Driving a Business – Identifying the HR Contribution

These days every one – be it an HR Head or a CEO talks about the value and contribution that the HR Function brings to the business. It’s not some thing that has come all of a sudden but well – that’s what the business environment tells you. Here are some key excerpts copied from some leading News Papers / Sites:

“the company decided to set shop in Pune as that would give it access to talent from premier educational institutions. Of the 50 people recruited so far, 90 per cent are from Universities from in and around Pune and they are very impressive, he said. Some of its employees worldwide, especially people of Indian origin, are also opting to work in India, he added. The company plans to add 250 professionals by 2005″ – CEO of a Leading IT Company

“Flexible timings at work and work-from-home policies are helping employees in finding a balance between stressful work lives and equally demanding home lives. While IT companies have taken a lead in moving towards flexible timings for employees, non-IT companies too are gradually realizing the benefits of flexi-timings.”

“……………believes in employing and retaining the best talent. we constantly strive to provide them with the best working environment. Our employees get the opportunity to work on the latest cutting-edge technologies. we recognize top performers and create a fast growth path for them. we believe in paying our employees well, since they create high value for ………… in their daily jobs.” COO of a Leading Telecom company

Seems that all of us are realizing the role people and talent plays in a business. Its simple – you need people to drive your business and as an employer you have to identify and deploy processes, mechanisms, programs to keep them engaged and committed to your organization. In the present day scenario long term commitment is too much to ask for however it makes sense that an employee feels like staying with your organization and delivers his best as long as he is there. Once he decides to move on to some other organization it’s important that he carries good thoughts about your organization, thus supporting the building of a employer brand for your organization.

There could be tones of ways to do this and we feel – your HR Head, CEO or some external consultants would already have created lots of processes, manuals etc for the same. May be the processes and manuals are effectively deployed as well. Have you tried to see if they are delivering the end results? Have you tried to find out if you’re HR Function and investment on people is going in the right direction? Is your HR really driving your business? There is a good chance that you have thought all this and equally good chance that you have never really been bothered.

In case you are not bothered today – may be once you are suitably big and are facing stiff competition or bottom-line & profitability issues you will think all that. Lets see what’s happening in Indian economy today – IT Companies are facing a huge pressure due to the rising Indian Rupee vis a vis the US Dollar. These movements are effectively hitting the bottom line of the company. What’s the key ingredient for a services company – People? People related expenses account some where between 40- 60 % in IT sector. What the company faces a crunch the first target for cost reduction is going to be people. This may imply downsizing, lower increments etc.

It always makes sense to start looking at the contribution of every Dollar you spend on people. We are not advocating a cost reduction – but reinforcing that every organization need to bring in place a mechanism to identify the impact of HR / HR Costs on business top line / bottom-line. This would also support decision making with regards to the possible HR interventions.

Taking the leap: You don’t need to do some big interventions and deploy some fancy processes for these assessments. All this can be started with putting in place some simple metrics and building upon them as per the needs of an organization. An Effectively deployed HR Metrics can keep you flagged off and updated of people issues, their contribution, HR ROI etc.

The purpose of deploying HR Metrics and Analytics is to support strategic decision making on Human Resource Interventions towards contributing to the business.

As businesses evolve HR professionals and business leaders face a more strategic set of requirements. We need a clearer picture of how human capital management initiatives add value to the organization. Human capital analytics helps identify essential insights that allow organizations to proactively apply strategic human capital initiatives to help meet corporate objectives, such as:

* Identifying workforce trends and forecasting changes before they happen;

* Quantifying bottom line impact of HR processes;

* Discovering potential problems and unusual patterns before they materialize and adversely impact the organization;

* Modeling voluntary turnover and performance abilities to proactively identify key talent for retention and/or leadership development;

* Anticipating, forecasting and predicting changes in human capital resources – within the organization and in the changing economic environment; and

* Enabling HR to clearly demonstrate its contribution to achieving corporate goals.

HR Analytics – The Way Forward

Let’s see if we have thought of the following metrics.

-HR KPI’s – Financial & Non Financial Indicators
-Head Count & Attrition Indicators
-Process Saliency Indicators – Implementation & Tracking
-HR Efficacy Indicators

There could be more, these are just thoughts. Every business and every organization can have its own set of measures to assess HR ROI. Start Thinking.