Should HR encourage organisations to return furlough funds?

With thousands of firms choosing to pay back government grants, People Management asks experts whether the function should be driving ethical decisions

In March, employers big and small were plunged into uncertainty by the coronavirus pandemic. The government’s response – which included a suite of business and worker support schemes, tax cuts and extensions – proved a lifeline for many, but at a significant cost to the taxpayer.

To fund such an extensive package, the government has borrowed on an epic scale, and for the first time ever, in the year 2020-21 public spending is set to exceed £1tn.

We’re now months into the crisis, and while companies continue to navigate choppy waters, many have successfully adapted or found themselves in a better position than first expected when they applied for furlough help and have announced plans to repay the funds. More than 80,000 employers had returned furlough cash by the end of September 2020, including Redrow, Barratt and Taylor Wimpey, Games Workshop, Bunzl, Ikea, and the Spectator magazine.

Among them is salmon producer Scottish Sea Farms. “There came a point where we could see that we were in profit – albeit reduced – and we decided that the right and responsible thing to do was to repay all funds received under the scheme,” head of HR and health and safety Tracy Bryant-Shaw told People Management.

“We pride ourselves on being a company that ‘gives back’ and we could see that others would need the funds more. The negative actions of companies will remain in the memory of both consumers and communities, so it’s best for all to do the right thing in the right way,” she added.

Tesco was one of several of the major supermarkets to have also returned money. On 2 December, its CEO Ken Murphy announced the chain would be paying back the £585m of business rates relief it received: “10 months into the pandemic, our business has proven resilient in the most challenging of circumstances,” he said, adding that while every business had been impacted by the crisis, Tesco was able to continue trading throughout.

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Asda, Morrisons, Sainsburys and Marks and Spencer are among the other supermarkets to have returned financial aid.

But with a list of organisations that are claiming government help now publicly available, and reputations on the line for those that pocket public cash they don’t need, is it HR’s responsibility to encourage organisations to return government money if they find themselves in a better position than expected, or decline the funds altogether?

As strategic business partners, HR should be encouraging organisations to be responsible and have a role to play when it comes to the repayment of government coronavirus handouts, Dr Na Fu, associate professor in HRM at Trinity Business School, told People Management.

“Responsible organisations give their people purpose and meaningfulness of work so that people are motivated and engaged,” she said. “They are setting strong examples for how responsible organisations can or should be, especially during this pandemic crisis.”

Gary Cookson, director of Epic HR, said HR could be the instigator of discussions around returning government money, but added he would be worried if other organisational leaders hadn't also been thinking about the issue. “Such prompting shouldn’t just be down to us in HR – we can act as the conscience of the organisation but we aren’t the only such voice.

“Perhaps we can voice and amplify the views of others who may not feel comfortable speaking up, and use our position to influence change accordingly and, given how much effort and energy HR has expended during the pandemic to ensure organisations behave in the right way, it should be something we are comfortable speaking up about,” he added.

However, Gemma Dale, lecturer at Liverpool Business School, said she was “generally uncomfortable with the idea that HR should be the moral arbitrator of an organisation”.

“The whole senior leadership team should lead ethically and consider these issues as a matter of course. It should not be the responsibility of one person or function to ensure that business does the right thing, however, there’s no reason HR can’t start the conversation,” she said.

Beyond the ethical considerations, there is also a good business case for returning support money if doing so is financially viable. Publicly returning money lets employees – and prospective employees – know which organisations “did well” during the pandemic, said Cookson. It also signals the values and behaviours staff can expect from their organisation, which can have a profound impact on morale, engagement, employer brand and recruitment and retention.

“Seeing organisations that could return the money but choose not to could lead to severe demotivation and disengagement as employees could well question whether they are working for the right employer – this in turn could impact retention, and if word gets out, many prospective employees could be put off applying to work there,” said Cookson.

Research has found this to be especially true for younger workers. A Henley Business School survey found that more than four in five (84 per cent) of younger workers think it is important that a prospective employer cares about its impact on society. The same percentage also considers whether organisations hold similar values to them.

According to HR consultant Steven Carpenter, it boils down to having a fair, open and honest culture. “Companies will need to create an environment where employees feel comfortable highlighting where they feel business practices need improving,” he explains. “This can only happen if a level of trust exists between employees and employers.

Ultimately, Cookson says, it’s vitally important that people professionals take the organisation’s temperature regarding possible repayment of government money. But, as Fu highlights, the situation “raises challenges as well as opportunities for HR".