developing a business case for
Investors in People
Segnes Schonken, Anila Ramsaroop and Daphne Hamilton
2 August 2002
1. CONTENTS
(i). Preamble p. 4
(ii). Executive summary p. 5
2. Remit p. 7
3. Introduction to the Investors in People standard p. 10
3.1. The international standard p. 10
3.2. The objectives of the Investors in People standard p. 10
3.3. Evolutions in the Investors in People standard p. 11
3.4. Overview of the Investors in People evaluation dimensions. p. 12
3.5. What accreditation involves p. 13
3.6. Context of this report p. 14
3.7. The cost of obtaining Investors in People accreditation p. 15
3.8. “Drop-out” rate from Investors in People p. 16
3.9. Investors in People and the Skills Development Act p. 17
4. The case for pursuing Investors in People accreditation p. 21
4.1. The case in general p. 21
4.1.1. Improved external perception of the organisation p. 21
4.1.2. More effective training and development p. 22
4.1.3. Improved retention of staff p. 22
4.1.4. More formal personnel systems p. 22
4.1.5. Improved customer satisfaction p.23
4.1.6. Improved quality of products/services p. 23
4.1.7. Improved recruitment of staff p. 23
4.1.8. Improved sales performance p. 24
4.2. Investors in People as a complementary initiative p. 26
4.3. Quantifying the return on Investors in People accreditation p. 29
4.4. Benchmarking p. 32
4.5. Compatibility with managerial imperatives p. 33
4.6. Minimisation of bureaucracy p. 36
4.7. Enhancement of training and development p. 38
4.8. Investors in People as a change management tool p. 47
4.9. Communication and public relations p. 50
4.10. Benefits for employee satisfaction p. 52
4.11. Benefits for productivity p. 53
4.12. Benefits for staff resourcing p. 55
4.13. The balanced scorecard argument for Investors in People p. 57
5. Sustaining the momentum of an Investors in People implementation p. 58
6. Conclusions and recommendations p. 65
6.1. Conclusions p. 65
6.1.1. The case in general p. 65
6.1.2. Presenting the case p. 68
6.2. Recommendations p. 68
6.2.1. Investors in People as a sectoral priority p. 69
6.2.2. Sectoral infrastructure p. 71
6.2.3. Sectoral initiatives p. 74
6.2.4. Sectoral grants p. 76
6.2.5. Quality management system p. 77
Appendix 1: Advancing the case for “Investors in People” in South
African business organisations. p. 78
Appendix 2: Making a business case of “Investors in People” p. 87
(i). Preamble
The writers of documents such as this always walk a tightrope, balancing between the need for brevity on one hand and the need for comprehensiveness on the other. Much information gathered during the visit has been omitted from this report and rather the text relies on exemplification to make points. It is hoped that the reader will find that an appropriate balance has been struck.
This document contains an organised body of information, and not a case which can be laid in raw form before management to obtain a mandate for an Investors in People implementation. It has an appendix containing a case for pursuing the Investors in People standard which is applicable to a particular audience; the same information must be organised in other ways to make much the same case to other audiences. It is hoped that the reader will find that sufficient information is presented and is so presented as to be easily adapted for most purposes of advocacy.
(ii). Executive summary
Investors in People as it is implemented in the UK is an international standard which stipulates a level of good practice for the training and development of people within an organisation to promote business competitiveness.
While Investors in People has been growing in strength in the UK over the past decade with approximately a third of the British workforce currently employed by recognised Investors in People organisations, it is only now being piloted in several sectors in South Africa.
This report is the result of a visit to a number of financial institutions in the UK, Guernsey and the Isle of Man to gain first-hand information about their experiences with the implementation of Investors in People so that a business case could be made for any South African banks wishing to pursue accreditation.
The case for pursuing Investors in People accreditation
The moiety of the report relates to interviews with the financial institutions visited.
