Abstract
The face of traditional Human Resources services in progressive organisations throughout South Africa is currently undergoing a dramatic change. The focus has moved from managing established traditional HR functions to providing guidance to implementing business strategy. As a result, professionals in Human Resources are increasingly challenged to take a more strategic perspective regarding their role in the organisation. As Human Resources professionals respond to this challenge, measuring Human Resource’s performance and its contribution to the firm’s performance consistently emerge as a key theme. At the same time more and more top-level managers are realising that HR or the people side of the business is critical to the long-term survival of the business.
Human Resources functions are challenged to prove to organisations that they add value to the organisation’s performance. These functions are, however, battling to justify the reasons for their existence in organisations. Perhaps one of the reasons that HR has not been more successful in communicating the importance of what they do, is because they have tended not to express it in economic terms.
The study underway aims at addressing one of the challenges that the Eskom Human Resources function is facing. In view of the reality of recognizing human limitations it makes eminently good sense to consider the experience of others. By systematically studying the best business practices, operating tactics, and winning strategies of others, an individual, team or organisation can accelerate its own progress and improvement. This study therefore, draws from the experience of others through utilising benchmarking as a method to evaluate the value that HR adds to business performance.
Benchmarking is the key to proving the impact of HR function as well as providing the data for effective strategic planning. A number of international HR benchmarking studies has been undertaken. Examples are, the PWC consulting group studies, The Saratoga human capital performance benchmarking studies, the Watson Wyatt human capital index and the HR Health checks undertaken in Europe and the U.K. Each one of these studies has a unique approach. The Saratoga tool has been chosen for this study as a result of its’ uniqueness regarding its’ capability of combining disparate data from around the enterprise in a central repository allowing HR professionals to deliver quantifiable results through analysis, benchmarking, trending and forecasting. The Return on Investment (ROI) of Human Capital draws years of quantitative and qualitative international research that has provided a breakthrough methodology for measuring the bottom-line effect of employee performance.
There are a vast number of HR practices that the HR function focuses on. In this context it appears that the reason why HR has not earned the respect they should earn is also because they have been slow in transforming themselves from the traditional, transactional role to the transformational leadership one that takes on the change agent status. This study therefore aimed at identifying value adding HR practices, which HR should focus on in order to add value to organisational performance. The concept of the balanced scorecard, together with he newly introduced concept of the HR scorecard was also used as guides to measuring the value of HR in Eskom.
Seven categories of HR activities were chosen according to the already established Saratoga measures. These categories are: organisational effectiveness; HR staffing, costs and remuneration; remuneration/ compensation and benefits; absence and retention; recruitment; training and development; and Occupational Health and Safety.
The results of the study were presented based on the key indicators for the employment cycle namely; Acquiring skills, maintenance, development and retention. These indicators were analysed in relation to the organisation’s human capital performance. An additional category was that of the HR function itself. The primary results were as follows;
Eskom posted relatively good results on human capital performance. However, there are indications that this performance can be improved.
Eskom is weak on acquiring. There are big opportunities for improvement.
Eskom’s maintenance posted poor results. There are however interventions under way to address this situation.
Eskom’s investment in the development of its employees was found to be very good, outclassing all its counterparts. The study suggests that maybe this high investment account for the reason why Eskom is able to have a high internal recruitment rate.
Eskom’s retention strategies seemed to be very effective especially since there were very low levels of resignations.
The findings on the HR structure and support were that the HR structure is too densely populated, yet, professionalism was slightly lower. There are opportunities for improvement in this area.
The study was therefore able to achieve its objectives.
The main recommendation for future research is that a qualitative approach, which is interpretative, should back-up this study so as to verify a number of supporting HR roles and functions.
Dr. Jos Coetzee