In 2005, the UK government launched its Local Government Pay and Workforce Strategy which sought to outline how local government should address the challenges of providing ‘community leadership and improved services within controlled budgets’ and better respond to changing customer needs and expectations. At the heart of the strategy was the following sentiment:

Local authorities need the right people, working in the right way and within the right culture. Achieving this demands nothing less than a transformation in many authorities’ working practices. Authorities can’t afford to take a piecemeal approach to workforce issues, responding to problems as they arise in an ad hoc way. They need to look ahead, analyse the key workforce issues, anticipate problems and take a strategic approach to develop the workforce needed to achieve their corporate objectives.

This strategy was pursued by Shire County Council in its efforts to respond to central government policy, including the need for ongoing efficiency savings, and reduced budgets. Following the strategy, Shire County Council set out five central elements of its change process:

1. Developing the organisation through the redesign of processes to generate continuous improvement and flexibility; workforce modelling, including the redesign of jobs and outsourcing some jobs to ‘partner’ organisations; and the implementation of high performance work systems to increase productivity and flexibility in service delivery.
2. Developing leadership capacity through skills development at all levels with an explicit focus on internal development and increasing diversity of the ‘talent pool’.
3. Developing workforce skills and capacity through increasing per head ‘spend’ on training and development, particularly for frontline staff.
4. Resourcing, recruitment and retention through the development of a strong internal labour market and, in particular, addressing a number of areas of considerable skills shortages (for instance, social workers, occupational therapists, environmental health officers, trading standards officers, planning officers and educational psychologists).
5. Pay and rewards through balancing the need for attractive salary packages with providing value for money. Explicit objectives in this area include ensuring pay inequality, eliminating occupational segregation and formulating ‘total reward’ packages.

The implications of pursuing these objectives have been manifold. The Council’s directly employed workforce has been reduced by approximately 900, through voluntary redundancy and a substantial proportion of Shire’s activity having been outsourced to ‘partner’ organisations in the private sector (although many continue to work on council premises). In some areas of activity, such as IT, the department has been considerably rationalised with a core of essential employees being retained on permanent contracts supplemented with sub-contractors employed as and when required, often for considerable periods of time (for example, for the design and implementation of new computer systems). There have been considerable changes to working practices, including a removal of traditional job demarcations and employees increasingly working in cross-departmental project teams which are largely self-managed. These teams are, however, limited to certain sections of the organisation. Departmental structures have been ‘flattened’ with a significant number of managerial posts having been removed in favour of encouraging greater responsibility and accountability among the remaining workforce. Pay structures have also been rationalised and the council has introduced a more formal performance management system which sets each employee’s KPIs (key performance indicators) that must be achieved for progression to the next salary band. Progression through salary bars is now dependent on promotion. Historically, local government employees have benefited from relatively secure employment often associated with hierarchical progression up a narrow-banded pay structure, passing through pay bars relatively easily. Changes to the pay structure have, therefore, led to considerable disquiet among employees. These changes have also contributed to the significant loss of some senior council employees, who have complained that these changes have resulted in the intensification of work, leading to, as one employee put it, a desire to ‘get out of the rat race’.

However, three years after the change process at Shire County Council, a review by senior management has revealed that many aspects of these objectives are far from having been achieved. In particular, recruitment and retention of key staff have actually worsened since this process was begun. The areas of skills shortage identified in the change objectives remain problematic. Whilst the council has made concerted efforts to recruit adequate numbers of these skilled workers, there is significant turnover among them, with many specialists leaving to work in other parts of the public sector, particularly junior practitioners. Turnover has also worsened among frontline staff, despite greater investment in training and development among this group. Moreover, despite concerted efforts to recruit from a wider pool in order to increase workforce diversity, this appears not to have led to a significantly greater number of employees from minority groups progressing to senior positions. This has resulted in a number of highly qualified employees leaving the council for work in the private sector, often at a higher level.

Problems have been particularly acute in the HR department itself. Before the change process, the department employed four grades of HR professionals: administrators, advisors, consultants and managers (who reported to the HR director). Administrators and advisors worked in small teams, servicing the HR needs of particular parts of the council. Consultants were typically specialised in one area (for example, payroll) and often took the lead in organisational-level projects. HR managers oversaw the activities of the department as a whole. As part of the change process, the HR advisory role was outsourced to a third-party service provider, meaning that all HR advisors would become directly employed by the service provider but work exclusively on work for the council. They were relocated to a purpose-built ‘service centre’ where they would provide support to line managers across the organisation. The majority of the HR administrators were made redundant, or ‘promoted’ to the role of HR advisor, following the introduction of a self-service portal on the company’s intranet allowing line managers to perform their own HR transactions. The HR consultants and managers remained employed directly by the council forming a ‘strategic HR team’. Prior to the restructuring, all HR consultants had previously worked as HR advisors at the council. Two recent appointments to the role have, however, been of external applicants, despite three HR advisors applying for the role. In the last six months, seven HR advisors have left their jobs, including two women, after their request to work flexible hours following maternity leave was refused.

