Previous Article Next Article Comments are closed. You’ve got the evidence, now go and build the case for HROn 5 Mar 2002 in Personnel Today HR’s identity crisis has been going on for far too long. But researchlinking HR to organisational performance could signal a new beginning for theprofessionThe constant worry of all personnel administrators is their inability toprove that they are making a contribution to the enterprise. Theirpreoccupation is with the search for a gimmick that will impress theirmanagement associates. Their persistent complaint is that they lackstatus.” This was written by Peter Drucker in The Practice of Management in 1955.Change the dated “personnel administrator” to “HRpractitioner” and his words translate all too smoothly for comfort to thepresent day. HR people lack foresight, influence and credibility, according toRoffey Park’s 2002 Management Agenda1. The CIPD, meanwhile, finds board members are mystified about what HR is forand ignorant of the relationship between good people management and financialperformance2. Drucker is still clairvoyant; HR still worried. The profession’s paradox Here we have the great paradox of the profession. The apparent shift inmanagerial attitude on the importance of people to business since 1955 has beenimmense. In a world of me-too products, technological uniformity and globalmarkets, people represent an organisation’s only real source ofdifferentiation. So if people are the greatest asset, why is it HR continues to play such amarginal role in so many companies? Certainly there are more HR practitioners than there used to be – 63 percent of organisations have increased their HR staff over the past five years3.Yet rather than this being interpreted as a vote of confidence in the value ofHR, worries about status and the nature of HR’s contribution increase. Boardroom presence is not everything, but it does say something that only 18companies in the FTSE top 100 have an HR director on the board – an increase ofonly two since 1999. While companies are now putting people issues at the heart of their policies,somehow HR is not getting recognition for putting these in place. There are only two explanations for this. First, the ‘people are ourgreatest asset’ stuff is pompous moralising. Second, the problem lies within HRitself – it has failed to convince business leaders of the worth of good peoplemanagement and high-performance HR policies. There is much to commend both arguments. It has become a rhetoricalobligation for senior execs to pay tribute to the importance of people inorganisations, without condescending to spell out what this means in practice. All talk and no action Many business leaders believe good people management is recruitingcarefully, rewarding fairly, and behaving honourably. If they were asked aboutinformation sharing, employee voice or flexible work, there would be blanklooks and throat-clearing. There is no off-the-peg set of HR policies that is right for allorganisations; they must trim and tailor to requirements. Yet from theburgeoning literature of the past 20 years on the HR-performance link, there isnow a degree of agreement about what high performance HR means. According to the CIPD’s work for the Economic and Social Research Council’sFuture of Work programme, there are 18 key practices incorporating such detailedrequirements as single-status bargaining, profit-related bonuses, flexible jobdescriptions and a no compulsory redundancy policy4. In the words of the man leading that research, take-up in the UK is”very low”. Less than 1 per cent of UK organisations employ more thanthree-quarters of these practices5. What organisations say and what they do are miles apart. Until the numbersgo up, they would be well advised to shut up. HR has not done itself any favours. It has not noticeably capitalised on thechange of mood in business by pumping practical substance into the sentimentsof business leaders. Given the generations-old controversy about the worth ofHR, one might have thought HR departments would now be making determinedefforts to measure their contribution to the financial wellbeing oforganisations. Not so. Many measure things like turnover and sickness, but in terms of evaluatingthe link between HR and productivity, only 21 per cent of organisations botherto do so6. It does not seem to be much more urgent in the US at 34 per cent. Nowonder HR people find it difficult to build a convincing case, if the basicdata is not there. A commitment to HR is still all hunch and intuition, just asit always was. The evidence mounts The CIPD believes the future of the function rests on the evidence that hasbeen stockpiling about the link between progressive HR policies andperformance. A veritable mountain of research it is, too, stacked bywell-funded Americans with memorable names such as Fitz Enz, Huselid, Ulrichand Pfeffer; 30 dense studies, and counting. Anyone masochistic enough to reada few could not help but be impressed. Thankfully, the message can be summed up in one sentence: the more HRpractices there are, the greater the impact on performance, (see page 26 casestudies of HRmeasurement) Some meticulous minds have even assessed HR’scontribution as a proportion of shareholder ret-urns. Consultancy Watson Wyattbelieves firms with the best HR practices provide a return of 64 per cent to shareholders,more than three times as much as firms with weakest HR practices7. This is powerful ammunition. The institute is surely right in saying thisresearch represents the best hope for the future of HR, although it has got itswork cut out trying to popularise it. Again one gets the feeling that in the profession, this momentous materialhas scarcely provoked a murmur. Which is odd. Because it is probably theclosest thing the function will ever have to the Holy Grail – the proof it hasbeen lacking since 1955. More at www.xperthr.co.uk/researchviewpointReferences 1 The Management Agenda 2002, Linda Holbeche and Claire McCartney, RoffeyPark Institute, 2002 2 Voices from the Boardroom, CIPD, 2002 3 IRS Employment Review, no 742, 17.12.2001; xperthr.co.uk 4 The Human Equation, Jeffrey Pfeffer, Harvard Business School Press, 1998 5 Effective People Management, interview with author, CIPD 2000, March 2001 6 xperthr.co.uk; as above 7 Human Capital Index, Watson Wyatt, 2002 Related posts:No related photos.