From best to good practice HR: developing principles for the profession

11 October 2015
Published: October 2015
 
This research, part of Profession for the Future, provides an important insight into the priorities currently relevant to decision-makers, and the ways in which those may be challenged in the future. Our work continues by collaborating with a wide range of stakeholders within and outside HR to define and test a new set of principles that will help HR professionals make the right decisions and advise business leaders on what to do, no matter what the context and no matter what the future may hold.
 
The report covers:
  1. The changing nature of the HR profession
  2. Why principles of the profession?
  3. Developing the principles
  4. What could the principles for HR look like?

Executive summary

Businesses are becoming concerned with developing a more balanced view of their stakeholders, to include not just shareholders but also customers, employees and the communities in which they operate. On the one hand, this is driven by an increased spotlight on the gap between the values that some firms communicate to the external world and the ones they later live out in their decisions, which ultimately damages their reputation and profitability, not to mention the well-being and livelihoods of those on the receiving end of some of those decisions. On the other hand, there’s a widening appreciation of the interdependency of the success of a business and the health of the communities it is tapping, which forces organisations to question the sustainability of the ways they create value, and invest in the development of resources necessary for their long-term survival.
 
This changing view of the ethical responsibility of the business also translates into shifts in how people working for an organisation are viewed and treated. Traditional business models considered employees as resources rather than stakeholders of the business, with their interests met to the extent that was required for the organisation to function effectively. The latest thinking on human capital management challenges that assumption, suggesting that although people (or their knowledge and skills) represent one of the biggest sources of organisational value, they are also investors of knowledge, skills and engagement, and therefore have a ‘share’ or a stake in the value created by the organisation.
 
The paradigm shift in corporate governance has considerable implications for the value that HR can deliver and the ways in which it treats people working for an organisation. But, to be able to support organisations in creating sustainable and successful relationships between people and the business (as opposed to simply using people as inputs towards organisational value creation), HR must professionalise, building trust and credibility in the ability of practitioners to make appropriate value judgements about how people should be managed in a business. The professionalisation of HR is therefore critical to fulfilling the CIPD’s core purpose: championing better work and working lives by improving practices in people and organisation development for the benefit of individuals, businesses, economies and society.
Professionalism is associated with several key attributes. The most familiar one is the use of specialist, expert knowledge, which is likely to require increased training, adherence to knowledge standards and a requirement to regularly update this knowledge. Some professions protect access to such knowledge and professional credentials with educational or legal certification (licence to practise).
 
Another critical aspect of professionalism is the use of knowledge for the good of society, implying an ethical responsibility. This means that professionals are able to make informed choices about their actions, but also have a responsibility to act, rather than ignoring the necessary choice or complying with a potentially harmful decision, even if this decision is pursued by some of their stakeholders.
 
Finally, situational judgement is key to professional behaviour, with some pointing out that ‘the true skill of professionalism may be not so much in knowing what to do, but when to do it’. This means being able to derive practical insight applicable to specific circumstances, while often resolving conflicts of interest between multiple stakeholders. It is the ability to draw on one’s knowledge as well as sensitivity to the ethical choices that allows professionals to gain the trust of their stakeholders.
 
Traditionally, standards for HR and other related disciplines have been defined through a set of specific practices that professionals established in an organisation. But, developed mostly in large Western organisations, ‘best practice’ is built on the traditional assumptions about people management and development, and is not fit to reflect the requirements of specific business circumstances today and in the future.
 
We argue that an inward-focused quest for a set of practices that would describe what good HR looks like is simply unproductive. In order to fit the demands of the rapidly changing world of work, the profession must focus on the overarching philosophy of work, and the shape of relationships between people and organisations they work in, designing specific practices in accordance with the circumstances of particular businesses and organisational cultures. This is why, similar to other professional bodies, we set out to establish the high-level principles, or fundamental priorities, that would describe what people management and development professionals stand for, as opposed to the activities they carry out at work.
Principles-based standards of professional behaviour have been enshrined in some professions like medicine for centuries, and have become a prominent feature in other professions since the global review of corporate governance in the wake of several corporate ‘scandals’. Principles represent fundamental beliefs about what is right and wrong, and, therefore, incorporate ethical reasoning into business decision-making above and beyond the legal norms. They require decision-makers to become aware of the stakeholders impacted by alternative courses of action and make a judgement of value – for example, weighing public interest against increased profit margins. As such, principles exist at a higher level than practice, requiring the practitioner to exercise professional judgement, but equally allowing for variation in individual situations.
 
