A Dear Winning Them Over:
To justify an HR position to someone with a financial perspective on of theworld, articulate how HR creates value in financial terms.
Your goal to logically show how having the position would create value forthe company. In human resources, where the talent resources are managed, value is or canbe created in the following ways:
Increasing profit. Profits result simply from either increasing revenues,and/or decreasing costs. Being efficient will typically result in reducingcosts. Determine the costs of current programs and processes before you improvethem to compare future reduced costs to show your savings. Human resources’success cannot depend on increasing efficiency alone, however. HR can increaseprofits by better supporting those processes that generate revenue.
For example, does the sales function have the skills it needs? Are theremotivational issues hindering performance that you can affect with anintervention? Following an intervention, document current performance andmonitor future performance to compare to your estimated benefits. Increasingefficiency and supporting revenue-generating processes are opportunities an HRprofessional has to increase profits.
Decreasing risk. First, decrease the number of times something bad may occur.Are there safety concerns in your business? Are there criticalperformance-targets that must met by a group of employees? Must the company becompliant with any rules? How can the HR professional play a role in reducingthe frequency of: accidents, workers compensation claims, missed workdays,missing targets, compliance violations? Determine the cost of these events ifthey were to happen. If the company has experienced them before, are therevalues associated with them? Then, the HR professional can draw on his expertiseto help reduce the number of incidents. By reducing the frequency, the HRprofessional is saving the firm from the losses from each event.
The second way to reduce risk is by reducing the magnitude of loss incurredwhen an event happens. For example, if a missed workday by a key employee stopsan entire process, an HR professional seeing the opportunity could facilitatecross training of others to cover that position and reduce the adverse impact ofa missed day. What is it worth to the company, in this example, to keep theprocess running? By reducing the frequency and consequences of negative events,the HR professional creates value for the company.
Increasing talent liquidity. Talent liquidity draws from the finance conceptof liquid assets -- those assets that are easily converted to cash and utilizedin whatever way is necessary. In the context of talent, the ‘assets’ ofhuman resources, it means having the bench strength to place people in new orevolving positions and having the right people in place at all times.
From the HR perspective, these take the form of development and staffing.Develop people to move into management and leadership roles when they areneeded. How important is it to have leaders that work together and alignfunctions to work toward a common company vision? What are turnover rates inthe different areas of your company? Is the company able to successfully staffthose positions as they turn over? The staffing process can be made moreefficient by using online resources for recruiting, for example. It can be mademore effective by applying appropriate screening criteria to applicants, lettingonly the "most-likely" on to meet with hiring managers. It can be morestrategic by adhering to a company-adopted competency model to ensure thateveryone hired ‘fits’ into the company and supports the mission and visionthe owner may have.
The HR professional and their team have unique expertise in managing theseprocesses to be efficient, effective, and strategic.
Before highlighting each of these ways, it is also helpful to remember toassess your actions in terms of whether your intent is to become, or help othersin your organization become, more efficient, more effective or more strategic.Your goals should balance efficiency, effectiveness, and strategic actions.
Thinking through each of the ways human resources creates value anddetermining where the position you are requesting can impact this framework canresult in a simple logic for justifying the position. A good understanding ofwhere the challenges lie in a company provides the savvy HR professional theopportunities to create value in all of these ways. Good luck.
SOURCE: Brian R. Ruona, Consultant, Organizational Solutions Group, PersonnelDecisions International, Inc., Atlanta, Georgia, and David Armstrong, SeniorConsultant, Organizational Solutions Group, Personnel Decisions International,Inc., Boston, Massachusetts, Jan. 17, 2002.
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The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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