hrs hourglass issue 10

8/2/2019 Hrs Hourglass Issue 10

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An enemy

within

Page 06

Tough at

the top

Page 14

Tax and

the City

Page 22

The search for

all-rounders

Page 32

HOURGLASSHR

Issue 10 May 2008 Enhancing value through peopl

How does HR remain relevant in a changing world?


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Human Resource Services international conference, Boca Raton 2008Changing course: redefining the people frontier

Save the dateOctober 2124, 2008Boca Raton Resort and Country Club

Boca Raton, Florida

The world around us is changing at an unrelenting pacein everything from the economy to the environment. Perhapsbecause of this changeor in spite of it, organizations arecontinually being held to higher standards and held accountableto the public.

Do businesses today have the leaders they need to executeon the strategies of tomorrow? Are the skill-sets needed

to pilot the worlds leading organizations through changereadily available where and when they are needed?How will your organization arm itself for the changes thatare happening?

It is clear that in order to go from vision to execution we mustlook past our own borders for the leaders with the skills to helour businesses connect and succeed. We are changing coursstretching the boundaries, challenging past practices and thusredefining the people frontier.

In this light, PricewaterhouseCoopers will be hosting its annuaUS international human resources conference in Boca Raton

in October 2008. The conference will feature a diverse rangeof plenary speakers and will be supported by a comprehensivworkshop program.

We look forward to seeing you in Boca Raton!

To register your interest, please send an email to:

[email protected]

NY-08-0727 2008 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers glwork or other member firms of the network, each of which is a separate and independent legal entity.


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Editors Welcome Douglas Broom 0

Thought leadership without the padding

Hourglass cuts through the clutter to reach the key issues.

As reverberations from the credit crunch continue

to be felt across the business world, with every

development we realise that few of us are immunefrom its effects. The consequences present particular

challenges for HR. As Alex Blyth outlines on page

26, money worries are becoming a major cause of

stress-related absences from work.

The question is how far businesses should become

involved in making sure that their employees are in

a fit state, emotionally and physically, for work. The

sudden interest in wellness at work programmes

suggests that the HR function is at the forefront of the

fight against stress.

This is just one area that amply illustrates the new demands placed on the HR function

in a fast-changing world. The role that HR will play in the future is an issue that is

preoccupying many a HR professional at the moment, as our regular columnist, PwC

global leader for HR services Michael Rendell, addresses on page 4.

HR undoubtedly has much to contribute in these turbulent times and should be one of

the first in line providing advice on future strategy. But as Michael Rendell points out, HR

is facing a perception problem. HR professionals have the skills and experience to help

in times such as these and should be an integral part of the business. The challenge for

HR is how it can communicate that it deserves its place at the strategic centre of the

company and has much to contribute.

We hope you find this issue of Hourglass a stimulating read. We are always delighted to

hear feedback from our readers details of how to contact us are on page 37.

Douglas Broom

Chief Editor

Editorial OfficesHourglassCroner145 London RoadKingston-upon-ThamesSurrey KT2 6SR

Chief EditorDouglas [email protected]

Editorial CommitteeMichael Rendell, Sandy Pepper, Faye Graham,

Andrew Smith and Janet Davies(Human Resource Services, PricewaterhouseCoopersDouglas Broom, Liz Fisher(Croner, Wolters Kluwer)

Commissioning EditorLiz Fisher

Sales

Mark Cleeve

DistributionBarry [email protected]

Design and ProductionPhil George

Published byWolters Kluwer (UK) Ltd145 London RoadKingston-upon-ThamesSurrey KT2 6SR

Tel. 44 (0) 20 8247 1372Fax. 44 (0) 20 8247 1388

Publication SponsorPricewaterhouseCoopers Human Resource ServicesPlumtree CourtLondon EC4A 4HT

Tel. 44 (0) 20 7583 5000Fax. 44 (0) 20 7212 2040

To comment on this issue of [email protected]

To request additional copies of [email protected]

Wolters Kluwer 2008


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Contents 0

18

26

29

Looking forward

How can the HR function stay relevant in a changing world?

Michael Rendell

HR risk

The Socit Gnrale affair has once again highlighted the risks companies face from their

own employees. How is the HR function responding?

Philip Smith

Called to the bar Karen Caddick The hospitality and beverage industry demands a steady flow of quality talent. The HR director oPunch Taverns explains how the group meets the challenges of supply.

Hamish Champ

Succession planning

The best succession-planning strategy encourages the steady identification of talent at all levels

throughout the organisation.

Mick James

Leadership

Businesses are increasingly turning to other disciplines to learn what makes a good leader.

Liz Fisher

Tax and reward

Recent changes to the UK tax regime for non-domiciles have shown how politics can affect

long-term HR strategy.

George Yeandle

Stress at work

Money problems are the most significant cause of problems at work. Should employers do

more to improve their workers financial education?

Alex Blyth

Employee wellbeing

Illness and stress-related absence costs business billions of pounds a year, which is why more

companies are turning to wellness programmes.Beth Holmes

Governance

The responsibilities and demands placed on non-executive directors has increased dramatically

over recent years. Is the result a shortage of suitable candidates?

Clare Gascoigne

End notes

The latest HR publications and research

Liz Fisher

Keeping in touch

Description Pa


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opic author

Looking forward Michael Rendell

Reality checkWhat can HR do to bridge the gap between its perceived profile, reputation and relevance and the function it actually fulfils? How doeHR remain relevant in a changing world?

04


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0

At the end of March, PricewaterhouseCoopers hosted its second HR

conference in Rome for people managers from all over the world. Our

theme was Keeping HR relevant in a changing world, and we explored

the important challenges and opportunities for our industry over the next

few years.

The pace of business change is unrelenting and the challenge of leading

and managing people in a global environment has never been tougher.

Yet some commentators are question ing the role of HR and its abi lity to

influence and shape the people challenges facing businesses now and

in the future. How does HR become more relevant to the business it

serves? Can HR truly take the lead in driving the people agenda?

We have come to expect people issues to be high on the CEOs agenda.

Our 11th Annual Global CEOsurvey showed that it was the number onepriority for nine out of 10 CEOs. 65% of CEOs said that an inability

to access the right skills was the biggest barrier to their business

achieving success, but we were surprised that only 43% had confidence

in their HR function to compete effectively for this talent. The questionfor us is, how can HR become more relevant?

Before the conference, we asked the delegates some searching

questions to kick off the debate. For example, what more could HR do

to attract new talent to the profession? More than three quarters of

respondees thought that raising the professions reputation and profile

would address this. What is the single most important challenge for HR

leaders over the next five years? Attracting and retaining talent was the

overwhelming response.

So, what does the future hold and how can we position ourselves to

take advantage of the changing environment? At the end of last year,

we looked at the future of work and what it might be like in 2020.

In one scenario, traditional HR departments become more and moremarginalised. Nearly a fifth of the delegates at our conference believed

the HR function would be defunct by 2015, yet nearly half believed there

would be a chief of Human Resources, or a similar role, by this date.

What can HR do now to bridge these potential gaps and remain

relevant? Where some people see gaps, others see opportunities. HR

needs to become more focused on the external market, particularly in

the current economic climate. HR teams should be discussing with the

board how they might be affected by the downturn. How will they retain

their talent if things get tough?

Beyond the current economic turbulence, in some markets there is also

the changing nature of global economic dynamics. Traditional routes

for capital flows are being diverted or even reversed. China is now

a major investor in the West, not a low-cost production solution. Al

this irrevocably changes the way organisations manage their peoplfrom where they get their people from, to the terms on which they

engaged.

In an article on succession in this issue, Laurence Barrett of Prude

plc makes the point that HR will be invited to the board table when

HR is recognised and valued for its role. When the HR function wor

effectively in its entirety, the questions around its value disappear.

The challenge is for HR to believe in itself as an integral part of the

business and advise the board in the areas it understands better th

anyone else.

