Proving that HR can make a difference

first_img Previous Article Next Article Related posts:No related photos. Proving that HR can make a differenceOn 11 Nov 2003 in Personnel Today Comments are closed. TheWork Foundation has come up with a groundbreaking report that demonstrates howHR contributes to the strategic goals of the organisation. Michael MillarreportsHRhas long argued that it should take a strategic role in business and now TheWork Foundation claims to have the statistics to prove it.Froman exhaustive study, including independent research of 1,000 UK chiefexecutives, The Work Foundation has identified five key areas of business,which have to be managed if companies hope to enjoy high-productivity.Theresearchers claim this gives HR the opportunity to go beyond the role ofinternal regulator and will enable it to use this hard evidence to become atransforming force in business.Thestudy comes in the wake of the recommendations of the DTI-sponsored Accountingfor People report, which looks set to take effect in the next two years. Itwill require the boards of larger companies to demonstrate that they understandthe factors that are material to a company’s performance.Accordingto the findings of The Work Foundation report – The Missing Link: FromProductivity to Performance – businesses must manage their staff to make themaware of customers and markets, shareholders, stakeholders, innovation and HRpractices.Thereport stresses that each area must be given the same weighting and that an‘Atkins-diet approach’, of putting more emphasis on one factor than the others,would be counter-productive.Byanswering 14 questions across the five core areas, companies can find out wherethey lie on a new productivity model, the High Performance Index (HPI), andthen take steps to fill any gaps.Thereport shows companies who fare well on the HPI can be up to 42 per cent moreproductive than those at the bottom.TheWork Foundation claims companies which use the HPI can expect to gain 2.5 percent extra growth, 2.5 per cent more sales per employees, 1 per cent moreprofitability and 17.5 per cent in terms of exports as a percentage of sales.RebeccaHarding, chief economist at The Work Foundation, said HR could now pinpointwhere there was a shortfall in the key HPI areas and take recommendations forimprovements right to the top of the business. “Everyonehas always known HR has the potential change agent – what we have done is putsome numbers behind it,” she said. “Thatgives HR a tremendous set of weapons to go and become involved in boarddecisions.”JohnPhilpott, chief economist at the Chartered Institute of Personnel andDevelopment, welcomed the report. He said there were lots of people makingrecommendations about strategic HR, but not enough coming up with practicalproposals for doing it.”Wehave enough think-tank analyses,” he said. “What we need is do-tanks.”Businessesalso backed the report. Norman Mitchinson, HR director at Lloyds TSB said:”This is a really powerful set of arguments that support a comprehensiveand integrated approach to improving business performance.”AndyScott, director of international competitiveness at the CBI, said the HPI wasimportant as it created figures for individual companies, rather than relyingon national figures, which might not match a single business.However,he warned that the real challenge would be to convince institutionalshareholders that the balance between objectives should be achieved. He doubtedthat there was sufficient recognition of the need for this equilibrium.”Wehave to get institutional shareholders to understand what the softer servicesbring if we want to give sustainability to business,” Scott said.ChrisBrown, strategy consultant for group HR at Abbey National, welcomed the work.But he said the investment community had been working in the same way for 300years, and a sustained effort would be needed to convince them of theimportance of working across all these areas.www.theworkfoundation.comTransformingHRWorkFoundation case studies show leading companies are moving the HR function froma transactional base to a transformational role using these techniques:–Leadership and clarity around the central values of the company and itsorganisational vocation.–Published material explaining corporate vision helping with embeddingorganisational values.–Increased profile of customer focus stimulating innovation and creativity–Flexibility and autonomous working creating greater motivation and performance.–Encouraging diverse thinking and creativity, whether service or science based.–Effectively using ICT to enable the people function through internal communicationlast_img

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