In June 2001, the Irish Business and Employers Confederation hosted the annual European human resource directors' conference, in cooperation with the European Commission. The main theme of the conference was a common challenge facing policy-makers and many European companies, that of attracting and retaining employees in new labour markets. Although there was a degree of consensus among participants relating to the nature of these challenges, there was less consensus on how to address them.
For the past 10 years, the European Commission, in cooperation with national and European employers' organisations, has organised a conference for the human resource (HR) directors of Europe's major employers. The conference is used as a forum for the Commission to engage in social dialogue with major employers. The 2001 conference was hosted on 18-19 June by the Irish Business and Employers Confederation (IBEC) at the European Foundation for Improvement of Living and Working Conditions in Loughlinstown, Co Dublin, Ireland. The aim of the event was to promote discussion and suggest solutions and new strategies to attract and retain employees in European labour markets, where labour skill shortages are currently a problem in some areas (IE0006152F).
Investing in human capital
The HR directors' conference commenced with an opening address by Odile Quintin, director general of the European Commission's Employment and Social Affairs Directorate General. Ms Quintin stressed that because new jobs are increasingly being created in areas relating to the "knowledge-based economy", people - "human capital" - will "increasingly be the bedrock on which Europe's competitiveness should be based". She said that three concrete strategies aimed at attracting and retaining workers would need to be placed at the top of the agenda.
- Companies would have to design strategies to create more, and better quality, jobs, in order to attract and retain employees - both young and older employees. The development of better quality jobs would involve: offering decent wages to workers; achieving a better balance between work and family life; enforcing high standards of health and safety at work; fostering equal opportunities between men and women; harnessing the benefits of ethnic diversity; developing life-long learning policies; and improving the quality of employee involvement in company decision-making. In relation to these issues, a new European Commission green paper will aim to promote a pan-European debate on how to diffuse best practice in terms of "corporate social responsibility".
- Companies should strive to create new forms of flexibility and security. When promoting adaptability to fast-changing market conditions, companies rely on workers' commitment, which cannot be acquired without some degree of employment security. With this in mind, Ms Quintin suggested that new forms of work organisation (such as teleworking), supplementary pension schemes, the promotion of labour mobility, skill enhancement, life-long learning and equal access to training and education, are key strategies for promoting security for workers in the context of moves towards a knowledge-based economy. She stressed that action was being taken in these areas at EU level.
- In the context of uncertainty in global markets, workers should have more involvement in workplace change, particular if companies want to retain people on a long-term basis. In this regard, Ms Quintin viewed the Council of Ministers' recent political agreement on a common position of the proposed EU Directive on national information and consultation rules (EU0106219F), as a "milestone for workers' involvement". She also identified employee financial participation as a means of generating a greater sense of loyalty and "corporate identity" amongst workers.
Following her opening address, Ms Quintin chaired a plenary session involving two keynote speeches by Turlough O'Sullivan, director general of IBEC, and Maria Joao Rodrigues, president of the Commission's recently-established high-level group on the future of industrial relations and managing change (EU0103200N).
The mantra of competitiveness
Stressing the importance of maintaining competitiveness, Mr O'Sullivan remarked that "Ireland is now operating in a global economy, and has to accept the new reality, which is that no one owes us a living. Competitiveness has been the mantra which IBEC has continued to preach over the last several years." To this end, he stressed the importance of "free competition" and stated that IBEC, in dialogue with the Irish government, was looking at how to increase deregulation in Ireland. He said that free competition was crucial for expanding growth, enterprise, and jobs.
The IBEC director general expressed anxiety that flexible labour markets were under some threat, and did not want to see a return to the situation of the 1970s when employers had to go through "long-winded negotiations" to introduce change. He said that there was a need to support enterprise. In relation to this, he raised objections to the extent of EU regulation and legislation, and "the speed with which this was thrust upon us". He stressed that it is difficult to argue against individual regulations, but it is the cumulative effects of regulation that has a negative impact upon the growth of enterprise.
Turning to some of the key challenges, Mr O'Sullivan emphasised the importance of investing in knowledge and developing "strategies to win the talent war". A number of measures need to be taken, he stressed, to attract and retain employees:
- creating new opportunities for employees, especially through life-long learning. Significantly, he observed, organisations are facing the challenge of life-long change, while employees are facing the challenge of life-long learning. External support was required, he believed, because "the market tends to underinvest in training. If there is any sort of downturn, the first thing to be hit in the budget of enterprises is training";
- promoting "family-friendly" policies - "there has been a cultural shift in priorities, and this had led to increasing demand for a better work-life balance"; and
- highlighting the importance of employee financial participation - "there is scope to improve the lot of employees, but more importantly, to secure their buy-in and commitment to the enterprise. If employees are to be properly motivated, we have to look at financial involvement." However, Mr O'Sullivan introduced a note of caution: "We have to be extremely careful. We have to understand that one approach will not fit all situations. The development of financial participation has to be on a voluntary basis. You cannot legislate for this. We have some progress to report in this area, but we have to be very cautious in developing these areas, we should only proceed at a certain pace, and must have regard for the individual circumstances in individual enterprises."
