Smart Moves: Watch out, you could become extinct

Philip Schofield on the human resources departments that must change or die

After several generations, so the fable goes, the Irish elk's antlers grew so large that it was no longer able to lift its head and forage for food. In other words, what had helped the elk to survive in the first place became so exaggerated that it also led to its extinction. It's an analogy that David S Weiss uses to describe the present state of human resources.

"HR is exaggerating what helped it to survive by continuing to focus on what the department has always done,'' he explains in his new book High Impact HR. "While the company has been transforming, HR has not kept pace ... without radical change, HR will not be able to help the company achieve its strategic goals."

Weiss believes the new challenge for HR is to make the most of the people a company employs. Firms will get a return on this investment - "the money it takes to cultivate people and their talents" - when HR maximises the contribution people make to an organisation's progress.

Weiss is not alone in his views. Linking people strategy to business strategy increases success, according to research by the Cranfield School of Management and AVICom. In fact, a series of expert-led discussion groups conducted during the study claimed that if the traditional HR function doesn't change, it will fade away. The need to align HR to business goals is also raised in The National Human Resources Directors' Survey 1999 by the Institute of Directors and Development Dimensions International (DDI). Asked what were the main opportunities that HR could take advantage of, three factors were cited by 94 per cent of the 230 HR directors: HR's understanding of the business issues, HR's relevance to core business goals, and HR becoming more of an internal consulting role.

However, a significant minority clearly fear that their empires might shrink - with outsourcing of routine administrative tasks seen as a threat by 43 per cent. Moreover, one in five do not believe their workforce gives their company a competitive edge and just over half would not rehire between 61 to 100 per cent of their staff again. It is also worrying that a quarter of HR directors recognise that a lack of business or strategic focus is their most serious weakness.

The report echoes Weiss in claiming the only solution is for HR directors to "treat human resources much like other assets and make a business case for investing in them".

So why is HR seen to cling to traditional attitudes and practices? In The HR Manager's Yearbook 1993 Charlotte Chambers described research undertaken for the Personnel Standards Lead Body: "Perhaps the greatest disservice that has been done to people in UK organisations ... has been to conceive of personnel management as a profession."

Almost all chief executives and personnel directors interviewed were concerned at the lack of understanding of business fundamentals of many people in personnel. They commented on the function's tendency to overburden the organisation with bureaucracy and to block change. One said his organisation was in danger of "drowning in goodness" through personnel's tendency to indiscriminately apply "good practice".

Some are quick to lay all the blame on the Institute of Personnel and Development (IPD), a strong advocate of personnel as a profession. But while this may have been justified a decade ago, the institute has changed much in recent years. Today, it is in agreement that the primary needs of HR are strategic. Geoff Armstrong, the IPD's director general explains: "The IPD is producing a great deal of evidence that people are the primary sustainable source of competitive advantage. The way in which people are developed and managed is becoming the premium core competence for any organisation. We have to create that spark of culture `that people make the difference'. And the way in which they are developed and managed is the key managerial skill."

Although the IPD has generally succeeded in putting over these messages to business and government, it is not so good at getting this message through to the general public. Too often, HR today is seen in the traditional terms described by Charlotte Chambers. Just as "personnel" gave way to "human resources", so it is perhaps time we changed it to "human asset management" or to "people management" to reflect the fact that a revolution in thinking is taking place.

`High Impact HR: Transforming Human Resources for Competitive Advantage' by Dr David S Weiss, published by John Wiley & Sons 1999