By KAREN P.S. YUE

OUR people are our best assets. It's a common statement often
made about human resource (HR). CEOs who believe that people are
their best resource must also believe that people play
definitive roles in the creation of value to business
enterprises.

This was not the case some 10 years ago. HR was simply known as
Personnel. Few people then would have thought of HR as serving
anything beyond its traditional role of personnel
administration.

Personnel managers handled purely routine tasks such as
maintaining records, recruitment and payroll processing, and
perhaps some industrial relations work like getting better
workplace benefits for employees.

Since then, technology has automated most of the HR routines.
Alternatively, such routine tasks are increasingly being
outsourced, not only to reduce costs but also to enable HR to
focus on higher value-added work such as competency building,
leadership development and performance measurement.

Line managers from the CEO downwards are expected to lead and
inspire employees to develop personally and professionally along
organisational goals. But there seems to be a general feeling
among corporate circles that some line managers are shying away
from this role – some see it as “nasty” probably because it
involves managing people, which can be as challenging as, if not
more than, managing the business process.

Precisely for this reason, HR managers today are required to
“understand and actively participate in finance processes and
understand business models,” K. Murali, HR director at GE India,
told a management symposium in New Delhi recently.

At a recent MIM-organised HR forum, Mohamed Ashraf Iqbal,
managing director of Federal Auto Holdings Bhd, gave a fresh
perspective of HR as seen from a CEO’s viewpoint. He believes
there are three interlocking variables in an organisation that
must be managed: capital, processes and technology, and people.

The people variable, he said, is the one that gives sustainable
performance but the most complex to manage.

To sustain performance, a continuous development or learning
strategy must be in place. It’s not something you can achieve
overnight.

Important, too, is consistent focus on values and respect for
people & treating them as more than a factor of production.

Ashraf enumerated some key lessons about his 13-year HR
leadership experience in both local and global companies –
Shell, Proton, the HayGroup and currently Federal Auto.

Firstly, he learnt that “it’s not quite true to say that what
you measure is what you get. Yet we spend so much time measuring
profitability, but how come we don’t seem to get it?

The answer lies in the fact that people (the people-quality
factor) figure prominently in the profitability equation;
processes alone cannot determine profitability.

Spend time measuring your people and processes and your
profitability will be ensured.

In the absence of clear performance indicators at an individual
level, people will use effort as a proxy for performance. We all
know that hard work itself may not equal performance. Hence we
must manage for performance throughout the year and give people
clear indication of where they stand at all times. It takes a
lot of effort but is absolutely necessary.

Another lesson Ashraf emphasised is that "leadership must walk
the talk". Like the proverbial adage "Monkey see, monkey do,"
management must realise that bad behaviour or poor performance
happens because it’s permitted, he said.

If undesirable behaviours are seen to be condoned, poor
performance is tolerated. “The guys below see the bosses as
where all the problems are,” Ashraf adds.

Having said that, Ashraf found out that the source of the
problem is always one step up the hierarchical ladder.

If you see a non-performing employee, you will probably trace
the problem back to a non-performing supervisor. People start
out working wanting to give their best. Over time, supervisors
either switch them on or switch them off. When you cannot deal
with a poor performer, by definition, you have become one
yourself.

Ashraf further observed: "When you hear line managers talking
about HR management and HR managers talking about business
issues, you know you have got it right. Because people are the
longest lead-time variable to manage in the organisation, line
managers must be focused on managing people.

HR must be focused on understanding the business to equip the
line with the right people and people skills."

Whether an organisation has the right people skills, an
indicator is the balance between a “doing” and a “thinking”
workforce. “Doing” promotes technical compliance, whereas
“thinking” promotes growth, innovation and accountability.

What happens when there are non-performers or passengers in the
organisation? Ashraf advocates removing them. He concedes that
managing out is the hardest part of a CEO's job and the higher
up the passenger, the harder it becomes to remove.

There are other “societal concerns” that make removing
passengers a very difficult task. But at the end of the day, a
leader has to balance between the good for the organisation and
the good for an individual.

A prelude to having the most competitive organisations is to
fight a battle from the front line, according to Ashraf. For
this, frontline teams have to be highly empowered, highly
capable, highly trained and just about highly everything,
including highly rewarded.

Ashraf's warning on rewards: "Pay peanuts and get monkeys."

He said we often hear boards complain: "If only we had better
people." But Ashraf believes it’s not about better people, it's
about the best people.

To him, it's not the size of the payroll cost that matters but
the returns you get against the cost. Then again, people are
not a cost. They are an investment.

Seen in this light, Ashraf's last point about announcing your
bonus plan at the start of the year may be good HR practice.

It tells people upfront what they can expect for good
performance. It forces the board to think of what
result-oriented performance means. It commits organisations to
set targets and rewards. Human capital is thus treated as real
capital, with a clearly articulated dividend policy.

Senior managers in HR are, therefore, increasingly looked upon
as business partners and not just personnel administrators of
old. That is probably why companies are prepared to pay them
super premium – statistics show they have the highest inflation
growth rate in the Malaysian salary market.

For more information on MIM programmes, call MIM Customer
Service at 03-21654611, e-mail enquiries@mim.edu or visit
www.mim.edu