Non-believer: Paul Kearns, director, PWL
A combination of two news stories in recent issues of Personnel Today tells us everything about the present state-of-play in HR. HR is giving chief executives what they want, rather than what their organisations really need, and in doing so is making itself irrelevant.
The first story (2 May) related to the Royal Bank of Scotland’s (RBS) new multi-million pound business school, which had no business justification other than an “investment in a belief”.
This in itself may not have generated much debate in normal HR circles, except that RBS has spent huge sums of money developing HR metrics, and regularly espouses the benefits of HR measurement.
Leap of faith
So why, when it comes to developing the bank’s future leaders, does it suddenly dispense with this principle and resort to an untested act of faith?
Is it because it does not know how to link the business school to business performance, or has it just acceded to the wishes of chief executive Fred Goodwin, who apparently sees no need to look for a good return on investment on this occasion?
What will they be teaching at this business school – that some decisions should not be subject to the same investment appraisal rules that apply in banking and loans?
Most HR people would probably see no contradiction in RBS’s actions, judging by the second story. This was the Personnel Today/Richmond Events survey (16 May) that showed a huge disparity between the priorities of HR (’employee engagement’ being their number one) and the businesses they serve (‘competition’ came 10th in the HR priority table). Such HR people subscribe to the shaky theory that “if you look after your people they will look after the business”, and so see no need to link HR activity directly to business performance metrics.
Among the many issues for the HR community that this inconsistency raises are fundamental questions of relevance and credibility.
RBS says that its new training programmes are “based on those from leading institutions such as Harvard” – as though that were an automatic seal of approval. However, designing off-the-shelf services – without dealing with specific business issues within a specific business context – will have little, if any, relevance. HR departments that promote such expenditure eventually lose all credibility.
The number one principle for any business – and that automatically means for HR as well – is to be clear about your objectives before you embark on any investment. The second key business/HR principle is that competition demands differentiation.
Doing what ‘Harvard’ does might look like it ticks the right boxes. But if all your competitors are doing the same, that is the best possible reason not to copy them.
Believer: Neil Roden, group HR director, RBS
When your ambition is to become one of the most admired global financial services organisations, it follows that you would want to attract and develop outstanding leaders and provide them with the best educational and learning opportunities.
Located at our global headquarters outside Edinburgh, the Royal Bank of Scotland (RBS) Business School’s purpose is to equip our senior management team to manage a global financial services company.
It is where our leaders work together on strategic issues, attending programmes and events customised for our businesses’ particular requirements. Programmes we are running in conjunction with business schools this year include Innovation with Harvard, ‘Doing Business in China’ with Thunderbird, as well as programmes with Duke CE, London Business School and IMD. Delegate feedback on their usefulness and relevance has been outstanding.
Committed to development
Our school is a bricks and mortar statement of the group’s commitment to developing the best leaders in business. With such ambitions – and noting that no-one has identified a single simple return on investment measure for such an investment as ours – we prefer to consider the school as a crucible of leadership that will find, nurture and support tomorrow’s leaders to equip the group with a pool of talented executives who will be able to respond to the strategic challenges and opportunities that lie ahead.
That doesn’t mean that we don’t measure the overall impact that executive development, as part of our people strategy, has on our business performance. We look not only at the effectiveness of our leaders, but at the impact our human capital management has on financial performance, sales and service.
This initiative, entitled ‘Service Excellence Through People’, links our leadership effectiveness and other measures, such as employee engagement and retention, directly with key business performance measures. This provides a single lens for our leaders to view their performance, and diagnostic tools to support them to take action. This means that we’re able to link a range of measures across the group, providing us with a more valid and reliable indicator of how the HR function is contributing to superior performance.
In our 2005 global employee opinion survey, we saw our fifth successive year of significant improvement in all categories. Group and divisional leadership areas improved against 2004, and continue to outperform the global financial services norm. We’ve also recently launched a leadership index and a suite of diagnostic tools that measure the effectiveness and impact of our leadership and management capability across the group.
In addition to being able to benchmark ourselves externally, we are able to pinpoint those areas that will deliver greatest value for the business. It will also enable us to measure, over time, how our leaders are developing, and the impact of our world-class development programmes.