In fact, it helps analyze how HR contributes to business outcomes. Empirical evidence demonstrates the existence of positive relationships between HRM practices, HRM outcomes, and organizational outcomes. For example, investing in better employees Generic Human Capital and training people on the job Unit-Specific Human Capital lead to better service performance and, in the end, to higher unit effectiveness, as shown in the following model.
Each factor circle represents change flow in that construct over consecutive quarters. Values in parentheses are those for the receipts versus flow-through dependent variable.
Based on Ployhart and colleagues, Your one-stop-shop for People Analytics! This value chain illustrates how HR adds value to organizational goals. Hiring more qualified people and training them increases service performance. As a result of this growth, the unit is more effective — and profitable. Interestingly, employee turnover influences this negatively. This is because essential knowledge and experience is lost when employees leave.
These findings justify the existence of HR policies like selection, performance management, and training. They add measurable value! A meta-analysis by Crook and colleagues took the effects of 66 studies and investigated the impact of human capital on firm performance.
This means that qualified and talented people make their departments perform better, which eventually causes the whole firm to perform better. So why is HR still struggling to show its added value? The most successful HR professionals in today's digital business environment have a T-shaped competency profile.
Take the free assessment now! The HR value chain solves this problem. It clearly depicts how HR activities lead to organizational goals. On the left of the chain, we find the HRM activities. These are measured using the so-called efficiency metrics. Examples include:. The need to develop those capabilities brings us back to the mandate for HR set forth at the beginning of this article. To be full-fledged strategic partners with senior management, however, HR executives should impel and guide serious discussion of how the company should be organized to carry out its strategy.
Creating the conditions for this discussion involves four steps. First, HR should be held responsible for defining an organizational architecture. Several well-established frameworks can be used in this process. What matters more is that an architecture be articulated explicitly.
Without such clarity, managers can become myopic about how the company runs—and thus about what drives strategy implementation and what stands in its way. They might think only of structure as the driving force behind actions and decisions, and neglect systems or skills. Or they might understand the company primarily in terms of its values and pay inadequate attention to the influence of systems on how work—that is, strategy execution—actually gets accomplished.
Senior management should ask HR to play the role of an architect called into an already-constructed building to draw up its plans. The architect makes measurements; calculates dimensions; notes windows, doors, and staircases; and examines the plumbing and heating infrastructures.
Next, HR must be accountable for conducting an organizational audit. Blueprints can illuminate the places in a house that require immediate improvement; organizational-architecture plans can be similarly useful. They are critical in helping managers identify which components of the company must change in order to facilitate strategy execution.
When the answer was no, HR was able to guide a discussion of how to obtain or develop what was missing. The third role for HR as a strategic partner is to identify methods for renovating the parts of the organizational architecture that need it.
In other words, HR managers should be assigned to take the lead in proposing, creating, and debating best practices in culture change programs, for example, or in appraisal and reward systems. Fourth and finally, HR must take stock of its own work and set clear priorities.
At any given moment, the HR staff might have a dozen initiatives in its sights, such as pay-for-performance, global team-work, and action-learning development experiences. But to be truly tied to business outcomes, HR needs to join forces with operating managers to systematically assess the impact and importance of each one of these initiatives.
Which ones are really aligned with strategy implementation? Which ones should receive attention immediately, and which can wait? Which ones, in short, are truly linked to business results? Because becoming a strategic partner means an entirely new role for HR, it may have to acquire new skills and capabilities. Its staff may need more education in order to perform the kind of in-depth analysis an organizational audit involves, for example.
Ultimately, such new knowledge will allow HR to add value to the executive team with confidence. In time, the concept of HR as a strategic partner will make business sense. For decades, HR professionals have been tagged as administrators. In their new role as administrative experts, however, they will need to shed their traditional image of rule-making policy police, while still making sure that all the required routine work in companies is done well. In order to move from their old role as administrators into their new role, HR staff will have to improve the efficiency of both their own function and the entire organization.
Within the HR function are dozens of processes that can be done better, faster, and cheaper. Finding and fixing those processes is part of the work of the new HR. Some companies have already embraced these tasks, and the results are impressive.
In all three cases, the quality of HR work improved and costs were lowered, generally by removing steps or leveraging technology. Many HR processes can be done better, faster, and cheaper. HR executives can also prove their value as administrative experts by rethinking how work is done throughout the organization.
