Time to reflect on HR’s influence

first_img Previous Article Next Article Academics are increasingly rowing back from the view that HRlies at the heart of corporate successListen carefully and you may be able to hear the squeak and scrape ofbackpedalling. Academics would not call it backpedalling at all; mutteringinstead of increased caution, insufficient data and early days in a new fieldof study. Fine. We’ll borrow a C of E-ism and call it ‘a period of reflection’.But whatever we choose, it seems the cocksure chants of four or five yearsago that ‘good people management pays’ – that progressive HRM feeds directlyinto the bottom line – are being remorselessly picked at. Taking their placehas come a new language of ifs and buts, nuance and caveat. In the British Journal of Industrial Relations, for instance, some of theleading voices in the field, including professors David Guest at Kings Collegeand Jonathan Michie at Birkbeck, argue there is indeed “a strong association”between the deployment of HRM practices and corporate performance. But theycannot show that HRM causes organisations to perform well because thestatistical correlation is too weak. There might be reverse causality in operation – successful companies decideto implement high performance HR practices. Besides, businesses that are goodat managing people are often good at lots of other things too. It is a more refined message than a study by the same authors three yearsago. Effective People Management (CIPD, 2000) analysed the 1998 WorkplaceEmployment Relations Survey and detected a link not only between the number ofprogressive HR practices in operation and financial performance, but also inthe way those practices were applied. In other words, how HR is managed mattersalong with the range of practices used within it. This in turn could be seen as a refinement on previous studies.”Practices that encourage workers to think and interact to improve theproduction process are strongly linked to increased productivity”, claimeda CIPD study in 1999. Today, such a statement would have half a page ofhair-splitting footnotes in tow. The problems with the much talked-up ’30 studies that link HR to bottom lineperformance’ are legion. Some only look at one point in time rather than at thecorrelation between HRM and performance across a longer period of upturns anddownturns, lay offs and expansions. There is an over-concentration of evidence from larger manufacturingorganisations, rather than from smaller service-orientated ones. Yet, thepractices appropriate for a company aiming at the top of the market, competingon the uniqueness of its products and seeking to motivate high-cost, high-skilland easily bored people must be different from a company selling bulk at lowcost, and requiring merely pairs of hands from its workers – ideally withoutthe bother of a head and a heart attached. The colossal diversity of organisations has only recently started receivingproper attention from researchers who came to their subject with the convert’sappetite for simple, universal messages. To be fair, much of the original certainty came from America. JeffreyPfeffer’s 1998 book The Human Equation, for example, claimed that by applyingseven progressive HR practices (job security, careful recruitment, teamwork,decentralisation, incentive pay, narrow status differentials and extensivecommunication) businesses could become more successful. This was always a bit far-fetched. A duff company with thick managers is notsuddenly going to transfigure itself by adopting a handful of fashionabletheories, any more than a fat man will become thin after a perfunctory benchpress. But Mark Huselid’s well-known books and journal articles on the impactof HRM also came packed with what now feels like slightly zealous conviction. Here, the data was never so clear-cut, and each new study adds its ownsprinkle of caution. “There is enough to be encouraged – but quite whenand why HR relates to performance, we are not yet in a position to know,”says Toby Wall, director of the Centre for Innovation and Competitiveness,based at Sheffield University. “When you go into the existing research in detail, the evidence of alink becomes less and less convincing. And then much of this work is based onthe assumption that these practices are possible to copy. Imitating aneffective way to manage people is extremely difficult,” he adds. Explaining the nature of the connection – the ‘black box’ as it is sometimesknown – is the subject of yet another recent CIPD report by John Purcell,professor of HRM at Bath University. In keeping with the new mood, it is far too subtle a work to be boiled downfor hack-friendly bullet points, so I shall mention just two fecund ideas itadvances that at least have the merit of ringing true. First, thatdissatisfaction with existing HR policies has a greater demotivating effectthan the absence of HR policies – in other words, that badly run HR is worsethan useless. And second, that freedom is contagious: allowing managers maximumdiscretion in the way they manage people in turn feeds the level ofdiscretionary effort employees are willing to give. Yet, if HR is no longer the motor of success we had previously come tothink, where does that leave the profession? Readers may have noticed sundry quasi-religious references in this articleand these, I hope, are quite fitting. The value of good people management is and will always be a matter of faith,conviction, and of basic intuitive rightness, irrespective of clever proofsthat may one day emerge. The ‘period of reflection’ changes nothing. Comments are closed. Related posts:No related photos. Time to reflect on HR’s influenceOn 2 Sep 2003 in Personnel Todaylast_img read more

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