CIPD three year study unlocks the black box

Today sees the launch of a major three year investigation which looks at the HR practices, staff views and performance in 11 large organisations including Jaguar Cars, Nationwide Building Society, Selfridges and Tesco. One of the critical conclusions is that the most carefully thought through HR strategy is a waste of time unless it is embraced by line managers who have the skills and understanding necessary to engage and motivate employees.
People management experts the Chartered Institute of Personnel and Development (CIPD) have already demonstrated the powerful statistical impact of people management practices on overall business performance. But in their latest study they wanted to understand more about why and how such practices influence business performance - to unlock what has been termed the ìblack box.î

The study, Understanding the People and Performance Link: Unlocking the black box, the most in depth of its kind to date, confirms the powerful relationships between HR practices, employee commitment and operating performance. It tracks organisational performance over a three year period and puts HR under the spotlight. Where effective HR practices are not in place, levels of employee commitment are up to 90% lower.

Other key conclusions include:

An organisation needs a clear direction and purpose, beyond the bland mission statement or generic goal of financial returns, which engages, enthuses and unites people. At The Nationwide Building Society this is a commitment to mutuality. At Royal United Hospital (RUH) Bath it is saving lives. This ëbig ideaí appears essential in motivating and directing people behind the strategy of the organisation.

High performing organisations invariably employ some form of balanced performance scorecard or methodology. Be it the stakeholder value model employed at Selfridges, the six-sigma methodology at Jaguar or the EFQM framework at the Court Service, this demonstrates the importance of different stakeholder groups to the organisationís success, and links individual and corporate goals.

The research confirms that there is no universal ëbest HR practiceí. It is all about having a broad and integrated ëbundleí, tailored to the needs of the organisation. For example, the practices employed at technology company AIT would be unlikely to go down well on the production line at Jaguar. Yet every worker there could tell you Jaguarís position in the JD Power quality league table.

CIPD adviser on Organisation and Resourcing, Angela Baron, said; ìStrong attention to team working, extensive employee communications and involvement, and positive perceptions of training and careers emerge as common ingredients in this performance-driving HR mix.î

ìLeadership, not at the top of the organisation, but at the front line appears to be the Achilles heel in many UK organisations ability to compete and in delivering HR strategies. Middle managers and supervisors set the context in which the HR/business performance relationships happen, or all too frequently donít.î

For example at Tesco, where 88% of staff feel loyal and share the companyís values, a typical section manager described their role as, ìmobilising the team with a goal, motivating peopleî. And building management capability is a core component of the Inland Revenueís HR strategy.
Another example in the research is nursing staff at the RUH Bath describing the change after a new ward manager worked with her HR colleagues on a range of new policies, such as flexible shift working and 360 degree appraisal. Comments include:
ìIím much more motivated now, thereís training, the atmosphereís totally differentî;
ìCommunication is excellent nowÖour manager is very approachableî;

ìWhen I came here it was unsettled. Now we have a strong teamÖyou want to do the job to the best of your abilityî.
The high level of staff turnover in the ward has since fallen to almost zero.

In another of the case studies, the management was subsequently changed in one location, to replicate the high levels of commitment and performance evident in the companyís other sites.

Adds Baron:îOrganisations can make progress very quickly. They need to survey employee attitudes and commitment; assess, train, coach and support their first line managers and integrate HR policies with goals and values.î
ìThis will get them started - and the good news is that once these processes are underway there is a very high likelihood of the kind of transformation we have seen in our case study organisations. The evidence is here for all to see.î