‘You can’t get the staff these days’…. Or the workforce planners and human capital investors

‘We’re sorry but….’

Like me, you are probably both enjoying and suffering from the summer boom in demand that our service sector businesses are experiencing at the moment. It is truly wonderful after the nightmare of Covid and lockdowns to be able to go abroad on holiday, physically to shop and buy new stuff and eat and drink in nice restaurants.

But not so wonderful that it took me 36 hours instead of 3 on a nightmare journey back from Sicily on Easyjet, and my flight out of Heathrow next month has already been cancelled. Or that getting up to the Lake District on Avanti trains later this month is looking to be a logistical nightmare after they just announced major cuts to their regular timetabled services in the week.

Or that my parents had no support one day last week from their careworkers who were off sick. Or that Boots in Twickenham was shut for three hours in the middle of the day on Friday; and the queues in Waitrose in Richmond later were horrendous, as only two tills were staffed.

Or that my elder daughter didn’t get the joining details from the over-stretched HR department in her new employer before her first day’s work. Or that I got chucked out of Pret and their delightfully air-conditioned-shop when they shut early, mid-afternoon, one day last week.

Pret had experienced the threat of strike action after proposing to cut store bonus levels in half last year to save costs. The spread of threated and actual strike action on services ranging from the railways to post, and the criminal bar to the NHS, is one result of this high demand/low supply post-Covid bounce-back, which has been well-covered by (especially our more right-wing) media. Even though such action still remains at very low levels by historical standards and compared to the 1970s, which these papers love to hark back to.

The growth in aggressive and violent behaviour from customers being suffered by front-line customer service workers at the moment is one of the worst effects of these disruptions to our daily services that I see receiving distinctly less coverage. We seem to have forgotten already those vital care and keyworkers we all appreciated and banged our dustbin lids in support of during lockdown.

‘You can’t get the staff…’

But who’s to blame for the service disruptions? Why the workers of course! And with record low unemployment and record high vacancy levels, the lack of them. As Brooke Masters noted in the FT last week, on how service businesses are struggling to adapt to a demand strong/labour short economy, ‘corporate executives universally blame the problems on (lack of) staff’.

Avanti blamed (unofficial) striking rail workers, and The Bank of England Governor (annual pay just a smidgeon short of ￡600k) came in warning darkly against ‘excessive’ wage demands fuelling a nightmare, ‘stagflation’ situation of semi-permanent high inflation and low growth. Pret blamed the tight post-Brexit labour market, Sharon White Waitrose’s chief executive the ‘great retirement’ of the over 50’s who left the labour market during Covid and haven’t returned. For Jacob Rees Mogg it has been those home-working civil servants at fault.

And the airports and airlines seen to be all blaming each other, as well as the staff shortages and competition from better paying employers such as Amazon. What appalling underhand tactics, actually paying staff higher wages! Rather than as for Heathrow Airport Holdings, making its salaries ‘aligned with the market’ and (allegedly) imposing a cost-saving pay cut for some of its managers and workers’. The CEO of Qatar Airways who sits on Heathrow Airport’s board even expressed the hope that it will become easier to recruit again once unemployment increases and unprecedented cost-of-living pressures really start to bite:

‘the only way we will get out of it is when people realise they have to get out of their home and back to their jobs and work to earn’.

Even then, one European industry executive reportedly asked colleagues whether they would rather work for a supermarket at decent times on a regular shift or get up at 2am and stand outside all night at an airport for similar money.

Planning and paying, or cutting?

But hang on a minute, couldn’t some of this booming demand have been foreseen once the economy opened up again after Covid? And the staff shortages too, given that the Brexit vote occurred in 2016 and unemployment was already at a record low of 4% in 2019? Might executives and management, perish the thought, have done a bit of workforce planning, perhaps improved pay and conditions, trained more of their own people rather than hiring them in, and acted to address this situation earlier?

Care England says vacancies in the sector have increased by more than 52 per cent over the past year. But they were already running at over 120,000 in 2019 with attrition rates in some care employers of over 30% pa. It’s not really surprising, if Amazon have acted faster to increase their pay rates, that some careworkers are heading to their nearest warehouse for ￡2,000 pa more and an easier working shift that better fits with their homelife.

Pret’s dispute followed a proposal to cut store bonus opportunities by 50%, that was quickly reversed. And while there are still some employers like P & O pursuing the uber-flexible, employment-cost-minimisation model, surely the shortcomings of this approach have been cruelly exposed by Covid and this subsequent economic bounce-back, in dealing with what one economist has coined as our new era of ‘permacrisis’.

?‘Just-in-case models’ are far more secure in such times than the heavily outsourced, ‘just-in-time’ workforce supply approaches that prevailed in the cost and shareholder value -obsessed 2010s. Occupational health expert Sir Michael Marmot believes ‘P&O provides a (contemporary) case study of how not to do it’, from both a national and employer productivity and an employee wellbeing perspective.

