Monthly Archives: February 2010

Did HR practices cause the global crash?

A flea in HR’s ear was an article featured in people management’s 27 August 2009 edition, in which Jack Welch doesn’t blame HR for the banking collapse. I personally agree with Jacks view, yes HR does develop the incentive schemes and manages them but how can a multinational company blame one department when things go wrong.
Companies develop an overall strategy which fits in with their business plan; this is something that has been developed with the owners, major shareholders, senior managers and stakeholders in order to drive and develop the business. The strategy that the company will put in place requires all the areas of a business to work together to meet the targets set; therefore HR will do what has been outlined in the overall objectives, thus how can you blame one particular department?

Bad bonus practice…

A letter in People Management Magazine from Michael Rose commenting on “HR to have greater role in reformed City reward, 16 July 2009” stating that a guaranteed bonus is often agreed for the first year  of employment as part of negotiation with a prospective employee. Michael Rose of Rewards Consulting Limited then comments that it is thoroughly bad practice to have any guarantees after the first year and that it should not take a regulator to point this out. I completely agree with Michael Rose from an incentive view point. Bonuses are one of the main aspects of an incentive scheme’s and writing an “automatic” bonus in to an employee’s terms and conditions defeats the whole point of the scheme or potential scheme, which could very easily conclude in the business failing to reach several of the HR objectives. I don’t believe a financial bonus is always the best reward in an incentive scheme, much the opposite the reward should change along with an employee’s needs to be fully affective but a lot of bonuses and employees do prefer a financial award, therefore financial awards are regularly used and guaranteeing them to an employee will reduce the overall incentive scheme dramatically.

CIPD issues reward code to tackle executive pay…

Lucy Philips wrote an article in 10 September 2009 People Management about the CIPD issuing reward code to tackle executive pay but is it too late? It is my personal view that bankers earn to much in financial bonuses but it reality if I had an employee earning my company 10 million pounds I would reward them heavily for making the money.  If a reward code gets issued to the banking industry will there then be a case for a code to be issued across all industries? There is a fine balance between reward and greed; if you want to get the best out of an employee then you have to have an incentive scheme that works to achieve this.

Government and individuals knew what they were doing most of the time taking out big mortgages and other financial loans/credit cards but a lot of individuals who are now struggling have wound it easy to claim that they were mislead and hide behind the blame of bankers. If you can’t afford something then don’t buy it but we live in a world where people want things before they can afford it and the bankers are only offering a service that has been on offer for years.

I do believe that guaranteed pension scheme e.g. Sir Fred Goodwin should be stopped especially when the company ends up being bailed out by government but if a code is introduced which limits financial rewards it will end up being complicated as people will soon find loop holes in the code.

Banks are companies and writing recommendations to the banks in my eyes is pointless. Banks gain customers regardless of all the hidden issues, if they have a good interest rate they will gain the customer or customers will stay with a bank due to the hassle of changing all their details. I believe that the money and time should be spent setting up an free advisor body that can educate the people who think that taking out loans they can’t repay or stop people being able to open a store/credit card when they can’t afford to pay off the money would be a much more sensible solution.