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August 23, 2012



Latest Management Fad: Stack Ranking


Requires ability to sack at will.

“It leads to employees focusing on competing with each other rather than competing with other companies.”
Vanity Fair

Also see articles linked in above article.


 Paddy Manning

The usual lies, nonsense & pure stupid ideology.
So called job protection laws increase the cost of hiring so discourage employment.
depicting the US as a land of petty tyrants & bullied workers is nonsense.
Only a grimly determined ideologist could carry on the exploitation/government to the rescue theory of economic interaction.



Under Raab's proposals only the hard working AND talented would survive. Hard working plodders should fear for their jobs. That's most of us, I suspect.


The US is awesome for people with talent; it is trivially easy to switch jobs when a company isn't working out for you.

Account Deleted

@Paddy, job protection laws do not increase the cost of hiring, they increase the cost of sacking - e.g. by mandating minimum notice periods.

As the need to sack an incompetent employee often indicates a primary error in hiring, you could argue that such protections increase the penalties of poor management, and thus add a potential risk premium to hiring, but they do not penalise good management.

Competent employers tend not to be bothered by employment regs (which, in the UK, are really quite mild), hence the lukewarm response to Adrian Beecroft's paper, outside purely ideological circles. The ones who work up a sweat on the issue either have crap HR or they want the flexibility to lay-off and re-hire staff at will.

One of the ironies of the current recession is the number of employers who are now hoarding skilled labour (keeping employment up but lowering productivity), having been burnt by the cost of recruitment coming out of previous downturns. Indeed, if you offered most employers a choice between the abolition of employment regs and a 50% cut in recruitment agency fees, I suspect (from personal experience) that most would choose the latter.


With Stack Ranking and competing with the Chinese, in Britannia Unchained, the right have lost their collective marbles.

'The race to the bottom, to be like China, is on, and we're all going to do it. So your wages will meet the Chinese somewhere, and so will your social conditions ... abolish minimum wages, abolish social protection."
Paul Mason



Seriously, I must be getting old - I remember when your Tory-type-person actually *felt sorry* for the Chinese worker...


I genuinely don't know what Raab is talking about: cf here: http://en.wikipedia.org/wiki/Zero-hour_contract

I have been on numerous 'zero hour contracts' and I don't work cash in hand in the construction industry, I am relatively 'respectable'.

But, as the blog post states, the most reasonable way to look at this is another unprovoked assault in the class war.


You are correct, good summary chris.

Lots of people need to wake up and realise that the policies of the Coalition are not constructive for the economy and are driven by a hard right ideology unconnected with facts.

It would be nice to believe that a Government might come to power which wished to increase human welfare and happiness. But we are still waiting.


On the flip side a lot of years ago I tried to hire a German GSM engineer to work in the USA. He was perfect and visas weren't a problem. We couldn't make the offer, much as we would have liked to, because he had to give 9 months notice. The job went to a Brit with no where near the experience.

Yeah I know, single data point and al that .....


Haven't checked, (can't be arsed, frankly) but what's the betting that Raab has never had anything to do with building and running a business from the floor up? These ideology-driven nutters/theorists are at best an irrelevance, mostly a distraction and at worst an obstruction to real business

Tim Newman

How many of those claiming job protection laws have no bearing on hiring policy actually run hire people as part of an ongoing business concern? I couldn't find much business experience your links, and a lot seemed to be academics citing research which, frankly, could mean anything.

From my personal experience, I work in an area which has probably the strongest staff employee protection in the world - the Nigerian oil industry. It is almost literally impossible to fire somebody, even when they have been caught red-handed embezzling money. Both the law and the unions ensure that once employed, nobody can be fired (and I cannot think of a single instance where somebody has been in the 2 years I've been there). I am also directly involved in the hiring process, and the process of hiring staff employees in Nigeria consists of 7 or 8 interviews and assessments and takes about a year. This is because it is impossible to fire anybody. The company is very very reluctant to take on staff, and prefers contractors, for the very reason that once in the door, the staff cannot be got rid of. We run at something like 70% contractors for this reason, and the only reason we have 30% staff is because of the union's insistence that we employ more of their members. Interestingly, the situation is not too dissimilar with the parent company in France, at least according to my French colleagues. When we set about hiring, the impossibility of firing people is very much at the forefront of our thinking. It has to be.

So whereas my own experience is probably not representative or universal, I find it hard to believe that some researcher has come up with a method whereby it can be confidently stated that employee protection laws have no bearing on hiring policies. I am doubtful that every aspect of business can be gleaned from statistical research and surveys, especially that which happens at the margin, which is the case here. Unless we have right from the horse's mouth somebody who has skin in the game saying that x does not affect y in his business, I'd not read too much into it.

Andrew Fisher


Even in the extreme case you describe (which is obviously nothing like the UK), you don't claim that the company hasn't reduced the total number of workers. If the protection for staff members was scrapped you might have more staff, but then you would hire fewer contractors. So few or no new jobs overall.

Tim Newman

"If the protection for staff members was scrapped you might have more staff, but then you would hire fewer contractors. So few or no new jobs overall."

I'm not so sure. Were staff easier to sack, I think we'd either reduce the head count drastically with no difference in output, or get one hell of a lot more done. Part of the problem is that once somebody becomes staff, you often have little chance of getting much out of them thereafter.

Account Deleted

@Tim Newman, as I presume your question about credentials in claiming that job protection laws have little impact on hiring was directed at me, let me 'fess up.

For 13 years to 2010 I was an executive director of a specialist recruitment company (ICT, engineering, pharma, banking, oil & gas), based in London (FTSE-listed), operating through over 50 offices in 18 countries. Not only did I do a lot of hiring and firing myself, but I made a careful study of the dynamics of recruitment, because there was money it.

Recruitment fees for a permanent staff hire average 20% of total 1st year package (not just salary), so you can see why a month's notice is a lesser consideration when it comes to the "cost of hiring", and that's before you factor in the overhead cost of interviews, induction and interim back-fills.

Coincidentally, I spent the 13 years prior to that role working (out of London) for an American oil company that operated in the North Sea and Africa (chiefly Nigeria and Angola). Many of the Nigerian jobs were sinecures, i.e. back-handers to the friends and family of government officials, as were the "development assignments" that the sons of senior officials were sent on to London and Houston.

The high proportion of contractor roles in the oil industry in developing nations reflects the power balance between oil companies and government. The oilcos want to keep a monopoly on exploration and production expertise, while government is caught between a desire for independence and the need for oilco money (for both legitimate and illegitimate purposes).

But the Nigerian oil industry is a distraction. The general point is that (in the UK) the burden of employment protections on employers is over-stated for ideological reasons. In practice, you can sack a new hire at any time up to 24 months and (if you've worded your contracts suitably) pay a pittance in termination. The real cost of a bad hire is the cost of recruiting a replacement.

Banner Pens

What an awesome article. God, am I speechless. Thank you so much! This is wonderful.


Hardworking plodders will do fine. Remember not to show any initiative or that you've noticed your employer is no longer sticking to their own principles. Best not have any of your own, either.


As well as owning 100% of your own business, you can keep up to 90% of the gross profit.http://www.sonovate.com/

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