Employers have a unique opportunity to shape
government guidance aimed at helping organisations prove the link between their
people management policies and the bottom line.
Denise
Kingsmill, who has been leading the DTI’s Accounting for People Task Force,
urged Personnel Today readers to respond to its consultation paper published
today, which will try to aid employers in measuring the impact on performance
of their HR policies.
She
hopes the finalised guidance will help firms prove the business contribution of
indicators such as training, diversity, remuneration, retention and staff
turnover.
The
best practice guidance will also will help large employers meet new performance
reporting procedures, called Operating and Financial Reviews, which are
expected to be introduced in the forthcoming Companies Act.
Kingsmill
was asked to set up the taskforce in January this year by DTI secretary
Patricia Hewitt, following her experience running the Kingsmill Review on Equal
Pay in 2001. Kingsmill said the equal pay review showed that UK companies are
generally very weak in the area of human capital management (HCM). She believes
the UK will only bridge the productivity gap with its main competitors if
employers start to take this issue more seriously.
"On
the whole, the standard of people management in this country is very lacking.
There are some brilliant exceptions, but in general it is poor. Companies
typically say that people are their greatest asset, but then do nothing about
managing this asset in an appropriate way," she said.
"Too
many employers do not treat people in a way to motivate them to contribute to
business success."
Kingsmill
said the consultation was an opportunity for HR professionals to boost their
profile by taking the lead in trying to prove the contribution towards
organisational performance of effective people management.
"It
is a great concern that out of the top FTSE 250 companies, only 20 have the
people function on the board. This does not reflect the importance of people
management to performance," she said.
By
Ben Willmott
Feedback
from the profession
Elaine
Wood, head of reward, Bradford and Bingley:
"In
theory, it is a welcome initiative and will help make organisations take HR
issues more seriously and think about their bottom line impact.
"But
in practice, it is difficult to make the causal links between say flexible
working and its bottom line benefits. In my mind, I may be convinced of the
link between flexible working and recruiting a more diverse workforce reducing
absenteeism and turnover but measuring this is much more difficult. The amount
of effort companies will have to put in to develop a dashboard of people
management measurements that are meaningful will be substantial."
Susan
Anderson, director of HR policy, CBI :
"What
we are all grappling with is trying to identify the right areas and how to
demonstrate the value of what we are doing in a meaningful way that can be
understood by analysts and institutional investors.
"It
is helpful the taskforce is trying to identify a common language and put some
flesh on the bones in these key areas. I hope the taskforce will help companies
present human capital measurement in a meaningful way."
Alison
Hodgson, resourcing manager, Sodexho UK and Ireland:
"This
should arguably be the business priority for every organisation. Within our
organisation, we have endeavoured to make progress in this area with monthly HR
reporting. We have followed the lead of B&Q by translating the results of
our employee engagement survey against commercial key performance indicators.
The taskforce appears to be trying to formalise a lot of what we are doing
already – this will undoubtedly help the profession gain credibility and a seat
at the top table."
Robert
Halton, HR director, DLA:
"I
agree that management information needs to be more than just financial, but if
companies are told ‘This is what you must show’, then there is a danger it will
turn into bureaucracy. Then you get people paying lip service [to people
management measures], and the figures will not tell the true story. However, in
principle, I think it is a good idea, but the measures needed to be worked out
carefully. There is a danger it could become a bit like quality standards –
just because you tick the right boxes doesn’t mean the goods are quality. A lot
of people ask ‘What is your staff turnover?’, but what will a turnover figure
tell you? You need to know the background behind the figures. Workplaces are
all very different. Do you want to reduce [their people policies] into
statistics?"
