Overview
HR’s value extends far beyond administration. Modern HR drives strategy, builds culture, and supports people across the employee lifecycle. From recruitment and engagement to compliance, diversity, and innovation, HR ensures organisations thrive. This article explores how HR adds measurable value, transforming from transactional support into a true strategic partner.
Knowing how HR adds value is essential
You may be an HR Professional leader or a manager relying on HR to help move your business forward. Whichever role you play. You have likely been at some point a party to a discussion about whether HR adds value. When discussing the value HR can bring, there is often a range of views. HR can face challenges in being perceived as delivering value and earning credibility. This can be because the HR Role is frequently misunderstood.
For years, of course, HR was the Personnel Office. This was where they used transactional processes to underpin the business’s employment obligations, such as payroll, recruitment and exits. With sophisticated employment laws and guidance constantly emerging, developing employee policies and practices was intrinsic to the role.
Ulrich
David Ulrich’s theory of the ‘three-box’ in the 1990s changed HR forever, and gone were the Personnel Departments. In came Human Resources, and their role in developing strategy was established; in theory, if not in practice. The name change held great promise of a more involved and strategic HR Department.
However, old habits die hard, and although HR had changed its name, many leaders and business owners paid lip service to HR’s new role, while secretly valuing the transactional role as the primary function of HR. With the change came the big question about whether HR adds value to the organisation.
Global economic crisis
One of the most significant catalysts to shape the perception of HR has been the recent years of the global economic crisis. Redundancies, reorganisations and mergers have meant that the role of HR has, in many instances, been focused on supporting and protecting an organisation through organisational change.
But with a faint glimmer of light at the end of the proverbial financial black tunnel, how will HR be perceived in an improved economic climate? Because businesses have embraced variations of the shared services agenda as a way to cut costs during the black times, will this be enough to finally remove the “transactional” label as the priority of HR for good?
Well, I believe yes, it is. Now, more than ever, HR has a real opportunity to be on the top table and bring real value, albeit in a slightly different way to that which it has secured the seat in the past, if at all. If HR is going to seize the opportunity and make sure HR adds value, it needs to grasp and be good at the following:
Knowing how to deliver all elements of an HR service
They are great at all levels of the HR offer. They understand how to develop people strategies, as well as pay people on time. The policies they develop reflect the desired outcomes and culture as well as mirror the values of the company.
Understanding the organisation
They understand the dynamics of their organisation; how people relate to each other, and the dominant dynamic or culture which is in place. If their organisation is a caring, sharing one, for example, they know what the big no-nos are, which might shatter the brand it has consciously or unconsciously developed.
Understanding the business goals and objectives inside out
They know how their CEO and the Board tick and they are committed to helping the business become a success because they share the vision and values of the organisation. They can link their metrics to the overall business objectives so that the difference they make is clear.
Talking the company’s language
They ensure that the products they develop and the frameworks they establish include accurate information and are presented in a format that everyone easily understands. Most importantly, they know how to get them to people in the right way so they absorb them.
Understanding individuals and teams
If an HR professional does not understand the basic psychological makeup of individuals and teams then they will struggle. Why? HR will struggle because it is no longer tenable. If you want to be ahead of the game, you must understand people. It is no longer tenable to introduce one-size-fits-all processes and policies to manage, engage and enthuse people. You need to understand the profile of your teams and individuals. This is so you can better understand how to communicate and engage them. Great HR professionals know how people tick. They understand how to motivate people. They get the dynamic of why some people will never be motivated unless you pivot them in a certain way.
Caring about people
They know that people are the organisation’s greatest resource, and so they create opportunities to engage, motivate and inspire them.
Delivering Services Across The Employee Lifecycle
HR experts add a myriad of value throughout the employee lifecycle, and what follows is a comprehensive, but not exhaustive, list.
1. Talent Acquisition and Retention Strategies
To add significant value, HR must excel in recruiting the right talent and crafting strategies that keep top performers on board. This ensures the company’s human capital aligns with its strategic goals. For instance, Google’s approach to hiring emphasises the candidate’s ability to learn and solve problems, which has been pivotal in their success.
2. Elevating Training and Development
HR can bridge skill gaps by organising targeted training programs. This boosts workforce capabilities, leading to heightened productivity and fostering innovation. A LinkedIn report highlighted that companies investing in employee development see 24% higher profit margins.
3. Refining Performance Management Systems
HR enhances organisational value by creating robust performance management systems. These systems clarify employee contributions and their alignment with company objectives. Adobe’s “Check-In” model exemplifies a shift towards continuous feedback, which has improved employee satisfaction.