Reforming the European social model
Ms Rodrigues opened her address by stating that the EU had recently adopted a new strategic agenda for economic and social reform based on the development of a "knowledge-based economy", which is to be based on more sustainable growth, better quality jobs, and social cohesion (EU0004241F). According to Ms Rodrigues, this will "create greater convergence between competitiveness and quality of working life".
A greater focus on life-long learning and adaptability will be one of the key bases for reforming the "European social model". Ms Rodrigues stressed that new political measures will also create new challenges for companies: "Knowledge management is becoming the key factor for competitiveness." EU firms must accept that "the resource focus is shifting from capital to knowledge, information and human resources. Companies are confronted with the issue of how to speed up the move towards a knowledge-based economy." The key "drivers" have changed from "management command and control" to "self-management and empowerment", and from "learning specific skills" to "developing broad competencies".
Ms Rodrigues stated that industrial relations must be adapted to fit the knowledge-based economy. This would require new forms of flexibility and new forms of security. She urged companies to develop "trade-offs", based on "win-win" solutions, to deal with change. She stressed that HR managers would play a critical role in managing change and building a "knowledge-based economy".
Finally, she warned that although Europe is "lagging behind the United States in developing a knowledge-based economy", there should be no attempt to imitate the US model and remove social protection. She stressed that Europe should build a different approach "combining competitiveness with social inclusion".
Best practice case studies
Following the plenary session, there were parallel workshops involving 12 case studies from various European organisations that were deemed to exemplify "best practice" in terms of creating new opportunities for employees, "family-friendly" employment policies and employee financial involvement. Three of the Irish case studies - RTE, Eircom and Xilinx- are briefly outlined below.
Staff development at RTE
Michael O'Brien and Stephanie Fitzpatrick described the role of the staff development centre (SDC) at RTE, the Irish national broadcaster, which has been important for creating new opportunities for staff. The purpose of the SDC is to: educate and train staff to meet skills shortages; provide a confidential and personal advice service to enable staff to develop their careers inside and outside RTE; act as an internal employment agency; and assist staff in developing new careers/business opportunities.
Eircom diversity strategy
An ambitious work-life balance policy at Eircom, the main Irish telecommunications operator, was outlined byGrainne O'Boyle. The policy embraces a wide range of practices including domestic leave, parental leave, career breaks, flexitime, job-sharing, teleworking, study leave, a subsidised company crèche, and an employee assistance programme.
Eircom has developed an innovative diversity strategy with the following aims: "to capitalise on a diverse workforce to fulfil our business goals and leverage the new psychological contract"; to "develop effective strategies to tap into the talents and potential of all employees - no one is excluded"; to "develop a range of work-life initiatives to suit the business objectives and the employee needs"; and to "deploy diversity philosophy into the customer care area to enhance customer loyalty and satisfaction". The following benefits reportedly ensued: retention of experienced employees; an advantage in recruitment; reductions in labour costs; improvements in productivity, job satisfaction and commitment; and enhanced customer service and retention.
Financial participation at Xilinx
John McGurrin described the employee financial participation schemes at Xilinx, an information technology company. He suggested that Xilinx has attempted to promote "a spirit of ownership" amongst employees, in terms of taking responsibility for the business. This has been done by introducing a wide range of financial participation schemes, including share-option, share-purchase, and profit-sharing plans.
According to Mr McGurrin, financial participation has brought about mutual benefits such as: improvements in recruitment, motivation and retention; an 18% employee stake in the company; and a low labour turnover rate of between 1% and 3%.
Creating worker opportunities
The final plenary session, which was chaired by Jackie Morin of the European Commission's Employment and Social Affairs Directorate General's industrial relations and managing change department, involved a summary and open discussion of the workshop findings. Finally, Mr Morin gave a closing address.
John Findlater of Guinness presented the findings of the first workshop on creating new opportunities for employees, and stated that there some innovative policies reported, relating to issues such as life-long learning, increasing competencies and employability. He struck a note of caution, however: "we forget that these large companies have also contracted out a lot of roles, but are the subcontractors using best practice?". Moreover, more thought needed to be given to the issue of how to apply these practices to smaller enterprises, and he raised question of measuring how many organisations are introducing new ideas.
