Issue link: http://www.e-digitaleditions.com/i/169755
HRO Today Forum Preview 2. HR cannot afford to have a split personality. Its dual roles of HR strategy and administration are irrevocably intertwined and inseparable. If cost-cutting is to add value, rather than increase the risk of failure, it has to be implemented intelligently. Unfortunately, when it comes to HR costs, there is still much muddled thinking. There are two, widely-held misapprehensions about HR administration. One is that it is overhead to be reduced wherever possible. Another is that it can be treated as a commodity with little expertise or personal judgement required. Yet anyone who has actually worked in HR for more than five minutes not only realises just how complex it can be but how over-complicated senior managers can make it by insisting on doing their own thing and generating numerous 'special cases.' If they worked within a coherent, strategic HR framework, this would not happen and HR administration would be cheaper. 3. The strategic role of HR requires professional strategists of the highest calibre. HR strategists also need the right ammunition if they are to be taken seriously at board level. This is where the real problems lie. Conventional HR does not have much ammunition when it is up against the big guns of finance, sales, and operations with all of their business critical data. Measurement of HR's value is, to say the least, problematic, but attempts to improve the situation during the last 20 years have been woefully misaligned. HR should not be measuring itself; it should be measuring the changes in profit, sales, and output that its practises have specifically focussed on. Meanwhile, conventional accounting practises, which have never coped with the measurement of intangibles, are still dictating that we produce training budgets without any corresponding double entry to show the return on this business-critical investment. Treating training as a pure cost significantly influences management attitudes to learning and development. If no one is measuring returns, no one is accountable for whether the organisation learns or not. Unfortunately, HR has missed a golden opportunity here to find its rightful place in the boardroom by failing to offer a better methodology to measure the value of human capital. The time has now come to put all of these matters right. Follow the Evidence The current chief executive of the CIPD Peter Cheese was recently questioned after his first year in the job about how he sees the HR profession developing. Not only does he believe that "HR has to stand up and be more confident," he also thinks that "bravery is inextricably linked to how credible the profession is perceived to be." Any professional Measurement of HR's value is, to say the least, problematic, but attempts to improve the situation during the last 20 years have been woefully misaligned. HR should not be measuring itself; it should be measuring the changes in profit, sales, and output that its practises have specifically focussed on. confidence, though, can only come from reliable evidence that its professional methods are working effectively and that its practitioners should not need to be brave if they are already trained to the highest standards. Unfortunately, neither of these necessary conditions are presently satisfied anywhere in the world of HR. In order to start moving in that direction there are several, interlinked principles that need to be followed. Maturity. HR can only be as efficient or effective as it is allowed to be by the board and executive team. This is both a vicious circle and classic Catch-22 situation. Executives who see people as costs rather than value generators could be described as immature. Organisations with an immature attitude to human capital are unlikely to achieve the highest returns. These same executives, who need to start taking human capital management (HCM) more seriously, will not experience what it can offer unless and until they accept that their own behaviour as part of the problem. General managers who regard HR as an overhead, a necessary evil even, should turn the mirror on themselves and admit that they get the HR function they deserve. They will only be in a position to reap the huge value opportunity on offer when they fully acknowledge this. This complex picture is represented very simply in Figure 1 on the following page by a continuum of perceptions about the importance and value of people in organisational performance. This is the HR Maturity Scale that has been developed and refined for more 20 years and has recently become the foundation stone for a new professional institute, the Institute of HR Maturity (IHRM, for further details visit www.hrmaturity.com). SUMMER 2013 | www.hroglobal.com [9]