HR's report card 2009: working hard and showing improvement

by 08 Dec 2009

Everybody knew that 2009 was going to be grim, but did HR rise to the challenges posed? Guy Sheppard asks the experts to give their end-of-term reports on a profession reschooling for recovery.

At the beginning of this year, three acknowledged UK experts from the worlds of academia, economics and workplace policy gave their views about how HR should cope with 2009. The economy was then in crisis and, for many in the profession, the need for short-term sur vival could have overridden their belief in tried and trusted practices. The experts warned against this, predicting the recession could be a great opportunity for HR to shine.

Nearly a year later, with the worst of the downturn apparently over, their verdicts on HR’s performance are generally positive.

Nick Holley, executive director of Henley Business School’s HR Centre of Excellence, has completed six months’ research into how the recession has impacted on the profession, and what support it should give business during a recession.

Lessons not learned

He found the most depressing part of interviews con ducted among a cross-section of 25 organisations was how little they had learned from the previous recession. “There were a number of people who found the question a revelation; they were so busy that they had not stopped to reflect,” he says.

Holley believes a core characteristic differentiating the HR functions that have responded well to the recession is “the ability to learn and constantly move forward rather than repeat mistakes again and again”. Other character istics include flexibility in the face of change, coherence so that everyone is pushing the same agenda, and the dis cipline to follow through initiatives in a focused and cost- effective way.

“One of my observations is that the HR functions that are thriving and surviving are the ones that are focused almost entirely on the needs of the business, rather than HR fads that are not necessarily focused on those needs.”

Holley’s original prescription for coping with the reces sion was for HR “to be incredibly close to the business”, perhaps postponing long-term initiatives to ensure survival in the short term.

But he emphasises this does not mean abandoning long- term thinking in the process. “One of the things I have noticed is that HR needs to be incredibly schizophrenic. If it does not respond to the short-term needs, it will have no voice and credibility.” At the same time, he believes the profession needs to ensure that the values and “moral com pass” of the organisation are retained.

Will Hutton, executive vice-chair of The Work Foun dation, is impressed with the level of flexibility shown in the workplace. “I do think, looking around the economy, you have got to say the number of innovative responses to this very severe recession – such as wage freezes and sab baticals – has been extremely good.”

HR bloodied

He says HR has been “bloodied” and has come through the process quite well. “You have to say: ‘Hats off to them’.”

The John Lewis Partnership, Sainsbury’s, Tesco and Rolls-Royce are among the companies singled out by him for particular praise. “Where people have put in the spade work beforehand, trying to create a good working envi ronment and investing in workplace relationships, they have reaped dividends.” For Hutton, retailing, business services and car manufacturing have done well, while trans port and telecommunications have tended to suffer.

He finds the contrast between British Airways (BA) and Japanese carmakers based in the UK illuminating. At Honda in Swindon, for example, workers have voted for a 3 per cent pay cut over 10 months, but Hutton says BA’s demands for wage cuts have not been handled well. He argues that the carmakers are reaping the rewards of treating their staff well, but for BA achieving the cuts it needs is proving very difficult indeed, because “they have come late to the party”.

He adds: “I think this recession has shown that there is absolutely no substitute for employee engagement and for HR and line managers to come up with customised, localised deals that make sense to the local workforce.”

Impressed with IT

Holley is impressed with IT sector companies such as Cisco and Oracle, saying their HR functions have gained respect for getting the basics right and for employing people who approach their profession in a commercial way.

Shell is also praised. “The company put a lot of effort into developing the commercial skills of its HR people. It’s their ability to be a really challenging partner with the business rather than sitting in an HR box reacting to what is going on.”

When Bryan Finn, economist and founder of consul tancy Business Economics, gave his forecast, he said the implications for recruitment were “profound and dis turbing”. He urged organisations to think ahead to when the recovery started, warning against disbanding entire departments because it would take years to reacquire the skills and experience needed to run them.

His impression now is that this was avoided and that HR and business generally reacted sensibly to the down turn. “They are not cutting everything but thinking: ‘Where can we be more efficient and effective?’. People have not panicked – they have knuckled down.”

He believes the UK economy has followed the pattern that he and other economists predicted. “We were look ing at a very bad first half of the year, and then for that to stabilise in the second half. It is a little bit early days, but it does look as if things are stabilising.”

Courtesy of Personnel Today.