Questions

1. What are the problems for employee development and career management that have been created by the organisational restructuring and implementation of new policies?
2. What are the career management policies and practices that you would implement to assist in the achievement of the council’s strategic objectives?
3. What aspects of the new career dynamic might begin to emerge under the new arrangements for staff?

Matsson Finance is a market-leading company providing wealth management and financial protection services, operating in more than 40 countries but with major operations across Europe, North America and Asia-Pacific. Worldwide, it has over 50 million customers, both individuals and businesses, and approximately 95,000 employees worldwide working across three of its operating divisions: MF Life and Insurance, MF Investment and MF Healthcare.

In the UK, Matsson is involved in insurance, investment, pensions, healthcare, protection and life cover, employing approximately 8,000 staff in five locations across the country. Its website makes the claim that: ‘As the trusted provider of financial services to two million customers in the UK, we seek to employ the best people to ensure both outstanding service and excellent value’. However, whilst Matsson is typically viewed as an ‘employer of choice’, senior management has in the past two years become concerned that in certain aspects of its HRM practice, particularly employee development and talent management, the company has lost ground to its competitors.

In particular, the firm identified a significant problem in retaining its highest potential staff across its six operating sites. In order to support the firm’s aim of achieving more sustainable competitive advantage through the quality and capability of its people, the firm recognises the need to attract, develop and retain talent throughout the organisation. Subsequently, the firm has recently begun to develop and implement a more strategic approach to talent management that brings together a number of disparate policies and practices already in existence to produce a coherent approach to developing promotable talent and to ensure a pipeline to service most senior positions. To achieve this more strategic approach, Matsson has established a Talent Development Team to support the achievement of competitive advantage through the ‘creation and deployment of a continuous pipeline of exceptional business and technical leaders’.

Among the first tasks of this team and central to the firm’s talent strategy is the organisation’s ability to successfully identify both immediately promotable talent and future leaders, stressing, therefore, the importance of appropriately defining its ‘talent pools’ to recognise both realised ability and potential. To this end, the company decided to categorise talent in the company in three ways:

1. Talent – defined as those throughout the firm who have performance ratings of effective, excellent or outstanding and representing 90 per cent of employees at Matsson UK. These ratings are determined by line managers during annual performance appraisals based on the achievement of individual objectives and the extent to which they display the behaviours informed by the firm’s core values. The company has yet to put in place structures and practices to further develop such staff but their potential is noted and filed for future reference.
2. Promotable talent – those employees with the potential to progress to the next career level in the relatively near future, representing approximately 40 per cent of all employees. Individuals are assigned to this group at the request of their line managers based on three key criteria: ability, drive and engagement. The highest-flyers from this group are identified as ‘being of future leadership potential’. The company has been surprised at how relatively few staff have been put forward by their managers and take this to be a sign of an absence of such talent. As a result, the company has begun a headhunting exercise to recruit high-potential staff from outside the firm at more senior levels.
3. Future leaders – 1–3 per cent of employees with the potential to be a business or technical leader or technical specialist. Such candidates are simply put forward by their line manager as someone of significant potential.

Despite recognition of the importance of talent at all levels in the company, priority has been given to nurturing and developing those staff who fall within the ‘future leader’ group. Senior management have diverted significant investment to the HR department to develop a bespoke, stand-alone and intensive programme of leadership development for the ‘chosen few’ (as they have become known in the firm), including paid tuition and time off to study for an MBA at a top UK business school, regular off- site teambuilding activities and fact-finding missions to Matsson sites all over the world. This investment constitutes the major part of the fund available for talent development but senior management take the view that ‘if you get the top right, the rest will fall into place’. In other words, if the workforce sees the internal promotion of a select few staff into very senior positions then others will be motivated to pursue such opportunities.

The aim of the future leadership programme is to assess each individual against the leadership behaviours and competencies identified at the most senior level of the firm, in order to map them against future roles. Before the end of the programme, individuals have to produce a portfolio that includes what they have learned about themselves, what they have done as a result of this learning and why they should be considered for specific roles in the organisation. The information then leads into succession planning activities where individuals are earmarked for particular posts in the future and are intensively schooled in the technical aspects of those posts.

Questions

1. How would you characterise the approach that Matsson Finance has adopted towards its talent management?
2. What examples of potentially good practice can you identify in Matsson’s approach to talent management?
3. What are the potential pitfalls associated with the policies and practices that Matsson has currently adopted?
4. What are the potential problems of adopting a very structured off-the-job programme of leadership development as the means by which to develop the leadership capabilities of a more junior member of staff?