The great irony of human resources management (HRM) is that it is people who govern and manage companies. Their decisions make or break companies.
In the past, HRM has been viewed as a victim, capable of administrative rather than strategic objectives. These misconceptions are most likely what have led to only 18% of CEOs feeling confident that they have the right people in place to execute strategy (according to Marius Meyer of SA Board for People Practices), and why, according to HCI Africa, human capital is the biggest concern for CEOs and the biggest risk in business.
While these statistics are factual, the truth of the matter is that HRM is not predominantly concerned with ‘soft’ issues and is, in fact, amenable to regulation.
HRM has, over a period of time, undergone a process of being systematised and is effectively governed by broadly accepted standards which address a number of barriers to profitability, innovation, and good business.
Modern developments in the field of HRM have laid the groundwork for a process through which over 100 senior South African HR practitioners from a wide range of organisations have contributed to the development of the SABPP National HRM System Model and Standard. This process of development and the subsequent roll-out of the Standards has been facilitated by HR Future in partnership with the SABPP. This partnership has resulted in setting HR standards which have successfully professionalised the practice of HRM, raised the quality of work in HR functions, and continually improved the standards in relation to evolving market and social requirements.
The resulting industry consensus on the purpose and process of HRM is precisely what is required to tackle such dire situations whereby only 13% of employees worldwide are actively engaged in business strategy, and an astounding 5% actually understand it. Not only does this combat negative results, but it also actively improves on positive activities, such as profitability. We have already seen proof of effective HRM on profitability, where the average ROI on wellness programmes is 300%, engaged employees outperform others by 202%, andthose companies with good HR practices are 105% more profitable.
For business sustainability and growth we can therefore observe how essential it is that effective HRM methodologies be encapsulated in widely accepted standards and that organisations have an assurance that such standards will be applied in their environment. Moreover, inconsistencies within HRM practices and across sites, business units, companies, and industries must be (and can be) eradicated.
To put it simple, every company must talk the same HR language. For this reason, it is best that the dissemination of HR best practice starts at an educational level. The standardisation of HR definitions will help to ensure that educators at universities, for instance, are all teaching an approach to topics, like talent management, based on agreed concepts, methodologies, and principles. This will give organisations confidence that the HR practitioners they employ have the ability to make them competitive, both in terms of achieving ‘preferred employer’ status and in the execution of business strategy.
Measuring the standards
With these tangible and achievable standards comes the ability to measure. Companies are in the position where they can assess their current situation, determine improvement objectives, implement actions to meet these objectives, and then measure the results.
The benefits of measuring and reviewing this data are numerous. Auditors can identify what, where, and how to improve a company’s efficiency and profitability by helping upper management to better understand their own HR systems. In addition, management, as well as shareholders, suppliers, and financial auditors, will know that the human capital risk in their organisation is understood, and effective systems (controls) are in place to manage them.
The South African context
In the context of such sweeping benefits, South Africa is underperforming – to the extent that it is said to be ‘rushing to the bottom’ in terms of IRO HR standards. This is hardly surprising, with strikes costing South Africa R200 million+ per day and a collective loss of R12 billion a year to absenteeism.
Globally, we rank:
48th out of 57 countries on skills shortage, brain drain, and discrimination (Finnemore, 2009)
113th out of 144 countries on labour market efficiencies (WCR, 2013)
143rd out of 144 countries on rigid hiring practices (WCR, 2013)
148th out of 148 countries by IRO of employer-employee cooperation and labour peace (Sharp, 2014).
Although South African organisations prefer to invest more in IT and other activities than in HRM, executive concerns about competitiveness has forced them into an awareness. This awareness extends to the fact that an inadequate HR function is a barrier to innovation, that the use of standards can improve effectiveness and drive change and innovation, and that these standards are the key to improving the consistency and quality of employees who in turn impact profitability.
Slowly, South African companies are putting their houses in order through the help of SABPP, who facilitate Standards Workshops. In addition, many HR Specialists have stepped in, offering presentations and workshops for their clients, using a variety of resource materials designed to help them implement the standards that are being put in place by the industry.
Digitising HRM solutions
In a rapidly digitising world in which business analysts predict that every industry will be digitally transformed, the easiest way to implement HRM standards will be through relevant technologies.
In general, modern technology allows companies to save time, money, and effort. Digital solutions amplify such benefits exponentially. This ensures that decision makers get the right data at the right time, creating game changing efficiencies. In the context of HRM, everything from payroll to talent management can be made more streamlined and coherent with the use of well-designed software and purpose driven business processes maps.
Digital workforce planning and analytics tools, for instance, enables companies to visualise data, perform hierarchy-driven forecast trends, and align trend and talent movement.
In spite of executive resistance, driven largely by a lack of understanding of just how profoundly effective HRM could be in transforming their business, the face of HRM is changing in principle and implementation – and not a moment too soon.
For the momentum of this change to be maintained, more organisational sources have to be funneled into HRM – under the precise guidance of the new standards. HRM, through years of development, has developed a distinct and authoritative voice, and it is abundantly clear that in order for companies to benefit they need to listen at board level about what needs to be achieved and how, and learn from the explicit commentary on the achievement of progress.