The best-laid plans put people first

MOST HEADS of human resources in top companies believe that their influence will increase. Yet they accept that they need to adopt a more strategic role, and that most are not yet able to fulfil that role. These conclusions are drawn from a recent survey carried out by Directions Development International in association with Human Resources Magazine.

The survey found that respondents in the 55 blue chip companies covered "are overwhelmingly optimistic about the future of HR". Eighty per cent think their influence will increase as "organisations begin to focus more energy on aligning people strategies with business strategies". But it points out that "only half of the HR departments in the survey sample (55 per cent) were represented at the board level. While systems supporting people factors will become increasingly important. HR might not be able to influence how they are positioned or used".

The sample was taken from very large companies. It is therefore likely that HR is taken more seriously in these businesses, and is more likely to be represented at board level, than in most smaller firms.

The survey also found that many firms focus only on business results or their business plan for their future strategy. They do not consider how cultural or people factors will influence the success of their plans. Only a third of survey respondents reported that their organisations had a cultural strategy or a business culture model to guide the way in which they do business.

According to Russell Reeves, managing director of DDI UK: "One of the things that's happening in human resources is that the whole function is re-evaluating the contribution it makes to organisations. Increasingly, large organisations are seeing people as the ultimate competitive weapon. Organisations that are conscious of this are looking to HR departments to make a more strategic contribution. HR departments are changing, and need to change."

However, he says that in too many organisations this consciousness does not yet exist and that there is an "awareness gap in senior management that quality people contribute to performance".

The survey asked about the biggest barriers to the introduction of culture changes. Entrenched attitudes, defensiveness, apathy and resistant cultures were cited by 37 per cent. Another 19 per cent experienced lack of support from individuals and groups in the organisation, and 16 per cent cited "systems issues" relating to special interests and politics.

Mr Reeves suggests HR people "need to do a better job of selling themselves. If they can do that, they will get senior managers to see the contribution that can be made to managing people better".

It is ironic that the survey found that if they were not in HR, the largest number of respondents (39 per cent) would like to be in sales or marketing.

In the move to a stronger strategic role, the report says that HR departments must prioritise their activities and focus on the areas where the organisation will experience the greatest benefits. It asked respondents to rate 11 strategic HR objectives as very important, important or not important. Most critical was "hiring the right people", rated very important by 93 per cent. This was followed by "motivating and retaining your workforce", rated very important by 78 per cent, and by "helping employees develop the right skills", rated very important by 67 per cent. Nobody thought these factors unimportant.

Much publicity has been given to the growth of teamworking and to the globalisation of business. So it is perhaps surprising to find that these were at the bottom of the list - ranked as very important by less than a quarter of respondents. Globalisation was considered as not important by 44 per cent.

The executives were asked about their worst HR decisions. In view of the priority given to "hiring the right people", it is surprising that the survey found that "by far the worst decisions in HR are associated with selection and recruitment". These were cited by a third of those surveyed. Usually these problems were linked to a specific hiring decision, not the system itself.

Even so, something does appear to be wrong with the system. The survey also asked "If you could change all the employees in your organisation tomorrow, what percentage would you rehire?". Only 60 per cent said they would rehire more than half their current workforce, and what the report describes as "an astonishing" one in five would keep 20 per cent or less.

Mr Reeves said these findings didn't shock him, but he did find them "interesting". He said expectations of the workforce are changing. "A lot of companies are trying to change the nature of the workforce and what was acceptable five to ten years ago is not acceptable today."

A related weakness is in succession planning. Identifying and preparing people for future roles through planned programmes of career development helps to ensure that organisations have the right skill in the right place at the right time. It also motivates key employees. Nevertheless, the survey found that only 58 per cent of respondents had a formal succession policy.

HR must accept some responsibility for these failings, but the main fault lies with top management. Most organisations have only two resources - people and money. And the human resource is by far the hardest to manage.

It is as foolish to exclude the HR function from the boardroom table, and ignore its voice, as it would be to exclude and ignore the voice of finance.