What the visiting team found was overwhelming enthusiasm for working towards and maintaining recognition as an Investors in People organisation from both large and small financial institutions. While the financial institutions visited had a variety of reasons for having engaged with Investors in People and while they did not view the standard as an all-purpose panacea, they were unanimous in vouching for Investors in People as flexible, non-bureaucratic, “paper-light” and compatible with managerial imperatives. Almost without exception, organisations were able to support their decisions with anecdotal, intuitive and in many cases quantifiable evidence about the benefits of Investors in People accreditation, such as improved external perceptions, preferred employer status, more effective training and development and improved customer satisfaction.
Sustaining the momentum
While the purpose of this report is to present material for use in preparing a business rationale for Investors in People rather than to focus on implementation issues, the report also covers those aspects of the implementation of Investors in People which must be planned and to which thought must be given from the outset.
Conclusions and recommendations
The writers of this report believe that a business case can be made for financial institutions in South Africa to pursue the Investors in People standard in its international form because, inter alia, it supports other managerial objectives, is generally capable of yielding a measurable return, promotes effective business practice and acts as an international benchmark. The warning sounded, however, is that there may be some elements extraneous to international best practice in any ideologically- or politically-actuated South African hybrid which may compromise the appeal or even the value of the international Investors in People standard.
The overarching recommendation is that the BANKSETA promotes Investors in People as a sectoral priority and to this end creates a sectoral infrastructure with the aid of sector grant funds. Further recommendations focus on initiatives for incentivising commitment to and implementation of the Investors in People standard in the banking sector.
2. REMIT
A party comprising Segnes Schonken (Standard Bank), Anila Ramsaroop (Standard Bank), Daphne Hamilton (BANKSETA) and Jonathan Mthembu (BANKSETA) visited the United Kingdom, Guernsey and the Isle of Man with the purpose of obtaining information on the basis of which a case could be developed for any South African bank to pursue accreditation with the Investors in People standard.
While a good body of information is available through various Investors in People channels providing “pre-digested” reasons for pursuing the Investors in People standard and reporting on surveys which purportedly prove the efficacy of Investors in People as a means for achieving a wide range of business-related strategies, it was felt that the surveys had been conducted among populations pre-disposed to positive reporting on results achieved through pursuance of the Investors in People standard and that in any case the surveys were themselves conducted by interested parties and should be subjected to verification.
The participants from the banking sectoral education and training authority were in addition interested to obtain information which would assist them in that organisation’s own Investors in People implementation.
The following representatives of the organisations indicated below were interviewed:
1. Barclays Bank / Phil GeorgeHead of Investors in People programme – business banking
2. Lloyds TSB / Harold Russell
Human resources manager
3. Business Link Hertfordshire / John Collier
Director: business services
4. Business Link Hertfordshire / Hillary Oakley
Senior consultant
5. HSBC Call Centre / Celia Frost
Human resources manager
6. Investors in People / Peter Russian
Director, development
7. Investors in People / Kate Dallas-Wood
Team leader
8. Investors in People / Sue Martin
Director of Communication and information
9. Investors in People / Kirsty Chappel
Research manager
10. Training agency / Fiona Naftel
Training manager
11. Barings Bank / Mike Tidd
Divisional head of human resources
12. Ernst & Young / Andy Offen
Partner
13. Bank of Butterfield / Kim Spaargaren
Head of personnel services
14. Zurich Financial Services / Janet Donnelly
Training and development manager
15. KPMG / Julie Callow
Human resources manager
16. Department of Trade and Industry Isle of Man / Andrew Qualtrough
Programme manager
17. Department of Trade and Industry Isle of Man / Jonathan Clague
Manager
18. Deutsche Asset Management / Paul Sheehan
Human resources adviser
19. Deutsche Asset Management / Guy Henning
IT central services manager
20. Board of Industry Guernsey / Stuart Le Maitre
Deputy chief executive officer
21. Performance Matters / Clive McCombie
Managing director
22. Investors in People / Catherine Rushton
Development Project co-ordinator
23. Business Link Hertfordshire / Helen Mehring
Head: human resources advisory services
The visit was conducted from 14 January 2002 to 24 January 2002, during which time the pertinent interviews were conducted.
