Before taking in a course on metrics, you have to see your role in HR differently. At the end of this course, you should hopefully see yourselves as having the ability to become professionals integrated into business strategy rather than a cost center.
- Everyone knows that people are an organization's greatest asset. Yet HR still seems to be battling for that seat at the table. Well that seat at the executive's table is reserved for people who can measure the success of their departments and HR is having a hard time doing that. Yes, you might have calculated turnover rate and know that 75% of workforce has attended harassment training, but how do those things contribute to the business's competitive strategy? They don't really.
Here's the thing we can divide HR professionals up into four categories. Compliance, focused on rules, policies, and compensation. Solutions-focused, who try to follow best practices. Strategic, who attempt to align their activities with the business needs. And integrated, who are a part of the business strategy and help drive decisions with data. Check out the exercise file to do a little assessment and see which category you fall into.
In order to be someone who can say I contribute to the competitive advantage of this company, you have to be that fourth HR professional, integrated into the strategy. To get there, you have to tie investments in HR to shareholder value. And if you don't have shareholders, you have to tie HR to customer value and the bottom line. Think about this analogy from the report, Performance Measures in the New Economy.
"Two companies have the same machines. "Machines don't differentiate them, how they're used does." And if one lost all it's machinery, while the other lost all its people, the one who lost its machines would be better off. They can buy new machines and fill customer orders as soon as those new machines are delivered. The one who lost its people has to spend resources to rehire and train new people, meanwhile losing customers to the other shop, who's already up and running.
Speaking of customers, they'll keep coming back if your employees enjoy what they do. Employee engagement and positive work environments aren't just feel good initiatives. They have bottom line value which you can prove with data. And these initiatives are part of a system where everything you do should focus on maximizing the quality of human capital. As they say in the book The HR Scorecard, you have to "structure each element of your HR system "in a way that relentlessly emphasizes, supports, "and reinforces a high-performance workforce." In fact, the book's authors mention their research comparing over 400 companies and their work systems and they found that high-performing businesses who had four times more sales per person for example, also had double the number of HR professionals per capita, used more resources for recruiting and selection and had more robust training programs.
In other words, an investment in people was resulting in competitive advantage and bottom line value. With all this said, you of course will need leaders on board to support your new endeavor to be more integrated into the business. You'll have to start measuring things and proving their worth to garner support. Over time, armed with your data, you can prove to the CEO that HR is not cost center, but rather an important piece of business success.