This need for principles to guide decisions is particularly salient for practitioners in parts of the world where the HR profession is still developing and perhaps does not yet have the credibility necessary for practitioners to make independent judgements that business leaders trust unconditionally. For example, while some countries stipulate a legal minimum of how people should be treated at work, other regions do not yet have the same legal base, and require a different mechanism of resolving the ‘rights’ and ‘wrongs’ of treating people in a business model. Appealing to ‘best practice’ might be a temptation; but such practices, most likely set in large Western organisations, are based on assumptions that may be irrelevant to those businesses that are attempting to copy it. One example of this is the varying interpretation of ‘fairness’ by employees from different cultural backgrounds – despite ‘fair’ working relationships being of global importance.
 
Principles-based standards can support HR professionals in making independent value judgements – although informed by the body of knowledge and experiential ‘best practice’. By providing overarching criteria of ‘good’, they will guide professionals to create HRM systems that create shared value for all of the organisational stakeholders. In turn, such capability would limit entry into the profession to those who can demonstrate the knowledge and skill necessary to make a principled judgement.
In order to develop the principles of value judgement for HR, we first explored how existing philosophy literature deals with the ethical issues of work (Clark 2015). This review identified a number of ‘lenses’, which do not represent ‘right’ or ‘wrong’ judgements about the relationship between people and organisations but describe possible perspectives one may consider when making ethical choices (see Figure 1).
 
Summary of the eight lenses
 
We then tested the use of these lenses in a series of focus groups and a survey with nearly 10,000 HR practitioners, business leaders and line managers around the world, asking them to decide whether the judgements associated with the lenses were ‘right’ or ‘wrong’ in their professional opinion. We compared these responses with the extent to which practitioners said they actually applied these lenses in their current practice. The findings provide food for thought around five questions:
 
Who should HR serve?
A commitment to a two-way relationship between people and the business was evident in the ways survey respondents used the Well-being Lens in their decisions. However, while they believe that workers should be treated as legitimate stakeholders of a business, in actual practice only about half (47%) of practitioners said that they always apply the principle ‘Work should be good for people’ in their day-to-day decisions, with a further 35% suggesting they may compromise this principle under certain circumstances.
 
Should people be treated as a means to an end?
The survey showed that some organisational priorities – such as cost management and downsizing – make it more difficult for practitioners to find solutions that are ‘good’ both for employees and business owners. Where negative outcomes for people (such as redundancy) are unavoidable, at least seven out of ten practitioners believe that treating people humanely – above their legal responsibility as employers – is the ‘right’ thing to do. However, the Rights Lens is less likely to be applied when making decisions about individuals who are not part of the ‘core’ workforce – for example, temporary staff or workers in a remote office location.
 
Giving employees an effective voice is one example of treating them as legitimate stakeholders in the employment relationship, consistent with the Democracy Lens. Yet, just under a quarter of practitioners said that the principle ‘People should be able to influence the decisions that affect them’ is one that they always apply in their decisions, with a further quarter suggesting it never applies or that it is ‘nice to have’, even though they believe it is ‘the right thing to do’.
 
What is fair?
Although markets appear to be a powerful driver in workplace decisions, particularly when it comes to reward, the survey respondents believe that ‘right’ decisions should follow an objective and consistent approach, rather than being shaped by arbitrary contextual forces.
 
Practitioners were highly likely to indicate that the Merit Lens is the one that should be used in their professional opinion, and the one already used by a large number of decision-makers in current practice. Over half (55%) of decision-makers said the principle ‘People should have equal access to opportunities in line with their ability/merit’ applies in all circumstances when they are making professional judgements.
 
In contrast, the Fairness Lens is one of the least likely to be applied, both when making decisions about organisational dilemmas and in their own professional practice. Only three in ten practitioners said that the principle ‘For an outcome to be fair, the decision-maker should not leave out the factors deemed important by the person affected by this decision’ always applies in their practice, while 45% thought it could be compromised.
 
Is long-term or short-term value creation most important?
In each of the scenarios, up to nine in ten practitioners chose the long-term interests of the organisation over short-term gains. However, in their current practice less than a quarter said that long-term gains always justify short-term sacrifices.
 
