Learn from HR’s mistakes

In 1997, a paper from the old NHS Executive entitled Managing Human Resources in the NHS – a service wide approach landed on HR directors’ desks. This was one of many attempts by the NHS to produce a strategy to manage its 1.3 million-strong workforce.

Since then, spending on the NHS has increased by 117% while patient outputs have increased by only 52%, according to the Office for National Statistics. This amounts to ‘lost value’ of the order of more than £200bn over this period and probably the amount of NHS spending cuts needed now to get back on track.

In 2001, Jean Pierre Garnier, the newly appointed chief executive of pharmaceutical giant GSK, presented his ‘Strategic Platform – Top 6 Priorities’, including what he called the firm’s ‘R&D Productivity Crisis’.

Between 1980 and 2000, GSK had increased its spending on R&D (research and development) fifteen-fold and yet had only increased new product approvals by just 50%. In 2007, Moncef Slaoui, who had just been appointed GSK’s head of R&D, was reported as predicting “within a few years, half of GSK’s experimental drugs would come from external partners compared with about one in 10 now”.

These are almost two identical tales of strategic failure, not just in terms of business strategy per se, but in terms of the inability of boards of directors to create value through the strategic management of people. It does not matter whether we are discussing the public or private sector; HR has failed in its prime duty of getting the best out of people.

Both of these organisations have poured millions into selection, training, development, talent management, career planning and rewards – and yet their results clearly indicate that something has gone seriously wrong. The billions in lost value is hurting everyone – especially patients waiting for better drugs.

In the midst of the worst recession that any of us is likely to experience, this begs the question: what are we going to do to make sure these tales become history rather than the future for HR? HR strategists should already be looking well past the need to survive and planning a future where everyone contributes as much value as they can. That way future generations will be much better prepared and able to repay our huge national debt.

So what are the immediate lessons for HR strategy? Well, first we need to help our organisations learn where we went wrong; top of that list is making a clear link between an organisation’s culture and its ability, or inability, to create value. At the British Medical Association annual conference in July, a specific motion was tabled to deal with the issue of the harassment of whistleblowers – those who want to raise serious concerns about patient safety. If this culture of fear persists in the NHS, we can only look forward to even higher health bills and even lower patient outcomes.

Second, we need to install ‘human’ systems into our organisations. What do I mean by that? We should work with each other as human beings, having intelligent, mature conversations about the issues we all now face, rather than as automatons controlled by rigid rules and ridiculous targets.

We all stop at red traffic lights, not because the lights force us to or we fear the threat of prosecution, but because we share a common understanding of what is in the best interests of us all. Systems always work best when people understand and believe in their purpose.

Third, we should take the opportunity that is provided by the burning platform of the recession to admit that we have got it wrong in the past and allow ourselves a completely fresh start – a strategy that really talks about the potential of human capital in added billions.

We have some very powerful people on our side in this endeavour. President Obama compared the US healthcare system with the country’s ailing car industry, stating: “If we do not fix our healthcare system, America may go the way of GM – paying more, getting less, and going broke.”

We won’t be able to do that by repeating the mistakes of our history in people management. HR strategists need a better vision of the future and much better practices to make it happen.

Paul Kearns, director, PWL. The 2nd edition of Paul Kearns’ book HR Strategy has just been published.

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