The days of thinking about human resources (HR) as merely a supportive, administrative function – say, passively managing employee documentation, overseeing timekeeping and administering payroll – are long over. Increasingly, leaders are recognizing the broader value of HR as a strategic partner and the critical importance of HR in overall business success.
If we think of people as the foundation and most vital asset of any company, then it’s clear that HR can significantly impact nearly every aspect of a business.
So, why does HR matter?
In today’s workplace, what all does HR encompass? What is the purpose of HR?
- It’s everything having to do with your team members, including your people strategy and management of the employment experience – from guiding the workplace culture to attracting and retaining the best talent, developing talent, enhancing employee wellbeing and inspiring morale, engagement and productivity. All these activities govern how satisfied employees are and influence the quality of their work output and retention.
- It’s the structure of your organization, the engine that keeps everything running smoothly every day. This includes policies, procedures, programs, systems and compliance.
- It’s strategizing and preparation for the future, using people analytics to uncover insights and opportunities, helping to anticipate potential challenges ahead, and determining how your organization may need to adapt to remain competitive and avoid risks.
Certainly, no organization today can thrive without a robust HR strategy, especially as businesses grow in size, geographical reach and complexity. This point is beyond debate.
When implemented well, HR is the key that unlocks success. On the other hand, if HR is not implemented well, the consequences can be disastrous.
As it turns out, it’s not enough to simply have an HR function. How you HR matters greatly to the long-term outlook of your organization.
What we’ll introduce in this discussion:
- What makes your approach to HR robust and effective?
- How do you know when your organization is doing HR well? What does success look like?
- What are some practical ways to get started right now in improving your HR practices?
The strategic role of HR in business success
A robust, effective and successful HR strategy is one that is:
- Relevant to and aligned with the organization’s current needs.
- All-encompassing.
- Fully integrated into each aspect of business operations and decision making, rather than being viewed as its own separate department.
- Given a seat at the leadership table and the buy-in of executive leadership.
- An enabler of an employee population is that it is not just engaged but fulfilled in their workplace.
When HR is executed well, businesses reach their goals and achieve desired business outcomes. There exists a direct connection between effective HR practices and these outcomes.
Some examples of this cause and effect in action:
Leveraging engagement tactics to make employees feel valued and supported > Employees are more motivated, productive, committed to the organization’s goals and put forth greater discretionary effort.
Fostering a positive workplace culture > The work environment promotes teamwork and harmonious interpersonal dynamics, which enhances productivity, reduces absenteeism and encourages people to stay with the organization longer.
Bringing in the right talent for the organization > The workforce comprises valuable employees who are aligned with the organization’s mission, vision, values and goals, and are a good cultural fit. Employees are capable of meeting the needs of the business now and in the future, helping to drive growth and profitability. Hiring right the first time also reduces turnover costs.
Investing in training and development > Employees feel that they have a place to grow within the organization, which boosts retention, and understand that their employer cares about their progress and career trajectory. In turn, the organization benefits from a more skilled workforce with relevant, up-to-date knowledge. This improves worker performance and promotes a culture of learning, open-mindedness, innovation and growth.
Future-proofing the organization > The organization has a solid grasp on the challenges it may encounter in the future and can establish a plan to address and overcome these obstacles, whether it’s upskilling the workforce, identifying the next generation of leaders and engaging in succession planning, or adapting to anticipated operational disruptions.
Managing compliance and risk > The company adheres to all applicable laws in a constantly evolving legal and regulatory landscape, which reduces exposure to legal issues and saves the organization the time, money and resources associated with audits, investigations and fines.
The cost of neglecting HR
When HR initiatives are ineffective or treated as an afterthought, organizations may experience a range of negative consequences that include:
- Poor reputation
- Inability to recruit and retain top talent
- Conflict within the organization
- Toxic workplace culture
- Low employee satisfaction, engagement and morale
- Increased absenteeism
- Diminished productivity
- Reduced quality in work output and customer service
- Stagnancy and lack of innovation
- Less skilled workforce
- Higher turnover
- Lack of preparation for change
- Failure to achieve organizational goals or improve profitability
Practical steps to re-evaluate and improve HR practices right now
Not sure how to get started on improving HR execution? Fortunately, there are simple steps you can take immediately to do HR better.
1. Perform a comprehensive audit of your current situation
Understand where you want to be as a company. Then determine where your company is at this moment and what you are currently doing, so you can compare your goals with the present reality and identify gaps. This involves:
- Reviewing all existing policies, procedures, documentation and compliance efforts for any inconsistencies, vulnerabilities or outdated information that could place your organization out of alignment with employee expectations.
