HR must look past the hype of ‘great places to work’ and start measuring the people policies that offer a competitive advantage, says Paul Kearns
One of the most pernicious business developments of the past 20 years has been the exponential growth in the number of PR departments and consultants. The goal is no longer to produce real results for public consumption but to paint whatever results you have in the most favourable light possible. Inevitably, many HR directors have happily succumbed to this trend.
Now, instead of human resource management (HRM) having to demonstrate its impact on business results, it just has to be ‘on message’ and seen as an ’employer of choice’. As with all PR messages, though, there is precious little substance to such a vacuous aspiration.
Needless to say, the present Government, which has been predicated on its ability to put a positive spin on even the most disappointing messages, is fully supportive of this development.
The Sunday Times’ list of Britain’s 100 Best Companies to Work For this year had an introduction from Patricia Hewitt, secretary of state at the DTI, who was fully supportive of the list. She said it was “a key benchmark against which UK companies can judge their performance as employers and an opportunity for us all to recognise and celebrate those businesses that truly value their staff, look after their customers and work in partnership with the communities in which they operate”.
This view is quite understandable coming from a government minister, and it might also be a view held by the HR profession at large. We might all want to believe that companies that look after their people achieve the best performances. Unfortunately, while we hope this connection holds true, it is quite difficult to reconcile with the Sunday Times’ list itself.
Microsoft, which came in at number 13, was found guilty by the EU of “abusing its software monopoly” and was due to be fined “between 500m euros and 1bn euros”.1 This hardly fits with Hewitt’s assertion that the list contains those who “look after their customers”.
Also, Tesco, currently the UK’s leading and probably most successful supermarket chain, does not feature in the list, whereas Asda does (number 31). Is this more to do with Asda’s HR director perfecting his PR abilities rather than working on his business impact?
Good PR though is self-perpetuating and breeds more PR. In Personnel Today (24 February 2004), it was reported that Asda had received £500,000 from the Learning and Skills Council (LSC) for its latest HR initiative – a pilot NVQ and Modern Apprenticeship programme. What business or community benefits this will result in is anybody’s guess, but it is on message with the Government and the LSC because they want to promote such schemes. But why should part of the huge and commercially aggressive Wal-Mart empire be subsidised in this way out of our taxes; particularly those of us who already feel we get better value at Tesco? More importantly, if Asda believes NVQs are a good business investment, why does it need public money?
Conversely, if it does not believe they are a sound investment, it shouldn’t be doing them at all. That’s the problem with most PR spin – there is very little logic to it.
Last year, the DTI further promoted its ‘people’ agenda by appointing Denise Kingsmill to head up the Accounting for People Taskforce, which was looking into the whole question of how companies report on their ability to get the best value out of their people – now called human capital management. So the big question we need to ask is: was this just another costly exercise in PR or does the Government really believe that the way we manage people is going to bring significant benefits to UK businesses and help to close our persistent productivity gap?
Another question that comes out of this is what role will HRM play? Will it just be ‘singing from the same hymn sheet’ as the DTI, or will it, at last, see this as an opportunity to establish itself as a key source of real and significant, competitive advantage and value?
The answer will come in the form of the human capital management (HCM) reporting organisations choose to use. Those who think reporting on the number of training days or NVQs achieved per annum will have completely missed the point. These are input measures, not results. Equally, those who say their employee attitude survey results have improved will not be telling us anything about how well those employees performed.
In fact, in the era of HCM that we have now entered, everything that you have always regarded as HR best practice is probably dead. Value rules, and that value has to show up in terms of profit and market value with pound signs. Even the public sector should be able to demonstrate improved societal value (service level per pound spent) through HCM, although the Government’s current plans for HCM reporting leave that whole sector untouched (it would be very difficult even for the best spin doctors to show any real value from the huge increase in government spending in this area).
Of course, anyone wanting to pursue an HCM strategy will certainly aim to fully involve their workforce. High levels of employee engagement are likely to be part and parcel of a concerted, strategic drive for value creation. But your HCM report will have to paint a much fuller and truer picture if it is ever to achieve any credibility outside PR circles.
1. The Times,16 March 2004, ‘EU countries endorse watershed anti-trust ruling against Microsoft’