Employer engagement with active labour market policy: a HRM perspective

1. Employer engagement with active labour market policy: a HRM perspective Dr Patrick McGurk University of Greenwich International Conference on Sustainable Employability, Nijmegen School of Management 12 November 2013

2. Overview • Introduction: Why employer engagement? • Background and Theory • Engagement with what? • The business case and the corporate responsibility case for employer engagement • Employer engagement and ‘human resource architecture’ • Some Data and Findings • Which employers engage? • How do they engage? • Conclusions and future research

3. Introduction • The demand side of active labour market policy (ALMP) is under-researched. Employer engagement (EE) in the UK is a data-free zone! • Corporate responsibility (CR) is commonly cited as the main reason for EE, but with little elaboration of the underlying ‘business benefits’. • Strategic human resource management (HRM) theory provides a basis for systematic enquiry into EE.

4. Engagement with what? • The three main ways in which employers can engage with ALMP initiatives in the UK are through: • Community Benefit Agreements • See especially ‘Section 106 Agreements’ • Labour market intermediaries • Active v. passive intermediaries • Sectoral programmes • See especially Sector Skills Councils / attempts to create career ladders (c.f. Osterman 2008) • However, short-termism and voluntarism exacerbate employer disengagement.

5. Business case v. CR case for employer engagement • Main business case for engagement seems to be reductions in employee turnover and associated improvements in customer service. This resembles the ‘business case for diversity’. • But: “it is only when management ‘gets religion’ that there is an opportunity to work with firms, and the task of propagating religion and selling it within the organization is slow and difficult" (Osterman 2008:230-231). • Why do only some firms ‘get religion’? What are the underlying strategic motivations?

6. Employer engagement and human resource architecture strong weak Employer engagement (after Lepak and Snell 1999, adapted from Martin and Hetrick 2006)

7. Two propositions • [Which employers engage?]Employer engagement is most likely among organisations that rely heavily on a large supply of low-skill labour for their core operations. • [How do they engage?]Employers who place a strategic premium on retention and customer service will recruit ALMP clients and internalise them as part of the core employee group.

8. Sources of data • Internal documentation from national welfare-to-work agencies → ‘which types of employers engage’ • 17 semi-structured interviews with employer engagement managers across 12 agencies → ‘how do they engage’

9. Which types of employers engage? • The UK’s lowest-paying sectors are hospitality, retail andcleaning, together accounting for over half of all low-paid jobs (Low Pay Commission 2013). • These three sectors correspond strongly with the three most engaged sectors with the government employment service and the ‘Work Programme’. Recruitment agencies are also an important sector. • It may be inferred that employer engagement is motivated by a strategic preference for low-wage, low-skill and temporary employees.

10. How do employers engage? • Staffing of new facilities • Linked to local planning agreements • Initially large-scale, but little evidence of sustained (strong) engagement • Localised externalisation • Most prevalent form of engagement • Large national corporate employers but offering small baskets of low-paid temporary jobs, increasingly on zero-hour/agency contracts • Local manager discretion (‘like working with SMEs’) • Mid-range internalisation • Some evidence of middle-to-large sized employers in low-paying sectors with a strategic interest in customer service (see especially newer, regional retail chains) • See also demand for ‘mid-range’ skills

11. Conclusions • Not yet possible to draw firm conclusions. • Strong suggestion that employer engagement is motivated by low wage-low skill and temporary labour. • Overall UK employer engagement may be considered ‘weak’. • Strongest employer engagement seems to be among ‘mid-range internalisation’ strategies. • More research required that sources data direct from employers and considers a variety of contexts.