What is a "Next Gen HR Team?" To me, it is one that strives to get beyond a task mindset and makes a difference to the business through tying everything it does to a strategic initiative. If there is no strategic value to the task -- outsource it.
There is still so much talk about the need for HR to be a business partner on the executive team. This topic has been swirling for so many years that I wonder if any progress has been made, and if not, why not? If HR is not "at the table" two things are probably NOT happening:
1. The HR department has not created its own path "to the table". HR must figure out how to put tasks into a strategic framework using financial concepts by learning about the business and its objectives. More on this later.
2. Executives of the organization are not holding HR to the same standard as sales and operations: How are you helping us meet our customers’ needs? How are you providing cost efficient value? How are you impacting revenue growth and expense reduction....specifically.
HR’s reputation is ours to make and to defend. There’s no point in trying to get to the table if you don’t know how to get there or why you should.
I am empathetic to individuals who are new to the profession or who are involved in setting up an HR strategy for a startup organization. While there are many books and articles on the subject, I will highlight here what I have heard over and over at networking events, and some suggestions for providing true next gen value to the organization in response.
“I wish someone would ask me to get involved in something like that.”
My high school French teacher taught us a proverb that created my drive and determination at that young age: “There are two ways to get to the top of an oak tree: you can climb up through the branches, or sit on an acorn and wait.”Here’s how HR can climb up the branches itself:
Do research by reading strategic HR articles and by following HR gurus such as Josh Bersin and John Boudreau to become familiar with strategic concepts. Access free webinars by HCI and CEO -- they are excellent sources of information and guidance.
Start with a small project. In my first job in HR, I decided to bring home all the workers comp folders and analyze types and frequencies of injuries in our mill (Yes, that was the olden days. Now most w/c carriers will provide this data for you through a portal).
I’ll say this more than once: If you stop after you’ve collected data, you might as well not have collected the data at all. Why is it relevant? What can you use to support a strategic initiative?
In my case, I then developed ergonomic assessments and other safety programs with the help of an industrial physical therapist to address injury prevention in our highest categories.
“I don’t have access to my company’s financial information.”
First, you have to understand why you need it. Then you have to ASK for it. But here is an important tip: once you have access, don’t launch a complex metrics dashboard without first talking to finance, sales, and operations to see what matters to them. Beware of "helpful" lists out there of HR metrics calculations. If turnover is not an issue at your company, why bother to calculate turnover? If attendance doesn’t need to be addressed, don’t report on absentee rates.
Focus on what drives the business. If innovation is a business objective, does the company have the right mix of entrepreneurial mindsets and results oriented execution? Predict success through proactive use of analytics and assessments and then address the gap between "as is" and "to be"with workforce planning initiatives and targeted recruiting efforts. Instead of exit interviews, many organizations are now conducting "stay interviews" to figure out what is important to employees and to management, so that HR can help create an effective workplace environment. Invest in leadership development training, coaching, and mentoring. The rate of turnover doesn’t matter as much as the cost of turnover.
Also, be wary of drawing incorrect conclusions based on data. In the above example of my analysis of injuries, the financial impact to my company of reducing injuries was NOT reduced workers comp premiums. Experience is only a part of that equation. Rather, the immediate savings were more likely to be in overtime reduction for covering an absence and in the administrative savings of not having to arrange for that overtime. Measure your current associated costs and then measure the costs following the initiatives and report on progress along the way.
Do your best. As John Boudreau states: "You can map the logical connections between an effective HR initiative and desired business outcomes. Focus on what can be measured along that path, and extrapolate where you can't measure precisely. That's exactly what every other management discipline does" (HBR July/Aug 2015).
HR should be asked to report on its financial accountabilities to the Board of Directors in a meaningful way. Boards love the metric "revenue per employee", but what does that mean? Is there a benchmark -- or any context at all -- that it is reported against? What if stress, burnout, and turnover are occurring because there is not sufficient staff in certain departments? In that case too few employees in an organization can create a great revenue per employee result -- but at what cost?
I told you I would say this again: don’t collect data unless it is relevant and tied to a strategic initiative.
“I don’t have time to focus on strategy because of all the transactional work I have to do.”
HR is a cost center. If strategic work is to be accomplished, all non-value add tasks need to be outsourced or automated. HR needs to make the business case for paying for outside resources in a cost/benefit analysis. HRIS systems are so expensive that achieving coordinated automation has been a struggle. But the emergence of cloud-based services is making it easier to create process efficiencies without a heavy upfront cash outlay. Eliminate as much paperwork as possible – W4’s, benefits enrollment, applications, retirement forms, etc. all should be done online where digital signatures are acceptable. Have your vendors provide customized and legally required reporting. Simplify your job titles/functions and human capital processes so that internal movement is less complicated and time consuming.
My final recommendations for the HR staff who want to become more strategic are these:
Understand a profit and loss statement. You don’t have to pay for a seminar, just find an ally in finance who can explain the basics and support your initial efforts at quantifying how HR programs matter to the organization.
Think creatively. HR can impact revenue generation by streamlining on-boarding and training of sales people so that sales revenue can be achieved more quickly. Purposeful and targeted recruiting strategies can result in customer retention and the cost avoidance of turnover by having the right people in the right positions from the start.
Measure the “as is” state, set specific goals and targets, and then promote your (quantified) process improvement achievements.
HR has a lot of other important things to address that do not come down to dollars and cents. But to get to the table, you have to speak the language of everyone else who is there. I have loved climbing through the branches of my career in HR and Organizational Development because of the breadth and depth of opportunities to make a difference. I’d be happy to talk to you in person about this topic and help you set up your framework. Go to my Contact Page to reach me.