A Year-End Challenge

December 14, 2008
The new year is an opportune time to re-examine the focus of your HR efforts. While time may be tight, I challenge you to take a day off from your busy routine and identify a few actions that could increase your strategic business impact.

If your business is experiencing a downturn, now is the time to shift your HR approach so that it more closely fits the new realities. Many organizations have to shift away from dealing with organizational growth issues to focus on activities that will have a more immediate business impact, such as increasing workforce productivity, innovation, workforce flexibility, workforce planning and metrics. If your HR organization does not now alter its approach, you are sending a message to senior corporate leaders that your function truly is NOT strategic.

Here are some ideas to get you started:
Focus on productivity: Calling your department "human resources" is better than calling it "personnel," but neither name captures what we should be doing in our organizations. I propose that you call your function "workforce productivity," or at least think of it that way. The name clearly expresses what should be our goal as HR professionals: to increase the productivity of the workforce by providing advice and programs that can directly increase the effectiveness of employees and managers. Adopting an emphasis on workforce productivity requires that you develop metrics to capture the productivity of your workforce, such as the ratio of dollars spent on people-related costs compared to the dollar value of the output or revenue produced by employees. The next step is to identify barriers to increased productivity and develop a rapid plan to remove them. Finally, your department needs to provide managers with the tools that have been proved to increase productivity.

Increase employee innovation: Even though business revenues may be down, competition in the marketplace has remained constant or increased. Fierce competition requires firms to accelerate innovation in product and service areas despite having fewer resources. This demand provides a great opportunity for HR to take the lead in increasing innovation. Action steps should include developing an HR group that can work with mission-critical business teams to identify current barriers to innovation. HR staffers can then act as consultants by providing tools, training and advice on increasing the rate of innovation.

Increase workforce flexibility: In this economy, factors such as access to credit, stock price and consumer demand rise and fall like children playing on a seesaw. This pattern requires firms to be more flexible in all areas, including labor consumption. Action steps might include increasing your firm’s ability to rapidly redeploy key employees to areas where they can have a greater impact. HR can also help managers make their labor costs more flexible by providing them with a larger percentage of contingent labor that can be more easily released. Development efforts also need to have more impact as the focus shifts from buying talent (recruiting) to developing talent (increasing the capabilities of the employees that you already have).

Plan for the recovery: It’s admirable to strategically contribute to efforts that contain cost and maximize workforce productivity. But to weather the storm in a truly strategic fashion, HR must increase its workforce planning capability so the organization can explode out of the starting blocks when the economy swings back. Action steps include building your image as a desirable employer, preparing managers for changing workforce demographics and focusing on retaining key performers.

Associate metrics with dollars: During economic downturns, senior executives require all managers to focus on cutting costs and increasing revenue. To better comply, the HR function must learn how to convert traditional metrics such as turnover rate or time-to-fill into dollar impact. For example, instead of simply reporting that your turnover rate is 6 percent, you would also report that the cost of that turnover was $12.2 million in lost productivity or revenue. With this new perspective, HR can show senior managers the hidden costs of cutting training, as well as the potential revenue effects that great leadership development and great hiring can have.

The key here is to be proactive. Instead of waiting for the inevitable budget cuts, act now to implement a handful of strategic actions that will have a measurable impact on the firm’s productivity, rate of innovation and competitiveness in the marketplace.

Workforce Management, December 15, 2008, p. 42 -- Subscribe Now!