The recent Economist Intelligence Unit survey of over 500 board members across all key business sectors throughout Europe made for depressing reading for the HR industry. HR was cited as one of the worst performing business departments in terms of overall contribution to the company. There doesn’t appear to be a hidden agenda behind this survey, and as such we must ask ourselves why the findings are so negative. In the past, people have often questioned the true value of HR so this topic isn’t new to us, however this doesn’t detract from how disappointing it is to see that perceptions are not changing for the better.

Perhaps it is because we, as a profession, have not worked as hard as other critical business functions in raising the profile of our contribution to business success. Whilst HR representation at board level is improving it is still not as high as it should be and without a voice at board level, how can our opinions be heard and acted upon?

Many forward thinking CEOs do quite rightly understand the strategic contribution that we make and many of the top performing FTSE companies have HR representation at board level. In recent years we have also seen HR Director salaries come more in line with other departments such as marketing, finance and IT which demonstrates that our value is understood and fairly rewarded. However, there are often high profile cases such as the recently advertised 2012 Olympics HR Director position whereby the clearly inadequate salary package on offer, demonstrated an evident lack of importance attached to the role.

So why, according to this survey, do CEOs not see value in our contribution? Many CEOs still perceive HR to be more of an ‘activity’ rather than a business discipline. Whilst those working within finance or IT often possess technical knowledge which immediately differentiates them from other departments, employees working in HR require a broader range of skills which are a mix of organisational theory, behavioural science, commercial awareness and strong interpersonal skills. All in all these are components of general management and are less tangible or measurable.

HR Directors are often in a no win situation much like the manager of the English football team! Everyone has an opinion as to how to pick the best team and they are always right! The key point here is that not everyone within an organisation would feel equally as qualified to offer opinion about Sarbanes Oxley or the future strategic IT strategy of the company.

HR Directors are forced to make difficult decisions about people resulting in activities such as redundancies or disciplinary procedures. This can lead to bitter feelings amongst employees within organisations – mostly targeted at the HR division versus the Business Leadership. It is unlikely that an IT Director will feel equal levels of animosity. Perhaps therefore the perceived lack of contribution to company performance can be linked to some of the ‘difficult’ situations that we have to deal with, situations that are negative in nature and high profile.

It could be suggested that CEOs feel constrained by the HR division and held back from making quick decisions. It is one thing to change the strategic direction of a company overnight but completely different to expect the entire company staff to follow. It is HR’s role to ensure that people are managed effectively, with integrity and due process, which some CEOs may see as a hindrance to progress.

The CIPD has done well to raise standards within HR but perhaps we need to start benchmarking ourselves better against other disciplines. The number and quality of university courses has steadily improved which has naturally improved the overall quality of graduates entering into the profession. The emergence of more HR focused MBAs from some of the top universities and business schools is also pleasing and the long-term impact will no doubt be felt in future.

Whilst this survey doesn’t tell us what we want to hear, it does at least create debate and allow us the opportunity to examine the issue further. This is a topic of particular interest to us at Digby Morgan, and we welcome comments with a view to debating this further in the next newsletter.

(If you have a view on the topic and would like to share you feedback, please email Anna O’Shea annaoshea@digby-morgan.com)

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