A few years ago David Smith was commuting 500 miles every week to get to his job as director of human resources at Asda. Fortunately for his wallet, a company fuel card bore the brunt of the £3,000 or so that he spent each year on fuel.

At least, it did until he reshaped the supermarket’s car scheme to cut costs. Staff were expected to give up the BMWs, Mercedes and other luxury cars they had chosen for themselves and switch to a new fleet that offered nothing but Vauxhalls – and only then to people who needed them for work. But rather than simply laying down the new cost-saving law, Smith, now an independent consultant, started things rolling himself. “When I made the change I thought ‘I have to lead this personally’,” he said. “So I came out of the scheme, bought my own car and gave back my fuel card.”

This willingness to lead by example and to demonstrate personal integrity is even more important to the human-resources profession today as organisations battle both the effects of the recession and the hangover left by the bonus culture and soaring executive pay.

“Integrity is going to have to come back into fashion,” said Smith. All human-resources leaders will have to decide whether they are willing to raise difficult questions about pay, performance and corporate values.

Michael Armstrong, author of Armstrong’s Handbook of Human Resource Management Practice, agrees. “The human-resources director should be not quite the conscience of the organisation, but he or she should have the courage to stand up and say ‘this is wrong’,” he said. He said human resources needs to take some responsibility for the way in which City bonus schemes were set up, and added that now is the time to knock some sense into the system. This means making sure that organisations understand the bigger-picture implications of their decisions and behaviour. “Human resources should ensure that, if their company is going to have a bonus scheme, it conforms to some basic principles that the schemes in the City didn’t.”

In line with this focus on corporate values and reputation, human resources should also use the recession to ensure that it is seen as more than a pay-roll-and-pensions department. This means showing leadership and demonstrating how the profession can make a difference to the business.

“Human resources should be devising new ways of working to improve productivity and performance,” said Armstrong. “It’s not just about developing new performance-related pay or bonus schemes, it’s more about understanding how the organisation works and how to make it work effectively.”

The three skills that human-resources professionals have identified as most important to riding out the recession recognise the need for business awareness, said Vanessa Robinson, head of practice and development at the Chartered Institute of Personnel and Development. In a recent survey, they listed change management, strategic thinking and business knowledge as the three most-needed abilities.

“Human-resources people really do need to develop a skills set that helps them to deal with the challenges of the current environment and prepare their people and their business for the future,” said Robinson.

Shaping strategic direction is easier when human resources has the respect of the chief executive and a seat on the executive board. “The recession is a chance to get your feet under the [boardroom] table as a human-resources director,” said Armstrong. “To get on the board, human-resources people have to demonstrate that they understand what the business is about, what it needs and what drives it in human terms.

They have to be able to use the language of the business because, if they can do that, they are in a position to make a business case for whatever needs to be done.”

Human-resources professionals who fail to do this might find that the heads of other departments start moving into their territory, said Andrew Kakabadse, professor of international management development at Cranfield School of Management. “You must have a strategic human-resources capacity within the organisation,” he said. “If you do not, you will see the function being taken over by finance [or marketing or operations]. Many finance directors are not only good at numbers but also at translating what that means to people and the organisation. They are taking on that mantle, so unless human-resources directors are very careful they will see their role taken over by others.”

Robinson said that more and more human-resources people are operating effectively in senior leadership roles. However, when human resources steps up its profile, it needs to make sure that it’s the profession that is being recognised, not simply the input of one well-networked person. “It needs to be embedded into the organisation. It can’t rely on one individual and his good relationships with others,” she said.

Times Recommends

• Inspirational leadership
• How to get a new job
• The reluctant CEO