded great influence in their companies. In those times unions had collective bargaining arrangements in seven out of ten private sector companies and other sectors were also influenced by terms and conditions in equivalent unionised sectors.

The decline of collective bargaining and union influence in the private sector has coincided with a decline in the status and influence of human resources. The financial function of companies has become more powerful, with the assumption that if you run the money side, the human and technical stuff will run itself.

A good leader at CEO level should understand the money side, but should also be strong on products and service as well as getting the best out of people. Not many CEOs in Britain can post excellence in all three categories.

“An ever widening gap has developed, with mediocre performance in so many companies. A code of practice including rules for leadership, and sharing of pain and rewards, could have an important role to play,” said Monks.

The best organisations do put people at the centre, focusing on skills, work culture, attitudes and being first rate. But the growth of insecure contracts and low paid occupations has been a feature of the labour market in recent times, with more regression than progress.

“The objective of all companies should be to be an employer of choice,” he said.
Monks challenged HR practitioners to be more assertive and re-establish a sense of leadership where people matter.

His message to companies was: “Your behaviour today will affect prospects tomorrow and the way people are treated today will affect how your firm is regarded tomorrow. Reputations are hard to build but easy to lose.”

What does good work look like?

Two human resources leaders and an academic shared their perspective of what good work looks like and how it can be measured.

Paul Tullett, EDF Energy

Kicking off was Paul Tullett, head of company employee relations at EDF Energy, who said “We live in a VUCA world – volatile, uncertain, complex and ambiguous.”

EDF Energy has various priorities and challenges across customer service and energy generation as well as the new nuclear build programme starting at Hinkley Point in Somerset, he explained.

He had looked at Prospect’s Manifesto for Good Work and tried to test how his company fitted around that model, despite the more challenging business environment it faces.

On secure, interesting and fulfilling jobs, the company has faced pressures on head count, but has managed this through effective dialogue with trade unions and a “sensible” voluntary severance package. New jobs are on the horizon, in smart metering and nuclear new build. A new campus network project and apprentice recruitment programmes are also planned.

In relation to a culture based on trust and fairness, the company works hard to be as inclusive as possible and has set targets to achieve the national equality standard, he said.

Choice and control over hours is difficult because many roles are shift-based, but the company has increased flexible working and encouraged agile working, including digital solutions to reduce business travel.

On control over pace of work and environment, people have been invited to influence the workplace design of new accommodation outside London.

On reward and balance of effort, he said a strategy is being developed and the company is mastering its performance management systems to leverage quality.

“We also regard employee voice as very important,” he said, believing participation can be achieved through its “Company Maker” scheme, inspired by the Olympics Games Makers, and other volunteering opportunities. “We have also developed a trusted relationship with the trade unions.”

All this is measured via a group-wide engagement survey.

Examples of success include a recent recognition agreement in the construction industry and a collective agreement to recruit smart metering staff without outsourcing the work.

Mark Story, Met Office

Mark Story, Met Office head of operational development, said it was important for people to understand the purpose of their job. Employees at the Met Office have a big advantage, with the weather a huge talking point in the UK and climate change a global challenge.

Employee attitude surveys seem to agree, with 95% of people interested in their work. When sent a single question: “What makes you passionate about working here?” the top answers were: weather, science and then people.

The Met Office is in the civil service top ten for worker engagement but second from bottom in terms of satisfaction with pay. However, he felt that open dialogue and constructive talks with the union, where people can openly express their dissatisfaction, are a big factor in how people feel.

Also important is people’s relationship with their own line manager.

His human resources department sees three things as important: to engage, equip and liberate people:

  • On engagement, all directors have been attending all team meetings to discuss and debate their new plan and create visible leadership.
  • Equipping people is about skills but also the tools, technology and time people need to do their jobs.
  • Liberation is strongly linked to innovation. The Met Office is starting a lab in April 2015 to bring together teams of scientists and technicians to do superfast prototyping.

Referring to Prospect’s Good Work Manifesto, he added: “Innovation is a product of inclusion and diversity. It has now proved to the business there is a pot of gold at the end of the diversity rainbow, that if you get different people together in a room you get better, different business outcomes.”

