Renu Birla, director of people services, reward, KPMG in Birmingham, stresses the need for positive personnel policies if West Midlands firms are to remain competitive

With tough times potentially on the cards for businesses across the West Midlands they have to have a well-motivated workforce with an interest in seeing their company succeed in order to steal a march on their competitors.

However, the current economic environment has not encouraged staff loyalty and many companies are finding it increasingly difficult to either attract or retain the executives and skilled workers they need.

According to data from the Chartered Institute of Personnel and Development, because the UK employment picture is relatively healthy, more than two-thirds of businesses are having problems finding specialist and experienced staff.

The change in approach is necessary because of the changes that have occurred in the working culture.

Many employees, particularly senior employees, are prepared to back their skills and try and find better paid or better rewarded work elsewhere.

“If you look at the graduate market, people are only likely to stay with a company for between three to five years before looking to move on and this can often pose difficulties for companies looking to develop long-term strategies based on the skills and experience of their employees,” says Renu Birla, director of people services, reward, with KPMG in Birmingham.

“There is no doubt that market conditions are getting tougher and there’s a lot of uncertainty around.

“In such a climate, it is important that businesses keep focused on one of their greatest assets; their employees. They need to identify what benefits they bring to the business and then if warranted, offer suitable incentives.”

The problem for many firms in the current climate is that they cannot simply throw money at the problem like they may have done in the past.

“Firms need to be more creative and flexible – and this applies just as much to their HR policies as it does to anything else,” says Ms Birla.

In the face of tougher trading conditions, many firms may have in the past opted for a knee-jerk reaction and simply looked at the easiest option for reducing costs – cutting their headcount.

Others have looked to impose pay freezes or a reduction in benefits.

However, according to Ms Birla, the policy can be a short-term fix.

“The loss of important skills and lack of investment in developing those skills will make any business weaker in the long run,” she says.

“It is far better in our view to develop suitable strategies that will promote the long term wellbeing of a business.

“Employers should incentivise their workforce and ensure their workers have a greater stake in the success of the business.

“HR departments can only do so much and we are finding that more and more companies are coming to us and asking for advice and/or sense check on the best personnel policies that will benefit their businesses in both the short, and long terms.

“They should encourage workers to have a greater say in how the business is run and to suggest ideas on how they think it could be improved.”
Although difficult, companies have to strike a balance and recognise key employees who are crucial to their business going forward, according to Ms Birla.

“We are encouraging more and more firms to deliver reward packages through performance-related measures,” she says.

“These are obviously dependent on the performance of the company but if employees can see a personal stake in this then they will feel more motivated and hopefully, better inclined to stay on for the long term.”

While not a fit-all model, the approach is being used increasingly in all sectors of business, not just in the professional and financial services industries but also manufacturing.

Employers are recognising the importance of retaining key staff if they are to weather the economic storm.

“Many are adopting a half-full rather a half-empty philosophy,” says Ms Birla.

“Many companies are also actively sourcing out new opportunities offered by the emerging economies of China, India and others – to ensure they have a far more balanced global footprint than they did.

“A lot of companies want to develop the right framework and many are doing so.

“Many firms are focusing on realising the value of a flexible reward strategy – something which is fundamental to any successful business strategy.”