The field of HR metrics is booming. Solid research has provided a glut of ideas, experiments, approaches, and paradigms on the subject. At the heart of most of these discussions is the question of value: What value does HR create for organizations, and how do we measure and communicate that value?
Human resource management is a business issue and not merely an HR issue. All leaders today are—or should be—held accountable for managing the talent on their teams. Leaders in all functions, and at all levels, are responsible—whether they like to admit it or not—for employee attitudes, behaviour, and performance; for ensuring their teams have the talent they need to get the job done; and for ensuring that team talent is appropriately deployed, engaged, developed, and retained.
We know from both experience and research that properly designed HR practices and programs positively impact:
- Employee engagement, focus, and effort
- Employee productivity and work quality
- Safety (fewer accidents)
- Employee attendance and loyalty/retention
- Customer service, satisfaction, and loyalty/retention
- Organizational alignment (teamwork versus turf wars)
- Profitability, margins, and growth
- Stock price, P/E multiples, and market capitalization
(I will share some of my favorite research in future blogs.)
Despite the overwhelming evidence, HR managers still find it challenging to make the case.
Here are a few questions that HR professionals can ask themselves (i) when building a case for investment in Human Resource Management, (ii) for thinking more rigorously and strategically about their work in general, and (iii) for engaging business leaders more deeply in addressing the organization’s most important HR challenges and opportunities:
- To what extent do I really understand the value of my HR work (my value-added) in both quantitative and qualitative terms, and how can I better capture that value in a “balanced HR scorecard”?
- Do I maintain, and communicate, a clear line of sight from HR programs through to concrete business objectives?
- Am I monitoring and measuring the impact of my work, and building a track record of internal cases I can refer to?
- Am I educating our leaders on the value of HR, best practices, and advances in the field?
- Am I engaging leaders in identifying and assessing the financial impact of their biggest people challenges and opportunities (current and imminent)?
- Are you building solutions around issues that the business managers themselves have identified, i.e., helping them better achieve their objectives and deal with their most important people challenges and opportunities?
- What are the potential benefits of each particular intervention and what are the risks of doing nothing or of under-investing in those areas?
- Strategic alignment & results: Is my HR work helping my organization achieve its vision, implement its strategy, become a more efficient, effective, and competitive organization, and prepare for coming challenges?
- How sophisticated are the decision makers with respect to human capital management; how do they make their decisions and what kind of information (type, format, detail) do they find most helpful for decision making?
- Am I finding common ground with the business leaders; tapping into their issues, needs, and concerns; addressing and leveraging their beliefs and values about what makes the organizations successful; and using their language to build and communicate my cases?
- Are business leaders engaged in and held accountable for managing talent? And am I holding myself accountable for results by reporting back to business leaders on my progress to plan?
- Are we regularly auditing the organization’s success or progress in employee engagement, leadership development, and talent management?
This short list of questions already helps us see that “making the case” is not a one-off event, a one-time sales pitch, or a singular act of persuasion. Making good cases occurs in the context of a longer term strategy of helping the organization achieve its strategic objectives, educating the organization’s leaders, and building solid, functional, collaborative working relationships with those leaders—our valued business partners.
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