<B>Human Resources: a failed subject?</B>

Alfonso Jiménez. Partner-Director. PeopleMatters

26 July 2004

Many management ideas are based on the importance of the human factor for success in business projects. Are we becoming more convinced of the importance of people in business development - particularly in a services economy like the one now being configured?

My belief is that numerous signs indicate that Personnel Management is a failed subject in many countries, particularly in continental Europe. We have a lot to learn and develop in this area. Here are some reasons why:

:: The Personnel Manager’s lack of power to influence and even participate in the company. His or her incorporation into the Management Committee is relatively recent;

:: A certain percentage of managers exists who have been forced to take charge of the Human Resources area, without their full volition and consent, and with a more than doubtful vocation;

:: Budgets for investment in HR are limited, particularly when compared to other areas such as professional services. If we take total consultancy turnover, the amount related to Personnel Management accounts for about 20 percent of world investment; in Spain it hovers around 7 percent;

:: When training managers in business schools the subject is oriented towards a moralizing discourse (“We must be very good”), which is far from the quality and meticulousness of other subjects.

Other symptoms, other questions

The size of firms specializing in Personnel Management consultancy services in Spain also keeps the sector weak. It bears no relation to size or prices in the Anglo-Saxon market. In addition, we are witnessing a negative phenomenon today: the ever-greater fragmentation of a sector that is growing impoverished due to the lack of market (Lack of need? Difference in quality of the offer?).

We must ask ourselves a second question: Why is this the case in our country and across continental Europe?

One possible reason is the legal labor framework that prevailed until a short time ago. It was protective of collective rights, and since it was made more flexible it has generated a double discourse depending on the accumulated rights in a certain type of company by a certain type of employee. This is paradoxical when other companies, jobs and people exist in our market that do not enjoy the same level of rights, and which are affected by the problem of excessive temporality.

Another cause is that for many years, of all the macroeconomic indicators in country rankings, the only one in which Spain topped the list with respect to its neighbors and other developed nations was unemployment. This meant that demand for work (generation of jobs by companies and public administration) was insufficient to meet the enormous offer of new workers during Spain’s baby-boom generations. This phenomenon lasted for three decades, from the 1950s to the 1970s. These generations hit the labor market in the ‘70s, ‘80s and ‘90s and created sizeable pockets of imbalance, leading to unemployment that exceeded 20 percent not so many years ago. When excess offer appears in a market, prices fall and the resource is considered less important. In this case, the offer was workers and prices their wages.

Other data could be quoted to support this thesis, but it is obvious that Personnel Management does not play a leading role in corporate management. This is unfortunate, since it is critical for our country’s competitiveness if it is ever to earn top marks - particularly in a services economy in which products and invoicing depend so highly on people’s conduct and costs.

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