Michael Rendell is global leader of HR Services at PricewaterhouseCoo

HR needs to becom

more focused the external markparticularly

the current economclimate. HR team

should be discussiwith the boa

how they migbe affected by t

downtu


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opic author

HR risk Philip Smith

An enemy withinA rogue trader at a French bank has sent human resource managers running to make sure their own systems and policies are in

place in the battle against fraud. But will they ever win the fight?

06


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0

History has a habit of repeating itself. When news broke about a 4.5bn

(3.8bn) rogue trader scandal at Socit Gnrale, commentatorsimmediately compared it to the collapse of Barings back in 1995. In that

case, Nick Leeson famously broke the bank betting on a recovery in the

Japanese stock market, losing a cool 827m.

Amid all the comparisons made between the two cases, one fact stands

out both Leeson and Jrme Kerviel (pictured, left), the alleged culprit at

SocGen, had detailed knowledge of the so-called middle and back offices.

In Leesons case he was in charge of both the front office, where the tradesare made, and the back office, where they are checked. Although this was

not the case at SocGen, Kerviel had had considerable experience in the

back office before moving into a trading position.

Following the collapse of Barings, and other financial scandals, moves were

made to ensure the separation of front and back office, alongside numerous

other controls, but with the passing of time, memories fade, and fraudstersspot their opportunities. In the immediate aftermath of this latest scandal,

HR functions in the financial services industry are working alongside theirinternal audit and control departments to ensure the opportunities are

closed down.

One immediate action for HR departments in many financial services

companies was to ensure traders were taking time off at SocGen itemerged that the man at the centre of the scandal had only taken four days

off in the previous eight months. Many organisations, if not all, will have

a policy stipulating that traders should have a two-week break from the

trading floor. The immediate response in the weeks after Soc Gen was toask whether this policy was being properly enforced. A key reason behind

this is that, with a fraudster out of the office, colleagues would be in a

position to value and check their outstanding positions.

It might seem obvious, but such a simple precaution can pay real dividends.Systems can be put in place to monitor not only the amount of holiday

taken, but also when it is taken. A red flag will wave when a trader, or anyother person in a high-risk position, takes their holiday but never fails to be

at their desk on a Monday morning.

This, of course, is just one simple step out of many steps human resources

professionals can, and are, taking to tighten procedures. Which employees

can gain access to which systems is also on the HR agenda, with many

HR departments going through a reconciliation process to understand whoshould have access, and who has.

Sharing passwords is a classic risk, as is the risk posed by temporary staff,

something that has been heightened during the current skills shortage when

staff might not be vetted as thoroughly as they should be. A recent surby Websense, an internet security company, found that nearly nine out

temporary staff had the same access to documents on the company sy

as permanent staff, 62% had used someone elses log-in details and 4

were able to connect a personal USB device such as an MP3 player ormemory stick to their work computer.

The risk of sensitive material being stolen should always be high on thlist of worries, and there are numerous cases where carelessness in th

way data is handled has placed millions of records at risk. This might

seem some distance from the financial scandal at SocGen, but the risk

are just as strong both financial and reputational and made more sby increasingly imaginative uses of technology employed by determine

fraudsters.

This is a two-way street, though, and technology can also be used mo

effectively in the way employees in high-risk areas are monitored. Hi-t

fraudsters demand a hi-tech response.

Phil Beckett, a director at Navigant Consulting, an international forensi

accounting and business advisory consultancy, says there are a numb

of areas where technology can assist in preventing and detecting fraud

First is data analysis, where one looks at the outcome of a fraud and tlooks for traces of it within the data held by the company duplicate

payments, ghost employees and suppliers for instance and how muc

they statistically vary from the average. Clusters and patterns can alsoidentified alongside neural networks, which pinpoint relationships bet

sets of data. Patterns identified from known cases of fraud can then b

applied to future data to give an early warning of problems. The patte

may be good, or they may be bad, but for every cluster there are two tyou need to think about, says Beckett. Why is there a cluster there a

why are there outliers to that cluster?

Technology allows this method to be applied to communications as wetransactions, according to Becketts colleague Andrew Durrant, manag

director at Navigant. You can now mix voice with emails and transact

to look at clusters and outliers. This forms part of the traffic analysiswhere you not only look at content but also at communication patterns

between people and organisations. This will also cover instant messag

and mobile phones, often the fraudsters favourite tools, as content

monitoring in the past was more difficult.

Moving on from this, it is now possible to have live monitoring of netw

which are then subsequently analysed with alerts put in place, says

Beckett. As soon as something unexpected happens, then it triggers investigation. Beckett adds that some of the most sophisticated softw


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will combine all of the above with external information sources news

websites, for instance and again look for correlations. But, says

Beckett, the tools allow you to do this, but it doesnt solve anything. As

Durrent says: Before you do this, you need to identify where your high-risk

areas are.

There is of course a danger that over-reliance on technology can create a

Big Brother atmosphere and there has been talk of patent applications

or software that will monitor, among other things, an employees every

heartbeat. Such innovations might seem over the top, but could be

employed if an organisation can see a commercial benefit in doing so.

A less contentious option is to look at some of the softer areas to help

identify potential problem areas. Staff satisfaction surveys, for instance, are

coming under closer scrutiny.

Organisations are now looking into predictive analytics, looking into areas

such as employee survey results to see whether they can be a precursor to

risk occurring, says Christopher Box, a director in PricewaterhouseCoopers

financial services human resources department. Are there correlations

between lapses in security and employee survey results? And once these

correlations have been identified, HR needs to act on them. You need to

equip your managers with the skills so they can understand their staff, so


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0

There has been talk of patentapplications for software that will

monitor, among other things, anemployees every heartbeat. Suchinnovations might seem over thetop, but could be employed if anorganisation can see a commercialbenefit in doing so.

that they have a certain level of emotional intelligence. It is about giving

people the skills so they can sense and understand certain situations, Box

says.

Managers and their organisations need, however, to be able strike a balance

when monitoring their employees. As PwC partner Richard Phelps says:

Most organisations at the moment are striving for staff to be engaged

but it is a fine balance with the risk scenario, where you do not want a

huge financial loss because you gave someone too much freedom. Phelps

stresses the importance of the quality, rather than the quantity, of controlsthat are put in place. SocGens own internal investigation into its losses

revealed that some 75 warnings had been issued over the conduct of its

trader, but that these were either ignored or not considered important

enough to warrant action.

Although much of the attent ion has focused on the role of internal controls

and systems, Box believes HR has an important role to play: I would argue

that if there was more effective management of an individual, then the

manager of that individual is going to have a greater opportunity to stop

that person from doing something they shouldnt be doing. Box says that

doing this will not guarantee success against a fraudster, but you will have

a better chance of succeeding if you do and a better chance of preventing

history repeating itself.


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opic author

Profile Hamish Champ

Called to theAfter a varied HR career that has ranged from banking to broadcasting, Karen Caddick, HR director of Punch Taverns, explains theunusual challenges of the hospitality industry.10


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These are challenging not to mention trying times for the UK pub

industry and its customers. Alistair Darlings debut Budget, which

introduced bigger-than-expected rises in alcohol duty, came at a time when

confidence across the hospitality industry was already at a critical low. Bad

weather effectively wrecked many a pubs summer last year, while the

effects of the now UK-wide smoking ban throughout the cold, dark winter

months are being felt in many establishments throughout the country.

Pubs that have previously relied on smoking customers are reporting

declining sales as people stay home and drink beer, wines and spirits

they have bought cheaply from their local supermarket. Meanwhile, those

who do visit pubs must now pay more for the drinks they buy. Economic

uncertainty is denting consumer confidence, and subsequently discretionary

spending on leisure pursuits is under greater pressure than ever. Pubs, to

put it mildly, are finding the going tough.

