If you’re in a room full of Human Resource professionals long enough, you’ll start to hear phrases such as “critical competencies” and “workforce evolvement,” and maybe even “human capital optimization.” It’s an industry fraught with initials, abbreviations and jargon. And there’s good reason for these industry terms in any occupational field. Each of those phrases carries multiple layers of analysis and understanding, making it a kind of conversational shorthand for the more complex idea that it represents. It allows people to connect about advanced concepts in a quick, simplified way.
The problem is, that secret language really only works to your benefit when you’re in a room full of HR professionals. When it comes time to interact with your internal executive team, you’re talking to an audience that not only doesn’t speak your language, they are rarely focused on your departmental concerns. And in many cases, you don’t share their concerns, either. ROI and CRM and ERM are just not a part of your regular lingo, mostly because you’re not asked to track or report on these aspects of the energy and utility business.
But you know what? They should be a part of your language and your primary concern. And they should be a part of your entire team’s way of thinking, too.
HR is evolving from a transactional division into an industry thought leader. More than ever, HR directors expect their teams to contribute to more strategic discussions concerning growth, profit and risk.
You’ve got to understand your company’s budget and planning process, so that you’re having the right conversations at the right time.
Consider the fact that technology, energy and healthcare sectors find themselves engaged in a “War for Talent,” which has been looming for the past decade. Companies find that their plans for growth are being stunted by the lack of qualified workers. There aren’t enough science, technology, engineering and mathematics (STEM) candidates available to fill the holes that are opening up, and more than half of the baby boomers, most of whom are in management positions, are expected to retire over the next five years. All this is converging to make maintaining a workforce, let alone keeping up with a steady growth track, the most critical factor contributing to a company’s future viability.
Therefore, it’s no surprise that C- Suites are turning to HR for solutions. It’s a profound change that has been developing over the last decade — HR departments are shedding the old-school image of administrative support teams and shifting into modern, strategic HR consultants.
These changing HR departments are now the specialists recruiting the employees who could eventually become the next CEO, CFO or COO. But the reality of HR’s importance isn’t shared across leadership teams. In a recent WEI survey, 15 out of 17 HR managers indicated that despite increased responsibilities, they were still perceived by leadership as transactional team members instead of strategic partners.
That’s partly because there’s such a gap between the solutions that HR is traditionally asked to provide, and the tactical conversations happening at the executive level. At the same time, human resource divisions have been stretched so thin that their ability to come up with profitable, forward-looking solutions has been usurped by the daily management of recruitment, compliance and workforce objectives.
In order to meet the growing demand, there are a number of solutions that you, as an HR manager or director, can employ to increase your department’s value to executive leaders. These tactics can empower HR teams to grow into the next era of change.
For instance, there are solutions offered by vendors that can help with recruitment: automate your company’s application process, decrease the time to hire, and change the job descriptions to focus on skills and talents, instead of on education and experience.
But none of these solutions address bridging the gap between what HR can do and what your CEO needs from you.
Live events are a great resource. HR meetings and networking functions are notoriously full of collaborative colleagues who are ready and willing to share what’s working today. But the ability to create an action plan and actually implement those swirling ideas is often a challenge that many teams are unable to overcome once everyone returns to the office, and gets back to business as usual.
The following are detailed descriptions of three, important actions that can be taken right now to interact with executive leadership and to boost your value to the organization as a strategic partner.
1. Turn HR into a Profit Center: A common shortfall is failing to adequately communicate to the executive team how HR expenditures are positively contributing to the company’s bottom line. While directors track recruiting and compliance budgets to make sure they aren’t overspent, it’s often difficult to explain exactly how the activities performed by HR, many of which can be expensive, are directly related to results that the executive team cares about. Earning respect in the C-Suite requires a connection between expenditures and results.
In order to show HR’s return on investment (ROI), and to establish the real value of your team, there are some metrics you need to track. Every single position your team fills, and keeps filled, represents profitability to the company in one way or another, or there would not be a need for that position. Know what it costs on a daily basis when a position opens, and show how closing the gap faster benefits the company. Be able to compare past practices to current expenditures in order to demonstrate how certain line items speed up the hiring process, increase the quality of applicants or reduce employee turnover.
In a short period of time, you’ll be able to connect your team’s efforts to money that was saved or created. There is some debate about whether to refer to this process as “ROI” in the HR industry, and there’s even more discussion about which analytics to track. Knowing your company’s and your leadership team’s top goals is the most important factor in determining what works best for you.
