As the economy continues to recover, businesses may very well wait for labour to become scarce again before looking to HR for meaningful support. However, HR can speed things up by assuming the reins now. It has the expertise to help companies get ahead of the market shift that we should all see coming. Here are the basic but powerful steps HR leaders can take:
Like any other function, HR must show why the issues it addresses matter to the business and that it has sensible ways to manage them. Well, CEOs and other operating executives are rarely experts on workplace issues. They often have no relevant experience.
As fewer of them are coming up through training programs and rotational assignments, they could have learned effective people-management practices from knowledgeable peers. Thus, the HR team can show these executives what they should care about and why.
HR folks, let’s articulating a point of view on every people-related topic relevant to the business. For instance:
According to a report published near the beginning of the 2008 recession, only about a third of HR departments said they were consulted on company decisions about which people to let go. That is a stunning lack of influence in an area where HR has the most expertise of any function.
HR understands that structured interviews help identify the best candidates. Yet many organisations allow managers with no training in interviewing to go with their gut in asking questions and deciding whom to hire —which increases the risk of litigation as well as the cost of poor hires.
Line managers who want to retain control often resist flextime and working from home. Yet, HR leaders know that these arrangements can be highly effective.
Forced ranking—imposed by top executives who thought supervisors weren’t tough enough in their evaluations—was the rage about a decade ago. Now most companies are stepping away from it as they realise what HR has long known: Supervisors need the training, the time, and the incentives to have serious conversations with subordinates about performance and growth.
HR should be in front of every one of these issues, saying, “Here is how we should be managing this task, and here is the evidence behind that view.”
Instead of copying what large corporations did decades ago, HR should craft company-specific (and industry-specific) policies that respond to today’s challenges. Detailed knowledge of practices is essential, but it’s more important to understand what works when and where.
All this is a matter of looking more closely at the environment in which the organisation operates. It is about continually identifying new challenges and designing tools to meet them.
See: Revealed, 5 Digital Challenges for Human Resources
HR has (and should have) deep knowledge about workplace issues. It should also bring first-rate analytic minds into the function to help companies make sense of all their employee data, and get the most from their human capital.
In a recent survey by Deloitte, HR leaders said they felt least prepared in the area of analytics—but some are doing exciting work on that front. In many businesses, CIOs and their teams are the ones wrestling with big data to solve classic HR problems, such as how to find the best candidates and which practices increase productivity.
If HR is to set the agenda on people management, it must either staff up to handle those analyses itself or partner with people in the company who can do the work. Otherwise, the answers to fundamental HR questions will come from elsewhere in the business, and HR might as well pack it in.
Few HR departments have felt compelled to make the case that any of their practices could drive profits. Many don’t calculate ROI, even though other functions have been expected to do so for at least a generation. That just feeds into business leaders’ view of HR as a cost centre where the goal is always to cut.
No doubt most HR departments were initially caught off guard by questions about whether practices such as expat and rotational assignments actually pay off. The information they gathered tended to focus on individual outcomes, such as job satisfaction; they didn’t feel equipped to estimate financial returns.
Luckily, that excuse no longer holds. The enterprise resource planning systems of most organisations contain copious data on turnover, productivity, and other factors that suggest which talent development programs merit investment.
Quantifying costs and benefits in this way turns talent decisions into business decisions.
HR invests heavily in many programs that lack impact. For example, the current preoccupation with generational differences and diversity programs. Such efforts are effective only if top executives lead them, transforming the culture. Otherwise HR is just a cheerleader for an initiative it can neither enforce nor measure; its leaders will end up pleading with line managers to take on yet another set of tasks, burning up more social capital in the process.
See also: The New Face of Human Resources