In such an environment it becomes even more crucial to ensure that a

company has the best talent at its disposal. Recruiting the best people to

run its pub estate, to manage the link between head office and its pubs, andoversee the whole company generally requires considerable effort.

Punch Taverns is the UKs largest owner and operator of public houses, and

knows only too well the stresses and strains that affect the industry.

Formed through the purchase of a portfolio of nearly 1,400 pubs from the

Bass Lease Company in 1997, the group has since grown to become a

publicly-listed business of some 8,500-odd pubs, around 7,500 of which

are operated by lessees effectively independent businessmen and women

who pay rent to and buy beer from Punch in return for operating the pub as

their own enterprise while the remaining pubs are managed operations,

whose staff are directly employed by the company.

Karen Caddick has been Punch Taverns HR director for 18 months and ispart of a team determined to create the best environment for all staff across

the company, whether it be a new member of bar staff at one of the groups

managed pubs found via an employment agency, or a new finance director

sourced by one of the countrys leading head-hunters.

The challenge of finding the right person to run a Punch Tavern pub should

not be underestimated, says Karen. The right candidate has to be good at

running a customer-facing business, a task that requires a whole range of

skills and responsibilities.

On the leased side of the business, new operators are found through a

number of methods, from advertising through to word of mouth. Being the

size we are we get a lot of interest from people. A lot of people come to us,

wanting to run one of our pubs, she says. Punch operates a Recomm

A Friend system, whereby those putting forward someone who succes

becomes one of the groups lessees receives a 500 reward. It helps

reduce agency fees, says Karen. Recruitment agencies are very good

put forward good quality people, but it can be costly.

Finding the right person to become a lessee is only the first step.

Then comes training in all aspects of running a hospitality business,

encompassing the serving of food and drink, health and safety

requirements, law, accounting and financial well-being and so on. We

offer training packages that are designed to bring out the best in a les

entrepreneurial side, such as Profit Through Beer or Profit Through F

says Karen. Beyond the tie, whereby lessees are required or tied

buying certain products from the group, these operations are independ

of much of the groups head office control. Lessees have recently beco

rebranded within Punch itself from retailers to customers. Designed

bar

CV Karen CaddickPrevious career

Karen began her career with Royal & Sun Alliance in 1993. She perfom

several roles while with the insurer, including head of HR for its divisio

More Th>n. She moved to Barclays, where she was head of Employee

Relations and HR Policy, before joining Channel Five Broadcasting as h

of HR. Before joining Punch Taverns in October 2006, Karen was Globa

Director at The Financial Times Group.

Qualifications

Karen is a graduate of the Chartered Insurance Institute and a Fellow o

Chartered Institute of Personnel & Development.

She says:

Our employer brand is really important in attracting key people, and it

important that we focus on building our profile as an employer. We are

doing a lot internally to ensure that we build our employer brand throu

external PR activity, and we also make sure that all of our employment

literature is clear about what we stand for. That is a key part of our HR

strategy. Awards are also very important to us, since again they enhan

the perception of the company with public.

The smoking ban and increasing food agenda has help to improve the

perception of the industry. That, and the fact that Punch has a Leased

a Managed arm means that the career opportunities we can offer to pe

are very broad. We need to sell all of this to increase our attractiveness

talented people.


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remove the tenant/landlord tag, with all its connotations, the move, Karen

says, aims to give lessees the feeling that they are just that: customers of

the group.

Away from the relative freedom of the leased business, the managed side

of the Punch the Spirit estate has tighter structures in place for its 700-

plus pubs.

Recruits to run the managed pubs are sourced through a core of

employment agencies and, intriguingly, are sometimes poached from rivals

We keep our ears to the ground, and if we hear of someone who is running

a rival companys pub really well we will sometimes approach them to see

if they would like to come and work for us, says Karen. Inevitably, the

company also sources employees from overseas. For our Managed estate,

she adds, we recruit a large number of people from outside of the UK. In

fact, in key areas such as London they are an incredibly valuable source of

labour. We now provide language training to help people to improve their

English.

Punch also monitors other sectors in the industry, for example hotels and

restaurants, to unearth good quality staff. The group applies benchmark

criteria against rival companies to ascertain the right level of pay, bonuses

and benefits for its employed staff.

As with the leased estate, training is a vi tal part of driving the standards

of the business higher all the time. Our Spirit Academy, based in

Northampton, raises the profile of our training across the managed estate,

says Karen, and is all about launching career paths, where possible, acros

the business. We look at the optimum structure for each managed pub

salaries, career progression and so on.

Further up the chain of command are the Business Relationship Managers,

or BRMs. Charged with overseeing the business needs of a number ofleased pubs each, these individuals are often found through traditional

networking opportunities, while the groups regional operations directors

can be found this way or via head-hunters.

But its a small world, relatively speaking, and finding the right person from

within the industry can be tricky. Were all fishing from the same pool

for these people, says Karen. We often try to get a fresh perspective by

looking outside the pub trade when were trying to find a suitable applicant

to fit a role. That said, Punch rarely takes chances: In both the Managed

and Leased business we use the Gallup SRI tool as a way of screening

potential managers to ensure we get the right talent in. We have profiled

what great looks like in these roles, and so we use the SRI assessment

tools to narrow down the talent pipeline to make sure we hire great people


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As with any organisation, sometimes the things that seem the most obvious

to maintain are the hardest to keep tabs on. A lot of training is easy to

evaluate, its quantifiable through results, says Karen. More difficult

are things like leadership issues. We evaluate our senior leaders with

twice-yearly personal assessments, and we have dedicated leadership

programmes in place to support and assess these individuals.

Part of this has been driven by the changes Punch has experienced as

a company in recent times. Weve gone from acquiring, acquiring,

acquiring, to being a business focusing on organic growth while getting

a grip on our cost base. We need leaders to shift up a gear and see the

market differently. More accountability is essential, she says.

But what of the top of the companys tree? Some of Punch Taverns senior

management are, after all, among the best paid in the sector. When it

comes to executive packages we benchmark against FTSE100 companies to

attract the right calibre of person, says Karen.

When it comes to hiring in the executive area, Punch looks for people

who can plug gaps, as Karen puts it. It seems that the process can be

exhaustive. With Phil Dutton [Punchs recently-appointed finance director]

we did head-hunter interviews, and Giles [Thorley, Punchs chief executive]

and I interviewed him. Then we got an occupational psychologist to profilehim. We wanted to ensure he would fit the role. Our culture is special; it

emanates from the senior team, and whoever joins us at a senior level

needs to be in tune with that.

Dutton hadnt worked in the pub trade before. He had previously been

finance director at budget clothier Matalan and before that had worked at

supermarket chain Asda. Karen herself had had no experience of the pub

sector, having worked in newspapers and television industries before

joining Punch.

Were looking for people who have the ability to work in the industry and in

our company, she says. It doesnt matter if theyve not worked in the pub

sector before, so long as we believe they are the right person for the role.

Reward packages and bonuses at senior level are linked to financial

performance, while discretionary long-term incentive plans are assess

by benchmarking against a number of listed companies, namely 20 lar

and 20 smaller than Punch in terms of market capitalisation. The long-

term incentive plan, says Karen, is an important retention tool: Like m

businesses, the rewards are high for exceptional performance and they

focus the mind on delivering outstanding results. On top of that, they a

built to deliver over a three-year period and people dont retain them if

leave. That increases the reasons to stay with the company.

While retaining many of its executives for lengthy periods, the group

saw two senior departures last year that demanded a dip into the

senior management pool as well as a rejig of the corporate structure to

accommodate new people and new talents.

But stability is key, says Karen. As we hire people we ask ourselves Ho

long will they hang around? When we see candidate for senior roles it

becomes apparent. We can sense their drive, their ambition.

