Paul Kearns
Director, PWL
January: traditionally a time for a combination of sober reflections on last year and positive resolutions for the future. So here is a combined ‘state-of-the-HR-nation’ view with a joint message for 2006 that says: “Let us admit our past failures while leading by example.”
Would that be energising or enervating? Admitting failure is a painful process. I hate to have to admit that my own input into the Accounting for People Taskforce completely failed to convince them of how to measure the value of people. That might be one reason why it failed to convince the DTI to include value measures in the Operating and Financial Review regulations (OFRs), and also why Gordon Brown snuffed out the last glimmer of light from the human capital reporting debate by scrapping OFRs.
Yet, what calibre of leadership is bred from a refusal to countenance failure? Brown wants to be prime minister, but seems to view an admission of failure as a weakness rather than a positive indicator of strength of character. He won’t admit that he has wasted billions of taxpayers’ hard-earned cash on the public sector. The NHS hierarchy won’t admit that a 70% increase in NHS funding since 1998 delivering a paltry 4.6% increase in operations is a failure. Neither will NHS HR directors, whose ‘professional’ recruitment policies have increased the number of administrators and non-frontline staff by 66% over the same period, without adding any significant value.
The chain of accountability does not end there. Does the Chartered Institute of Personnel and Development (CIPD) regard this as a failure of conventional HR practice? If it does, why does its research suggest the NHS offers case studies of best practice HR?
In the meantime, two trends continue unabated. First, the drive for cost efficiencies through outsourcing HR and setting up transactional, shared service centres is continuing to reduce erstwhile HR expertise to a mere commodity delivered by technology. This is reinforcing HR’s image as a ‘necessary evil’ cost, but it is meant to be supplanted by a shift to a strategic investment role. Unfortunately, the NHS experience, not only mirrored elsewhere in the public sector but also in large private sector organisations, suggests that what we like to call HR ‘strategy’ – usually following the ‘American’ model – has actually turned out to be a costly and worthless import.
Some of the key elements of this continuing experiment are notions of diversity, union partnerships, ageism and core competence theory, all of which have failed to deliver demonstrable improvements for the organisations they are meant to serve. As a result, HR now has the job of shedding a new negative image – that of the PC police.
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On a more positive note, the highlight of 2005 for me was a talk at the Finance Directors ‘Futures’ conference in December. Here was an audience that, while not fully admitting any failure (accountants are human), were nevertheless seriously concerned whether their own conventions for gauging organisational performance were still entirely valid. They saw a real and urgent need for business-focused HR people who can help them make better connections between people and performance.
So the priority for 2006 has to be an urgent search for real HR leadership. Paradoxically, this will not come from the top – existing HR directors supporting the failed model will remain in denial despite the mounting evidence. This year should be the year of the up-and-coming HR professional who can see the writing on the wall and learn from failure. They may even have to go over their own HR directors’ heads and go straight to the board to get true, strategic HR on the agenda. Meanwhile, I’m looking forward to a year of much more interesting conversations with the finance and investment professions.