Duncan Gallie, University of Oxford

Professor Duncan Gallie, department of sociology, University of Oxford, said two criteria should be used to measure whether a job is of high quality.

  • First, good jobs should correspond to shared value priorities – linked to people being able to use their skills and initiative, job security, and further down, pay.
  • Second, a good job should meet the requirements for good long-term psychological and physical health.

Research has built up knowledge about factors like job control, managing workload and job security. The European Foundation for the Improvement of Living and Working Conditions (Eurofound) has distinguished four key dimensions of job quality: earnings, prospects, intrinsic job quality and working time quality.

Intrinsic job quality is particularly important for health and psychological wellbeing – this includes people being able to use their skill and discretion, their social environment, physical environment and work intensity.

Research has shown a strong linear increase in job skills between 1986-2012 (though also a rise in low-end jobs) and over time the divergence between men and women has vanished.

However, rising job skills have not increased job quality, and there has also been a sharp increase in work intensity, particularly marked after the recession of the 1990s and the most recent recession. Yet it is clear that “if you have control over your job you can cope much better with work intensity”.

Performance management

Stephen Bevan, Work Foundation

Stephen Bevan at Good Work eventThe business case for and the outcomes of difference approaches to performance management was explored in a session opened by Professor Stephen Bevan, director of the Work Foundation centre for workforce effectiveness.

He launched his paper Performance Management: HR thoroughbred or Beast of Burden?

Highlighting the crucial role of HR leadership, he said performance management has become a “metaphor for the challenges that the HR function faces in building and maintaining its credibility in modern organisations.”

In theory it is meant to integrate business purpose and the individual goals of each employee through constructive feedback and dialogue. But a 1991 a survey found that 97% of employers only used it for an annual appraisal linked to pay. Things have not improved in the intervening 30 years.

HR departments face a challenge to prevent a draconian approach to performance management, based on “rank and yank” or forced distribution. Performance management needs to be “properly integrated with all other aspects of people management, not least employee engagement and the importance of the wellbeing of employees”.

His new report asks: can HR play a part in that or is it just a bureaucratic functionary within the organisation?

A performance management “system” is about bureaucracy, paperwork and compliance. Instead it should a “process”, with the quality of dialogue between line managers and the people reporting to them the most important factor, Bevan said.

The Work Foundation has also found that processes linked to reward rather than development make line managers apologists rather than advocates.

Forced distribution does not promote good quality work or improve engagement or productivity. It often means that people are being put on performance improvement plans, even if they have met all their targets. He compared this approach to the policy in the Roman army of killing one solider in ten to make sure everyone was “on message.”

“At the heart of today’s debate is: what is the role of the HR function? Is it the moral compass of business, its conscience? Should it be thinking about how to mitigate the worst excesses of the minority of line managers?

“We need to get this balance right. HR needs to stand up, use its professional expertise and its ability to be the bridge between the demands of the business and the needs of the workforce.”

Paul Hucknall, Lloyds Banking Group

Paul Hucknall, HR director, performance and rewards, Lloyds Banking Group, said his organisation is seeking to change the way performance is measured, so that it focuses on people’s behaviour and not just outcomes.

“We are trying to rebuild trust with our customer base and that can only be done if colleagues trust us and how we manage their performance,” he said.

Hucknall said key risks around performance management include:

  • a structure that is top down, which can be mitigated through seeking feedback about the process and allowing people to amend their own objectives throughout the year, giving them more control
  • having to show regulators that the business is being very strictly controlled, which can create a tension for individuals having control of their own jobs
  • focusing just on outcomes, rather than behaviours, particularly in sales
  • forced distribution, which is counter to building a culture and organisation that people want to belong to. His company does look for an expected distribution, but at a macro level across 90,000 people, rather than across teams of ten people
  • process over substance. HR’s role should be to build frameworks and then get out of the way
  • the rise in job intensity and greater role agility; and the risk that part-time colleagues may be viewed differently
  • businesses not wanting to own their performance management approaches.

His company ultimately measures success by customer feedback, with data suggesting that while Lloyds is in a reasonable place, there is more work to do.


Dr Richard Heron, BP vice-president health and chief medical officer, said:
“If human resources is the conscience of the organisation, then health is maybe the conscience of HR.”

