The rational manager seeks to get the best out of resources without spending too much on them, to produce a service and realise a profit. Or so the theory goes.
There is a problem, however: the theory is wrong. It misses a fundamental difference between an inert resource and a conscious human being. Without people using their skills and co-operating with each other none of the other resources have any value. For the practical manager the ‘human resource’ is very different from a resource like a computer or a delivery van. This can be a very good difference (enthusiasm, inventiveness) or a very bad one (sulking, aggression), or somewhere in-between (compliant but rather bored).
Research shows that these human dynamics resonate throughout the organisation. If the bulk of the employee population is appropriately skilled and enthused there are waves of emotion rippling through the teams; similarly for negative behavioural patterns. This can actually be detected at the neurological level using social neuroscience.
All this calls into question the very term ‘human resources’, the beliefs that underpin it, and our most common performance measures.
The dominant metric in business is accounting, which works quite well for inanimate resources but is inadequate for living ones. If you double the workforce, for example, you may double the salary expenditure but that doesn’t necessarily double the running cost because this is also influenced by staff retention levels, absence rates, and so on.
The best-run companies understand this. They hire on the basis of talent and develop good management to get the most out of it. But this begs a very serious question: surely our terms of reference and performance metrics ought to support such smart management, not get in the way?
We haven’t really modernised our business model. The term ‘human resources’ gives a misleading impression of the nature and potential of the people employed. The dominant performance indicator for business (the accounts) doesn’t even measure operating cost.
The approach I have developed, based on rigorous research and piloting, accepts the behavioural reality of human assets. Returning to the spectrum of human behaviour, from alienation at one end to inventiveness and commitment at the other, this approach deploys the concept of levels of engagement. This runs from Level 1 (a deeply dysfunctional team), through Level 3 (orderly and compliant), to Levels 4 and 5 (highly enthused commitment). The term ‘human resources’ suits the Level 3 world but this guarantees sub-optimal business performance. It’s not fit for purpose.
High engagement is no guarantor of high performance because there may be poor systems or a misguided strategy. So my approach is complemented with analysis known as 6-box diagnostics. This is a questionnaire-based assessment that shows the functionality of a business based on six core dimensions. Three relate to processes: strategy, systems and resources; and three relate to people: culture, relationships and individuals.
When all six dimensions are healthily aligned, represented by teams operating at Level 4 or 5, a transformation occurs. The organisation becomes much more than the sum of its parts and a positive resonance takes hold, lifting performance to an optimal or even an inspired level.
So here’s a proposal: let’s rechristen ‘human resources’ as ‘human resonance’. It’s not just rebranding; it’s a modern, evidence-based approach.
Vlatka Hlupic is professor of business and management at Westminster Business School. Her book The Management Shift: How to Harness the Power of People and Transform Your Organization for Sustainable Success is out now