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A 5-Step Plan For HR to Show Its Business Value
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CEOs today have no shortage of challenges, but what keeps them up most at night? In 2018, it’s attracting and retaining talent, according to the latest C-Suite Challenge survey. In other words, the solution to the boss’ biggest problem today rests on the shoulders of HR.
This challenge is good news for HR. It means HR leaders have an opportunity to step up and fulfill a larger role. But there’s a problem: just over a third of HR leaders believe their teams can address the talent issues around them. It’s clear HR needs to evolve. In order to address talent recruitment, retention and other pressing needs, you must become a more strategic business partner.
To do that, you need credibility. To get that credibility with the C-suite, your HR department should think of itself and its operations as a business. When executives see your team performing like a business, they are more prone to give you a seat at the table, where the broader business discussions happen. Here are five strategies to help you build credibility with the corner office by functioning more like a business.
A business serves customers. So who are the customers of HR? Everyone under the corporate umbrella is an HR customer: employees, managers, executives and candidates — even the company’s customers. Start building personas to highlight the needs of each of these customers and how you can best meet them. The best businesses deliver a great customer experience, and you should seek to do the same across these different customer segments. If you’re struggling for resources, identify one or two target customers most in need of the value you have to offer, and focus on them. All you’re really doing is segmenting your target market and prioritizing the customer(s) for whom you can create the greatest impact.
Once you’ve defined who your key constituents are, next ask the question, “What value can HR provide to this target customer?” Culture, employee engagement, retention and operational efficiency are just a few of the many areas where you can make an impact. But you can’t boil the ocean. Trying to do everything at once will stretch your team thin and reduce potential impact. Instead, focus on one or two value propositions for a couple of your most important customers. If your CEO’s top concern is talent recruitment and retention, identify the teams where this is most important and focus on solving this problem for them first. This allows you to show your value on the issues that matter most with the C-suite.
As a business, you too need to market your own value. In this case, you’re marketing that value to your executives. By focusing small — one or two value propositions to one or two target (internal) customer segments — you can now more quickly measure and report on the impact of your efforts. Providing measurement goes a long way to winning credibility by showing that you, like the rest of the organization, take an agile, incremental approach to serving your customers and demonstrating impact. Just make sure that part of your initiative design is the ability to measure and report on impact. Investing in measurement capabilities and making sure results get into the hands of executives is a must.
Human resources needs resources too. Once your HR department can measure its impact, you can then focus on expanding the activities that create the biggest return. Instead of going hat-in-hand in asking the CFO for more money, make a formalized business case. This proposal should include planned activities and the value they provide to each customer segment. Don’t forget the most important lesson: if you can’t quantify your impact, you’re not walking out with more money. It’s been said famously that people don’t want a ¾” drill, they want a ¾” hole. Don’t pitch an initiative. Rather, pitch the value. Start with the customer, state the customer’s need or pain point, state the solution you can provide to that pain, illustrate the activities you will use to create that solution, and then (but only then) identify the resources you’ll need to do so.
The human element must not be forgotten in human resources. To become a strategic business partner, you need to focus on the most critical element to business strategy — people strategy. To do this, you need to automate operational processes where possible and eliminate unnecessary activities. It would be a terrible error to forget that people create the real value, and not organizations. The human touch creates loyalty, genuine engagement and powerful cultures, and your people are the only part of your organization that truly differentiate you.
More than ever, the HR industry needs to rewrite its story. It must evolve from a transactional department to a strategic partner. This transformation won’t be easy, but it is mission critical, and the rewards are great. The renowned economist Alfred Marshall taught that organizational power will naturally go to the departments solving the biggest problems. Today, those biggest problems are increasingly found in HR operating like a business. Functioning as a business unit will allow you to solve these problems, while also building much-needed credibility at all levels of the organization — especially at the top.