Decision-making and improved human resource performance

People are a resource of the business. Like any other resource they have to be managed. Most organisations claim their people are 'our most important asset' and that HR management makes a significant difference to business success. All too often staff are treated like a cost, not an asset.

A huge number of decisions and circumstances affect competitiveness. Among the great British business success of recent times, it is hard to see HR at their heart. The most important factors have been strategic decisions.

Despite this, these companies could not have enoyed success if their people had been alienated or misdirected from the organisations' objectives. Therefore it is valid to see HR as a key factor. 

Of course, successful HR decisions can affect comptitveness eg. Dyson moving production to Malaysia.

Whereas there are plenty of marketing directors and finance directors in boardrooms, it is difficult to find many HR directors. Unilever was the first to have a HR director, but they are not on the board. 

The implication is that it is naive to think that HR departments make decisions that the other business functions have to follow. The reality is more likely to be that the board decides on general aims and objectives; that these are firmed up into an overall corporate strategy by the CEO and his or her team - then the functional areas have to play their part in making things happen. 

The relationship between HR and operations or marketing, therefore, has to be collaborative not dominating. 

They key impact on HR decisions comes from the labour market. If jobs are plentiful, HR departments have to focus hugely on staff recruitment and retention. This ensures that issues such as flexible working are tackled with people in mind instead of the company.

When times are rough, HR managers focus on flexibility from the company's viewpoint. There is no better example than zero hours contracts. 

There's a tedancy to assume that it's the personality of the HR boss that determines whether a 'hard HR' or 'soft HR' approach is taken. In fact its a function of market and competitive conditions. During times of recession, many more firms will adopt a hard HR approach - simply because they can get away with it.

Ultimately, competition is the key factor affecting HR performance. When the labour market is buoyant, the brightest graduates can expect lavish inducements from prime employers such as management consultant and investment banks. 

Unemployment makes it easier for companies to get their way in the labour market, because the competition from that 'reserve army' meant that HR departments did not have to try so hard.

People like to think that the ethical environment for business is improving, perhaps because companies make more of an effort to sound concerned. However, in many areas of business this is not the case, Banking is one of these. At Lloyds a whistleblower tried to get senior manaers to take seriously his evidence that bank employees were pursuading its poorer customers to pay more for life insurance. His claim was sept aside. 

If you are working in an organisational culture where truth and fairness come second to getting things done, the logical thing is to lie low  and perhaps start looking for another job. 

Environemental influences on HR perhaps focus mainly on transport factors eg. health benefits from cycling pushed by tax incentives by the government. 

• e-learning makes it easier to train employees
• the ever developing improvements in international communications, which makes it more possible to interview overseas online, and to discuss common probems with HR departments in different parts of the world
• the impact of real technological change, for instance high street selllers switching to online stores. There would probably be redundancies, retraining and new recruitment needed to carry out such a strategy.