Companies need to create a ‘high performing’ Human Resources function in order to win the “war for talent”, drive efficiencies and manage cost across all functions. ‘High Performance’ Human Resources:
- Is aligned with and understands the depth, breadth and dynamic nature of the core business.
- Uses an operating model that delivers efficient HR services as well as differentiated and tailored solutions for effective talent management.
- Operates like a business where service costs and benefits are quantified and reported in a relevant and timely manner.
- Offers business leaders deeper insights on ways in which business results can improve and broader corporate strategies can be executed.
Human Resources must serve the business and it must report financial results so that business leaders can forecast and manage cost, organize priorities and assess and execute opportunities for improvement.
Human Resources, like many other corporate functions, is traditionally targeted as an area to decrease costs. While some executives believe that some HR functions provide value, others strategically use Human Resources to acquire, develop and retain talent as a top corporate priority. Historically, Human Resources has been challenged to become a business partner that the CEO, CFO or Leadership Team can rely upon to drive business value. We believe that the gap between becoming or not becoming a business partner may be attributed to the following:
- HR executives tend to focus on HR operational tasks and/or gatekeeper activities.
- HR executives tend to discuss programs and organizational features rather than financial concepts, which are topics that are more familiar to the CFO and CEO.
- HR costs have been traditionally viewed as relatively fixed cost and hence, have not been reviewed as regularly as other costs.
Human Resources is used to dealing with programs and polices rather than finance and operations. However, leaders such as Jack Welch have raised the awareness on the “people” element driving corporate strategy and growth. In his book Winning, Jack states that the head of Human Resources is the second most important officer in the company, after the CEO.
If you agree that great companies are composed of great teams of high performers, then the person acquiring and developing people or “talent” is a key player in the organization.
Today, executives better understand the relationship between their “people” strategy and their corporate growth strategy. While “trendy” HR offerings proliferate, our consulting experience suggests that executives are challenged with assessing their current operational capabilities and evaluating future options.
We continue to see a two-pronged agenda directing a company Human Resources strategy:
- Executive leadership will demand Human Resources to plan, execute, and sustain a cogent and effective strategy around talent management. This encompasses the entire “employee life-cycle” to acquire, develop, promote and retain the competent, key top performers.
- Non-core processes will be outsourced. And, outsource providers will work hard to “up-sell” value-added services on top of the basic payroll and benefits administration services, which continue to experience significant pricing pressures.