Firms ‘cutting personnel investment’

SOME businesses have succumbed to the basic instinct of cutting personnel development budgets in the current economic climate, a national personnel conference has heard.

While this can create short-term financial benefits, it can have a negative impact on company performance in the long-term as employees may not be able to keep up with changing trends, the Chartered Institute of Personnel Development (CIPD) was told at the weekend.

A new PricewaterhouseCoopers study has identified 35% higher revenue in organisations with a human resources strategy.

Such a strategy is associated with more effective reward systems, better management performance and reduced absenteeism.

Yet 42% of the participants did not have a documented HR strategy, according to Kevin Delany and Bernadette Breen, of PricewaterhouseCoopers, authors of the global and Ireland HR benchmarking reports.

They also said a HR strategy was not about "nice to have" attributes such as "to be an employer of choice" or "to ensure that our people are our greatest asset".

They said that, based on their research, it was likely that almost 50% of the organisations represented at the CIPD conference in Killarney, did not have a documented HR strategy.

"'If organisations are to take our research findings seriously, they must develop a HR strategy which is derived from a clear vision of where the organisation wants to be and how it plans to manage its people," they said.

They also said preparing a documented HR strategy, aligned to the business strategy, could be a difficult and complex task.

In their study, Mr Delany and Ms Breen found that many organisations still do not measure, or report, on key people issues.

For example, while 69% of HR professionals believe that they make a measurable contribution to business performance in terms of improvement to employee satisfaction, only 28% regularly report on employee satisfaction a drop from 53% since their 2000 study.

There is also evidence to suggest that investment in training in terms of spend and number of days training per employee has fallen since 2000.

"The most important business issues identified in Ireland were revenue growth, cost reduction, customer satisfaction, leadership development and quality improvement," they told the 500 delegates.

"'The most important HR issues identified in Ireland were organisational and cultural change, leadership development, reducing labour costs, HR technology change and increasing working productivity."