The idea of strategic human resource management is gaining traction in today’s business environment. HR has moved beyond just managing transactional functions, and is now recognized as a strategic asset within many organizations.
The motivation behind this shift could be competitive pressure: businesses today are trying to utilize the best talent to generate more sales and higher profits. CEOs are accountable for increasing revenue and reducing costs, all while under more pressure than ever before. They are looking to all departments—including HR—to help them achieve their goals. In fact, 60% of executives are starting to expect HR to partner with others in the organization to improve company performance. Many HR professionals are stepping up to the challenge, taking their place at the executive table and delivering against key objectives.
How can HR take their place at the table?
HR leaders must demonstrate the strategic value they provide, and how they contribute to real bottom-line benefits, performance and profitability. Twenty percent of executives still see HR as the manager of transactional employee processes, instead of a real contributor. Here are three ways to make the transition from transactional to strategic:
1. Define your value
* For the company: Defining HR’s value for the company as a whole
starts with crafting a department vision that links up with the
company’s overall strategic goals.
* For company’s customers: Realize that HR has a direct impact on the customer experience—the results of your hiring, development and engagement efforts are great sales and service people who please customers every day.
* For the executive team: Uncover what competencies are needed for HR leaders to be true partners to the executive team, beyond what is needed in their day-to-day work. Competencies could include financial acumen, business strategy and organizational efficiency.
2. Get involved
* Financial training: The HR staff needs to understand cash flow,
billing cycles, receivables and other financial measures. Train your
staff in these areas so they are better equipped to make a positive
* Field experience: To understand and serve the business as a whole, HR should get out in the field. Have the HR team participate in customer visits, sales calls, product development meetings and any other key functions of the business to gain vital firsthand knowledge.
3. Be accountable to the numbers
* The big numbers: All employees should be held accountable to the
key metrics established by the company, whether it’s sales revenue,
customer retention or any other metric. These critical numbers should be
a part of HR’s goals as well.
* HR’s metrics: Link your efforts to big company goals like profitability. It may seem unusual at first, since HR has not historically been regarded as a major player in profitability. But precedents have been set: take this example of a global company whose HR team developed a training program for salespeople. Their efforts resulted in improved relationships with prospective clients, and eventually led to their status as a preferred provider. In two years, the HR team helped generate $4 million in revenue.
How can HR become more strategic?
All of these tips can help your HR team become a strategic player in the organization. But what if they’re too busy managing all the transactional elements of their roles? To enable HR to be more strategic, traditional HR activities such as benefits administration, recordkeeping and payroll need to be outsourced and digitized. And companies that are considered “best-in-class” in human capital management are doing just that, according to a recent study by the Aberdeen Group. These outstanding companies are investing in technology to automate, streamline and standardize processes.
To reach the best-in-class level of human capital management, companies must:
# Standardize processes for both workforce and talent management
# Combine workforce and talent data with business data to drive organizational growth and performance
# Invest in technology to lift HR’s administrative burden, create greater efficiencies and provide a positive user experience
It’s important to understand that these changes won’t take place overnight. Evolving to strategic human resource management takes time. But the right technology can help you get there faster:
systems create standardized and efficient processes with automated
workflows, an intuitive user interface and self-service options.
* Our Custom Web Reporting application allows you to make the best use of workforce data, creating insightful reports on labor, compensation, benefits and more, helping you be more strategic.
Learn more about how Paycor can equip your HR team to make the leap from transactional to strategic: get in touch with us today.
Sources: Aberdeen Group: Human Capital Management Trends 2013, HumanResources.About.com
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