3. INTRODUCTION TO THE INVESTORS IN PEOPLE STANDARD
3.1. The international standard
Investors in People is an international standard which stipulates a level of good practice for training and development of people to promote business competitiveness. The standard was developed in the United Kingdom during 1990 by the National Training Force in partnership with leading British business, personnel, professional and employee organisations such as the Confederation of British Industry, the Trades Union Congress, and the Institute of Personnel and Development to address a perceived problem of low commitment to skills development in organisations. It is the belief of the Department of Labour that the same problem exists in South Africa.
The standard was officially launched in 1991. Since then it has been revised twice. The latest version was launched in April 2000. The purpose of the revision was to make the standard more accessible to a wide range of organisations, especially small organisations which do not have internal human resources management expertise.
By the end of 1996, 4 673 organisations had been accredited with the standard, while the another 20 692 were pursuing it. At that point, 28% of the United Kingdom work-force was working in an organisation involved with Investors in People. Today more than eight million British workers are employed by organisations involved with the standard. By March 2001, over 24 000 organisations in the United Kingdom were fully accredited with the standard. This represents a total of 24% of the British work-force. At the time a further 25 000 organisations were working towards accreditation, which together with those accredited represents fully a third of the United Kingdom’s work-force.
In the recent years the standard has spread beyond the United Kingdom. Investors in People (UK) are currently working in partnership with Australia, New Zealand, Finland, the Netherlands, Germany, Sweden, Guernsey, Bermuda, Jersey, the Isle of Man, Malaysia and South Africa. Negotiations are also under way to establish the standard in France, Spain and Denmark. Kenya and Botswana have also expressed an interest in implementing the standard.
3.2. The objectives of the Investors in People standard
The purpose of the Investors in People standard is to recognise organisations which value their staff. Because “valuing staff” is widely expressed as an objective, but seldom given real effect, a criterion for enactment was required. In consequence, the standard reflects best practice identified in successful companies of all types and sizes. Initially that best practice was described in 23 statements, subsequently reduced to 12, which in fact become the evaluation criteria for Investors in People accreditation.
The assumption of Investors in People is that every training and development action should properly be driven by what the business needs. The philosophy is to link the activity of people and the development of those people to these business needs. The obvious wholesomeness of this philosophy from the point of view of short-term and medium-term business interests sets Investors in People apart from a host of other governmental education and training initiatives whose benefits, inasmuch as they are obvious, are of the long-term sort.
None of this means that one of the objectives of the Investors in People standard is to improve the profitability of organisations, although in fact this is a fairly commonly-held misconception. The misconception has resulted in some controversy about the value of Investors in People. This is exemplified in an article by Chris Mahony, entitled “Firms fail to show how IiP boosts profits”, published in People Management, (6) 16 which reports on research by Noelle Murphy. Regardless of the fact that Ruth Spellman, chief executive of Investors in People, questioned the validity of the survey, this serves to remind the reader not to fall into the obvious trap of presuming that best practice in human resources management and development necessarily equates to profitability. Nor does this diminish the usefulness to organisations of what Investors in People tries to achieve: the viability of an organisation does not depend only on its profitability, and the Investors in People standard demonstrates a lively awareness of pertinent factors in business viability.
Nevertheless, the Investors in People standard does try to take account of individual hopes and needs, without compromising its main aim, which is to support what the business should be doing anyway. In practice, it seems that Investors in People is a means to effecting a happy convergence of employees’ interests with organisational interests, and as such it may represent a breakthrough in employee relations in many South African organisations.
In addition to framing best practice outcomes, the Investors in People standard endeavours to provide a practical framework to direct implementational progress.
3.3. Evolutions in the Investors in People standard
While the Investors in People standard has evolved a great deal since its launch in October 1991, its roots still lie firmly in the 1989 white paper entitled “Employment in the nineties”, and the seminal research done in 174 “world-class” companies.
The first set of revised indicators became effective in February 1997, following an intensive review of the standard. By the middle of 1997, new standards for the accreditation for the advisors had been introduced. From 1998, the arrangements for re-assessment toward accreditation of organisations which had already been accredited were under review. In July 1999, a new and more “client-focused” approach to assessment and re-assessment was launched.