ACTION ITEM: (time required – one hour) Google the phrase “workforce return on investment report.“ Read every search result on the first two pages. As you read, write down all of the metrics identified in those links and put a check mark next to each one you’re already tracking. Talk with one of your team members about creating a spreadsheet that can track the metrics you think would be of the most value to your executive team. After a defined period, about three months, review the metrics and observe the improvements needed and the successful accomplishments of your team.
2. Start Using C-Suite Language: It may seem trivial, but few HR leaders are steeped in the jargon used by the company’s strategic planners, finance executives and risk managers. These are the terms your C-Suite executives are hearing in high-level meetings, and, when used correctly, they can be a real attention-grabber that lets leadership know you’re paying attention. You can find many of the terms in online publications such as Forbes, Fortune and C-Suite Insight.
But using catchphrases isn’t enough. You’ve also got to understand your company’s budget and planning process, so that you’re having the right conversations at the right time. When you’ve got a true understanding of the company’s goals, understand how your leadership team measures progress, and can use their measurement terms in a proposal that relates back to one of those goals, you’ve got the equation for a strategic statement that will get recognition, respect and consideration.
If you don’t have what you need to prove that a proposed measure is beneficial from a profit standpoint, it may be because you need to concentrate instead on risk. Talking with your CEO in plain terms about what could happen is an executive-level risk analysis. Explaining how employee morale and productivity affects the number of sick days taken is one example. Taking the next step and showing how productivity or increased efficiency relates to corporate goals, or how a lack of it threatens those goals, will give you the ability to propose a solution that can both be understood in terms of dollars, and that aligns with company objectives.
ACTION ITEM: (time required – one hour) Obtain and review copies of your company’s last few years’ annual reports to stakeholders, including the financial reports they chose to include. These are the messages and financial reports that have gone out to your bosses’ bosses, so you know that they’re important. As you read, check the finance footnotes carefully since unpublicized challenges may often be mentioned there to explain elevated expenses or lower-than-expected profits. Take notes in a pro/con tally sheet format. Record the top success markers (pro) and challenges or risks (con) articulated by the company over the years. Keep the list near your phone or on top of your notepad for any executive conversations, and start framing all of your discussions within one or more of these categories.
3. Stop Proposing HR Solutions: A huge barrier HR managers and directors experience is having their ideas labeled as “HR initiatives,” a phrase that can breed internal resistance. These ideas are commonly pushed back to be implemented and followed only inside of HR instead of being implemented companywide, or they are not taken seriously at all. The problem is that HR divisions have been perceived as transactional units for so long, executives may associate HR initiatives as proposals that create squishy, feel-good results.
HR leaders can overcome this built-in resistance by meeting individually with executives about their biggest challenges, so that proposals are directly related to departmental challenges. That allows them to be labeled “customer service solutions,” “sales solutions” or “mechanical downtime resolutions.” It not only shifts the executive mindset, it shows that the HR department is contributing directly to the company’s biggest profitability concerns, instead of asking to fund an HR-labeled program.
In order to gain strategic credibility with leadership, be sure to propose solutions that incorporate the results of metrics you’ve been tracking (if you’ve done so). That will allow you to show how past actions have helped close profitability gaps, or how a lack of action has caused the challenge to grow. If you have only one instance, extrapolate what impact it could have if implemented companywide. If you don’t have enough history and need to make your case now, there are always studies, surveys and reports that can make your case for you. But phrasing is important. For example, say “when a similar customer service solution was used in the technology industry, companies generally saw a seven percent increase in profitability, because customer service employees called in sick half as often.” Always relate your proposal directly to the department that will benefit.
ACTION ITEM: (time required – 30 minutes) Ask for a 15- to 20-minute appointment with your company’s chief financial officer to discuss goal setting for the new year. Let the CFO know that you’re taking a proactive approach to HR solutions and would like to better understand other departmental goals. Ask what the top goals are for the coming year in his or her department. Ask what challenges are anticipated that could keep the company from accomplishing those goals. Ask what benchmarks are the most important measurements of success for your CFO this year. Take detailed notes and afterward, spend 10 minutes writing down your impressions. Repeat the process with every executive who will give you the opportunity, and note how each executive’s goals align with the pro/con worksheet you created.
Once you’ve started tracking new analytics and have a better understanding of what matters most to your executive team, your next step will be educating your team about the company’s focus — and to keep them thinking of the solutions you proposed that are aligned with those goals. As a team, you’ll be well on your way to increasing your value to the organization and you’ll personally be solidifying your place as a strategic partner to the executive team.