We are probably saddled with the term 'Human Resources' for the foreseeable future, but it has two major disadvantages. First, and most obvious, the term resources implies that people are a commodity, exploitable and disposable. Secondly the phrase 'human resources management' carries with it mechanistic connotations which bear little relation to the actual processes such as inspirational leadership that are involved in getting the best out of people.
On the first point, there is abundant evidence that over the past decade or so the tendency to treat people as a commodity has grown considerably, in the public sector as well as in the private. Such things as the increasing scale of redundancies and plant closures and the closing of defined benefit pension schemes provide clear evidence of this.
In the private sector the doctrine of maximisation of shareholder value has fostered an attitude of mind in top management circles such that organisations are seen primarily in terms of financial ratios and market capitalisation or as financial assets to be traded, rather than as collections of human beings working to some common purpose.
In some parts of the public sector, the drive to achieve what are perceived as private sector standards of efficiency has led to people being treated as disposable.
In the words of Arie de Gues 'There is accumulating evidence that corporations fail because the prevailing thinking and language of management are too narrowly based on the prevailing thinking and language of economics. To put it another way, companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organisation’s true nature is that of a community of humans. The legal establishment, business educators and the financial community all join them in this mistake.’
Arie de Gues's point is well made, but does not go far enough. In many companies it is not even any longer the case that top management focuses on producing goods and services; they focus instead on the share price, quarter by quarter, and financial transactions such as capital restructuring, acquisitions and rights issues.
'Chickenless heads'
Where top managers focus their attention primarily on financial transactions and relations with the city institutions they inevitably lose touch with the grass roots of the organisations they control. The result is the opposite of the term 'headless chickens'; instead we have 'chickenless heads', leaders who have lost touch with their employees.. The term headless chickens implies that, without clear leadership from the top, employees run around in small circles confused knowing what to do.. The concept of the chickenless head tells a story that is more common today. The organisation's rank and file employees may carry on doing a reasonably good job of pleasing its customers and producing quality goods and services, unhampered by the remoteness of top management, until, because of mismanagement of its financial affairs it becomes bankrupt or is taken over. Northern Rock did not destroy shareholder value because its employees at all levels below the very top were not doing their jobs. This type of situation is all the more tragic, of course, when the employees concerned lose their jobs and in some instance their pensions. When the same chickenless heads who have brought about the company's collapse walk away with payoffs that represent huge sums in the eyes of the average worker any remaining vestige of morale or loyalty is finally destroyed.
The point is often made that if a company declares the creation of shareholder value as its purpose then this is hardly likely to be inspiring and motivational for the shop floor or graduate entrants. Even a statement of purpose that is about meeting the needs of all the stakeholders is unlikely to call forth exceptional commitment and effort. For this to happen the purpose needs to be inspiring or challenging, seen as worthwhile, as serving society in some higher way than the material interests of the stakeholders. It also needs to be capable of being clearly articulated in very few words and sufficiently tangible and quantifiable that the extent of its achievement is capable of verification by measurement.
A Company that, from a modest start in a garage rose to be one of the world's most rapidly growing and successful business of all time - Hewlett Packard - was guided from the beginning by Dave Packard's thinking on purpose.
'I want to discuss why a company exists in the first place…I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being…We inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society.’