"We do not have time for this management business," they complained. Happily, the now merged Department for Education and Employment aims to achieve IIP recognition by the end of 1988.
But lack of management commitment remains the biggest obstacle to organisations achieving the IIP standard, with almost a third of firms finding resistance at the top, according to the latest Industrial Society research. This echoes surveys carried out last year by Coopers & Lybrand and the Institute of Employment Studies.
Group chief executive of NatWest Derek Wanless has been a trail-blazer in the financial sector where until recently IIP has struggled to gain converts.
So far about a dozen NatWest business divisions have achieved IIP recognition. Nigel Barrett, head of group HR development, says it was crucial for the initiative's credibility that Mr Wanless was the driver. "It must be led from the top," Barrett says.
"It's critical it's led from the business, not the Human Resources function - it's about business, not HR systems and the chief executive is the leader of the business."
During mergers or restructuring organisations are particularly prone to see human resources initiatives such as IIP as a distraction from the core business. One NatWest division, NatWest Mortgage Services, put IIP on hold for a year at the end of 1994 when the organisation was restructuring. This shift in priorities was not the only problem. Initially the business failed to recognise the importance of executive involvement and progress was further hampered by management cynicism and changes of senior executives.
In 1995 a working party made up of is managers, assistant managers and team leaders began working towards the standard and the managing director sat in a steering group to determine the time for assessment. Benefits reported include more reports from senior managers on business performance and more communication between departments.
However, when restructuring involves redundancies the IIP process can be undermined. A recent report on IIP by the Institute of Employment Studies found that fears about job security were making employees sceptical of management rhetoric about people being the company's greatest asset.
Mr Barrett at NatWest says IIP has helped counteract the effect of the bank's redundancy programme. "It's tough, but we turn it into a virtue because it is a business reality that we have to restructure and sometimes you have to lose jobs," says Mr Barrett. "IIP demonstrates that even while you have to take some painful decisions you can equally demonstrate that you're investing in the future of your people."
Another problem identified by the Institute of Employment studies is that even when chief executives rate highly the importance of people to success they lack the techniques and systems to capitalise.
Mr Barrett says NatWest managers found it easy to adopt the processes of IIP because they were already using an approach which judges business performance on measures other than financial performance such as customer surveys and people management. The group had also already linked its training and development with business strategy. "IIP helps change but it hasn't been a major driver as such," says Barrett.
Lancashire firm Peter Miles Engineering, which employs 140 people, achieved IIP recognition last year. Managing director Peter Miles says taking up IIP has transformed the company's approach to management.
"Frankly when we first looked at IIP we thought we were reasonably smart, we thought we were a good employer," says Mr Miles. "When we did our first assessment we were nowhere. IIP has helped us to mean what we've always said about looking after our best resource which is our people."
Mr Miles admits shopfloor staff were wary to begin with. "The first year we did IIP we talked to everyone on the shop floor but the response was muted. They wondered if it was flavour of the month and if we would continue with it. The following year we had a marvellous response - we moved from 10 to 20 elements of training to about 200." Business strategy is decided in meetings with the heads of engineering, purchasing and production departments and decisions are then discussed with small groups of staff. Every member of staff has an individual training plan based on business goals. Mr Miles says the biggest difficulty he has had with IIP is working out a strategy that was not too bureaucratic. But he is convinced the methodical approach has paid off. "Without such a structured approach I don't think we would have been anywhere near so successful," he says.
Malin Court Hotel in Ayrshire has a staff of 85. Bill Kerr, general manager, says IIP has transformed his management style from the autocratic approach he had when he signed up. Since then he has allowed staff to design their own appraisal system. Not all his colleagues were able to make the change though.
Four of the original eight left when they decided IIP was not for them and Kerr admits he had to overcome cynicism among another one. Since committing to IIP Malin Court, which is part hotel and conference centre and part charity providing shelter for elderly people, has made a surplus every year for the first time in its 25-year history.
Mr Kerr says it has had a particularly strong effect on customer service and points out that the AA hotel guide lists hospitality as a particular strength. In a benchmarking exercise with 55 hotels, Malin Court was ranked fourth on a range of business criteria.
Mr Kerr says the key is to learnt to trust staff. "I can walk away at night and leave the receptionist, a girl of 21, to effectively run the organisation," he says.