British managers are often confused about who should take responsibility for training and development, fail to develop proper succession planning procedures and rely on the corporate "grapevine" for communication, according to a damning new survey.
The study by PricewaterhouseCoopers LLP of over 500 chief executives, finance directors and HR directors found many business leaders are failing to practise what they preach.
More than half of the companies polled identified learning and development as the key to improving people performance.
Yet there was confusion about who should take primary responsibility for this.
Almost half the business leaders surveyed believed their line managers did not spend enough time helping to train their people, while just five per cent of chief executives and finance directors saw training as the primary role for their HR function.
Almost two-thirds recognised that failure to develop succession planning for senior roles would have a major impact.
Yet 22 per cent had done little on this front and a worrying 41 per cent nothing at all, said the PWC survey.
And while 88 per cent claimed effective communication had a direct impact on the bottom line, 92 per cent used the unreliable company "grapevine" as a means of communicating, believing it more successful than a formal system of e-mails and memos. Use of staff surveys was also low.
Many business leaders appeared to place limited importance in the role of HR, with more than half of chief executives spending less than 10 per cent of their time with the most senior person responsible for people-related issues.
More than half described the primary role of their HR function as that of "an administration centre", yet 73 per cent of HR directors saw their role as strategic – a clear misalignment on understanding HR's role and value within the organisation, argued PWC.
Isabel McGarvie, human resource services partner at PWC, said: "These findings show a considerable gap between corporate rhetoric and action.
"Saying you are going to invest in human resources is easy, but turning good intentions into profitable business practice is the real test, and is one that does not appear to be delivering optimum results," she added.
"The issues raised by the research are not all about soft HR; if companies get people policies right, the impact on the bottom line is positive and there will be less fighting in the market place for increasingly scarce talent. The sooner the rhetoric turns into hard focussed activity, the sooner bottom line impact will come through," she continued.
Nearly seven out of 10 of the companies polled identified future stars through performance appraisals.
Although this was better than intuition it was a limited approach, as appraisals are, by their nature, retrospective and do not assess future potential, warned PWC
Despite the fact that more than half of companies believed they offered their people challenging job opportunities and 32 per cent felt they had effective reward arrangements in place, lack of career progression and salary considerations were cited as the two main reasons people leave.
Although in the past year 85 per cent of respondents had reviewed their strategic business plan, it was apparent that matching people policies and behaviours to that plan was a low priority.
The results showed that more than 80 per cent of annual bonus schemes and between 50 per cent and 70 per cent for other longer term incentive plans had not been reviewed within the past two years.
Establishing employees' views was also poorly handled by many businesses, despite stating that they are focusing on gaining employee commitment and improving individual performance to increase productivity.
The reality was that only 41 per cent carried out staff surveys, while 40 per cent had never used them.
"Succession planning should be a key focus of any business plan, as should reward. Companies should look at how well they have aligned their reward schemes with their business strategy and also study the link between reward and staff commitment and loyalty. Higher pay is often cited as a reason for leaving a company when other factors are really at play," said McGarvie
"Furthermore, if companies improve how they identify their future stars, fewer will leave to get their career aspirations fulfilled elsewhere," she added.
"Companies need to make sure their staff know where the business is going, what's expected of them, how success will be measured and what their reward will be in terms of pay and career progression. Good communication is vital," she concluded.