Demonstrating business impact should be top priority for human resources

A few weeks ago, Jackie Orme, chief personnel officer at PepsiCo, was announced as the forthcoming chief executive of the Chartered Institute of Personnel and Development (CIPD).

We are now in the era of ‘Gordon’ not ‘Flash’, and substance over style, and while Orme is not the best-known HR director, she has a good reputation for business-focused delivery in a successful, global organisation.

So what will top the list of issues in her in-tray when she starts? My research and consulting experience indicates four areas.

First is demonstrating business impact. How do we get more HR professionals in many more organisations demonstrating the employee, business, economic and social benefits of the work they do?

Like me, you probably work in HR because you have made a real difference to people’s lives, benefiting them and their employer. Yet why have we been so poor at demonstrating the financial benefits?

Judging the HR measurement category in the Personnel Today Awards this year, there were fantastic examples of organisations doing this successfully. Yet they stood out because they are so unusual.

In my work with company directors and finance executives, I often see HR people marginalised because they cannot understand the business dynamics or demonstrate their contribution to improved financial performance. As Pricewaterhouse­Coopers’ (PwC) review of Key Trends in Human Capital concludes: “There is little evidence to show in Europe that HR functions have been able to move to a higher level of strategic influence.”

Developing these skills in measurement and financials, along with more in-depth specialist expertise in areas such as international HR management and organisational development, is a second key area. New subjects need to be fast-tracked into the core professional development scheme. The CIPD needs to address the shortage of quality senior HR executive development programmes in the UK (an area where institutions such as Henley Management College and Roffey Park have taken the lead).

Improving marketing skills and management is a third priority area for HR. Leading HR directors, such as David Fairhurst at McDonald’s and Glyn House at Wagamama, display personal and professional marketing skills to create internal and external impact through their organisation’s people management policies. House’s success with internal branding led to him being responsible for the firm’s marketing and customer branding as well.

The CIPD’s recent research report on employer branding highlighted good examples. Yet most of its content has no relevance on recruitment success, staff engagement or the performance of the employer.

These broader skills needs also raise the issue of the CIPD’s future in relation to other professional and management institutes.

The final priority, which the profession and Orme will need to focus on, is to build what Winston Churchill referred to as “courage in action”. HR has been overly focused on its own structure and on legal compliance, rather than how it can innovate to build improved performance through people. For all the rhetoric, the PwC report notes “there is little evidence that the internal drive to build business partnerships and shared-service operations have produced any mainstream benefits”.

PwC’s new report, Managing Tomorrow’s People, identifies three future scenarios for HR:

  • the ownership of the strategic people remit and a key deliverer of value
  • the driver of the corporate social responsibility and green agenda
  • a restricted, transactional, mostly outsourced service role.

As HR services leader Michael Rendell puts it, HR professionals (and the CIPD) need to realise “the future is something we can create, not a place we have to go to”.

In the same week as the Orme announcement, BP’s chief executive Tony Hayward announced a major restructuring and downsizing exercise. He said: “Our problem is not about strategy, but our execution of it.” For the HR profession, the problem is both.

The opinions expressed in this piece are the personal views of the author.

Comments are closed.