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How can HR avoid being the weakest link?
The Human Resources (HR) department has long proven its importance in the workplace, so it's perhaps surprising to hear that many quarters fail to recognise how instrumental it can be to the success of a business.
Contrary to this, HR departments and staff carry out a number of functions that are crucial to any workplace. What can be done then, to ensure HR maintains its importance?
Opinions of HR in the workplace
HR can be defined as the company department that focuses on all activities relating to employees. This can be anything from the hiring and training of staff, to ensuring employees know what is expected of their workplace behaviour. In many cases, complaints also go through the HR department, who can deal with any disciplinary concerns.
You can see the importance here. A line manager can be involved in much of the above but, especially on the complaints issue, might not be the most impartial of people. This is where HR comes in.
However, given the importance of the role, there is evidence that the work carried out by HR is not always universally popular.
Earlier this year, CIPD published its HR Outlook: Leaders' views of our profession report for winter 2015 - 2016.
As the professional body for HR and people development, CIPD is well placed to accurately gauge the opinions of HR given its position that includes 140,000 worldwide members.
The survey, according to Dr Jill Miller, Research Adviser, is "written for HR and other business leaders and is designed to provide insight and expert commentary about HR's current and future contribution to business performance."
It's fair to say there are some out there who do not have total faith in the function of HR.
What is apparent is the differing priorities of HR leaders and non-HR leaders.
The latter of the two, which includes directors and senior managers, can be defined as people who are senior decision makers but outside of the HR function.
The main priority for these two groups is cost management, but where non-HR leaders then prioritise an increase in customer focus, HR leaders think talent management is key.
An interesting line comes on page 13 of the report when the question of HR's strategic contribution is raised. When asked to what extent you believe your current HR or people strategy will help your organisation achieve its key priorities in three years' time:
- 72% of HR leaders said key priorities would be achieved.
- Only 26% of non-HR leaders thought key priorities would be achieved.
- 30% of non-HR leaders believe key priorities will not be met in that time.
This inevitably raises questions about the faith in HR structures and strategy implementation. It could mean a lack of faith in strategy, the ability of a HR team to implement it, or could even point to a lack of communication which means non-HR leaders are unclear about HR contributions.
Further investigation is clearly needed but it's fair to say there are some out there who do not have total faith in the function of HR.
This stretches to satisfaction of internal stakeholders about an organisation's current HR systems such as for payroll, talent management and recruitment.
40% of HR leaders declared that internal stakeholders are satisfied with these systems. However, non-HR leaders say that dissatisfaction reigns, with 45% of internal stakeholders of this opinion.
Overall, the survey shows that there are areas where HR's strategy aligns with the opinions of non-HR leaders. However, there are "areas of disconnect," and there's a feeling that there are areas that HR can act upon.
There is a disparity in opinion between HR and non-HR leaders when performance management is surveyed. In general, the former believe that the organisation is managing all aspects of performance well.
However, while non-HR leaders broadly agree on the points of assessing individual performance, improving individual performance and assessing team performance, fewer non-HR leaders believe the organisation is rewarding performance appropriately or dealing with underperformance.
The suggestion is that some HR practices aren't as effective as HR leaders believe them to be. Annual and six-monthly appraisals both fall into this bracket.
Overall, the survey shows that there are occurrences where HR's strategy aligns with the opinions of non-HR leaders. However, there are "areas of disconnect," and there's a feeling that there are aspects that HR can act upon.
Challenges facing HR professionals
There are a number of challenges facing HR professionals, in terms of both the knock-on effect of the situation in certain industries as well as the perception of HR in some quarters.
With the skills shortage still prevalent in certain industries - construction in particular is suffering from this - there is a school of thought that suggests HR professionals and departments don't fit into the picture, or at least face uncertainties.
However, Ian Dowd, Marketing Director of NGA Human Resources (HR), believes that "HR professionals must not be part of the skills gap problem, but rather of its solution."
That is to say they are even more important in the hiring process, ensuring companies spend as little as possible by employing the right individual for vacancies.
This show of confidence does not make up for the general feeling of some. Indeed, NGA HR's own research shows that 46% of surveyed business leaders do not believe a strategic contribution is made by HR.
