I once heard a chief executive declare, with a dismissive wave of the hand, that "human resources is not part of the business". The HR director of a different organisation recently told me that he was kept from the boardroom unless redundancies were on the agenda. Yet both firms have few assets apart from phones, desks and people.

Despite the "people are our greatest asset" mantra, many businesses marginalise HR. A recent survey by Human Resources Magazine found only 18 of the FTSE 100 had board representation for HR - an increase of only two since a previous survey in 1999.

Organisations recognise the value of intellectual capital. But HR is failing to increase its visibility and influence. Even though companies are saying the right things, many HR professionals are not seizing the opportunity.

Board presence is not essential for HR directors but lack of it illustrates a common view that HR is not part of the commercial business.

HR practitioners sometimes have trouble seeing eye to eye with the rest of the company. Many HR people promote robust processes that are purist rather than pragmatic. But businesses increasingly value innovation, creativity, speed and responsiveness. Although well-intentioned, HR processes can appear to hinder rather than help.

For example, performance management systems get longer and more complex - managers and those they appraise wrestle with competences, objectives, action plans, personal development plans and several sorts of feedback.

These processes can seem inflexible and suppressive of entrepreneurial spirit. If HR practitioners are to integrate into the top team, they need to focus on practicalities and business demands, as well as best practice.

Once a business sees HR as a bastion of standard ideas, routine procedures and back-office functions, it is easy to imagine the organisation without it. But if HR is acknowledged as commercially valuable, it becomes unthinkable to outsource it.

It is often only when businesses do away with HR that its value becomes apparent.

One FTSE 350 organisation refused to have a HR department because it did not want to stifle the entrepreneurial spirit. This organisation embraced many practices that would be anathema to a HR professional. It recruited people who were right for the company and then figured out where to fit them in. It had no career planning but appeared to offer terrific opportunities for those courageous enough to seize them. Its "people" department arranged fun events rather than policies.

Over a period of two years I saw this company struggle because it lacked policies on people management. Attrition rates rose and, in spite of the company's best efforts, the entrepreneurial culture was eroded and discontent bubbled beneath the surface. The value of HR became apparent and a HR manager was appointed.

HR departments, even effective ones, tend to suffer from image problems. Often HR is described as "fluffy" or "touchy-feely" when people are really talking about tricky performance issues that are ducked by most managers. Poor performance is "hard" not "fluffy", and ignoring it is an unhealthy commercial decision. HR is often left with unpopular or controversial tasks that no one else wants to deal with. Much of HR is far from "touchy-feely".

For HR to be seen as a commercial part of the business, HR leaders, on the board or not, need to quantify and communicate the contribution they make. This is easier and more effective when the HR director is part of the top team and seen to share responsibility for organisational performance. But this will not happen unless his or her focus changes from perfecting processes to demonstrating practical benefits.

Business needs, rather than HR best practice, should form the basis of decisions. Nothing works quite as well as cost savings and efficiencies. But these may not be immediately apparent to people caught up in the operational aspects of a business. It is up to the HR director to point them out.

If the message for HR is to focus on business needs in order to survive, the message for business is to focus on people's needs to survive. From either perspective, it is needs, not process, that make the difference. - (Financial Times service)

The writer is human capital consultant at Deloitte & Touche in Britain