I'll Be Back (with some cash)

Posted on 4th July, 2009

Would you accept an IOU from Arnie?


Well, as a public sector employee in the Golden State, this month you've got no choice.


I owe you, says the Governator, last month's salary. But is he good for the cash? The answer to that question depends on a judgment requiring a sophisticated understanding of some complex fiscal and political factors which are simply outside the ken of most individuals.


Now this looks and feels outrageous (because it is) but in asking state employees to enter into Hobson's Choice - accept an IOU with the risk the money won't follow, or quit and be certain that it won't - is California simply doing what it does best: trailblazing?I remember as a young boy growing up in England, someone sagely telling me that what happens in California tends to become mainstream on the East Coast of the US about five or ten years later, and hits these shores about a further five or ten thereafter.


It was good advice. And if anything, in our globalised, 24/7 media-engorged world, the timelines involved have probably reduced.With Britain set - by 2013 - to be spending as much annually on repaying debt interest as it does on its prized National Health Service (that's before we even begin to think about the capital, by the way), it is by no means impossible that we'll see "Dear Valued Employee....It is with regret that....." style notes emanating from HR departments across the public sector.


To an extent, it is already happening in the private sector in the form of the crazed 'special offers' being touted to employees of the bloated, poorly managed, former public corporations British Airways and BT.British Airways wondered if staff might like to work for free for a while.  How sweet.


And BT is offering a 75% pay cut not to turn up for a year. Particularly in the case of BT, which - incredibly - employs a whopping 106,000 employees, but also to a large extent BA too, having to take such drastic action now is the price to be paid for years of complacent navel-gazing, unchecked growth of fixed costs and, most importantly, sluggish, timid management cultures.


But in many respects the story of these monopolistic private sector giants, both of which have yet to engage in genuine cultural and structural reform, is the story of the UK's public sector writ small.Schwarzenegger's desperate action is as unfair as it insulting, breaching as it does so many of the basic tenets of the psychological contract that exists between employer and employee.


The 'suggestions' from BA and BT are not much better.


But unless senior leaders in the UK, in both the public and the private sectors, are prepared to look scrupulously, honestly and relentlessly at the performance of their most expensive resource - people - we might as well sit back and wait for the IOUs to hit the doormat.

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Comments (4)

OK, Nick, so maybe I eat my words! This was just posted on BBC Online: <br /><br />BA staff reject cost-cutting plan<br /><br />A mass meeting of more than 2,000 British Airways cabin crew workers has rejected the airline\'s plans to reduce costs by cutting jobs and freezing pay.<br /><br />Staff said they were not prepared to accept an \"assault\" on their pay, terms and conditions. <br /><br />http://news.bbc.co.uk/1/hi/business/8136503.stm<br /><br />====<br /><br />Maybe this change programme has some way to travel! ;)
I hear what you are saying, but also let\'s bear in mind the organisation needs to start somewhere; judging by their recent spate of special offers (241 in Club World - hurray!) clearly BA needs to address cashflow -- now -- so maybe this initial focus on salary was as good a place as anywhere to start. We\'ll need to take another look in a few months\' time to see whether this really was an initiative to drive change and get employees to take responsibility for the company\'s future, or whether it was just about making savings now.<br /><br />An interesting example of how to do this is Google. As the downturn accelerated last year, they needed to think about where to drive cost efficiency, but needed to bear in mind an opinionated workforce that cherishes the many benefits the company offers. So they used Google Moderator http://www.google.com/enterprise/marketplace/viewListing?productListingId=5143210+6088191711778981644 to survey opinion around the organisation: anyone was able to suggest ways in which the company could save money, however large or insignificant, and then others in the company could debate and vote on all the different proposals. That meant that when cuts were eventually made, those who decided could credibly say they had taken employees into account and been as transparent as possible.
Thanks Nicholas. I agree that, if handled properly, these kind of new situations for corporations also represent opportunities, particularly when it comes to new patterns of more flexible, responsive working.<br /><br />The difficulty is that, however Wilie Walsh wants to spin it (and I have a fair bit of time for him as a leader - see my blog post on Gordon\'s Lessons in Leadership below), so far the response of the big corporations has been top-down: \"this is what flexible working will look like\".<br /><br />You may be right that this is more a product of mishandling the external PR, and Mr Walsh may well have asked people to think about what else they might like to consider, but the fact remains that this all still looks and feels like the somewhat Stalinist, command-and-control model with which the BAs and the BTs are most comfortable. It is more than just poor external comms.<br /><br />The whole point about flexible working is that it is highly individuated. And these business will always struggle to accommodate that because of their exceedingly conservative way of going about things. <br /><br />Had they genuinely said to their people, \"look, we need to make some savings, some of you will want to work more flexibly, so come to us with your ideas\" - and left it there - well then that would have looked a lot more like a serious change programme. Indeed, it would have been pretty exciting and innovative, an example to posterity of how tough times force people to think differently. <br /><br />Instead, the approach they took looks liked the fairly desperate measure that it was: scrabbling to make up for years of bloated, complacent management practices.<br />
I agree, Nick, that mismanagement of culture has led these organisations to this place, and that drastic change in attitudes are needed. But having seen Willie Walsh speak at London Business School last Monday I believe that, in the case of BA at least, the call for staff to work without pay is, in fact, part of a serious change programme that could promote exactly the kind of change that's needed. Walsh told the audience last week that he included the suggestion of working without pay for a month in the context of a broader, urgent message to encourage *all* staff to think about what they *as individuals* could do to help the company survive. By doing this, I suspect he may have created a sense of urgency and individual responsibilty (even, dare I say it, empowerment) that didn't exist before.That said, BA clearly screwed up the PR around this is, and that's inexcusable. It's all well and good to get the internal messaging right, but how are BA employees meant to feel when their friends ask them at parties or in the pub what it's like to work for a organisation that (to put it politely) is "taking advantage of them"? Walsh also described the extraordinary sense of pride that BA employees have in working for the airline; the extensive, generally negative coverage of this kind of initiative is only going to erode that pride. So, a creative, challenging initiative that could have strengthened engagement is in serious danger of being let down by poor external comms.