A worthwhile investment

The Investors in People Standard has become a solid part of people
management in the UK, but Alex Blyth investigates whether it is really worth
the time and money 

"We operate high standards of personnel best practice and don’t feel that
getting Investors in People (IIP) status would add anything. How would we
benefit?" asks a spokesperson for the Transport & General Workers

In stark contrast, Trevor Rampley, IIP co-ordinator at London Underground,
enthuses: "IIP is so crucial to our people policies that we are even
training our own staff on it, so that they will be able to assess other parts
of the business."

The debate about the value of IIP has raged ever since the standard was
launched in 1991. Trumpeted as the flagship initiative in government efforts to
improve skill levels in the UK workforce, it has to date conferred its
well-known laurel logo on almost 30,000 organisations, representing more than
25 per cent of the UK workforce.

Its four principles – commitment, plan, action and evaluation – have become
ingrained in UK people management theory and practice. Yet there remain many
who question whether the benefits of IIP outweigh the costs.

IIP UK, the body that manages the standard and awards the kitemark, has
recognised the validity of complaints about excessive red tape. It claims that
the only paperwork a business now needs is a business plan. IIP also suffers
from a perception that it is a costly process. According to research conducted
by the Institute of Directors (IoD) for a 2001 report, the average cost is

However, Peter Russian, IIP UK’s development director, points out that the
cost varies greatly, depending on the size of the organisation. "An
organisation with less than 50 employees should take no more than a day to
assess and this should cost no more than £550. This is pretty good value when
compared to the cost of team-building awaydays."

He also points out that in last year’s Budget, Chancellor Gordon Brown
announced £30m to help small businesses gain the standard. Very soon, all
organisations with between five and 50 employees will be entitled to financial
support towards the cost of assessment and advice.

Russian goes on to argue that there is little to lose in getting IIP status.
"If an organisation believes that its people have the power to make a
difference, and that they ought to be doing everything they can to make that
happen, then they need to think carefully about whether they should ignore this
cheap and hassle-free way of assisting with that process."

While the process has undeniably become simpler and cheaper in recent years,
many believe that this is not necessarily a good thing.

Jonathan Austin, managing director of Best Companies, compilers of the
Sunday Times annual list of the Best Companies to Work For, argues that this is
a weakness of IIP. "IIP has lost its cachet. Only two out of the top 10
and only 17 per cent of the top 50 companies in the 2003 Best Companies to Work
For list have IIP.

"This reflects that IIP is viewed as a bare minimum, focusing on
processes rather than outcomes. Many of the top companies on the list already
have such good existing HR policies they have seen little benefit to be gained
from IIP," he says.

Given this, it may well be that IIP’s future lies in providing a cheap and
simple way for organisations to make a start on people development. The SME
(small and medium-sized enterprises) market is one where the standard has made
few inroads so far and where there is a palpable need to raise standards to
even a basic level. However, the IoD’s research findings indicate that SMEs
will not rush to adopt the standard just because it is cheap and simple. The
reason given most frequently for non-participation in IIP is not the bureaucracy,
the cost, or even the time investment – it is simply that respondents could see
no discernible business benefit in using IIP.

On its website, IIP UK makes bold claims about the potential benefits of the
IIP process, such as "improved earnings, productivity and profitability,
and improved motivation through greater involvement, personal development and
recognition of achievement". This, IIP asserts, leads to higher morale,
improved retention rates, reduced absenteeism, and "readier acceptance of

Jane Pike, HR director at Betty’s & Taylor’s, a Harrogate-based tearoom
operator and tea manufacturing company employing about 1,000 staff, backs these
claims. "We have gained immense value from IIP. It is extremely beneficial
to have an experienced assessor come in, really get to know our business, and
share knowledge on best practice. We’ve been able to identify areas of weakness
and get advice on how to put them right. It’s a simple process with an
independent assessor providing a high degree of objectivity and emotional

Pike has the facts to support her comments. Since first gaining the standard
in 1991, Betty’s & Taylor’s has seen labour turnover reduce year–on-year.
It now stands at 23 per cent, comparing favourably with other businesses in the
hospitality and catering sectors. Customer satisfaction has increased
year-on-year, reaching the new heights of 93.2 per cent in 2002. This has all
resulted in consistent sales growth, with 2002 showing an unprecedented
increase of 18 per cent.

