7 Strategic Steps to HR Relevance

7StepstoHRRelevancePamelaJ.Green,MBA,SPHR,ACCTheHRCoachingandCareerIns2tute

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HR’sBusinessChallenge

HowCanHRDemonstrateBusinessRelevanceandAddValuetothe

BoGomLine?

Beingcapableofmakingadifferenceindecision-makingwithNmelyHR

informaNontoimpactthepresentandfutureoutcomesdesiredbyyouandyour

organizaNon.

HRRelevance

RecentCEOQuotesAboutHR

“TheseniorHRexecuNve[needstobe]abusinesspersonfirstandanHRleadersecond.Theyneedto

decipheranddeliver.”

“Humanresourcesmustuptheiract…”

“HRneedstopreparepeopletoacceptchangeandbehaveinnewwaystoachievethefirm’sgoalsand

realizeitsreturns-on-investment(ROI).”

AreHRandOrganiza2onalPriori2esAligned?Asurveyoftopstudiessuggestthattheymightnotbe.

Organiza2on’sPriori2es HR’sPriori2es

1.  MatchtalentneedswithorganizaNonalstrategies.

2.  MasterthebasicelementsofHR.

3.  Predictoutcomes.4.  Diagnoseproblemsand

prescribevalueaddedacNons.5.  Useanaccurateandcomplete

viewofworkforcecoststoevaluatedecisions.

1.  CommunicaNngHRiniNaNvescompanywide.

2.  Employeeengagement.3.  ProvingtheROIofHR

iniNaNves.4.  Costmanagement.5.  Focusontechnology

andperformancemanagement.

Sources:EREMedia,Forbes,EntrepreneurMagazine,HCI,CIPD,HBR

7STEPSTOHRRELEVANCE

Step1:BuildCredibility

•  Establishstrategicpartnerships•  Demonstratefiscalresponsibility•  Serveasinternalconsultant•  Respectedasthechieftalentexpert

EstablishStrategicPartnerships

•  IdenNfy,modelandimplementbestpracNces.

• SupportorganizaNonalwork.• EnsurecrossagencyandcrossorganizaNonalcollaboraNon.

DemonstrateFiscalResponsibility

•  DeterminetheRIGHTmeasuresthatdemonstratevalueandstrategicbenchstrength.

•  IdenNfystrategiesandbusinessproblemsthatlinkHRtovalueandprofitability.

ServeasInternalConsultant

•  IdenNfythenewbehaviorsneededtoachievegoals.

• PinpointtechniquesthatensurethesupportandsustainabilityofHRprogramsandsystems.

RespectedastheChiefTalentExpert

• KnownforaGracNnganddevelopingatalentedanddiverseworkforcethroughworkforceplanninganddevelopment.

• DesignscenarioandstrategicworkforceplanstoalignHRwiththecorestrategy.

Step2:Determinewhatkeystakeholderscareabout

•  UnderstandthatHRisnotmonolithic.•  Knowthebusiness.•  LookforwaystoconnectwithandidenNfywhat“they”wanttoaccomplish.

•  PutHRonthefiringline.

TopLeaderPriori2esInclude…

•  WorkforceDevelopmentandRetenNon•  TechnologyChanges(mulNchannel,e/mcommerce)

•  BusinessGrowthandDevelopment•  AddressingCompeNtor’sAdvancingMarketShare

•  BusinessSecurityandRecovery

Step3:KnowWhat’sTrendinginHR

•  HRISSystemsandSecurity•  DataAnalysis•  FinancialAcuity•  HealthcareCosts•  TalentManagement•  EmployeeEngagementandDevelopment

Step4:LinkHRtoProfitability

•  SalesGrowth:AnalyzethepaceatwhichyourorganizaNon'ssalesrevenueis/notgrowingandtheHRimplicaNonsandrelatedstrategies.

•  WorkingCapital:MeasureyourorganizaNon'sfinancialhealthbyanalyzingtalentreadinessandcapabilitytomeetanyshort-termobligaNons.

Step4:LinkHRtoNFPProfitability•  Development:AssesstheoperaNonalcosts,especiallythequanNty/qualityoftalentneededtoraise$1.Forexample:–  CapitalCampaign/MajorGils$.05to$.10perdollarraised.

– DirectMailRenewal$.20perdollarraised.– DirectMailAcquisiNon$1.00to$1.25perdollarraised.

•  SalaryandBenefits:EnsuretheyareproporNonedtorevenuetheorganizaNonwillraiseduringtheyear.

