People, Purpose, Profit – The key to growth and prosperity post 2020

At the start of 2020 few of us would have predicted that we were about to embark on one of the most turbulent years in modern history. Restrictions on our travel plans, working and schooling from home, and adapting to new social distancing measures have meant we have all had to change huge aspects of our personal and work lives.

Similarly, alongside crisis management, many employers are still facing significant challenges in staying afloat, keeping people in jobs and somehow satisfying shareholder expectations.

The series of lockdown measures globally, and subsequent constraints on the worldwide economy, have rightly forced all organisations to examine their cost base and make quick decisions to shore up their financial position more stringently. However, whilst in tough economic times, people development budgets are put on hold, a number of reports agree that if businesses are to prosper long term, investment in people and critical skills development cannot afford to be side-lined.

A COVID-19 Special report released by KPMG this summer stated that the number one growth risk that CEOs face currently is managing talent. That means the focus on keeping key employees, attracting specialised talent and investing in upskilling and reskilling, key to employee effectiveness and economic recovery, will have to be placed strategically front and centre to drive long term prosperity. Employers wanting to reinvent their organisations and build sustainable workplaces for the future must then prioritise people development.

The challenge of priorities

As seen in many organisations, an instinctive reaction to the crisis has been to prioritise reducing costs, stopping anything other than essential expenditure and working through a spreadsheet to decide where savings can be made. As a result, people investment budgets are often first to be cut and when you examine the anatomy of a typical business leader this is somewhat understandable. According to Robert Half, currently 52% of the FTSE 100 CEOs come from a finance background and 27% from technology.

Whilst financial and technical acumen is critical to running a successful business, it is only the starting point. Top executives now need to have significant HR exposure in their ascension to the C-Suite to understand the ‘softer’ aspects of leadership as well as the direct impact on employees of any cost or tech driven decisions made. According to the Robert Half report, only 8% of today’s CEOs in the FTSE 100 have any direct HR experience which may well account for why the priority for investment in people practices is downgraded.

People and Purpose

One forward-thinking organisation has put their ‘people plan on steroids’ as they call it. Like many businesses, MSC Direct Industrial Supply Co, a UK based industrial consumables distributor in the West Midlands, has been impacted by the global pandemic. But as Dave Darby, Managing Director, explains, this year has only served to re-establish why their people investment is critical. “As a principle our approach is about putting people before profit as, in the end, it is people who deliver results. Not that delivering profit is not important, of course it is, but there needs to be a relentless focus on creating an environment where your people can excel at what they do. Our customers often say that MSC employees care more and go out of their way to help across all parts of our business. The reason for this is simple, it is because MSC focuses on their people first.”

The face of talent attraction and retention is changing, as we discussed in an earlier post The changing face of talent attraction and retention. In considering what the future of their workplace will look like, MSC is transforming its strategic talent plan and introducing innovative HR practices to radically change the way they attract, recruit, and develop people.

They have ripped up the traditional performance review process and moved toward a more continuous conversations, continuous development approach that exists beyond the monthly 1:1 check-in meetings. Managers and teams discuss competencies and values as well as tasks. This means people managers need to develop and enhance their skill set to have effective discussions with their teams. As such MSC have heavily invested in their leadership programme.

Managers are becoming more self-aware and now have frameworks and tool kits in place that help them improve their communications and feedback skills. More importantly, MSC actively demonstrates how seriously it takes its responsibility as an employer to safeguard the wellbeing of the workforce. Managers are developing a deeper understanding of human needs, especially when it comes to adapting to uncertainty during periods of change and will be attending educational programmes to help them spot early signs of ill health for those they are responsible for.

MSC is also redesigning how it recruits and interviews potential candidates. It evaluates motivation, behaviours and personal values as well as a candidate’s skillset to strengthen the level of engagement between the individual and the organisation. And its people commitment extends beyond their organisation and into the local community. In partnership with local educational establishments, MSC is creating a platform to engage and inspire local young people to access career opportunities in engineering. The approach is designed to help address the skills’ shortage in the sector and establish a more diverse pipeline of emerging talent.

Penny Davies, HR Director, explains, “We recognise that ticking boxes is not good enough, there is a need for us to engage with our current and future workforce in a meaningful and authentic way. We are now frequently seeing employees wanting to work for organisations that care more about the bigger issues than just the bottom line. They are looking for employers who share their values, where they feel connected and empowered with a sense of belonging.”

A renewed human focus as a means of organisational evolution

This year many of us have exposed our home working environment to the world and placed our office décor, children, housemates and / or pets in full view. This insight into the human impact of working life is changing societal focus. Whether it be donating to a worthy cause at the behest of a 100-year-old war hero walking laps of his garden, or a renewed collective respect for NHS workers on the front line, 2020 has shown the power of human purpose.

The focus on humanity and purpose will force companies to demonstrate how they can make a real difference beyond just making money. CEOs are now having to re-think their organisational purpose as they are no longer just being held to account by shareholders. Their strategies will need to cater for the needs of diverse stakeholder groups including employees, communities, partners and clients.

It seems that shareholder primacy might be finally losing its grip. If shareholders hold their nerve and concede to investing in people and creating a purpose beyond profit as a strategic imperative, they may well reap bigger rewards long term.

This post is part of our Future of Work series. You can read the previous post or find them all in our Future of Work section. If you’d like to discuss how we can help get you prepared for the way work and business is changing, then please contact us.