Cutting sick pay benefits, a common employer and HR cost-reduction measure in the 2010s, looks pretty dumb when a killer virus strikes. As REBA’s Debi O'Donovan? observes ‘it appears that it takes a global pandemic for employees and directors to realise how important ‘boring benefits’ are’, like a good pension, sick pay and health insurance.

We might also now question, as Professor Ewart Keep at Oxford University did recently, whether the cuts in employer training days provided, to a record low of under 4 days per employee pa in 2019, representing a fall of 60% since 1997, has really been a sensible workforce supply strategy? Or the precipitous decline in apprenticeship provision? Where was HR allowing this to happen we might well ask, shouldn’t it have been arguing for the need to switch in to response impending labour supply shortages, to more of a ‘grow your own approach’, in far more employers?

On the railways, according to railway engineering expert Gareth Dennis ‘large-scale cancellations by Avanti owe more to a dysfunctional (staffing) model than unofficial strike action’. Apparently cost-driven staffing models have been so tight that 20% of services were being staffed by drivers voluntarily on overtime. And so if their ‘goodwill’ is threatened and that volunteering stops, then as Dennis, explains, it’s hardly the fault of their drivers that Avanti’s well-paid executives can’t staff their scheduled trains.

Their executives (CEO ￡635k) by the way voluntarily took a 20% pay cut when the furlough scheme was introduced in 2020 and some of their staff laid off through it. The reduction lasted for a full three months before their pay was restored.

Meanwhile as far as the far-worse-paid retail and public sector workers are concerned, as Yvonne Roberts notes, if the over-50s have experienced the opposite, a decade of worsening pay and conditions in many sectors; and 40% of civil servants have had to take out a loan or credit to pay a bill for essentials; then no wonder so many have jumped at the first possible opportunity to call it a day and retire from a life of growing demands and fewer rewards.

In aviation, airlines have outsourced as many parts of the business as possible over recent decades, producing a complex web of business and labour inter-relationships. If an unexpected crisis hits, then as Philip Georgiadis notes,

’When one link in the chain fails — and each part of the industry has suffered staffing problems this year — the fine margins airlines run on tend to break down. Several airlines have blamed disruption on ground-handlers, for not having enough workers. But frustrated executives in those companies say the same airlines have for years squeezed margins on the contracts they offer’.

A similar situation of outsourced, low-pay staffing models exists in UK social care provision, with depressingly similar outcomes for staffing and patient care outcomes.

The airlines have been accused of cutting too many staff when the pandemic first hit and then finding themselves hopelessly unprepared for the return of passengers. BA for example, cut around 10,000 of its 42,000-strong workforce during the pandemic and despite the operation of the furlough scheme, a move described as “wanton destruction” by a UK parliamentary committee. Yet many of its rivals took similar steps.

Ryanair on the other hand, hardly represented in the media as a leading exponent of HR and customer management, made the decision not to lay off any staff during the pandemic (though it did cut salaries for pilots and crews - now restored). It has been rewarded in being able to deliver on a rapid return of passenger numbers without any need for flight cancellations, leading to a equally rapid return to profits this year, reported in July.

The hopes for better pay and planning

Others employers appear to be getting the message now, on the importance of better pay and workforce planning. BA for example, has recently awarded its check-in staff and refuelling workers a 13% and 12% pay rise respectively and currently are offering a ￡1,000 signing-on bonus for new employees. On the ground, Avanti are recruiting and training 250 extra drivers. In retail Aldi next month will be raising pay rates for its shop staff for the second time this year to ￡10.50 per hour, above the rate of the real living wage and now totalling a 10% increase for the year. Pret have similarly made two pay awards over the past year since their dispute over cutting bonuses.

And at last more employers seem to be reacting to the well-informed and prescient pre-pandemic admonishments of my colleague Wendy Hirsh to HR professionals to react to?labour market supply shortages and ‘stop dithering, start (workforce) planning!’

The report on workforce planning that Wendy and IES colleagues authored for CIPD is a brilliant guide and ‘how to’ manual, with many useful tools for HR professionals. I used it working with a well-known bar chain who were experiencing horrendous staff shortages and turnover, leading to poor customer service and shorter opening hours in many locations. They couldn’t even measure the problem as all of the information their bars provided to their central functions – on finances, purchasing, etc. - included nothing whatsoever on their human capital, their people. Or current lack of them.

In response, they introduced a simple staff planning process for their bar managers, to report on and forecast their staff needs and numbers for the previous and following month, with HR business partners following up and helping the worst affected locations to source staff. It has proved so useful and popular an initiative that it is being extended to annual staffing plans with monthly update reports for every bar.

Will these examples be followed by far more employers and their HR functions in the weeks and months ahead? Have UK employers really recognised that the failure to plan for and invest sufficiently in staff pay and skills, just creates a poorer, low-skill, low-pay, low-productivity company and country? We really hope so at IES and are helping more employers to make the shift in employment approaches required. But far more employers need to follow. And fast.

‘When I started working here, on an apprenticeship, it was really something to be proud of,” a Heathrow airport engineer told Delphine Strauss earlier this month. ‘Now, I see hours of queues, crying little kids . . . I am ashamed to work here now.’