Personnel staff told to adapt or die

Human resources departments face extinction unless they can both create shareholder value by achieving high levels of short-term performance and assist chief executives in planning ahead, according to a leading academic.

Lynda Gratton, associate professor of organisational behaviour at London Business School, made her warning at the second annual "Human Resource Debate" held in London last week. The two challenges were not alternatives but roles to be carried out simultaneously, she told HR specialists from some of Britain's leading organisations.

Ms Gratton, who is heading a project designed to identify how companies are really managed in the 1990s, added that recent changes in organisations - such as the arrival of multifunctional teams and the shift in the relationship between employer and employee - posed significant questions for HR departments. And while much of it was uncharted territory, there were some key success factors.

Among these were ensuring coherence and consistency throughout an organisation, establishing a structure that was simultaneously strong and flexible, and emphasising performance. And the last two can prove especially problematic for companies.

"Europe hasn't really grasped that you can have a people-oriented organisation with a strong orientation on performance management. The best companies combine both," said Ms Gratton, who has extensive experience of the United States and the Far East.

Another problem for HR specialists is how to balance short and long- term demands. On one hand, Ms Gratton explained, they were increasingly required to demonstrate how their programmes were producing swift improvements in performance. But the real way to add value was by producing a long- term vision for such areas as developmental processes, leadership and the shape of the workforce.

As technology becomes more influential in changing methods of working, this last area was vital. It meant that the current emphasis in many organisations on training high-potential managers was wrong. Instead, they needed to look at developing their entire workforces because there would be fewer opportunities for semi-skilled workers.

As far as the leadership was concerned, HR's central role was to develop a "visioning capacity". In countries such as Korea this was seen as a natural part of being a senior executive, but in the West few had done anything like Shell in the field of "scenario planning".

This was "a disaster for HR" because management development, unlike capital raising, for instance, was such a long-term activity. Another challenge, then, was to push for a shift from the short term. This would require HR professionals to link up with line managers so that they could become change consultants. Indeed, Ms Gratton added: "If HR doesn't become a strategic partner, it will be outsourced."