I want to spend this year talking about how the HR profession adds value to the business. And by “add value” I mean precisely that—how does the work we do benefit the enterprise?
Sure, there are responsibilities we have, (insuring legal compliance for example), that may not appear to impact the bottom line directly, but go a long way in protecting the image, reputation, and even the viability of the company.
Connecting our work to the company’s objectives and measuring the impact of that work needs to be a common activity that is communicated and understood throughout the organization. Since this is so obvious, and not at all a new story, why are will still talking about it?
Let me start with this: Unlike most other functions, ours is highly variable and this variability leads to the type of criticisms we often hear about our profession. Different businesses often require a different focus from the HR function. The life cycle of a business is a case in point: If you are operating in a mature business, cost control and/or cost reduction might be of primary importance. If you are in a startup business, speed of innovation becomes critical. And there are any number of variations in-between that require an HR organization to adjust and adapt to drive business value.
In our world, one size fits nobody. In large organizations, multiple business strategies are common, and HR leaders need to understand each one and determine how best to not only support each, but to maintain an approach that fits the overall company. Hence why we talk about agility and speed, since to be effective we must be very flexible and responsive.
If we have built-in variability in how we support the business and employees, then what if anything is standard? From my vantage point, the process used to determine your HR strategy should be the one standardized process in our profession. This should identify the focus area(s) and the measures that determine what is working and what is not and it should do so in a manner that speaks to business leaders in their language.
I just did a search for “how to develop an HR Strategy” and it came back with 60,200,000 references. No wonder so many are confused about our profession and its contribution to the business. While I generally think that giving people choices is important, we should be a bit more predictable in how we develop our HR strategy.
Starting with a simple framework is beneficial. In this regard I suggest the i4cp white paper Four Steps to Enable HR to Support an Agile Business , not because I chair the company’s Chief HR Officer Board; rather, I believe this resource provides a simple and practical guide that is easy to communicate and convey to your stakeholders. Here’s what the guide covers:
Step 1 is to understand the business model and areas that drive value.
This sounds simple, but having a full understanding of how the business provides value to its customers and its financials is critical. Work with your counterparts in Finance to understand how the business makes money, then move on to Sales to understand your customers and their needs, etc.
Step 2 is to define the business strategy and the opportunity for HR.
This is where the insights from the previous step will provide an understanding of where the business is heading so that HR can lead rather than lag.
Step 3 is determining how the HR strategy will drive business performance and the metrics to support this.
This is the time to align your work to the specific goals and objectives of the business, and to do so in a systematic way.
The report highlights 17 key performance indicators that have very strong correlation to a firm’s market performance and fit into one of the five domains of i4cp’s People Profit Chain model (Market, Strategy, Culture, Leadership, and Talent). That empirical model easily translates how an organization’s people component connects to critical business outcomes. It is also a highly effective tool to help HR prioritize where its efforts will have the greatest impact on the business.
And Step 4 is ensuring sure the HR team has the skills necessary to execute the strategy.
This is where clarity of roles becomes critical. Ensuring there is no confusion here will make certain your customers (both internally and externally) are not confused and frustrated. Clarity of roles between the HR Business Partners, the Centers of Excellence and the Service Delivery team are all critical in delivering this value.
While the HR profession is, by necessity, variable based on each business and company, the way we develop our strategy should be standard so that HR leaders can structure their function in new ways to effectively deliver the support their businesses need.
Kurt Fischer, former CHRO of the Bill & Melinda Gates Foundation, is the chair of i4cp’s Chief Human Resources Officer Board.