Banking on the worth of humans

By VICKI JAYNE

Air New Zealand is far from being the first local company to find itself in deep water after crossing that deceptively narrow Ditch.

The lopped-off limbs of over-extended corporates serve as salutary warning that this particular path to overseas expansion has its pitfalls.

A transtasman shift can be harder than companies or managers expect, says Ian Taylor, managing director of Sheffield.

He rates the business environment there as "tougher and more protectionist", and the approach to human resource (HR) management as "more constrained and legalistic".

All of which hasn't stopped Sheffield from relaunching itself across the Tasman or Taylor from suggesting that, in HR terms, New Zealanders have an edge on their Australian counterparts.

"In Australia, the HR function is still seen as being more allied to payroll, administration and union issues. It is not high on the strategic agenda of many Australian companies.

"Here, I think, HR has shifted to a more powerful and influential place closer to chief executive concerns, because there is a better understanding of how people create value for the enterprise."

The rather rapid pendulum swings of a smaller economy mean it is not so long since deregulation and restructuring did a fairly good job of trashing the value of human capital in this country.

That we now treasure "human wealth" may be partly a reaction to earlier excesses, agrees Taylor.

"But it is also based on some very sound research coming out of the United States that getting the people equation right has a direct effect on client and customer relations, which in turn has a huge effect on the affluence and profitability of the business.

"There is a very good business case for investing in people as a source of wealth for the organisation. It is all about creating a virtuous cycle.

"Happier employees make for a wealthier company, which in turn feeds employee needs for ongoing development and new opportunities."

In the past couple of years, Sheffield has reinvented its own 40-year-old business around this concept of "human wealth" creation. These days, the focus of the business is human capital strategy, which incorporates Sheffield's traditional offer of search and selection under a much broader consulting umbrella.

It's not just a case of recruiting the right people, but giving them a culture in which they can flourish, says Taylor.

"If you have a culture geared for peak performance, it is one in which individuals are motivated to develop.

"We do a lot of work in the area of performance and in managing organisational change so the workforce is prepared for the future."

He reckons skilled managers with experience in New Zealand's deregulated environment can inject a breath of fresh air into the more traditional, unionised climate typical of many Australian companies.

"If you come up through a more constrained, legalistic environment, it is hard to see how to do it differently.

"I think New Zealand managers' experience can be broader around a number of people-centred levers that can be used to re-invigorate businesses."

He cites the experience of a couple of Sheffield consultants who worked with a New Zealand manager appointed to head an Australian subsidiary.

"He was able to demonstrate how a very constrained business structure could be realigned around its people.

"We worked with the CEO on creating a new vision and organisational structure that had the empowerment of people values at its heart as opposed to a more limiting financial/marketing/legalistic approach.

"For the company it was all very new and a welcome insight into how change could be accomplished."

It is this integrated approach to managing human capital that Sheffield is pushing in its move across the Tasman.

The competitive selection market has proved too hard a nut to crack in the past but there is a gap at the more strategic consulting level, says Taylor.

"There's been huge rationalisation of HR departments in Australia, which to some extent may reflect some scepticism around the so-called soft skills.

"There are now a number of sole traders operating in that human capital area in the more innovative and, dare I say, enlightened pockets of the economy, but there isn't a medium-sized consultancy such as ours able to offer a range of products into that niche."

Talent retention, for instance, is as big an issue across the Tasman as it is here - though the events of September 11 have already seen an increase in skilled people wanting to return, says Taylor.

"How you get them to stay is the next issue and leadership quality is the hottest topic in business today.

"Talent retention strategy and improving management quality are the most common requests we get from companies wanting to improve their performance. We're working in both those areas in Australia."

Sheffield's shift to Sydney has been relatively low-key and follows a year's preparation in terms of identifying its market niche, recruiting well-networked local talent and building on its existing associations with transtasman companies.

The company is also happy to tap into the vein of confident optimism that makes Australia a refreshing environment in which to work - and from which New Zealanders could take a lesson or two.

"There is a real desire to succeed there which will overcome any constraints around its more legalistic approach to HR.

"While it's a more sceptical market, it is also financially tough and pragmatic - so when we can create wins and profitable results from this sort of human wealth-creating activity, I think our business there will expand."

* vjayne@iconz.co.nz