UPFRONT Profits get personal

No matter how many wonderful management theories are bounced around the boardroom, the frontline reality is that if their immediate manager is manifesting all the emotional intelligence of lizard, employees are unlikely to be fully engaged on the firm’s behalf.
And there’s now an increasing body of evidence to show that how people are managed has direct impact on company productivity and profitability. That’s according to Geoff Armstrong who is director general of the Chartered Institute of Personnel and Development (CIPD) in the United Kingdom and presenter at last month’s HRINZ conference in Wellington.
He cites one “notable” study of comparable companies in the UK engineering industry that came out about eight years ago.
“It showed pretty conclusively that 18-19 percent of the difference between winning companies and less successful ones was accounted for by the way they managed their people – and that’s been reproduced in number of other studies in other sectors since.”
Such studies demonstrate not only that strong HR focus on people management has bottom-line worth but the sorts of practices that help make the difference.
“In particular, what [this research] does is bring out the critical role of the frontline manager and how they behave. It’s not so much about HR processes and procedures but how frontline managers take personal ownership for crafting relationships with the people they are responsible for such that those people feel the organisation is receptive to their wants and needs and responsive to their discretionary efforts.”
Armstrong says it is now increasingly recognised that in competitive, globalised economy, people are the only sustainable source of differentiation and competitive advantage.
“Very few companies have product, service or technology that they are the only source for so it’s increasingly about going the extra mile in terms of customer relations and employees wanting and being empowered to do things that increase the competitiveness of their company.
“That can’t be screwed out of them by traditional scientific management or compliance-driven procedures. Employees have got to want to make it happen.”
Which is why HR professionals need to take lead in designing the sorts of policies and practices that create an environment where more progressive people management can thrive. And while there’s no magic bullet, some necessary ingredients include what’s termed “positive psychological contract” between employer and employee.
In other words, it’s relationship involving mutual sense of respect and trust where employees feel empowered to be part of the decision-making, feel their own needs are being met in terms of challenge, ongoing development, flexibility etc.
Okay – so we all know what that good stuff should look like – but is it happening?
“I do see quite lot of progress but not enough and not fast enough,” says Armstrong.
While some sectors – eg, some retail or high tech areas such as pharmaceuticals and biosciences – are adopting very progressive approach to management, there is still lot of the old command-and-control approach around.
However, Armstrong says there’s lot of hope coming through with new generation of younger managers.
“Their style is much more engaging, less hierarchical, more inclusive, less functionally narrow. I say in my presentation that HR people have got to think as business leaders first and functional specialists second but I could equally say that about financial specialists or logistics specialists. It’s about the notion of team as being more fluid in composition where members can play in several different positions on the field and more naturally cover for each other. That is much more the reality of business operations today.”