The government could not have picked a more appropriate day (1 April) for the new Operating and Financial Review (OFR) regulations to become law.
Those of us who actually work in the growing field of human capital management (HCM), and take the subject seriously, always knew that the Accounting for People Taskforce missed the whole point and failed to produce any meaningful recommendations. We also knew that OFRs were a complete red herring.
Whether we report on HCM or not, the reality is that traditional HR management is failing to produce value from people and this is particularly true in the public sector. You only have to look at the billions of pounds poured into the NHS and the resulting drop in productivity to get a very clear indication that the new HR teams that entered the NHS more than 10 years ago produced no value. HCM specialists would draw a similar conclusion if OFRs had been given any teeth and were applied to any government department or public sector institution.
Such findings might not be a great surprise, but what should make any HR professional’s toes curl is the admission that the commercial sector is in no better shape in HCM terms.
In a week when Ford has announced that it is having to inject 500m into Jaguar and General Motors’ long-term debt has been downgraded to virtually junk bond status, HR teams should be asking themselves about the value of their own activities.
The vast majority of HR people have not woken up to the reality of HCM. They seem blissfully un-aware that the EU’s economic development has stalled and that, in the face of fierce competition from India and China, the politically correct policies they have installed over recent years will be seen, in HCM terms, as totally irrelevant to the issues that their organisations face.
So those who think the watered down OFR regulations mark the end of HCM should think again. Annual reports may make happier reading in the short term as a result, but the bad news can never be hidden from the eyes of a shrewd HCM analyst.
Paul Kearns is director of HR consultants PWL and is a member of the Personnel Today Strategic HR Forum
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