The questions have been asked with more urgency in the past 12 months as other corporate disciplines have faltered. Chief executives of large companies are under attack for allowing their pay to escalate out of proportion to that of other employees; finance directors have been criticised for tolerating creative accounting; and non-executive directors have taken flak for being too chummy with the rest of the board.
HR directors, therefore, with their working knowledge of performance management techniques and reward theory, should be better placed than any of their peers, not only to capture the moral high ground, but also to immerse themselves in the cabal of corporate accounting.
Corporate accounting? Shouldnt we leave that to the numbers people? Shouldnt HR be handling the soft issues such as maternity leave, training and work-life balance? You can almost imagine the chuckling at HRs temerity as the CEO and finance director step into the chauffeur-driven BMW that whisks them off to an important meeting with the analysts. Meanwhile the HR director is given a broom and told to sweep the kitchens.
This was the picture a year or two back before the grand talk of continuing double-digit earnings increases evaporated amid falling share prices. The companies that seemed best placed to weather the downturn were those that emphasised the strength and importance of their workforces. So the HR people were suddenly in the limelight. Their potential was beginning to be recognised and they could lean on a whole new raft of performance measurements and processes that linked performance management to financial results. Measures like these could encase HRs fragile esteem like a glass slipper.
Is this a fairytale story for HR? Well, not quite. Many of the new measures have not emerged from the ranks of corporate HR but from consultants, some of whom are attached to the big accounting firms. Is this a case of the number crunchers stealing HRs lunch?
There may be a case to answer here. HR and consultants make uneasy bedfellows. Not everyone in the big accounting and pay consultancies has been glowing in their assessment of big company HR departments over the years. Some, in fact, have been quite scathing, arguing that from a career perspective, consulting offers the best rewards and a broader learning experience.
But consultants do have their uses. They are able to compare different practices in their client companies and many of the benchmarking indexes have emerged as tools for comparison.
The big advantage of corporate HR over consulting is that HR employees work hands-on with colleagues, dealing with a constant stream of unexpected issues. Consultants, however, can be more theoretical in the knowledge that they will not be implementing whatever scheme has been installed in the client company.
We could argue these points until the cows come home. But however much they may dislike the idea, even the most committed of corporate HR practitioners must give some recognition to the work of consultants in the past few years. In fact many of the consultants tools are now being adapted or copied by the in-house teams of former clients and non-clients. Some companies have realised that, faced with paying the hourly rate of a top consultant, it is cheaper to buy the book.
In its eagerness to embrace performance measurement, the HR profession must accept that it has linked arms with the bean counters and that the soft side of HR is giving way to hard numbers and statistics. This is all well and good until we ask the question: how good is any measure at assessing the complexity of human performance? Yes, it looks like HR will now go to the ball. But will we still be able to tell it apart from the ugly sisters?
richard.donkin@haynet.com
Richard Donkin is employment columnist at the Financial Times
Blood Sweat and Tears, The Evolution of Work, by Richard Donkin, has just been published in paperback by Texere (9.99)