Step4:Con2nued…AtmeeNngslistenforthefollowingwords:

ExpansionDownsizeReducNonsRisk-Adverse

NewTechnology/ProgramLong-termgoal

Sluggishsales/revenue/incomeAcquisiNonGrowth

CompeNNonProducNvity

Step5:KeyMeasuresthatLeadtoResultsandROI

•  RetenNonValue:Hire/Develop/SeparaNon(employeeretenNon=moneyretenNon)

•  Employeereferralrates•  Revenueperemployee:(Revenue-OperaNngCost)/TotalFTE

•  SaNsfacNon/engagement(predictturnover)

Step5:Con2nued…

•  TieEmployeePerformancetoCustomerSaNsfacNon/RetenNon

•  MeasureEROI-thepre-taxdollarsgeneratedforeverydollarinvestedinemployees.ThismetricshowshoweffecNvelytheinvestmentinemployeesissupporNngtheorganizaNon’sgoals.ThelargerthepercentagereturnthemoreeffecNveyourinvestmentinpeopleisworking.

EROIExampleEROI={(Revenue–(OperaNngCost–LaborCost))/LaborCost}-1Forexample,ifanorganizaNonhas:Revenueof$4.5millionOperaNngCostsof$3.75millionLaborcostsof$1.5millionthentheEROI={(4,500,000-[3,750,000–1,500,000])/1,500,000}–1=0.5=50%Or,foreverydollarinvested,theorganizaNonreceivesbacktheoriginaldollarand50centsofpre-taxprofit.Thisisdescribedasa50%return.

HRProfitCenterModel

BusinessProblem

Costofthe

Problem

HRSoluNon

CostoftheHRSoluNon

$Benefitfrom

SoluNon

Cost–Benefit=Profit/Loss

Source:TurningYourHRDepartmentintoaProfitCenterbyMichaelMercer

YourApproach

•  ThecostofthesoluNonshouldnotexceedthecostoftheproblem

•  Monitorindustrysalarytrends– DetermineyourcompeNNveness(WhatarecompeNtorsdoing?)

•  Capturethebenefit/expenseofTraining,MeeNngs,ProducNvity,AbsenteeismandTardiness

YourMethodology

•  AnNcipatebusinessneeds– Growth/declineinrevenue

•  Yoursolepurposeistofigureoutwaysto:–  Increaseprofit– Decreasecosts– Makeemployeesmoreefficient–  ImproveproducNvity

Step6:ElevateYourCapability,Competency,andCredibility

•  ScenarioPlanning•  StrategicWorkforcePlanning•  LeanSixSigma•  HRFinancialReports•  MetricsandAnalyNcs•  CyberSecurity

ScenarioPlanning1)Developcrediblescenarios.

EvaluatethewidevarieNesofpotenNalinfluencesonyourbusinesses,fromcustomermovestosupplierchanges,shilsinenergyprices,andcompeNNveacNonsetc.

2)Theniden2fysuccessfactorsorcompetenciesforyourorganiza2ontoflourishineachscenario.

Managingchange,collaboraNon,technicalcapabiliNes,innovaNon,customerservice,etc.

ScenarioPlanning

3)HRandtopmanagementshouldthenfocusresourcesondevelopingthesecompetencies.

ExpectedFuture

Alterna2veFuture#1

(Preferred)

AlternaNvePossible

Future#2

WorstCaseScenario

StrategicWorkforcePlanning

AlignstheneedsandprioriNesoftheorganizaNonwiththoseofitsworkforceto

ensureitcanachieveitsbusinessrequirementsandorganizaNonalobjecNves.

Demand Supply Gaps AcNons

LeanSixSigma

AmethodologythatreliesonacollaboraNveteamefforttoimproveperformancebysystemaNcallyremovingwaste:Defects,overproducNon,waiNng,non-uNlizedtalent,transportaNon,inventory,moNon,anddownNme.

Step7:EnsureSustainability•  HRisalignedwithvision,mission,andstrategy–alsoinvolvedinstrategicplanning.

•  Thereiscommitmentbytopbrass.•  IfmorethanoneinHR,othersarecommiGedtothework.

•  HRinvolvementbecomespartofyouroperaNonalDNA:PerformanceReviews,discussions,calibraNons,businessgrowth,etc.

ShowcaseHRRelevance

1.  Determinewhatkeystakeholderscareabout.2.  KnowwhatistrendinginHR.3.  LinkHRtoprofitability.4.  IdenNfykeymeasuresthatleadtoresults

andROI5.  Elevateyourcapability,competenceand

credibility.6.  Ensuresustainability.

ShowcaseHRRelevance

•  Track,analyzeandsolvebusinessproblemsfromaprofit/valuecenteredperspecNve(notjustserviceoriented)

•  DeliverpresentaNonstoleadershipaboutprofit/valuecenteredeffecNveness

•  TrainandcoachHRstafftothinkfromaprofit/valuecenteredperspecNve

ResourceBooks

ThankYou

Askmeanything.

[email protected]

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