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Beyond boom and bust: Building resilient UK employability services across the economic cycle

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Beyond boom and bust: Building resilient UK employability services across the economic cycle

With unemployment poised to soar in the United Kingdom, the employability sector is being called to action. The focus will be on how to best support those affected back into decent, sustainable work. But the coming investment also represents a generational opportunity for the sector to put itself on a more sustainable footing, beyond the next economic cycle. It must not be wasted.

The countercyclical nature of employability services poses familiar challenges. The economic boom-bust cycle leaves the sector hollowed and de-skilled at the start of the downturn, just when it is most needed. It creates traumatic redundancies, business disruption and loss of performance during the upturn, as contracts wind down.

But while the cycle is inevitable, the damage need not be. How can the sector manage the cycle better to improve responsiveness, limit uncertainty for businesses and employees, and maintain quality service delivery?

Part of the answer is a new approach to planning. In this article we show how long-term scenario planning and innovative thinking can create a more responsive and resilient sector.

Scenario planning improves responsiveness to commissioning changes

Scenario planning in industry has been around for more than 50 years. It famously guided Shell to gain early access to Russian oil fields when few others imagined that the USSR would disintegrate.

Employability providers and commissioners may not have to imagine the disintegration of a nation but identifying scenarios that go beyond the coming downturn – and genuinely incorporating these into strategic and operational planning – is a powerful tool to build longer-term resilience and sustainability.

Using scenario planning, leaders develop detailed visions of potential futures, then use these for decision-making during uncertainty. Scenario planning balances the task of predicting the future with reacting to the immediate context.

External drivers inform future scenarios

Local, national and global phenomena can all effect the employability sector and individual providers. Exploring these enables the sector to design meaningful but provocative scenarios. It is important to consider the many drivers that could influence the sector.

Politics and policy directions. The post-referendum era has revealed the spectrum of politics and policy possibilities is much wider than we imagined previously. Devolution, centralisation, nationalisation and further outsourcing in employability and related services are all realistic for future commissioning. With the work and health agenda prominent, and a focus in public services on holistic assessment and social determinants, we could see further integration of contracts or supply chains across traditional sector boundaries.

The new economy. Ongoing changes in the broader economy will influence both the nature of employability services and the labour market in which jobseekers are engaged. In the medium term, the post-crisis scale of unemployment and underemployment will be critical. But deeper shifts are equally important.

The economy’s response to climate change will drive investment swings across geographies and industries with increasing pace. Brexit and the rapid rise of developing economies will influence Britain’s industrial mix and areas of strength.

Social change. The nature of work will continue to change, with portfolio careers, flexible working, and lifelong learning likely to remain, if not accelerate. Demographic change will also shape demand for employability services, with older workers an increasingly critical and engaged part of the labour force. Concerns about privacy may also strengthen in response to increasingly pervasive technology.

Technology innovation. Technology and digitisation will reshape the expectations of employability service users, as well as the broader world of work. Developments such as the growth of ubiquitous connectivity mean service users will demand increasingly personalised, responsive support. Meanwhile, innovation and investment could give rise to whole new industries and jobs.

Automation will rapidly change labour markets, displacing demand for routine manual and cognitive jobs, but also creating new demand for others, including in fields not traditionally considered vocational, like creative arts and design.

These factors can read like a verse from Billy Joel’s “We didn’t start the fire”. Unless the sector deeply explores these drivers and use them to create plausible future scenarios, it risks another Groundhog Day.

New ideas emerge in response

Good business model ideas can emerge from a single scenario. In the case of Shell, one scenario stepped through the events that would lead to the collapse of the USSR, enabling it to be more responsive as world events unfolded. More typically, ideas emerge from the collision of several scenarios to create more robust business model ideas. Innovative ideas that could emerge from good scenario planning include:

The wrap-around business. Employability providers excel in many capabilities that are valuable in other public services, including bidding and business development; mobilisation; case management; supply chain and partnership management; learning and development; service system knowledge and networks; and holistic assessments.

For some providers, extending into relevant but separate service lines will be an effective way not only to smooth the boom and bust, but also to deliver further value that aligns with their purpose, mission and values. This strategy is often discussed but rarely executed effectively. This might be because providers leave it too late in the cycle. By this stage, the risk appetite and investment requirement associated with diversification may be limited. Clearly, planning must have a sufficient horizon and contemplate low unemployment scenarios right from the start, as discussed above.

Multi-sector career paths. We know employability practitioners have a plethora of skills that apply in other sectors, from caseload management to behavioural change techniques to coaching and mentoring. Alongside the effort to professionalise employability practice, there is an opportunity for providers to help employees see themselves and their skills in a broader context.

It is essential that we do not construct a silo of our own. We must ensure that sectoral competencies are transferable. In an ideal world, brilliant employability professionals would spend time in other sectors during bust phases then return during boom phases, bringing fresh perspectives, skills and motivation.

Life-cycle stewards. Commissioners frequently invoke “market stewardship” to frame their role managing public service markets. Under this framework, commissioners consider not just the needs of the user and the outcomes being sought, but also the broader dynamics shaping the operations and outcomes of the market. Using scenario planning, commissioners could think beyond a single economic cycle and lay out a longer vision and approach.

For example, we envisage central and/or local governments maintaining a playbook for scaling up employability services, as part of economic emergency response planning. This would support improved sector responsiveness and push commissioners to maintain pilot light capability by investing in professional development, research and evaluation. Recent commentary, including in these pages, highlights the risks of forgetting past lessons in the rush to scale up.

Managing the boom and bust cycle will require ongoing innovation

As the new system takes shape, managing the next bust phase and beyond should be part of the conversation for providers and commissioners. The sector must not repeat the mistakes of assuming the growth phase will last forever or delaying planning until it is too late.

By taking scenario planning seriously and infusing it with innovative thinking, providers can make better strategic and operational decisions, explore diversification, and work with staff to reframe employability career pathways. Concurrently, commissioners can support these efforts by adopting a whole-of-cycle stewardship approach.

We hope these ideas spark discussion and that creative strategies for managing the employability sector’s boom and bust cycle emerge.

Over the next few months, Nous is working with the IEP. We will engage the sector leaders though a set of scenario planning workshops and will present a synthesis of this work at the 2021 IEP Summit. The workshops will be delivered online with provisional dates set for mid-to-late November.

Get in touch to discuss how we can support your employability service.

This article was first published in The IEP Journal, published by the Institute of Employability Professionals, on 23 October 2020.

Connect with Zac Ashkanasy and Jamie Tang on LinkedIn.