People can also move sideways at senior level, and far from being a pot

negative, this can add value to the business, suggests Karen. When Ad

Fawcett [Punchs former chief operating officer] left the business last ye

Deborah Kemp moved across to run the operational side of our leased pbusiness. Deborah started her life at Punch on the property side, doing d

and now shes overseeing the leased estate.

So what of the challenges facing Punch Taverns? Crucially its the shift in

culture, from an acquisitive group to one focusing on growing from within.

Karen again points to the slowdown in dealmaking. We could do other de

she says, alluding to a proposed merger with rival managed pub operator

Mitchells & Butlers, which at the time of writing Punch had walked away f

But for now, like I said, we are focusing on driving organic growth.

Were looking for people who have the ability to work in the industry and in ocompany. It doesnt matter if theyve not worked in the pub sector before, so

long as we believe they are the right person for the role

Hamish Champ is business editor of The Publican.


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opic author

Succession Mick James

Tough at theGood succession is about much more than filling the top job; the best systems encourage a steady identification of talent at all levels.14


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Poor succession planning costs money lots of it. A 2005 survey carried

out by the Centre for Economics and Business Research suggested that

poor succession planning had wiped 2bn a year from the stock market

value of FTSE 350 companies between 2002 and 2005. Companies

with clear succession plans outperformed their rivals, not only in the

immediate aftermath of a senior departure, but in the longer term as

well.

Yet many companies s till find themselves unprepared for the unplanned

departure of a senior figure. A lot of things have come through that

work against succession planning, says Jonathan Krogdahl, managing

consultant heading the consulting sector team with Futurestep, a

division of executive search firm Korn/Ferry International. Many UK

companies work on a very short-term and immediate basis compared

to, say, Japanese firms that think about succession planning in terms of

the lifecycle of the firm, says Krogdahl. Theres a perceived need for

flexibility, and an expectation among Generation Y that they will need to

change jobs to get to the next step.

Against this background, the costs o f poor success ion planning are often

overlooked. Theres a loss of intellectual property, damage to client

relationships and to the bonds that hold teams together, says Krogdahl.

Firms need to find a way to make people stay longer, but they put off

having those conversations until theres a sense of urgency, someone

says theyre leaving and they have three months to fix it. But most

people who accept a counter offer leave within three months anyway.

Good succession planning not only saves on recruitment costs but

protects companies against the vagaries of the war for talent. In China

the organisations that are doing better are those that have developed

people internally rather than just stuck expats in, says Laurence

Barrett, director of group resourcing and development at Prudential plc.

In Asia salaries are becoming highly inflated, but you can pay peoplereasonable salaries and they will stay if they can trade off career growth

and development for cash.

The more senior the position, the greater the risk of external

vulnerability. A vacancy at the top is a classic sign a company may get

taken over, says Paul Harper, chairman of the Association of Executive

Recruiters and head of Paul Harper Search. Thats when youre

exposed, when you can seem like a natural target.

Even if an immediate successor is not appointed at once, having a

strong bench and a good acting CEO can be enough to manage the

transition if it has been planned in advance. The problem with

appointing a headhunter once someone has left is the time it takes,

says Harper. People underestimate the time it takes to get the righ

person for any of their key roles. Youve effectively got to pluck out

someone who is at the top of their game; getting the best versus th

second best can make a lot of difference at this level.

This doesnt necessarily mean that an external search is in itself a

of weakness. Often people will use it as a benchmarking exercise

against the internal candidate to demonstrate to the world that it is

the right one, says Harper. Often when theres change at the top

intention is to change direction to get different thinking or new blo

but if you dont have anyone in mind you are massively exposed.

Many companies simply dont have the information to support prop

succession planning. We look at succession planning as the starti

point for talent management, says Grant Crow, UK managing direc

of talent management software provider Stepstone Solutions. A ty

client will be an international player, which might run the SAP HR s

in Europe, and PeopleSoft or Oracle in the US. How do they start to

an overview of that talent and the aspirations of that talent base?

Crow says that UK organisations need to be a bit bolder in their

attitude to talent management: Many management teams have no

even defined what they mean by talent. Or theyve gone down the t

in-the-water route but people dont know they are in the talent p

Crow is strongly in favour of moving towards a self-service appro

to succession planning, in which people can nominate themselves

the talent pool to be assessed against explicit criteria. Its a view t

endorsed by the Chartered Institute of Personnel and Development:

Succession planning should not necessarily be restricted to the to

roles, but should be extended more widely to look at the career jou

of more junior people, says Vanessa Robinson, adviser on organis

and resourcing at the CIPD. You dont always have to have a verysophisticated system, but you have to be active both to nurture peo

and to see it matches their own aspirations.

Transparent processes and self-nomination make it easy for manag

to have open conversations with their staff and for individuals to se

where they might need to change or think differently about their ca

path. People can waste a lot of effort second-guessing the criteria

needed to progress, says Robinson. However, intervention may als

be necessary, for example where firms are looking to build a more

diverse management team. Certain groups of individuals may self

select themselves out, Robinson adds, so it needs to be done wit

management support, so you can say to people, why dont you put

yourself forward.

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Succession planning also needs to be considered in a more flexible manner

han simply lining up individuals for roles. More and more people are

not looking for someone for a specific job but for a broader role, for types

of behaviour and competences, says Robinson. You need a number of

people you could possibly put in different roles if the external business

environment moves on. If you start to plan five years ahead, by the time you

get there the organisation will be looking very different.

According to Robinson, one of the problems with succession planning, and

development work generally, is a lack of consistency through the employee

ifecycle.

You get a lot of development at the graduate level, and then it comes back

at a senior level, she says. Its the people in the middle who get less

attention.

Now that the job-for-life culture has been all but eradicated, this coincides

with the period when people are developing their careers by moving jobs.

But even leavers can be included in succession planning. Korn/FerrysKrogdahl points out that many professional services firms such as lawyers

and consultants have become adept at placing and tracking their alumni: If

he career path is away from what we do and towards the client, then why

ry to delay the inevitable? If you let them go in the right way you can have

hem back at some time later on.

While HR can advertise the benefits of succession planning, it is not

necessarily something that can be forced on an organisation. You cant

mpose it on people organisations are complex, says the Prudentials

Barrett. I see this as a line manager responsibility to develop a succession

plan. If as a manager I dont know the market well enough to recruit talent,

f I cant create opportunities for my people, then I havent done my job very

well.

The role of HR is much more about having the expertise to support and

educate line management. Its not a question of saying to your top people

you must go through this process, but of getting to the situation where the

CEO says to you I need your advice, says Barrett. HR doesnt need to

ight to get a seat at the top table we do good work and we get invited.

The important thing is to avoid overprocessing succession management.

Most of our talent processes are very light, says Barrett. To devise a

succession plan is a no-brainer. The trick is to turn that into real outcomes,

he real issue is the quality of the conversations you have with people.

Nor should people see succession planning, or even achieving a particular

atio of internal to external appointments, as a goal in itself. Succession

planning is not a silver bullet, says Barrett. If you choose to go internally,

thats not a problem, but equally if you choose to go externally to refresh

the organisation, thats equally not a problem. The point is whether you are

actively thinking about and caring for a pipeline of talent: if you do that you

need to have a conscious strategy on how to approach talent.

A family problem

A recent PwC survey highlighted the problems of succession planning in

family firms. Well over a quarter of family firms expected to change hands

over the next five years, and nearly half (44%) of those are expected

to remain in the family. But of those firms only 47% have drawn up

succession plans, and only 30% of those with a plan have nominated a

specific successor. While family firms are more than twice as likely as

global firms to appointed a management team composed entirely of

non-family members, six out of 10 will appoint at least one family memberto a key role.

Paul George, a PwC partner who specialises in family businesses,

commented: Many owners are not facing up to the tough choices

involved. There is, sadly, a long tradition of great family businesses that

have failed as a result of sleepwalking into a succession process.