Pike’s view is the exception rather than the rule, however. Most
organisations struggle to pinpoint a link between IIP and specific,
quantifiable benefits.

Harold Russell was the Lloyds TSB IIP programme manager until last
September. During his tenure, he supported nearly 60,000 staff in achieving IIP
recognition and says it was hugely beneficial. "IIP provided a foundation
for our new ‘group people strategy’. Findings from our staff attitude research
showed that people looked more positively on their role, on training, and on
their relationship with their manager," he says.

However, Lloyds TSB’s reluctance to release results of its staff attitude
research somewhat undermines this statement. The picture is repeated across
many organisations – the IIP champion makes strong claims for the benefits of
IIP, but lacks facts and figures to support that belief.

However, Ros Barker, HR director at Ladbrokes, points out that measured
improvements in key performance indicators are not the only reasons to use IIP.

"I’m not sure that it impacts on the bottom line. There are so many
variables in areas such as recruitment and retention that it is impossible to
pinpoint the impact of IIP. However, for us, it’s useful in two senses: it
gives our employees public recognition of their work, and assists our
management team in promoting a consistent HR message across 1,900 sites."

While IIP can improve key performance indicators for a few companies, for
most it seems to have greater impact in softer areas. The IoD’s research
revealed that while only 15 per cent found IIP led to higher profits and only
25 per cent found it improved employee retention, 73 per cent did believe that
it had helped to link training more effectively to business benefit and 66 per
cent felt that it had helped to improve the quality of training and

While these benefits fall some way short of those claimed by the IIP, they
are nonetheless important to many organisations. Also, it takes many years for
improvements in training to affect areas such as staff morale and company
profits. Betty’s & Taylor’s can see the link after 12 years, and it may
take at least that long for many other organisations to see softer benefits
turn into harder ones.

As a forthcoming report from the Work Foundation concludes: "The first
10 years of IIP established the standard among those employers who most
understand the value of training and development. The next 10 years must be
spent addressing those employers that arguably need the most help."

IIP UK plans to offer that help. Those organisations with poor HR records
need to consider whether they can afford to ignore the offer.

Other HR kitemarks

ISO9001 The International Organisation for
Standardisation is a network of standards institutes from 145 countries providing
quality marks in more than 13,700 areas of business, government and society.
ISO9001 is its quality management system. Its process helps organisations
understand what they need to do to establish and continually improve quality
customer service. Organisations are advised to use it in conjunction with IIP.
As Chris Cox, ISO9001 programme manager, says: "It’s a way of linking HR
and training advances gained in IIP into broader business objectives. ISO9001
is understood outside of the UK in a way that IIP is not. In a global market,
instant global recognition is crucial."

GoodCorporation Launched in
July 2001, the GoodCorporation standard is rapidly becoming recognised as the
corporate social responsibility kitemark. Its scope is broader than that of IIP,
covering the way in which the organisation behaves towards employees,
customers, suppliers, shareholders, the environment, and the local community.
As Ros Barker, HR director at leisure services company Ladbrokes, points out,
it is entirely complementary to IIP. "Staff are just as concerned about
how the company behaves in areas such as the environment, as they are about
their own compensation and benefits. If employees feel good about where they
work, they can be walking ads for the organisation."

UK Business Excellence Awards
Since 1994, only 20 companies have achieved this standard run by the British
Quality Foundation. It uses a business excellence model to assess every aspect
of the organisation, including its HR.

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