4. Boosting Employee Engagement
HR initiatives that drive employee engagement correlate with superior job performance, reduced turnover, and heightened morale. Gallup research shows that highly engaged teams show 21% greater profitability.
5. Succession Planning for Business Continuity
Through strategic succession planning, HR ensures the seamless transition of leadership roles, protecting the company from the unexpected departure of key figures. Companies like IBM have long-standing succession planning processes that support smooth leadership transitions.
6. Cultivating a Positive Workplace Culture
HR plays a crucial role in fostering a workplace culture that attracts and retains talent, promotes collaboration, and reflects the company’s core values and objectives. Netflix’s culture of freedom and responsibility is a testament to a strong, positive workplace culture.
7. Ensuring Compliance and Risk Management
HR professionals safeguard the company against legal issues and financial penalties by ensuring compliance with labour laws and regulations. The Volkswagen emissions scandal serves as a stark reminder of the costs of non-compliance.
8. Strategic Workforce Planning
HR adds strategic value by aligning the workforce with the company’s long-term goals, ensuring readiness for future challenges. This strategic alignment is evident in how Amazon anticipates and fills workforce needs in its fulfilment centres.
9. Competitive Benefits and Compensation
Designing attractive compensation and benefits packages helps HR attract and retain talent, while ensuring pay structures are fair and motivate desired behaviours. For example, Salesforce’s commitment to equal pay has been a key factor in its high retention rates.
10. Leading Diversity and Inclusion
HR’s leadership in diversity and inclusion initiatives fosters a dynamic, innovative workplace and expands the company’s market and talent pool. McKinsey’s research indicates that diverse companies are 35% more likely to outperform their peers.
11. Efficient Conflict Resolution
HR’s mediation services resolve workplace conflicts effectively, maintaining harmony and preventing escalation. The use of professional mediators in organisations like ACAS has proven effective in resolving disputes without litigation.
12. Developing Clear Company Policies
Clear company policies from HR set expectations and procedures, contributing to order and fairness in the workplace. Google’s clear policies on data privacy set industry standards for transparency and user control.
13. Promoting Health and Safety
HR’s commitment to a safe and healthy work environment is crucial for employee wellbeing, reducing absenteeism, and boosting productivity. The OSHA guidelines serve as a benchmark for HR policies in various industries.
14. Implementing Employee Assistance Programs
Confidential support through EAPs can significantly improve employee wellbeing and job performance. The American Psychological Association highlights the effectiveness of EAPs as a key resource for employee support.
15. Leveraging HR Technology
Utilising technology, HR can improve analytics and decision-making processes, enhancing recruitment, onboarding, and employee management. The use of AI in talent acquisition is revolutionising how companies like Unilever approach recruitment.
16. Driving Organisational Development
HR leads change management initiatives, helping companies like Apple adapt to market shifts and restructure operations efficiently.
17. Advancing Corporate Social Responsibility
HR-driven CSR initiatives can enhance the company’s public image and employee loyalty. Patagonia’s commitment to environmental causes has significantly boosted its brand loyalty and employee pride.
18. Managing Global Talent
For global businesses, HR manages the complexities of a diverse workforce, including cultural diversity and international labour laws. IBM’s global talent management strategy has been crucial in its international success.
19. Employee Recognition Programs
Recognition programs from HR reinforce behaviours that align with company goals, boosting morale and productivity. Google’s peer recognition programs have been instrumental in maintaining a motivated workforce.
20. Encouraging Work-Life Balance
Flexible work arrangements from HR lead to a more satisfied and productive workforce. The rise of remote work options has been a game-changer for companies like Twitter, promoting better work-life balance.
21. Facilitating Internal Communication
Effective communication within the organisation, facilitated by HR, ensures that employees are informed and engaged. The internal communication strategies at Southwest Airlines are renowned for keeping employees aligned with the company’s mission.
22. Providing Legal Expertise
HR’s expertise in employment law helps the company navigate complex legal challenges and avoid litigation. The legal challenges faced by Uber emphasise the importance of HR legal expertise.
23. Streamlining Cost Management
HR adds value by optimising the workforce and reducing labour costs without sacrificing productivity. Lean workforce strategies employed by companies like Toyota have established industry standards for efficiency.
24. Safeguarding Data Security and Privacy
HR is responsible for the confidentiality of employee data, preventing breaches in an age where information security is paramount. The GDPR has raised the bar for data security, impacting HR policies worldwide.
25. Promoting Sustainability Initiatives
HR’s role in sustainability encourages practices that support long-term organisational health. Interface’s mission towards sustainability has made it a leader in the industry, reflecting the value of HR in driving these initiatives.
