The relevance of Human Resources
Why Human Resources Makes Up Your Organization? Perhaps we use the wrong moniker to describe what human resource departments are being asked to do in today’s world. While people management remains their core business, much is also drifting towards analytics
Some HR departments operate and are treated as a negative cost centre, an enabler function within their company; put another way, a necessary evil. In some instances, more in smaller companies, when finances get tight, they rely on their management team to perform the hiring. Never mind that they don’t have the skill set. After all, how hard can it be.
In larger corporations the senior executive teams are asking human resources to be strategic business partners. This transformation requires new means of thinking; in some cases, a change in leadership in order to become that partner that will advise on the types of employees needed to fulfill their business plans.
The term Return On Investment (ROI) has traditionally been used at the business line level, but more and more it is being used at the administrative level. So, it is no surprise that questions are being asked in the HR Departments. This can put a chill on some departments that do not perform measurements and only look at their regular duties, failing to measure any performance. In that case, they may not be ready to answer needed questions.
A change in philosophy is driving the rise of analytics. HR Departments cannot be strategic business partners without good data and analytics to enable better and faster decision making. The only way to measure the ROI of an HR Department is through analytics. Just as in baseball, when analytics were first introduced, they provided General Managers and owners with better decision-making tools. In Human Resource Departments, that applies to
( Why Human Resources Makes Up Your Organization? ):
- Performance Management
- The ability to measure employee performance, verifying if they are on track to meet their performance plans.
- Analyzing compensation correctly will lead to hiring and retaining the proper employees with the required skills. You will not be overpaying, and you will not be underpaying, resulting in attracting lesser talent.
- Attrition / Retention
- Attrition can be costly especially when the wrong people are hired, due to unrealistic expectations or improper information during the interview process. To that end, metrics around exit interviews become important.
- Succession Planning
- An aging workforce needs to be addressed for succession planning and to ensure continuity. In addition, employees should be targeted for promotion and training to reduce costly external hiring practices. Peter Baeklund was quoted as: “CFO asks CEO: “What happens if we invest in developing our people and then they leave us”? CEO: “What happens if we don’t and they stay”?
Several years ago, I worked for a very large company (over 50,000 employees) and there came a time when a large group of engineers were moving into retirement age. A decision was made to hire several replacements directly out of school for continuity purposes. After they had been trained and obtained the necessary experience needed, they left for other organizations. So, was that the wrong management decision, or were there other factors that had not been considered? The pay was pretty well equal, but it was the culture that may have been at issue. That’s why it becomes important to do exit interviews and look at the various reasons
- Finding the right people will make a difference in the long run. Measuring the cost per hire along with comparing the quality of hire will go a long way towards comparing cost with quality.
- Some companies prefer not to spend money on training but expect the new hire to bring in new ideas and start doing things their way. Sometimes that can be helpful, but in other cases, it leaves peers annoyed and not being cooperative. The new person can disrupt existing culture. A good onboarding process and strong people skills are needed to overcome skepticism. Training must be budgeted, and the affects measured to ensure that the training has brought value and the expected results.
When drilling down the data of any of these areas, they can provide meaningful insight. The real benefit of metric analysis is corralled when you can overlap, data from several areas and connect the dots. When done correctly, they may answer questions such as:
- Is the performance of individuals or groups affected by compensation levels?
- Does compensation impact on the attrition rate?
- Can you identify “high flyers” and are they targeting them in your succession plans?
- What affect will a multi-generational workforce have on productivity and succession planning
- Which recruitment channel(s) have your top performers come from?
- How is social media being utilized and which platform produced the best results?
- Have you considered targeting a virtual workforce, reducing the need for office space?
- If the HR department knows its metrics, then they have a pretty good understanding on whether it is feasible to outsource some or all their work. There are quite a few companies that use staffing agencies in order to assist them with many aspects of human resources, including the procurement of assignment employees or more permanent solutions.
- Are training needs adequately defined, resulting in the correct training, for participants?
- New Technology (software for tracking and increasing efficiencies; easier metric analysis.)
Ensuring that the right data is captured and analyzed should be on the top of Human Resources mind set so they can demonstrate that they are not just an overhead expense but a strategic business partner.
So, to answer the title question, Human Resources is more relevant then ever. The questions that still need to be answered is whether that should be outsourced or not. That answer lies in your analytics. We are certainly happy to assist should you decide to outsource a portion or all your HR needs. Come see us and let us become your business partner in HR.
Why Human Resources Makes Up Your Organization?
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