A vacancy at the top is a classic signa company may get taken over. Thatswhen youre exposed, when you canseem like a natural target


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20/40

opic author

Leadership Liz Fisher

Lessons from theSporting stars and military leaders have become a popular feature of the leadership lecture circuit. But this is more than a novelty

business has invaluable lessons to learn.

18


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If you are looking for a practical induction to the essentials of leadership,

you could do worse than start with this years RBS Six Nations rugby

championship. To the surprise of just about everyone, Wales won not only the

title but beat every other team in the contest to win a grand slam, just months

after the same collection of players were unexpectedly bundled out of the

Rugby World Cup by Fiji.

For the past two years, the Welsh team has been a collection of individually

talented players who, infuriatingly, consistently failed to add up to the sum

of their parts. If the rumours are to be believed, too many strong characters

among the players and coaching team contributed to their lack of overall

focus.

It took a new coach, the New Zealander Warren Gatland, to pull them into

shape but not, he stresses, by placing a proverbial bomb in the changing

room. There is a public impression that I am ruling with an iron fist, but

there are only three things I insist on, Warren Gatland told journalists the day

before Wales secured the championship title with a win over France. They

are intensity and quality in training, working hard in the gym and the type ofgame I want us to play. Everything else is up for grabs. Its not a dictatorship.

Provided with a leadership structure that has made it clear who is in charge

but respects the players skills and contributions, and is never despotic, the

team have thrived. In Ryan Jones the team has a captain who commands

respect and affection among the players, but who completely trusts the

guidance of the coaching team. In the space of a few months, the new

approach turned a team embroiled in a crisis of confidence into an unbeatable

force (in the northern Hemisphere, at least).

The contrast with Englands performance over the same period has been

salutary. At the time of their World Cup win in 2003, England arguably had a

similar leadership set-up to the Gatland regime at Wales. Sir Clive Woodward

was seen as an excellent manager of the team, and while the coachingleadership was strong, there was a solid emphasis on collaboration and

mutual respect between coach and players. And in Martin Johnson the team

had a captain who commanded respect and inspired commitment. The end of

the Woodward/Johnson tenure, though, saw England lose their way.

Over recent months, England showed many of the same characteristics and

shortcomings that plagued Wales in the run-up to last years World Cup. The

players seemed to lack a clear understanding of what their strategy on the

pitch should be, and they wanted for ambition and focus at times. It was not

until the young scrum-half Danny Cipriani made his full-match debut at the

final game of the Six Nations against Ireland that England played like the team

of old. That Cipriani runs the game with an authority bordering on arrogance

cannot be a coincidence. He may not be the best type of leader, but at least

the team had one. It remains to be seen whether Martin Johnsons rece

appointment as the England team manager will ensure that the squad re

its focus.

Even if you are not a rugby fan, the respective fortunes of the two teams

raise some fascinating insights into leadership styles and skills that work

and the effect they can have on an organisation as a whole. It is no acci

that some of the key members of the England World Cup team, as well a

many other successful sporting stars, are now sought-after speakers on

leadership lecture circuit. Business and sport may be different discipline

that does not mean that they cannot learn from each other.

Business is different, but its not that different, says Jeff Grout, former

business adviser to Woodward, now an international leadership speaker

consultant and co-author of a number of books that draw on lessons in

leadership from other disciplines. Ive learned some incredibly valuable

from listening to sportsmen, and people from the military, talking about

they approach leadership and their chosen discipline in general.

Grout uses as an example the psychological approach that many Olympi

athletes take to their long-term goals. Many of these sportsmen and

women set a number of interconnected goals, he says. They would ha

an outcome goal, a series of performance goals and process goals. The

swimmer Adrian Moorhouse, who won a gold medal at the Seoul Olymp

and now runs a performance development consultancy, told Grout that h

set his outcome goal to win an Olympic gold at the age of 12.

Winning required a time of 63 seconds, which was his performance go

says Grout. So the next few years were taken up with process goals, w

meant training, working on style, technique and mental performance. It

the process goals that were going to get him closer to the performance

The outcome goal was pushed to the back of his mind and he focused o

the process. That is true of many athletes they only take that outcomeout occasionally and dust it off to get them out of bed on a cold, dark m

when they need to be training. There are lessons to be learned here I

convinced that business concentrates far too much on the outcome goa

the detriment of the process goals.

It is this ability to break down winning strategy and processes, which ha

become more common in the sporting world as it becomes more profes

and competitive, that brings valuable lessons for business. Martin Johns

for instance, talks during his leadership sessions of his view of successf

communication. He divides the communication strategy that went on du

his time with the England team into Big Talk and Little Talk. The big t

was the strategic-level discussions, on and off the pitch, of how the gam

would be played and the tactics that would be used. These were genera

field


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set beforehand but could often change during the course of a game because

of the weather, for example, or because the opposition were employing

unexpected tactics.

The little talk was what Johnson calls the everyday stuff that gets

hings done. When on the pitch, he says, he was rarely quiet, constantly

encouraging players, supporting or correcting split-second decisions,

eminding the team of tactics and communicating (along with other players)

he second-by-second judgments that drive a game. Johnson makes the point

hat both forms of communication are essential, but its easy to concentrate

on the big picture alone. Its the little talk that makes the big talk happen, is

how he puts it.

The analogy with business is not difficult to see. The best business leaders

set a successful strategy, but they then concentrate the greatest part of

heir effort in making sure that the strategy is properly communicated and

understood at all levels, that it is being followed and that, crucially, they listen

o and act on any events that may influence their strategic decisions. Johnson

says that if things were going well on the pitch, his role was akin to thatof the conductor of an orchestra the preparation had already been done,

everyone knew what they should be doing and had the confidence and ability

o do it. His role was to inspire them to do their best and guide them should

he tempo change.

nterestingly, Johnson and the World Cup squad also learned valuable

essons from other disciplines over the years. The team spent what Sir

Clive Woodward says was a valuable session with the Royal Marines, which

emphasised the importance of reacting to what does happen rather than

ust merely rehearsing what you think will happen. The Marines made the

point that war is a series of cock-ups, and that is what they train for when

hey jump out of a helicopter in a combat zone, they have no idea what will

happen. Woodward transferred a similar approach to the rugby field, stressing

hat a team may have the best players and coaching team, but the oppositioncould still outsmart them on the pitch. The secret was to react to what was

happening in the game.

Perhaps this is why military leaders are also in demand as leadership

ecturers. The thing about the military is that they practice scenarios they

might face for real and explore everything that could go wrong, says Grout.

They make enormous efforts to replicate real conditions, so there are as few

surprises as possible. The sporting world also makes great use of visualisation

and scenario planning. A lot of business training, by contrast, is classroom-

based, and generally there is only ever a plan A.

Major General Patrick Cordingley, who commended the Desert Rats during the

irst Gulf war, is one of the military speakers in popular demand on the lecture

circuit. Along with other military commanders, he emphasises that no-one

will follow their leader into a life-threatening situation unless they have their

absolute trust, and believe in what they are being asked to do.

Military leaders know better than most the importance of maintaining morale

and mutual trust between leader and followers. Major General Cordingley

says that when he was in charge of troops he would be sure to eat with them

whenever possible, particularly when in a combat zone. The commander

needs to know what the men are thinking, he says, and it is relatively easy

to gauge mood when you talk to someone over breakfast, for instance, and

he has been on guard during the night. I could sit next to him and say, what

were you doing last night? And he would say he had been on guard and did

I think it was going to be alright. And that was very useful because I had the

opportunity to say directly to him that yes, of course it was.

Cordingley and his 5,000 men spent five months in the Saudi Arabian desert,

waiting for orders to advance on Kuwait. During that time he made huge

efforts to stave off boredom among the troops and made sure that they knew

they were as well-prepared as possible, but he also took great pains to makehimself visible and accessible. If I went into an area where I didnt know the

men particularly well and I saw someone playing chess, I would go over and

play with them, he says. It was a bit of a waste of time, strictly speaking,

because it might take half an hour, but if they beat me and they often woul

they would love being able to tell everyone that they had beaten the brigade

commander. Those sorts of things really helped, and I think it is an important

thing to do, although it wasnt studied on my part.