- Getting a sense of what your people are feeling and where they may have identified opportunities for change. This can be accomplished with employee surveys and focus groups.
- Analyzing data around employee engagement, turnover and retention. Which metrics need improvement?
2. Focus on the basics
It’s imperative that everyone at the company – from leadership on down to the lowest-level employees – understands what the organization is all about at its most basic level.
- What is the vision and mission of the organization?
- Which core company values act a guidepost in carrying out the organizational vision and mission each day – especially when times get tough and people are under pressure?
Make sure you are communicating these concepts clearly to employees, as this impacts how they conduct themselves at work and carry out their job responsibilities. Ultimately, this influences the unity, cohesion and culture of the organization.
3. Ensure organizational compliance with current laws
For any organization, compliance is the single most important risk-management action you can take. Otherwise, your organization is vulnerable to penalties ranging in severity, which can disrupt operations, divert resources, tarnish your reputation and negatively impact the bottom line.
As organizations scale in number of staff, expand to new territories, hire remote employees and increase operational complexity, compliance becomes even more complicated and crucial.
Stay up to date on all applicable federal and state laws, and continually review your compliance initiatives to ensure that any changes are addressed and covered. Communicate to stakeholders what you are doing to maintain compliance.
4. Update and clarify HR policies
Review your policies regularly to ensure that they are:
- Timely and updated
- Relevant to the organization’s needs and compliance situation
- Aligned with workforce expectations
- Supportive of organizational goals
Make sure that all policies are written, clear and understandable, as well as accessible to employees. Communicate any policy updates to all employees so everyone is on the same page. This eliminates any confusion and potential for misunderstandings, and puts all personnel on the same playing field.
5. Align your HR team with your leadership
Because people are the most valuable asset of any organization, company and HR leaders should be in constant communication about the goals of the organization. Whenever company strategy is discussed, HR needs a seat at the table. This is so HR can:
- Revisit programs, policies and procedures, as needed.
- Help determine how to leverage people and teams to support company goals.
- Coordinate with all teams and individual performers to align their efforts with overarching company goals. Everything should filter up from the bottom to support these objectives.
6. Reassess current recruiting and onboarding processes
Rethink how you are bringing people into the organization.
- Do you have a carefully constructed recruiting strategy?
- Do you consider each candidate holistically, examining technical capabilities and skills alongside other equally important factors such as cultural fit?
- Are you capturing who your organization needs at this time? Are there any opportunities to recruit new perspectives or types of talent you haven’t previously considered?
- What is your approach to onboarding? Are you giving new hires a fully comprehensive introduction into the organization, going beyond standard job-specific training to also cover mission, vision, values and culture?
- Are you taking steps to make remote employees feel included, supported and part of a team?
- Is turnover decreasing?
7. Review your learning and development program
Assess your current employee development activities and consider whether your business is doing enough to build up employees’ skills so they can perform their current jobs effectively and be well-positioned to attain their own future career goals.
- How relevant is development to each employee and their job function? Are they learning skills that are immediately applicable to their job?
- Is development routinely integrated into the workday?
- Does development cater to different learning styles and time constraints?
- Do employees have a say in their development?
- Do you meet regularly with employees to discuss their performance and any gaps that persist between their performance and company needs?
8. Reconsider your employee benefits
Your employee benefits package is one of the most meaningful ways to demonstrate care for your people. Compare your benefits package to those of your industry peers to determine whether it is competitive enough to align with employee expectations and attract and retain top talent.
9. Consider a professional employer organization (PEO)
Many companies understand the importance of HR for business success, but they’re intimidated by getting started. It can be overwhelming trying to focus on day-to-day business operations while executing and managing all the pieces of your HR operations.
For many businesses, a PEO can be an optimal long-term solution for offloading these incredible responsibilities, along with a significant share of risk, and establishing an effective HR infrastructure that satisfies organizational goals and grows with the needs of the business.
Summing it all up
Without a doubt, every organization needs a robust and effective HR strategy. HR plays an important role in business success – but how you HR matters. There is a direct link between effective HR practices and desired business outcomes, as well as a link between ineffective HR practices and poorer outcomes.
Practical steps that organizations can take to improve HR practices focus on key themes: promoting values, enhancing culture, ensuring compliance, understanding gaps and clarifying the direction ahead, aligning HR with executive leadership to coordinate strategy and determining how to better the employee experience.
For more information on improving HR practices, including how to integrate a PEO partnership into your plans, download our free e-book: A step-by-step guide to HR outsourcing.