Winifried Heidemann from the Hans Böckler Foundation in Germany raised the question of what can be done by the European Commission in this field, and made the following two points:
- as actors at enterprise level are driven by global competition, "it should not be the task of the Commission to set out an architecture of regulation." Rather, the Commission should "encourage the exchange of ideas and best practice, which will help to create a new European model of organising knowledge and life-long learning";
- "employability and mobility have become more and more important" and in future employees will frequently change jobs over the course of their working lives. To this end, the Commission should "create a flexible framework of certifying and recognising competencies and qualifications that have been gained in different institutional contexts."
Work-life balance
The findings of the second workshop on family-friendly work policies were presented by William Coupar of the UK-based Involvement and Participation Association (IPA). Mr Coupar stated that the term "work-life balance" (WLB) was preferable to "family-friendly policies", because it offered a broader definition. A number of themes emerged:
- the sponsorship of policy direction in this area by key senior people is desirable, if not essential;
- it is important that the business case for WLB policies is clearly articulated. The key business issues relate to motivation, recruitment and retention, managing absence and promoting "bottom-line" benefits, in terms of reducing labour costs;
- cultural and institutional underpinnings are significant. In Sweden, for instance, there are a set of cultural and institutional values underpinning WLB practices; and
- it is vital that the process of WLB is introduced through extensive dialogue with workers, in order to tap into what they actually want themselves.
WLB initiatives were said to be associated with benefits such as improvements in recruitment and retention and increased flexibility in other areas of work, in the sense that people are more likely to be committed.
A number of challenges were also identified:
- equity issues, in terms of the distribution of the availability of WLB practices. For instance, professionals are more likely to have access than blue-collar workers or front-line service workers;
- the issue of take-up. The case study examples indicate a plateau of 10%-20% of people who currently avail of WLB practices. This leaves the question of whether WLB policies would be feasible if, for instance, 35%-50% of people used them;
- the issue of institutional support, particularly relating to the ability of people to avail of childcare and elderly-care facilities. Two important questions are "how to deliver childcare in a 24/7 society" and the long-term challenge of care for elderly people; and.
- the fact that much of the business case for WLB is predicated on a buoyant labour market where recruitment and retention problems exist. A major question is whether the business case would be anywhere near as robust where there was a labour surplus.
Employee financial participation
The findings of the third workshop on employee financial participation were presented by Kenneth Glynn of IBEC. The key message emerging from the case studies was that financial participation programmes were put in place in order to promote employee identification with the ethos of the organisation. In this regard, clear communication and educating employees about the various schemes were perceived to be vital for generating trust. Other important issues raised were the difficulties associated with establishing schemes in advanced economies with high social welfare rates, as well as in developing economies with low wages and poor educational standards.
Challenges facing the EU
Mr Morin concluded the conference with a closing address. He commented that there are a number of key challenges in Europe relating to the recruitment and retention of employees:
- the EU must improve competitiveness in a more open global economy by moving towards a new knowledge-based economy. This is a new paradigm that companies must take on board;
- it is necessary to invest more in "human capital" in order to address technological developments and fill skills gaps;
- there is a demographic challenge in the context of an ageing workforce; and
- the EU has a 10-year strategic objective centred on achieving an employment rate of 70% across the Union.
These challenges have implications for public authorities, stressed Mr Morin. They raise the question of how we can create new opportunities for employees and ensure a better balance between life and work, and promote employee financial participation. Significantly, in the context of globalisation, he emphasised that change must be managed so that employees' concerns are addressed, rather than just those of employers. The implication is that change must be negotiated rather than imposed unilaterally.
Finally, Mr Morin stated that HR managers have a key role in managing change, but that companies have to take broader societal factors and aspects of the overall governance system into account - "things do not stop at the factory door."
Commentary
The conference dialogue illustrated that there is a certain degree of common ground between the European Commission and many major European employers concerning the challenges associated with attracting and retaining workers, and enhancing competitiveness by striving to move towards a "knowledge-based economy". In this regard, there is evidence of common acceptance of the importance of issues such as training and education, life-long learning, skill enhancement, family-friendly policies, and employee financial participation.
There is disagreement, however, over the broad means of accomplishing these objectives. Many employers - particularly in Ireland and the UK - are critical of the extent of employment-related regulations and Directives emanating from the Commission, which they perceive as an unnecessary restriction on enterprise and management prerogative. They argue that individual employers should have the freedom to shape employment relations policies that reflect their specific competitive circumstances. For its part, the Commission views the various pan-EU employment regulations as a means of promoting a "European social model" which promotes worker involvement and helps to protect workers from the uncertainties generated by unregulated market forces. (Tony Dobbins, CEROP, UCD)