Nerves of Steel for HR in Wales

Adrian Lewis, Commercial Director for Welsh HR software company Activ Absence, shares his thoughts on the steel industry crisis affecting South Wales:

As a South Wales businessman, living in Neath, I have many friends working both directly and indirectly for the steel plants in Port Talbot and Trostre in Llanelli – so like many others in the region, I have everything crossed and am hoping that the current bidders are able to save as many South Wales jobs as possible.

Whoever buys the plants, one thing is clear, a reported £1 million a day loss (i) is not sustainable and the new business owners will be scrutinising every single area of the business to look for new ways to save money, both hi-tech and old fashioned.  The new owners will face some tough decisions and if it saves money, it will be up for discussion.

The good news for the region is that even saving some jobs is better than than none at all, and a buyer will secure the plants’ future, at least for now.

Whilst the financial pressures on home grown steel are especially challenging, the pressure to cut costs and improve productivity and profitability are universal.

SMEs and PLCs across the UK face similar challenges, and it appears our organisations are not equipped to meet them.  Research this April (ii) revealed a UK workforce hindered by complexity, unnecessary administration and poor performing technology.  In fact, 82 percent of respondents claimed to be struggling to complete their daily tasks due to unnecessary complexity.

The report concluded that out of date tech and unnecessary admin is costing the UK £60 billion every year - putting Tata’s alleged losses into perspective.  They also noted that employees were disengaged and viewed as commodities rather than valuable assets and called for a need to create people-centric environments, investment in technology and a reduction in unnecessary admin in order to solve the current crisis.

It’s certainly a report that rang true with me – just using spreadsheets in HR instead of software can cost a business with 200 staff £5,900 a year – it’s a silent cost, because the wages get paid no matter what staff do.  It’s only when managers analyse how much time is being spent on sickness and holiday administration and unchecked absence that managers get a nasty wake up call.

Managers also often don’t consider the cost of sick days, which are often higher when there is less visibility.  Some reports even estimate the true cost of sickness absence to be as high as 30% of payroll. (iii)

Whilst we are experts at reducing HR admin costs, imagine that level of wasted time and effort across the business as a whole.  That may explain why the UK has among the lowest rates of productivity in Europe.

As the report shows, the problem isn’t people, it’s processes, poor technology support, internal politics, and unrealistic workloads, all of which also has an impact on customer service, which some plcs then seek to resolve by outsourcing telephone support to India (in many cases leaving their customers even more unhappy).

Interestingly, whilst the total cost was £60 Billion, the report found that if the UK reduced time wasting at work by one hour, per week, per UK employee – the UK could save £21.4 billion almost instantly.  That makes sobering reading.

It also concluded that improving employee engagement was vital, both to combat a climate of high employment and to meet the UK’s productivity challenge.  The report claimed that investing in technology would in most cases reduce admin and improve engagement in one fell swoop.

It’s great to see research backing up what we’ve been saying for years, that cumbersome manual admin leads to mistakes and disengaged staff.  Improved technology in our experience improves efficiency, employee engagement and communication.  UK plc simply must leave its comfort zone of out of date folders, paper forms, unnecessary admin, wall planners and spreadsheets and invest in technology that saves money in both the short and long term.

Of course, the steel industry has far bigger challenges and like everyone else in the region, I’m nervously holding my breath and praying for a good outcome for my home town.

In the face of huge global instability, EU uncertainty and a global steel crisis, an extra £60 billion in the UK economy would be a welcome boost.

(i) https://www.theguardian.com/business/2016/mar/30/tata-steels-british-plants-must-be-sold-within-weeks
(ii) http://hrnews.co.uk/uk-businesses-wasting-60-billion-year-unnecessary-admin/
(iii) http://www.kronos.com/ads/absence/38/Kronos_absence_out_sick.pdf