Military leaders are generally (there are always exceptions) more adept than

most at engaging with their men, and work hard to inspire trust and keep

motivation high. Some are naturally empathetic, but those that are not will

have learned through structured leadership training and experience that these

skills are invaluable. They are also skills that transfer successfully to business

some of the greatest business leaders are those that inspire their staff to dotheir best.

The business world is certainly not short of advice on what it takes to be a

good leader. Sometimes, though, the best advice can come from unexpected

quarters. Gatland and the Welsh rugby team have shown that with the right

leadership, a collection of talented individuals can be pulled together to creat

a phenomenal result in a matter of weeks. The ultimate aim of any business

to win so why not learn from the winners?

Military trainers make enormous efforts to replicate real conditions so thereare as few surprises as possible. The sporting world also makes great use ofvisualisation and scenario planning. A lot of business training, by contrast,s classroom-based, and generally there is only ever a plan A.

What Do Leaders Really Do?by Jeff Grout and Liz Fisher, is published by

Capstone Press, price 14.99


23/40

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24/40

opic author

Tax and reward George Yeandle

Tax and theGovernment policy, particularly tax changes, can have a profound effect on HR strategy. How can you plan for politics?22


25/40

Overseas secondments are a vital element of the talent management

programme of most multinationals, and often an administrative headac

for HR managers. The decisions of politicians, however, can have a

profound and sometimes unpredictable effect on an organisations

secondment strategy.

The taxation of overseas workers, particularly at the higher end of the

spectrum, is a contentious domestic issue in many countries. A key pla

for the new French president Nicolas Sarkozy, for example, is to use th

tax system to tempt talented French workers back from Belgium, whic

has a far more favourable regime. The reform of the tax system aroun

shipping sector in Greece has already resulted in companies and indiv

relocating back to their homeland.

In April the issue of non-domicile taxation hit the headlines in the UK, w

the government announced a significant amendment to the non-dom t

regime. The result has been a frenzy of HR activity as multinationals a

the impact of the changes and domestic companies anticipate a disrup

of the flow of talent into the capital.

In the last two years, London has overtaken New York as a financial

and commercial centre in terms of access to capital, its financial and

commercial infrastructure and its vibrant business community. Indeed

UKs attractiveness to businesses and to ex-pats has been undisputed

a long time. But changes to the UK taxation regime look likely to erode

attractiveness and to some minds call Londons pre-eminence into

question. In the aftermath to Alistair Darlings first Budget, the outlook

London as a destination for overseas businesses and business people

looks decidedly foggy.

It will perhaps come as a surprise to the HR directors of international

businesses that moves by the UKs new Chancellor will have an impac

their international assignment programmes. But as of April 2008, peopliving and working in Britain who have financial and business interests

other territories, but have until now not paid UK tax on those interests,

face a much more stringent tax regime than before (see box).

The changes will have little impact on the super-rich entrepreneurs an

business moguls for whom the new flat rate charge of 30,000 repres

small change. It will, however, give pause to the thousands of individu

who are offered secondments to the UK in the course of their work.

For many years, sending high potential employees on secondment to t

UK has been a no-brainer, particularly for financial services businesses

Now the personal financial affairs of those individuals are likely to be t

deciding factor on whether to move them to London or Sydney.

City


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27/40

received as a blow to Londons competitiveness, but they also represent aloss to the wider global business community, which now faces either added

complications when formulating the pay and benefit packages for those

destined for the UK, or a reduced set of choices when it comes to finding

assignments for their talented individuals.

In and of itself, taxation is probably not a factor that will rule London out as

a destination entirely, but the changes are likely to make HR directors and

senior managers look twice at the UK for employees whose financial affairs

are more complex than the norm. Its a close decision, but the new regime

may prove one obstacle too far.

Tired of London?

The City of London Corporations Global Financial Centres Indexfor 200

rated London as the most successful of 47 financial centres around the

world, and ahead of New York by five points in an index that rates citie

by the quality of their people, business environment, market access,

infrastructure and general competitiveness.

London, the researchers conclude, is in the top quartile in over 80% of

what they consider to be instrumental factors (such as cost and quality

living, access to qualified people, infrastructure and regulatory climatewith particular strengths in people, market access and regulation. And

London benefits from strong inflows of professional and managerial

workers more than half the number attracted to the UK as a whole. T

main negative comments concerned corporate tax rates, transportation

operational costs.

Hong Kong and Singapore were third and fourth in the 2007 index

respectively, well ahead of Tokyo (in ninth place) and two major Chines

centres, Shanghai (24th) and Beijing (36th).

In Europe, Zurich is in fifth place and Frankfurt sixth. Paris is 11th in th

index, only three points behind Geneva. Canadas national financial cen

Toronto acts as major international centre and is in 12th place in the in

ahead of two US cities: San Francisco (13th) and Boston (14th).

The Corporation, which publishes the index, says that research for the

study shows a change in emphasis in the factors that make up a count

competitiveness ranking over the past few years. In 2005, for instance

people and skills issues were rated as the most important factors of

competitiveness, followed by regulatory issues.

It seems more than likely, however, that concerns about the level and

complexity of corporate and personal taxation and other regulatory issu

may eclipse the people agenda in years to come.

Source: The Global Financial Centres Index

George Yeandle is a partner with PricewaterhouseCoopers


28/40

opic author

Stress at work Alex Blyth

Drowning in debtMoney worries are thought to be the root cause of poor performance at work. Should employers do more to improve their workers

inancial education?

26


29/40

After years of out-of-control consumerism fuelled by cheap credit, the globalcredit crunch has brought the chickens home to roost. The crisis has broughtpersonal debt levels in almost every developed country into the spotlight.In Canada, for instance, personal debt has increased by 36% over the past

decade (to Can$752.1bn). The populations take-home pay increased by just15% over the same period.

Personal debt is at unprecedented levels in all OECD countries. In Australia,credit now accounts for more than 150% of GDP, compared with 25% in themid-1960s. In the UK, personal debt increases by 1m every five minutes. Atthe end of January 2008, total UK personal debt stood at 1,412bn. This wasup 113bn, or 9.1%, on the previous year. On average, every household owes56,708, and is paying an average of 3,775 each year in interest.

The evidence globally suggests that on almost every aspect of personalfinance, from debt through to savings and pensions, the majority of thepopulation in developed countries are under-educated and under-performing.While this is undoubtedly a problem for many people in their personal

lives, it is also increasingly becoming a problem for us in our working lives.According to the latest MoneyExpert.com research, 33% of adults with debtsare concerned or very concerned about their ability to keep on top of theirborrowing. 4.8m adults spend more than they earn and 9m adults just breakeven at the end of every month.

Indeed, more and more companies are beginning to consider whether ornot they have either a responsibility or an incentive to help their employeesaccess financial advice. While there are potentially many benefits to themof doing so, it is also a complex area which is fraught with danger. For theforward-looking employer of today it is an area that cannot be avoided.

The latest figures from the UKs Health & Safety Executive for 2005/06 reportthat more than 420,000 people took a month off due to stress, equating to

more than 10.5m working days lost, says John Hall, chief executive of debtsolutions provider newtomorrow.com. Debt worries play a major part instress at work. It has been estimated that 250,000 of those people takingtime off work did so because their stress was caused by money problems. Itis not only debt that is a problem. Research from Scottish Widows reveals that34% of those aged 55 and over do not believe they have enough savings tobe able to retire at state retirement age.

