The Role of Human Resources as Value Creator
Value Creation by HR is a hot topic these days. Gone are the days when HR as a function used to predominantly add value (due to its larger focus on administrative and transactional activities). The expectation is that, like marketing, sales or research, and development, etc – HR has to start creating value in business and if it cannot create value than its best suited to sit outside the organisation with an outsourced service provider of transactional activities
Today, no market is more competitive than the market for employees. The challenge for organizations is not only to make potential employees aware of their company as a good place to work, and bring the best applicants successfully through the recruitment and hiring process, but to retain them, ensure their understanding of the company’s goals and commitment to them, and provide the environment and structures to motivate them to give of their best.
In today’s rapidly changing and highly competitive environment, the human resource function plays an increasingly important role in an organization’s ultimate success or failure. Where success was once dependent upon an organization’s ability to discover and manage natural resources, success today goes to the organizations that most effectively discover and manage their human resources. Leading the people is not just for creating a “feel good” atmosphere all around, it is about infusing the right attitudes and behaviors required for winning fair and square in the marketplace.
Leaders communicate the organizational values to influence people behaviors. Communication is the keyword here. And what better way to communicate the values than making the values visible through their actions. In other words, leaders create coherence between their words and behaviors. The clarity on values enables people to live by them too. It is through these values that leaders influence organizational culture. In their must-read book ‘The HR Value Proposition’, Professors Dave Ulrich and Wayne Brock bank outline a practical approach for HR Professionals to add business value.
They state “HR Professionals add value when their work helps someone reach their goals. It is not the design of a program or declaration of policy that matters most, but what recipients gain from these actions. In a world of increasingly scarce resources, activities that fail to add value are not worth pursuing…
The HR value proposition means that HR practices, departments, and professionals produce positive outcomes for key stakeholders – employees, line managers, customers, and investors”. Unfortunately, in some organizations HR is still not seen as an occupational group that delivers value to key stakeholders. The value created by the HR function is frequently questioned by Senior and Line managers. This reflects how many human resources functions are perceived to be out of step with the needs of businesses.
Human Resources is under increasing pressure to move from transaction management and oversight responsibilities to a strategic function that positively impacts organizational results. Implementing innovations to your organization isn’t just about doing HR better, but also about delivering business value. The traditional factors that executives typically consider in calculating return on investment – reduced administrative costs and HR staff-to employee ratio, for instance – are limited. Improving the entire company’s productivity is the priority. There’s a growing consensus among HR Professionals that the modern HRMS has already squeezed all the inefficiencies possible from transactions and reduced HR staff as much as it can.
The HR Role in the modern organisation is different from the traditional company. HR is no longer mere resource administration, now HR people need to be focused on the key business imperatives. Most organizations are focused on aggressive growth, bringing innovative products, finding niches in the market and being the top company in the industry. Keeping in view the bigger picture organization is focused on and working tirelessly towards, the role of HR needs to be more strategic and less operational. While it’s true the operational part of HR is unavoidable there is a need to train and involve HR on strategic level. There is a need to hire and train HR personnel that can connect to resources on all levels.
This two-way connection of HR with management (strategic partner) and employee (HR liaison) serves as the strongest foundation upon which we can truly excel at building and keeping the competitive advantage. Especially for people constantly engaged in highly creative and rapidly changing business demands the value creation needs to be dynamic as well. HR operations and policies must be robust enough to be adapted quickly to changing situations.
Followings are the main areas to focus on for transitioning Operational HR to strategic HR.
Human Capital Optimization
There is a need to have an ongoing process to keep track of professional giveback, experience, and contributions of an employee to a team and different projects. This combined with knowledge of strategic direction of the department will help to quickly point out, not only the current but projected contributions of an employee. To quickly assess to restructure teams and find the most appropriate position for employees, to hire new resources, or to outsource certain positions.
Learning and Development
Identify the critical workforce individuals and tailor specific training and development programs and services. What employee abilities do our people need so that they can understand and respond to short-term and long-term market demands?
- Define and determine which resources are most critical to achieving the desired results.
- Assess the needs of such employees and draw up programs and services tailored to their needs.
- Identify and develop prioritisation criteria that are aligned with the organisation’s strategy and priorities
In order to maintain the competitive advantage and ensure the business strategy and objectives are on target, the performance management needs to be flexible. There is a need to educate resources and managers alike regarding the continuous process of setting objectives, assessing progress and providing ongoing coaching and feedback to ensure that employees are meeting their objectives and career goals, rather than bi-annual performance reviews.
Employee Appreciation Programs
For employees working in highly competitive and creatively charged environment, the appreciation serves as fuel. There is need to design balanced appreciation programs both monitory and non-monitory to keep morale of employees high. Apart from yearly bonus and project incentive, non-monitory programs like monthly excellent contributor, team lunches, and outdoor activities once a quarter at least, can go a long way in motivating employees.
HR Professionals are most valuable when they can forge strong partnerships with top management in order to affect the organization’s strategic direction. We all want a seat at the table. However, we won’t even get to the highchair if we don’t improve our core relationships with those we serve. When HR Professionals begin with the receiver in mind, they can more quickly emerge as full strategic contributors; add greater value for key stakeholders (clients, investors, line managers, and employees); enhance business productivity; achieve measurable and valuable results; create sustainable competitive advantage, and have more fun in their careers.
HR Professionals need to show how investment in HR work will help deliver business results. With clients, HR Professionals need to remember that their interest in the client must create value in the products or services clients receive. For the client who is worried about shared returns and growth, HR must create organizations that deliver results today and intangibles that give owners confidence that results will be delivered in the future. Finally, the foundation of add value to a business is trust. So, how do HR Professionals enhance the trust levels in their organizations? They do it by understanding that trust cannot be fabricated. In today’s environment, employees and lower-level managers see right through such efforts. In reality, trust is based on honesty, confidence, and the ongoing belief that HR Professionals and Management will follow through on their commitment to value creation
Conclusion- to provide the optimum value creation HR needs to be able to connect both with management on strategic level and with employees on an operational level. HR person should be the one-stop for both management and employee, with whom they can comfortably share their issues and ideas. The need is to go from reactive to proactive internal HR consultancy which will ultimately morph into a true business partnership.