HR – still sitting on the table – part II

07.DEC.07

by Suzanne Joachim

continued from last week

Promoting HR priorities in the context of real business necessities is critical to getting and keeping a seat at the decision-making table. More than ever, according to a recent study across 35 top Officers in American and British organisations, those who manage the HR function must be able to do more than just manage the personnel function and tend to transactional activities; they must be more strategic.{{more}}

In these parts, however, the weight given to HRM is still minimal. To underscore the point, if a business needs to manage its financial processes, a suitably qualified and experienced Chief Financial Officer is deployed. Similarly, if a business requires smooth management of its operations, it hires a Chief Operations Officer. Comparable analogies can be made for Chief Executive Officers, Marketing and Promotions Officers and the like. Could it be that business leaders do not understand the role HR should or can play in executing business strategy? Do they not understand the inherent value of HR? It would appear that the concept of human resource management and the centrality of human resource for all business activities still have not taken root.

It is common practice for most companies to be painstaking in the management of their financial records and accounting processes and procedures. This type of management is looked upon as a necessary part of doing business. Firstly, for its contribution to the bottom line, and secondly, as a result of regulatory requirements, including imposed compliance. Conversely, however, the rigorous and painstaking organisation, supervision and management of the HR function is absent, and in many cases, the vital contribution played in securing business performance is not even recognised. People strategies support and drive business growth, and it is the individual and collective talents of people that create value and enhance organisational success. Yet, the basic requirement of HRM to serve corporate strategy and achieve corporate aims by means of a high performance workforce is missing.

The growing body of research has shown that “human capital management is the single most important predictor of an organisation’s ability to outperform its competition”. It stands to reason, therefore, that without good human resource management systems and processes, talent loses its organizational value and the company or organization is no longer making the best use of its human capital.

Companies engage in two main types of capital investments in order to ensure that their processes are truly assets – human and structural. There are two schools of thought when it comes to how the former is viewed within an organization. Is it an asset or an overhead expense?

This is evidenced by (a) an accounting procedure and (b) the overall attitude, approach and mindset of management regarding Human Capital – the corporate DNA. For example, an Accountant sees an asset as something with value on the balance sheet.

On the other hand, employee costs may feature in the Income and Expenditure account but employee “value” does not appear as an asset (or even liability) on the balance sheet. Based on the company’s overall attitude and approach toward Human Capital, it will either fritter away people – assets as casualties of short-term financial thinking and short-term results, or ensure that people are a company’s primary assets, representing the knowledge base and the proprietary edge. The former seems to be the case.

Return on capital assets is constantly being measured with break-even calculations and strictly financial returns, even among SMEs, but there are no real measurements to monitor and maximize a company’s biggest assets – people.

The realm of “human resources” is often reporting at a non-executive level to a financial manager, and it is mostly related to payroll, vacations, insurance, legal regulations and discipline. Even in large companies, the Human Resource (HR) Manager is often ranked lower than other executives. Besides, the common homily “People are our greatest assets” is glossy and persuasive but is not translated to commitments, as evidenced through a lack of the establishment of excellent human resources management systems and appropriate and commensurate HRD. Worse still, the return on human capital is not being measured nor its value truly recognised.

I feel compelled to end this article by sharing the following anecdote as it possibly sums up the current status of HRM here in St. Vincent and the Grenadines, as well as in the wider Caribbean. When I initially expressed an interest in opening a Human Resource and Business Consulting firm, a colleague who I consider to be smart, educated and intelligent asked me “why would you leave such a powerful job to push a little back office function”? This perspective is representative of the weight given to the HR discipline; it transcends all borders and boundaries to include most CEOs, CFOs, COOs, Accountants, Executive Directors, beneficial owners of companies, Politicians, Chairpersons, Business Developers and the like.

The comment from my colleague encapsulates not only the lack of understanding of HR management, but also the relatively meagre significance or credence given to HR management and development here in St.Vincent and the Grenadines and the wider Caribbean. This possibly indicates why HR is still not AT the table in these parts.

The present situation seems grim. HRM appears to represent little worth to our business community. Luckily, the world – including the business world – is constantly changing and evolving.

As the eternal optimist, it is my strong belief that one day, in the not too distant future, HR will have its rightful place AT the table, rather than sitting forgotten, embarrassed, underused ON the table.