HR departments gain their credibility by understanding both the business and the employees extremely well and any performance management system should fit that.

Heron said he believed that all systems are flawed but all have some benefits. If people live by the company’s values but are not delivering results, that should be a performance issue, but where people do not live by the company’s values they probably shouldn’t be there.

He criticised large organisations who focus on dealing with poor performance at the expense of forgetting to reward the rest of the employees.

The key issue is to equip managers, many of whom have risen up technical ladders, with the skills to deal with people rather than tread on their feet.

He saw performance management systems as moving towards rewarding the “how” as well as the “what”, with safety values a good example of this.

While it pays to focus on what health and wellbeing could contribute to outcomes, this needs to be evidence-based, as many charlatans exist.

A question of trust

The day concluded with a debate on how to build trust in the workplace.

Rosalind Searle, Coventry University

Rosalind Searle at Good Work eventProfessor Rosalind Searle, Centre for Trust and Ethical Behaviour, Coventry University, said that to establish trust, people need to feel confident they are not going to be exploited by their organisation or excluded from decisions or opportunities. There are four dimensions to gauging trust, she explained. They comprise:

  • ability
  • benevolence
  • integrity
  • predictability.

Surveys have shown that higher job satisfaction leads to higher trust, with people more likely to recommend their organisation to others and be more high performing in terms of effort and cooperation.

Low-trust organisations need to work much harder at getting positive messages across, she added. Those who don’t face the risk of higher levels of theft, sabotage and litigation. People who are uncertain and worried, with their mental health under strain, are also more likely to quit.

Since 2010 her organisation has been looking at trust in relation to human resources systems. HR departments are key agents in building trust “because they help create certainty and help to build fairness and connect with people in a regular way”. Examples include information sharing, fairness in recruitment and selection and performance management.

The focus has to be not just on the systems or the content of the systems, but also how they are delivered and perceptions of justice.

In conclusion she reminded the audience of a Dutch expression: “Trust arrives on foot but leaves on horseback.”

Peter Cheese, CIPD

Peter Cheese, chief executive of the Chartered Institute of Personnel and Development, said that in times of uncertainty trust becomes even more important as an organisational asset, but it is damaged. This is playing out in areas such as stress, the single biggest cause of absenteeism.

Traditionally it is about a person’s trust in the ability or competence of their managers. But while competence matters, “benevolence and integrity are also important”.

Benevolence is centred on “does my boss care about me?” and is the strongest driver of workplace trust.

On integrity, he had lost count of the number of organisations that call it out as important without delivering.

Trust also has to work in both directions, down as well as up, he said.

“Employee voice is a very important part of trust – that means starting with benevolent managers listening to people, and not just telling them what to do. If we do not give employees voice within their organisation, they will find other channels to express their views eg the online Glassdoor public forum. This is particularly important for the younger generation.”

Human resources can either be a huge enabler or get in the way. Key principles should be about being open, transparent, fair and non-discriminatory.

Mike Clancy, Prospect

Mike Clancy at Good Work eventMike Clancy, Prospect general secretary, stressed the need for both individual and collective trust.

He welcomed the consensus during the day on many themes, but asked: “What happens when we leave the room? What do we do better to influence this agenda?”

Collective bargaining coverage by unions in both the public and private sectors has declined across western economies over the past 20 years and this is not helping.

“Unions are a vital part of civil society. But 85% of people in the private sector do not have a collective, independent voice. We are at a tipping point, where if we don’t ask ourselves what do we want in terms of a collective voice which contributes to collective trust, we will go the way of the USA.”

Prospect union represents aspirational people who care about their workplaces and will want to engage with anything that genuinely empowers them. But their experience is that while they are trusted to improve the business, they do not always have a collective say in its direction.

This contrasts with Scandinavia, where workers have a statutory right to influence decisions.

“Trust builds confidence, confidence builds people who feel successful and stable at work, and that builds aggregate demand and sustainable growth,” he added.

Clancy said companies get the trade unions they invested in. “At the heart is giving union representatives the time, credibility, development and training to be the ambassadors we want them to be.”

Useful links

Coverage on the Work Foundation website 

Coverage in Human Resources magazine