Serious as all this is, companies have no legal obligation to do anything.James Carmody, principal at employment law firm Reculver Solicitors inLondon, says: There is no legal obligation on employers to educate staffon personal finance. The only obligation is to put in place a stakeholderpension scheme if more than five people are employed. There is not even anyobligation on employers to contribute anything towards the scheme.

Yet, many people believe that it is in the interests of companies to providtheir staff with financial education. Bev Budsworth, MD at advisory firm TDebt Advisor, says: Regardless of whether they are blue or white collardebt can affect an individual physically, as well as mentally, so that theyunderperforming at work and may have higher than usual absenteeism.

Organisations that understand the effects that debt and financial worriehave on their staff can help them by providing confidential help and advishe adds. Staff who are educated in personal finance are less likely to debt and to suffer the associated stress. A happier workforce contributesthe business more efficiently.

Staff that are educated in personal finance are less likely to bedebt and to suffer the associated stress. A happier workfo

contributes to the business more efficien

Case study:

Dunfermline Building Society

Alan Mitchell, HR Director at Dunfermline Building Society, believes thacompanies do have a responsibility to educate staff about financial matMoney worries are never a good thing for anyone to have, and helpingstaff in this area can play a vital part in the morale of the business,he says. It can only improve the relationship between employee andemployer, and it gives employees a way to find information if they do hmoney issues.

Dunfermline Building Society has partnered with the Financial ServicesAuthority to provide all staff with a booklet that contains information onbasic budgeting, saving for the future, borrowing and costs of repaymeacross different types of mortgage. It also covers personal finances in staff training.

Mitchell recognises the dangers inherent in providing advice, and believthat the best way to avoid these potential problems is to partner with aindependent financial adviser. Dunfermline also helps other employerseducate their staff. For example, it provides a savings scheme foremployees at Michelin Tyres in Dundee, through which staff can savedirectly from their wages and receive a preferential rate of interest.

We are keen to ensure our staff are financially aware, and so we provsupport both internally and externally, through our employee assistanceprogramme, says Mitchell. I guess some companies assume their staare financially aware or that it is not their responsibility, but we feel it our responsibility to help in this area, and we dont see any reason whyany company wouldnt at least provide staff with information from theFinancial Services Authority.


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As well as these operational benefits, providing financial education can

enhance the employer brand. Many people appreciate their employers

advising them in this area, says Marc Hommel, partner and head of

pensions at PricewaterhouseCoopers. However, you need to consider

carefully whether or not it is suitable for your staff. Generally, financial advice

s valued by those who have money to save or invest, and who are willing to

consider different options. If your workforce fit that profile then this can be a

great way to set yourself apart from rival employers.

t is important to tread carefully in this area. Apart from anything else, if you

get it wrong you can end up facing legal action from the very employees

you are trying to help. Carmody at Reculver Solicitors explains: Liability can

arise if the employer ends up offering financial advice that turns out to be

wrong. It is a complicated area and many employers may not be sufficiently

well-informed to try to educate their staff.

Budworth outlines what she believes companies should do: They should

concentrate on educating their staff in how to take a responsible attitude to

heir finances and help them to realise how an irresponsible attitude can leado debt problems. They should also provide practical help with their finances

such as mortgages, insurance, lending and their rights as a consumer.

Companies should employ a welfare officer so staff have someone they

can talk to, in confidence, about their finances, she continues. They

could also consider having in-house courses by teaming up with charitable

organisations that offer debt advice.

Donald McNaught, director at Scotlands largest personal debt solution

provider Invocas, suggests setting up a full-time helpline. Having a debt

counselling service that is accessed through the workplace is an effective

way to tackle employees financial problems and reduce absenteeism,

he says. Such a service can be provided under the brand of the employer

and can help prevent employees taking time off work through stress. Ourexperience suggests that almost half of callers can be put back on track

hrough general budgetary advice, with the rest of callers requiring a more

specific solution such as a debt management plan, refinancing or Protected

Trust Deed.

There are many options for how to provide this advice, and many external

suppliers willing to help you provide it. Whichever route you choose, you

must always ensure that it gives you and your staff what you need. As PwCs

Hommel concludes: Many employers waste time and money providing

advice that their staff dont understand. Some make the grave error of

providing specific investment advice. The solution is to give your staff

generic information in a format that is straightforward and easily accessible.

Do that and you will soon reap the benefits.

Today in the UK

According to campaigning group Credit Action, the following will happen in

the UK today:

Consumers will borrow an additional 310m Consumers will pay 257m in interest The average household debt will increase by over 12.45 74 properties will be repossessed 292 people will be declared insolvent or bankrupt 2,750 County Court Judgements will be issued Bank and building societies will hand out 1bn in mortgages 4,000 fixed-rate mortgages will come to an end 388 mortgage possession claims will be issued 404 landlord possession claims will be issued and 306 landlord

possession orders will be made

Citizen Advice Bureaux will deal with 6,600 debt problems More than 7,716 loan repayments will go unpaid 526m will be withdrawn from cash machines 24.5m transactions worth 1.4bn will be spent on plastic cards

Debt in the USYear Consumer debt Outstanding debt as a

percentage of disposable income

1975 $736.3bn 62%

1980 $1,397.1bn 69.5%

1985 $2,272.5bn 73%

1990 $3,592.9bn 83.8%

1995 $4,858.1bn 89.8%

2000 $6,960.6bn 96.8%

2005 $11,496.6bn 127.2%

Source: Federal Reserve

Liability can arise if the employer ends up offering financialadvice that turns out to be wrong. It is a complicatedarea and many employers may not be sufficientlywell-informed to try to educate their staff


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Ill health costsEmployees are waking up to the benefits of effective wellness management. In a climate of pressurised economic uncertainty, it hnever been more important.

29

topic author

Wellness at work Beth Holmes


32/40

ll health costs the UK economy over 100bn a year the same as the

cost of running the National Health Service for a year according to

an analysis by Dame Carol Black, national director for health and work.

Her report, published in March, looked at all aspects of the delivery

of workplace health, includes measures such as replacing sick notes

with well notes, stating what work someone with health problems can

actually do.

The shift from sickness to wellness, both in terms of recognition and

management, has been subtle. Indeed, wellness is a relatively recent

ntroduction to the language of business, at least as far as human

capital is concerned. It is one thing striving for a healthy bottom line,

but companies are beginning to cotton on to the fact that the physical

and emotional health of their employees is not only as important as, but

directly correlates to, the success of the business.

Broadly speaking, wellness encompasses all those reasons why staff may

not either be giving their best or actually be present in the workplace,

rom illness to stress to a Monday morning hangover. With the currenteconomic climate meaning that more is expected of employees to help

companies ride the wave of a credit crunch while their personal finances

are being stretched to the limit, the pressures of work are being felt by

most. Add to that the endless media reports of binge drinking, a time-poor

nation fuelled by unhealthy eating in a polluted environment, and its a

miracle anyone manages to function at work effectively.

According to Pr icewaterhouseCoopers partner David Baty, stress is one

element of wellness and one that is increasingly recognised as a problem,

even if it is still difficult to see it happening. It creeps up on people,

he explains. Its an insidious set of small, incremental changes. People

suddenly become aware that things arent right. It could be event-based

or a sudden perception of loss of control, and, crucially, it cuts in to the

broader topic of wellness.

Baty defines wellness at work as consisting of three things. First,

occupational health and safety, including workplace ergonomics, accident

prevention and so on; second, managing ill-health, taking into account

such things as absence through stress, how you deal with the absence,

how it is monitored and measured, and looking at the culture of the

company; and finally, promotion and prevention, which is all about

enabling employees to be healthy on all levels, and helping them with

stress, diet and exercise, plus the cognitive aspects and understanding

about what makes for feeling good at work.

When you consider that even people who are unwell but not off sick

have an impact on productivity indeed potentially a bigger impact than

absenteeism a companys success becomes inextricably linked with its

workers enlightened self interest.