How easily are values compromised?
The survey results showed that the Character Lens is one that is likely to be compromised by professionals struggling to balance the needs of the business with the needs of the employees. In current practice, almost half of the respondents (46%) said that the principle ‘Core values cannot be compromised whatever the context’ always applies in their professional practice. A further 37% said it applies but can be compromised, and 11% said it is ‘nice to have, but not imperative’. The most common reasons why people management professionals compromise their principles are ‘current business needs’ and ‘pressure from business leaders’.
 
In sum, our analysis of the ‘professional opinions’ on the use of various lenses in workplace decisions by HR practitioners, business leaders and line managers paints a picture of an ambition to make more balanced choices about work, but also a gap between that ambition and current practice. The main concern is that while professionals might want to create win–win solutions for people and organisations in a principled way, in some circumstances they either deprioritise certain ethical perspectives or lack the knowledge and/or power to consider those as part of the decision-making process.
The survey findings provide an indication of the current application of principles and the recommendations of the HR practitioners, business leaders and line managers on what the ‘right thing to do’ might be. However, it is likely that changes in the world of work will highlight some of the ways of looking at the working relationship more than others. For example, increasing workforce diversity has already brought the question of fairness to the forefront for people management and development practitioners having to manage the diverse expectations of different categories of staff about how they want to work.
 
Our review identified eight drivers of change that are likely to have a disruptive impact on the value judgements of HR (see Figure 2). Considering the current challenges in making the ‘right’ choices in their decisions about work, three themes from the impact of the drivers of change appear to be of particular importance.
 
Drivers of change in the world of work
 
The first perspective concerns the dimension of power that various players have in the workplace. Talented employees are now firmly a stakeholder in work relationships and want to have a say over their careers. They also demand such work that supports their personal goals and work–life balance, relying on employers to support their needs beyond pay. Thus, in making decisions about work, professionals will increasingly have to account for the responsibility they have for the welfare of various groups, and to give them effective voice, if they are to attract and retain talent.
 
The second – and related – theme is one of fairness. While some individuals will be able to apply their talent and luck to secure better ‘deals’, there are also workforce groups that do not have the same degree of influence nor negotiating power to have a say in what happens to them. The voices of those disadvantaged by this approach are likely to contribute to instability and conflict in the workplace. So, the expectations of various workforce groups will have to be understood and carefully managed, taking into account the subjective perceptions of workers, rather than arbitrary rules of the market or the seemingly objective criterion of merit, which are likely to lead to dissent, low engagement and productivity.
 
The final theme concerns the long-term success of people, organisations and societies. With ongoing change being the only constant attribute of the future world of work, the ability of practitioners to apply the long-term view in making decisions at work is likely to be continuously challenged. Professional decision-makers willing to protect the long-term interests of society will have to take responsibility for balancing the sustainability view with the demands of today, as well as for convincing others to assume a similar approach.
 
Despite this ambitious view of the world, ever tightening competition will mean that creating win–win solutions for people and the business will require a real strength of character and commitment to one’s core values, as well as deep expertise and creativity for managing and meeting the expectations of different stakeholders. Doing this is extremely challenging, but those who succeed in applying their expertise without losing sight of the critical values will gain the trust they require to be called true professionals.
This report is part of the CIPD’s wider strategy, Profession for the Future (PFF), to ensure we continue to fulfil our purpose as the world of work evolves. It began with a programme of work to define what it will take for the HR profession of the future to meet its full potential to champion better work and working lives - for the benefit of individuals, businesses, economies and society. This research provides an important insight into the priorities currently relevant to decision-makers, and the ways in which those may be challenged in the future. Our work continues by collaborating with a wide range of stakeholders within and outside HR to define and test a new set of principles that will help HR professionals make the better decisions and advise business leaders on what to do, no matter what the context and no matter what the future may hold.
 
We expect the principles to be broad and ambitious – they’ll describe desired outcomes rather than prescribe a specific course of action. Applying them in practice will take professional judgement backed up by specialist expert knowledge about people and organisations as well as a thorough understanding of the business context. That’s what we think will define the HR professional of the future and that’s what we think it will take for HR to remain a trusted and credible profession that can have a real impact on work and working lives. Join the debate on the future of the profession by using #changingHR on Twitter, or by emailing us on pff@cipd.co.uk
Download the full report and exec summary below
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