Lord Monks: 'Declining HR lacks influence it had in 70s'
Arvind Hickman, December 10, 2014
The HR function has declined too much and does not wield the same level of influence of industrial relations managers in the 1970s, Lord John Monks has said.
The former general secretary of the TUC challenged the HR profession to “be more assertive and more militant about putting people at the centre” of organisations.
Monks was speaking at a joint Work Foundation and Prospect event that explored the contemporary role of HR.
He said HR had “regressed more than it had progressed” in recent years, citing excessive executive pay, growing inequality and employment insecurity as failures of the function.
“It’s an area that has declined by too much and needs strengthening. We need leaders of big companies who come from the HR function who can do the money and product as well.”
Monks recalled the time he led the TUC in the 1970s when “the stars of the HR world were the industrial relations managers”.
Part of this influence came from much more powerful unions and collective bargaining; in the private sector 70% of workplaces were unionised compared with about 15% today.
“So the IR directors, people like Patrick Lowry at British Leyland, John Hougham at Ford, Geoff Armstrong – these were well known figures, they were very influential. Is that still the case of HR managers or is it much more of an operational subordinate role than used to be the case? How many HR directors are really on the board or are they merely told what to do?”
Monks said the objective of companies should be to be an employer of choice, “not just ‘we’ll give people a job at the lowest possible rate and on the shakiest contract as far as their security is concerned”.
“The heart of any organisation is what you do about job and employment security. What can you do to keep the people you employ interested in work? We’ve seen some regression here – the growth of insecure contracts, low paid occupations, zero hour contacts, are now features of the labour market.”
Part of the problem has been the growing influence of finance, which views “the company as a vehicle for short-term profit maximisation”.
“Executive pay is not an area where HR can cover itself in glory because it has not stopped excess, conspicuous consumption at the top of the executive pay level and this ever-widening gap despite some mediocre performance in so many companies has continued,” Monks added.
“I think any code of practice or ethical charter might assist a little bit towards some kind of rules for leadership and sharing pain and rewards are very important.”
Sharing pay and reward more evenly is an idea that Dave Ulrich recently endorsed.
Monks would like the HR profession to take a stronger stand against short-sighted leadership that centres on maximising profits before people.
This could involve “a war with finance in some cases if it’s far too dominant in short term creaming off profits”.
Monks said HR’s challenge is to re-establish a sense of leadership that was "given by those industrial relations managers long ago".
No mean feat in an increasingly short term, results-driven business environment.
Photo copyright of Stefano Cagnoni.