Latest NCPP study will show firms how to deal with economic pressures, writes GERALD FLYNN

IRISH WORKPLACES are great places for rumour and supposition. This came home to me last week as a radio interviewer took exception when I demurred from his declaration that “everyone is having to take a pay cut”.

I suggested that most people who have kept their jobs probably have at least the same basic pay as they had last year though the exchequer is about to take an even larger slice in income tax, social insurance and levies.

In many cases lawyers, journalists, advertising executives and accountants have experienced salary reductions and this may explain why it has become received wisdom that everyone is in the same situation.

Yet a recent pan-European survey by the Hay Consultancy suggests that while most (53 per cent) Irish organisations introduced pay freezes in the past year, few have opted for compulsory salary cuts, shorter working weeks or withdrawal of other benefits.

Apart from the 53 per cent who are freezing pay, compared to an average of 37 per cent across Europe, 7 per cent were cutting pay and a further 7 per cent had paid some wage increases. The remaining quarter were unclear as they had been postponing a salary review decision either to wait and see what the emergency Budget had in store or to establish whether the social partners national pay deal signed just five months ago is still dead or alive.

The survey indicates that more companies are cutting employee numbers rather than pay rates.

That is the attraction of such surveys – they help to pinpoint the reality from the self-serving views of employers and trade unions.

Unlike many developed economies we have been slow to analyse what goes on in most Irish workplaces. That changed in 2004 when the National Centre for Partnership and Performance (NCPP) funded the first comprehensive study of management practices and employment relations.

The survey, undertaken by the ESRI, presented detailed questions to 1,491 managers in the private sector and 392 in the public sector on their practices and levels of employee engagement. It also separately questioned nearly 2,000 employees to get a good picture of “organisational fitness”, especially against pressure to enhance competitiveness and responsiveness to changing market or customer demands.

The results were worrying apart from the leading multinational firms, both Irish and foreign-owned, which seemed to mix energy, innovation, responsiveness and effective human resource management skills. The study was against the backdrop of developing a knowledge economy and promotion of lifelong learning when, in reality, many firms and State agencies were living on high margins, overcharging or expanding on the back of soaring public sector spending. The survey highlighted weaknesses that contributed to the steady decline in our competitiveness since then. Now we are about to have a second NCPP survey and it will be beneficial if the adage that “a good crisis is a great time to implement overdue changes” is actually taken up.

We have had irate teaching union members, angry at pay cuts disguised as a pensions levy, tilting at pupil-teacher ratios and property developer windmills and beating their drums on behalf of the “knowledge society”. This reflects what is happening in many workplaces – a focus on their sector. What is needed is an exploration of opportunities and improved productivity.

NCPP research director Damian Thomas said the survey would include 5,000 employees, 1,500 private sector employers and managers and 400 in the public sector. “It will provide us with insights into employee and employer experiences of change, working practices and their anticipation of future change as well as track progress since the 2004 study,” he added.

The lesson from the first survey was that effective changes cannot be sustained by top-down decisions and, more worryingly, that many organisations lacked management competencies or employee engagement structures to be adaptable and responsive to external pressures.

“We now have the greatest external pressure for over two generations and the latest workplace survey, being undertaken by the ESRI and Amárach, may provide insights into the potential survival of the fittest organisations. Within another year, a fair proportion will be out of business and the expanding State agencies will be a bit leaner,” says Thomas.

Then they might wish they had paid greater attention to the results of the 2004 study which was largely ignored by strategic managers distracted by the boom. Another report is imminent: it would be very silly to ignore it.

Gerald Flynn is an employment specialist with Align Management Solutions in Dublin