Ben Willmott, employee relations adviser at the Chartered Institute of

Personnel and Development (CIPD), says: Adopting a policy of wellness

management means taking a holistic approach to the promotion of employee

health and wellbeing in order to create enhanced business performance.

Wellness management, he claims, is about prevention of sickness and

absence, rather than rehabilitation. CIPD figures show that absence costs

business on average 659 per employee every year.

Due to the sheer size of the job of managing wellness, more and more

companies are implementing wellness programmes.

But Willmott warns: Attempts to promote wellbeing and manage absence

will be fatally undermined unless they are underpinned by good people-

management and effective work organisation. There is no point providing

healthy eating options and on-site gyms if people are dreading going to work

because of their bullying line manager or because of excessive workload.

So what can be done? In Aguascalientes in Mexico, the authorities have

plumped for fiscal incentives, with overweight police officers being offered

cash bonuses if they slim down. Elsewhere the approach is broader and

perhaps more educational.

According to the CIPD, in the UK almost half of organisations provide all

employees with access to counselling services as part of their wellbeing

initiative. This is followed by employee assistance programmes (31%) and

support to stop smoking (31%). Around a quarter of employers also provides

health screening, healthy canteen options and subsidised gym membership to

all employees.

PwC undertook a review of its entire health-related benefits in 2004 inorder to implement an integrated approach. The firm set up a working

group with members of leading individual workstreams examining sickness

and absence data, sick pay policy, health benefits, long-term sickness

absence management and wellbeing initiatives. It also ran workshops with

representatives from the business to understand how they currently managed

employee sickness.

The result was a completely revamped Health Matter Programme, which

includes Zest for life at PricewaterhouseCoopers a scheme that supports

employee health and wellbeing by raising awareness of health issues.

Activities across the UK include on-site dentists and physiotherapists,

reflexology, massage, meditation, yoga, pilates, smoking cessation clinics,

wellbeing workshops, fit-for-life and desk survival courses. The scheme also


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provides an employee assistance programme to staff and families and offers

Choices a flexible benefits scheme providing a range of health-related

options.

Jackie Gittins, director in Human Resources Consulting at PwC, is also keento stress that it is not a one-size-fits-all package and that each employee,

wherever they are based, has the right to a tailored package that suits them.

PwC has 37 offices across the UK, she says, and our network of health

champions act as the eyes and ears for what kind of local health matter

activity would be successful.

Accountants Ernst & Young also has a comprehensive infrastructure to

help monitor its people, including private health insurance, annual health

screening, dedicated occupational health professionals and workplace

assessments, along with an employee assistance programme that supports

employees families as well. It also claims to lead by example, with chairman

(and marathon runner) Mark Otty being lauded as the model of a healthy and

balanced approach to life and work.

Supporting our people to achieve their potential must begin at the most

fundamental level their physical and mental wellbeing, says Richard

Jordan, head of employer brand at E&Y. It is only from strong foundations

that they can handle the complex issues and challenges that they face every

day.

All of this admirable and growing attention to employees all-round health

is commendable, but it does throw up some difficult questions. For instance,

do employees still have the right to assert their unhealthiness? It is, says

Willmott, a fine line to tread.

Theres clearly a balance to be struck between promoting health and

wellbeing and interfering in private lives and choices of employees, he says.

Most employees want to live healthier lifestyles, so in most cases empl

promotion of wellbeing will be supported. However, wellbeing can only r

be about positively engaging with employees. You cant bully people into

healthy living. That wouldnt work and would be actively counterproduct

Baty also believes that knowledge is power. It has to be about persona

choice, but an educated one. Choice has to remain the fundamental

principle of this. And he agrees that compulsion is not an option. Argu

compelling people to do something that they dont want to do could be

causing more problems.

Also crucial is the constant evolution of health programmes, claims PwC

Gittins. Using integrated reporting we are continuously identifying key

issues in the workplace. The programme also has links with our diversit

agenda, community affairs and corporate responsibility. It supports our o

business by engaging with our people, giving them opportunity and choi

So what, then, does a healthier workforce mean for the future? Will a st

and healthy workforce build the foundations for, ironically, a more stressfuture in the form of a pensions crisis?

There are bigger forces at play in the pensions crisis than wellbeing

initiatives, says Willmott. It is inevitable that more of us are going to k

working for longer in the future. Wellbeing initiatives will do more to help

employers get the most from valued and long-serving employees than th

will to contribute to the pension crisis.

With employers persistently experiencing difficulties attracting and reta

talented people, then keeping workers happy, healthy, well-motivated an

work can only become more important for employers, continues Willmo

Many employers are already working actively to improve their engagem

their workers, and are reaping the rewards.

With employers persistently experiencing difficulties attracting and retainingtalented people, keeping your workers happy, healthy, well-motivated

and at work can only become more important for employers.


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opic author

Corporate governance Clare Gascoigne

The search forAre the increased demands placed on non-executive directors resulting in a shortage of good-quality candidates?

32


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It is relatively rare for a country to claim that it has set business standards

worldwide, but it is a claim that the UK could legitimately make in the area

of corporate governance. The Cadbury report, published in 1992, was a

comprehensive review of corporate governance practice that set out a code

of best practice for company directors. In particular, its recommendation

that company boards should contain a minimum proportion of non-executive

directors was one that was quickly adopted around the world.

A year after Cadburys recommendations were published, Sweden issued its

own report on recommended corporate governance procedures. South Africa

was next, with the King report in 1994, followed by Australias Bosch Committee

report in 1995 and India in 1998. Between 1993 and 2000, more than 18

countries issued their own guidance on corporate governance and specifically,

the role of executive and non-executive directors (NEDs).

Since then, the UK has continued to review and refine the role of non-executive

directors. The Greenbury report looked at directors remuneration, Hampel

at internal controls, and guidance from Turnbull pulled everything together.

In 2002 corporate scandals such as Enron and WorldCom had the corporateworld worried; Derek Higgs, chairman of the investment bank SG Warburg,

was appointed to find out how a similar disaster could be averted in the UK. It

was Higgs that changed the role of NEDs, setting out clear requirements and

responsibilities (see box) and describing them as custodians of the governance

process. This is echoed in other countries in the US, for instance, independent

or outside directors are viewed as the key gatekeepers under the

Sarbanes-Oxley Act.

There is still a debate about whether non-executives are there as policemen or

to develop the business, says Malcolm Higgs (no relation), professor of Human

Resources and organisational behaviour at Southampton Universitys School of

Management. Good corporate governance can enable people to fulfil both roles.

What the Higgs Report did do was to significantly boost the importance of anddemands on NEDs. That may have helped on the corporate governance side, but

has the increased responsibility led to a shortage of people willing to take on the

role? Yes, according to Graham Durgan, chairman of the NED Association, which

trains people in NED responsibilities and acts as a clearing house for companies

looking for a non-executive.

There are a lot of people who could be NEDs partners of professional

practices, those who work in not-for-profit organisations, civil servants. These

people are all capable and the way round the shortage is through training, he

says.

Not everyone, though, agrees with the idea that there is a shortage of good NED

candidates. I dont see any evidence of it, says Sir Andrew Likierman, professor

of management practice at the London Business School and himself an NE

four organisations. If companies have very particular requirements it may

difficult to find someone, but I see plenty of good new non-execs.

Perhaps the perception of shortage stems from a slowing down of the rate

appointment of new NEDs, according to Sean OHare, partner in the HR res

service at PricewaterhouseCoopers. Boards have gone through a significan

refreshing following the Higgs Report, which said there should be a greate

diversity in boards and a focus on the calibre of non-execs, he says. Betw

12% and 15% of NEDs were appointed new each year for the first few yea

after Higgs; then in 2007 that dropped to 2%.

But, he argues, that is more a sign of the corporate world achieving its aim

of a shortage in good candidates. There isnt a drum beat of chairmen say

hrs hourglass issue 10

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