When talent is a luxury

Having developed a nurturing culture in the way they treat personnel, are HR departments finding it hard to frame the best strategy for their firm?

by Richard Reeves
Last Updated: 31 Aug 2010

This October, the luminaries of the HR world will make their annual pilgrimage to Harrogate for the main conference of the Chartered Institute of Personnel and Development (CIPD). The northern spa town has been the mecca for human resources bods for six decades, and for three days the town will be filled with the usual earnest crowd discussing talent, recruitment and leadership.

But this is the last year attendees will be able to curse the appalling train connections and decaying hotels of Harrogate. In 2009, the CIPD is moving its festival of empowerment to Manchester. The elite divisions of HR are dropping the doilies and cream teas for the hip cafes and bars of Canal Street. It's a sign that the CIPD, and HR generally, might be entering the 21st century.

The CIPD's brand has been that of an organisation that is - how to put this politely? - spine- crackingly dull. It is like John Lewis or the WI: full of fantastically well-meaning, nice people attending to the needs of the HR community and being ignored by pretty much everyone else.

But the CIPD has a new chief executive in the shape of Jackie Orme, formerly HR director for PepsiCo UK. The organisation has avoided the temptation to go for one of the 'great and good', appointing instead someone who has led the HR function in a fast-moving consumer goods firm known for its tough, no-waste culture. She is bright, businesslike and articulate, and will soon be a powerful new voice and face for the organisation. (I worked as a consultant to Ms Orme a few years ago: nobody has made me work harder for my fees, nor earned my respect more quickly.)

The CIPD has also launched a new series of publications - with the excellent general label of 'Futures' - intended to be a forward look at the 'people' dimension of the challenges facing the business community. Unfortunately, the first issue, Leading Through Uncertain Times (available free from www.cipd.co.uk/futures), is a failure. With a few exceptions, the contributions from both CIPD insiders and external practitioners are a mish-mash of old platitudes about the importance of investing in people, the need for strong leadership and the benefits of engaging with staff. Linda Holbeche, director of research and policy at the institute, catches the reader's attention with 'Let me state my position clearly'. OK, prepare for some fireworks. 'I believe that leader- ship is going to be crucial if organisations are going to survive the downturn and even thrive.' I suppose it is clear, but it is a numbing cliche.

One of the external contributors, Neil Roden, head of HR at the Royal Bank of Scotland, urges readers to 'excel in leadership and management capability', 'drive engagement in people', 'actively manage talent', 'work collaboratively' and - no, please, don't say it - 'align HR and business strategy'. The HR community has been banging on about aligning HR and business strategy for at least two decades. But if people are the vital accelerator of business success, then the business strategy itself should contain the investments in people required for success. If HR strategy is seen as separate from the main business strategy, no amount of aligning will save it. If the series keeps up like this, they should rename it 'Histories'.

Perhaps I'm being harsh. So I should declare another interest: I used to be director of a Futures division at what is now the Work Foundation, a quasi-competitor of the institute. I believe the CIPD has a chance to lead a vital debate about the future of work and business. It has yet to seize it.

The strongest theme running through Leading Through Uncertain Times is a call on business leaders not to react to the economic slowdown by shedding staff. Holbeche argues that firms that chopped headcount in the recession of the early 1990s lost valuable intellectual capital, as well as the loyalty and commitment of remaining staff. Jeffrey Pfeffer of Stanford University warns that dismissed staff are often snapped up by longer-sighted competitors. John Philpott, the CIPD's chief economist, points out the cost of replacing staff and urges 'avoiding the self-inflicted wound of letting people go', then broadens his appeal to the conscience of bosses: 'Add to all this the fact that rising unemployment can itself reinforce a weak macro-economic situation by dampening consumer confidence and further depressing the housing market, and the merit of holding on to workers for as long as possible becomes crystal clear.'

It's striking that whereas all the CIPD contributors issue 'Don't lay off your staff!' warnings, the external writers or interviewees are silent on this issue. Perhaps they know it's not as easy as all that. It's true that many firms, in a panic-stricken state, lay people off too quickly. But the thing about people being your most important asset is that they are often also the most expensive asset - which means that if costs have to be cut in response to falling demand, people are likely to have to go.

Most successful business leaders know their people are vitally important. But they fear that HR professionals too often confuse the general message that human capital should be guarded and maximised with a specific belief that it is wrong to sack people or make redundancies.

The HR community will secure the ear of business leaders only if it stops sounding like a lobby group for the workforce. That is what trade unions are for. As for the CIPD, it now has a new conference home, a new publications stream and a new boss. All it needs is some new ideas.

- Richard Reeves may be contacted at: richard@richard-reeves.com.

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