Written by
Changeboard Team

Published
12 Apr 2010

HR at crossroads? Path to re-defining future of HR

12 Apr 2010 • by Changeboard Team

Examining current perceptions of HR

The responsibility for proving HRs value lies solely with us as HR professionals and we have to learn that over-promising while under-delivering the business Benefits of HR just reinforces the image among HRs many detractors that we are nothing more than an unavoidable cost and an unfortunate irritant.

The good news is that it doesnt have to be like this. The bad news is that we recognise that we are weak at measuring HR value. Recent research highlights that most HR leaders assess themselves as being weak in HR metrics and that a lack of time, lack of appropriate measurement tools and lack of expertise are the excuses given. 

If you and HR are to have any significant future in organisational life, you need to ensure that you are able to use a range of business and people measures to demonstrate how HR has become more efficient and more effective in what it does. However, this only the first step.

HR - recognise that people are key to business

People are the heart and brains of all organisations and therefore should be treated as resources to nurture and grow rather than commodities to trade and discard.

HR has the potential to position itself within organisational life as the people experts and through the development of such expertise find ways to actively create organisational value rather than limit itself to merely adding value. Who is currently better placed to maximise the return from employees talents than HR?

If you are wise enough to recognise this opportunity, then you need to look at how you can build your credibility and take the first courageous steps towards a new future. 

In our experience, proving that you (and therefore HR) can create value within the business is a three step process.

1. Create an HR business value chain

Human resources has proven that it can add to an organisations profits. The HR partnership structure, when implemented well, is a systematic way of consistently delivering business value. However, in order to successfully implement an HR partnership organisation, it's critical to start with the basics and understand what the key HR building blocks are and how they influence what HR delivers.

At its core, the value chain recognises that an HR partner community has to have deep understanding about HR and the organisation it serves. 

HR technical knowledge is no longer enough to succeed as an HR professional. Our research shows that business acumen is a critical key HR competency, but one which HR leaders acknowledge their team consistently falls short on. Without a good understanding of the business you serve, how can you build core HR deliverables which deliver business value?

HR metrics can show HRs real value

HR needs to be clear what its purpose is, how it defines its distinctive contribution through an HR strategy and then ensure it develops its in-house capability to consistently deliver a quality service. Only then is it in a position to start creating value through focusing on its core HR deliverables:

  • delivering the HR fundamentals (i.e. key HR transactions) to a consistently high quality
  • creating and being a role model for powerful partnerships within the organisation
  • bringing about and managing change
  • co-delivering the people strategies of the organisation and each business.

This knowledge is then used to create and align to the business the most appropriate blend of people programmes, policies and processes. 

  • These activities will be both organisational and business unit specific. 

Fine tuning the role of human resources

The final element of the value chain is the role of the HR function and its members. 

  • HR partnership also refers to the alignment within HR. Too many human resources functions fail to define their ways of operating, handover points and distinct roles; and then wonder why they fail to deliver co-ordinated and quantifiable business value.
  • As the HR function and individuals develop their skills, competencies and partnership mindset, the mix of what HR delivers will be fine tuned. This takes time and constant two way communication within HR and with the organisation.
  • The speed and ultimate success of this transformation of HR is dependent upon its courage in moving out of its comfort zone and starts setting new expectations, displaying new behaviours and demanding different relationships with line managers i.e. what we call courageous leadership.

While potentially different HR teams could take the same basic organisation and HR knowledge and promise identical HR deliverables, the courageous leadership element of each member within the HR creates different levels of value.

2. Link business strategy to personal objectives

One of the greatest failings of organisations is not the lack of a business strategy, but the failure to implement the one they have got. 

As employees implement strategies, the organisational secret is to translate the business strategy into personal objectives. In order to do this, the business strategy needs to be broken into a people strategy, which in turn can be subdivided into team/function strategies and finally into individual objectives. 

For further information you can download a series of whitepapers on this and related topics by going to www.courageoushr.com/resources.  

3. Establish business and people measures for HR

The definition of any metric is an agreed indicator of a process or outcome.  This definition applies to popular metrics such as profit and loss (where the rules which define what they mean can be very different in different countries) to potential measures of HR. 

The activities of HR, like any other part of an organisation, can be measured and judged.  However, unlike more established functions such as finance, sales and marketing, HR does not have a heritage or regulatory framework of established metrics to draw upon and therefore faces a further difficulty in gaining organisational agreement to potential metrics before they are implemented.

We in HR need to realise that metrics however are not a black art through which we can measure what we do e.g. how quickly we process forms. The most powerful metrics demonstrate how HR managed activities (but not necessarily run by HR) to support the organisation i.e. in the same way that marketing measure the success of their programmes by an increase in sales increase, even though they're not salespeople.

Showing HR's real value

HR metrics can show HRs real value when they:

  • link employee return on investment to organisation financial objectives
  • help managers to manage by providing pre-agreed indicators of success

Help leaders to lead by:

  • defining strategy in operational terms (linking strategy and people)
  • quantifying the organisational vision
  • articulating leadership expectations

'Value added' metrics examples

Reduce employee turnover:

  • average employee productivity increases as the number of leavers and new starters decrease
  • direct costs decrease as less money is spent on hiring

Increase employee engagement:

  • employee productivity increases i.e. employees work harder
  • employee turnover decreases
  • customer satisfaction increases

All of these are measurable by accepted financial and marketing metrics provided we can establish baseline figures before HR interventions and demonstrate success after them.

The future of HR

HR is at a credibility crossroads and its destiny is in our own hands. 

If we choose to define and measure our own distinctive contribution and have the courage to go into the organisation and make it a reality, then HR will become both a value creator and a strategic leader. The choice is ours.