{{B}}Human resource management{{/B}}
It is nearly a century since the car manufacturer Henry Ford said, 'You can destroy my factories and offices, but give me my people and I will build the business right back up again.' In the light of this statement, it is odd that people management has taken so many years to move up the agenda. But a few business theorists are beginning to argue that managing people well can add more to the bottom line than anything else.
Mike Manzotti, a leading American author in this area, has strong views about the growing importance of human resources in today's business world. {{U}}(8) {{/U}}. A company with high staff commitment, for example, has an asset that its rivals find hard to copy. Research in Britain would appear to support this notion. A recent business school survey into the performance of eight multinationals found that people management could be the most decisive factor in a company's performance. Another study indicated the same thing in medium-sized manufacturing firms. {{U}}(9) {{/U}}. After all, how can an organisation evaluate the commitment of its staff?
For this reason, the researcher George Hessenberg argues that a scientific approach is needed. He feels that when HR professionals suggest changing an organisation's compensation structure or being more selective in recruiting, they are asking for things that require resources. {{U}}(10) {{/U}}.
Some new approaches are emerging that attempt to do just that, including the scheme devised by consultants Couze Jordan. The scheme, which covers communication, recruitment, and use of resources, predicts that significant improvements in these areas achieve an increase in shareholder value of up to 30 per cent.
Another programme, launched by James Lester, an independent human resources expert, approaches the problem from a perspective that is designed to appeal to a wide range of managers. {{U}}(11) {{/U}}. Both, he argues, involve appropriate decisions being made about the allocation of resources within a particular budget.
Lester's expertise enables him to carry out an organisational audit for his clients to identify which areas of HR are in most need of improvement. This is because there is no point in businesses spending large amounts without knowing if the investment is worthwhile. {{U}}(12) {{/U}}. Lester's advice, however, is for companies to think twice before hiring people, since it is vital they assess whether they are getting value for money.
A But the findings are inconclusive because of the difficulty of collecting reliable evidence.
B He argues that the role of a skilled, motivated and flexible workforce has become more significant as traditional sources of competitive advantage diminish.
C For example, a common mistake is to spend a fortune on recruitment to cover up for deficiencies in training.
D However, most leading experts in the field believe that there is sufficient evidence to support this model of workplace dynamics.
E He compares the positive use of human resources to effective fund management, as this is something that senior executives can relate to.
F He believes, however, that the only way they will gain approval for these potentially expensive initiatives is to have some data that demonstrates positive financial benefits.
G In the light of this statement, it is odd that people management has taken so many years to move up the agenda.