For example, they can design and implement a system that allows departments to share administrative services. At Amoco, for instance, HR helped create a shared-service organization that encompassed 14 business units. HR can also create centers of expertise that gather, coordinate, and disseminate vital information about market trends, for instance, or organizational processes. Such groups can act as internal consultants, not only saving the company money but also improving its competitive situation.
Work today is more demanding than ever—employees are continually being asked to do more with less. And as companies withdraw the old employment contract, which was based on security and predictable promotions, and replace it with faint promises of trust, employees respond in kind. Their relationship with the organization becomes transactional.
They give their time but not much more. That kind of curtailed contribution is a recipe for organizational failure. Companies cannot thrive unless their employees are engaged fully. Engaged employees—that is, employees who believe they are valued—share ideas, work harder than the necessary minimum, and relate better to customers, to name just three benefits.
In their new role, HR professionals must be held accountable for ensuring that employees are engaged—that they feel committed to the organization and contribute fully. In the past, HR sought that commitment by attending to the social needs of employees—picnics, parties, United Way campaigns, and so on.
HR must now take responsibility for orienting and training line management about the importance of high employee morale and how to achieve it.
Orienting and training line management about how to achieve high employee morale can be accomplished using several tools, such as workshops, written reports, and employee surveys. Such tools can help managers understand the sources of low morale within the organization—not just specifically, but conceptually. But more than that, HR should be responsible for educating the line about the causes of low employee morale. For instance, it is generally agreed by organizational behavior experts that employee morale decreases when people believe the demands put upon them exceed the resources available to meet those demands.
Morale also drops when goals are unclear, priorities are unfocused, or performance measurement is ambiguous. HR serves an important role in holding a mirror in front of senior executives.
HR can play a critical role in recommending ways to ameliorate morale problems. Recommendations can be as simple as urging the hiring of additional support staff or as complex as suggesting that reengineering be considered for certain tasks. The new role for HR might also involve suggesting that more teams be used on some projects or that employees be given more control over their own work schedules.
It may mean suggesting that line executives pay attention to the possibility that some employees are being asked to do boring or repetitive work. HR at Baxter Healthcare, for example, identified boring work as a problem and then helped to solve it by redesigning work processes to connect employees more directly with customers. Along with educating operating managers about morale, HR staff must also be an advocate for employees—they must represent the employees to management and be their voice in management discussions.
Such advocacy cannot be invisible. Employees must know that HR is their voice before they will communicate their opinions to HR managers. To adapt a phrase, Change happens. And the pace of change today, because of globalization, technological innovation, and information access, is both dizzying and dazzling. That said, the primary difference between winners and losers in business will be the ability to respond to the pace of change.
Winners will be able to adapt, learn, and act quickly. Losers will spend time trying to control and master change. Human resource managers are also expected to embrace and promote diversity among staff, orient team members to their new work environment, and ensure healthy interactions between employees and organizational leadership.
But what does a human resource manager do exactly when it comes to hiring and training? Some of the most common tasks for this type of HR manager may include:. The bottom line —An HR professional is often the face of the company for potential new employees. Recruitment, hiring, and training policies are supervised and improved upon with the help of HR managers.
A human resource department is also in charge of keeping employees safe, healthy, and satisfied. With proper HR management, workplace policies keep up with necessary protective measures and implementation and provide solutions to issues between team members, avoiding risk for the company and its employees.
Daily duties for an HR manager who specializes in employee relations may include:. The bottom line — HR managers are in charge of many duties, but employee well-being should always remain a top priority.
The main goal of a successful, strategic HRM should be to ensure the staff feels safe, respected, and heard at all times.
The HR department works with organizational leadership to help manage risk and compliance. As an HR manager, you may be put in charge of the following risk management responsibilities:. The bottom line — Human resource management is intended to protect the company and its employees. Proper management of compensation, time off, and insurance is what keeps employee satisfaction high. Responsibilities within this department may include:. This is perhaps one of the most vital parts of HR management, since many candidates choose their place of employment based on salary and benefits.
The bottom line — Human resource managers are often put in charge of employee compensation and benefits. Proper leadership within the HR department will involve negotiating insurance plans, making sure payments go out on time, and improving and developing employee benefits packages.
HR management is not what it used to be. Technology, workplace policies, and a changing market are some of the biggest factors influencing the growth and evolution of human resources. Some examples of these new and improved practices include:.
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