Human resources may have suffered identity and confidence issues in the past but a US business development expert now believes it is one of the most important tools in generating confidence in a company's future performance.
Norm Smallwood believes HR practices shape "an organisation's identity, brand and reputation" and firms who invest in HR practices "are more likely to have financial returns than firms who do not".
Smallwood, a co-founder of leadership development firm RBL, which represents Intel, BP and Citigroup, was in Ireland this week for an Ibec human resources summit, where he addressed delegates about good leadership and the importance of people management.
"There are several levels for increasing confidence in the future, such as keeping promises, having and delivering a clear growth strategy, and building organisational capabilities, which is the domain of HR.
"If you ask experts which level brings the most competitive advantage, almost everyone will say HR. Investments in HR practices increase employee commitment, which is a lead indicator of customer commitment, and that results in profitability."
A respected author, Smallwood recently published a book on leadership codes called Memo to the CEO: The Leadership Code, with his partners at RBL, Dave Ulrich and Kate Sweetman.
As a prerequisite to building a leadership brand, Smallwood says firms must first master these leadership codes.
"In broad terms, the [ leadership] code consists of these requirements: leaders must master strategy and be able to position the firm for continued success with customers. They must be able to execute, which means they must be able to build organisational systems that work and deliver results.
"Talent management is very important. Leaders must understand how to motivate, engage and communicate with employees. They must also find ways to develop tomorrow's talent and groom employees for future leadership."
In his writings, Smallwood has outlined a number of key points for developing a respected leadership brand. He believes defining a clear definition of leadership is important and this statement should reflect external customer and investor expectations in terms that translate to employee actions. Companies should also measure the effectiveness of leaders in terms of how well they are able to deliver on strategy and how well the investments in leadership have worked.
He also believes investing in broad-based leadership development helps managers to hone the skills needed to meet customer and investor expectations.
Smallwood says Irish business leaders are viewed in a "very positive" light internationally because of the "excellent results" companies have returned in recent years.
"If you look back on the last decade or so, Ireland has had a great transformation; it's a real rags-to-riches story. One thing that has really worked for Ireland is the collaborative approach that exists between business, government and unions."
One way he recommends for companies to evaluate the success of leadership brand efforts is by looking at how much confidence investors have in their future earnings.
"A publicly traded corporation's price/ earnings ratio is a simple, though not a perfect, indicator of that confidence. Companies with strong leadership brands, we have found, tend to have above-average price to earning ratios."
