Should HR professionals stop worrying about their value to an organisation and concentrate on other issues? Not at all, says Andrew Mayo.

There is always a certain amount of paranoia present in the HR function that its importance and contribution are not sufficiently valued. If it is any comfort, I observe the same in marketing and IT functions, who certainly have their own worries – not least when it comes to assessing the ROI of their programmes. They too agonise why they are not on the board, about outsourcing and threats to their resources levels.

There is no greater sign of insecurity than commissioning research to ‘prove’ that one is important, and the HR function has no shortage of this. Many studies are said to have demonstrated a direct link between good people management and good business results – even a thriving share price. The analytics of some of the cause and effect statistics may be questionable, but the result is comforting.

But such research does not seem to make a lot of difference to the way senior management behaves – if it is committed to investing in its people, as many are in practice, it will continue to do so; if not, there is little evidence of change over the 10 years or so since this research started.

Like much research, it often involves masses of effort only to demonstrate the obvious. It doesn’t seem, to me, to need proof that if you take care over choosing, managing, developing and engaging your people, they are likely to do a good job for you.

Worthy research

Nevertheless the latest such research is a worthy and thorough effort. People and the Bottom Line has recently been published by the Institute of Employment Studies and supported by the Work Foundation (available free from www.investorsinpeople.co.uk). It asks: “Does the way people are treated at work make a difference to the performance of the organisations that employ them? Are there returns to investment in human capital in a similar way to investments in physical capital?”

The report is the final phase of a three-part project started in 2004, involving several bodies such as Investors in People (IIP) and the Chartered Institute of Personnel and Development (CIPD). In phase two, it drew together a theoretical framework – the 4A model – alongside a list of 40 measures (related to skills development and wider people management practices) which employers could use in order to monitor performance in each of these areas; and this third phase seeks to link them (plus others that were added later) to organisational performance. The latter is based, as usual, on commercial performance such as profits and revenues – nobody seems to be able to measure not-for-profit performance in any coherent way.

The 4A model has four quadrants based on two dimensions – individual vs organisational, and development vs deployment; in the individual’s half we have ‘ability’ and ‘attitude’, and on the ‘organisational’ half we have ‘access’ (resourcing) and ‘application’ (the working environment).

This does sound somewhat forced but it does embrace the range of HR practices. What was found? They found that at the individual level, the 4A indices have very little effect on performance. Previous studies have shown more success in linking a composite HR index with performance, and by creating one for this study they found the same thing. In other words, it is a culture of positive people management that makes the difference. One encouragement to all those who have put lots of effort into it was that IIP was found to have a positive and significant effect across all 4A indices, and in each case the scale of this effect was substantial.

All this goes to support the view that isolated initiatives and programmes are likely to make very little lasting difference from a business perspective, unless they fit into an overall strategy.

A true guide

My own approach to a building a people strategy is to lay the foundation of ‘guiding principles on people management’ first. These must not be set by HR, but by the senior management team who actually dictate how people will be managed. They then form a coherent umbrella for programmes, processes and tools to sit – ensuring that all the principles are fully supported. I do not mean anodyne bland motherhood statements, but positive positions which are truly ‘guiding’.

It is the job of the HR director to ensure that all their specialists and process designers sing from this one songsheet, and that there is a vision of completion that they are working towards. The importance of ‘OD’ in the sense of building an effective organisation, and cultural vision, is clear – so that everyone and every unit works systemically as it interacts together. This was Peter Senge’s ‘fifth discipline’ in his defining work on a learning organisation.

So should HR professionals stop worrying about their value to the organisation? By no means. Everyone in a support function should be asking “am I/are we value for money?” Just because people are important, does not mean that being valued in HR will ever be automatic.

“By their fruits shall ye know them,” said Jesus in the Bible. Our fruits are our credibility with line managers, understanding their needs and helping them (not preaching at them), and, most of all, building a consistent and comprehensive – but appropriate and supported – people management culture that everyone works towards and within.

Andrew Mayo is president of the HR Society, which runs a number of events and learning opportunities, focusing on the HR business space. He is also a director of Mayo Learning International and can be contacted at andrew.mayo@mayolearning.com

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