Ian Dowd cites a number of reasons for this, the main one being that some business leaders simply don't 'get' HR and fail to see just how important the department's strategic contribution is to an organisation.
He said: "It may be that HR is making a strategic contribution and the CEO isn't aware. In this case there is a problem and an opportunity to help realign the expectations and understanding of said CEOs."
How is the role of HR evolving?
There is no set answer to this question. Some say there has been evolution over the past 10 years, whereas others believe this hasn't accelerated enough to compensate for the changing nature of the workforce.
In October last year, CIPD released its From best to good practice HR: Developing principles for the profession document, which looks at the changing nature of HR as well as what it can do not only to retain its importance in the workplace, but also its relevance.
Laura Harrison, People & Strategy Director at CIPD, believes relying on HR simply to undertake traditional roles is 'unsuitable'.
She said: "Traditional standards for HR focused on specific best practices - but the growing complexity rendered these unsuitable for a diverse range of organisational and cultural contexts."
The report highlights the changing nature of HR, with importance moving away from just the human element of function and now looking at its position to the organisation's structure and how the department can contribute to success in a business.
As time has moved on, there is a feeling that HR has expanded "beyond the familiar areas of setting out policies and supporting line managers and into the areas of organisational knowledge, innovation and brand."
It may be that HR is making a strategic contribution and the CEO isn't aware. In this case there is a problem and an opportunity to help realign the expectations and understanding of said CEOs.
Within the aforementioned CIPD document, it goes on to talk about the considerable ways in which the role of a HR professional has changed over the years. An importance on people management has been reaffirmed but their influence has stretched to other areas of business, including both informing and supporting business strategy with its actions.
This evolution of job function has been a prominent debate for a couple of decades according to CIPD's research, during which time the "debate on professionalism of HR moved into space of strategic contribution to different business functions, as opposed to the more operational personnel management function it used to and still performs."
The opinion of evolution is supported by Janice Haddon, founder and Managing Director at Morgan Redwood. Her view is that HR is fundamental in any organisation.
In terms of how duties have changed over the past 10-20 years, she points to a change from the traditional personnel role of HR which supports contracts, deals with recruitment, disciplinary procedures and any other tasks related to employees. She believes it has developed even more, as organisations are acutely aware that they need to look after their staff.
"It is the employees that make a business successful when they are motivated to work hard and take accountability for their performance. The benefits of employee engagement, developing a strong culture and paying attention to staff wellbeing are key elements to business success and HR play a key role in driving this forward."
Has the role evolved enough?
Not everybody we spoke to is satisfied that the evolution of the HR role has kept pace with time - something that could contribute to people perhaps not knowing the full value of this department and function.
It is up to HR to change these perceptions and the best way to do this is by demonstrating a return on investment.
One such opinion comes from Paul Harris who is co-founder of BrightHR - a HR software and employment law business.
He believes that HR "is dated and hasn't really evolved" in the face of a vastly changing world and working environment.
"I don't think it's changed enough personally. The world has changed immeasurably and is continuing to do so and that rate is accelerating and yet HR, and business in general, is typically very slow to adapt to change. I think what we have at the moment isn't really fit for purpose in the way a lot of HR departments are run."
What needs to be done, then, to ensure that the importance of HR is maintained and highlighted to those who don't see its relevance?
Maintaining the importance of HR
Despite the evidence that HR isn't as highly thought of as could be expected, it is crucial to any company and should not be disregarded. Clearly though, there are areas that could be improved, either in terms of perception or physical changes, that would help this process.
As the heading suggests, this is less to do with changes to the physical functions of HR, and more to do with how the department and workings are perceived. Many senior executives within organisations don't necessarily see the correlation of increased revenue and successful HR.
It is a point made by Paul Harris at BrightHR who said: "As a business owner, you're interested in growing a business and costs. HR is seen as a cost to the business. It's easier to grasp for an MD that winning a new contract will improve the business."
It perfectly encapsulates some of the challenges facing HR. How can the people working in these areas hammer home their importance given they're not the ones to bring the tangible benefits of financial gains?
While it is true that new contracts bring financial benefits, it shouldn't detract from the importance of having a content workforce. A happy workforce will undoubtedly work better, give greater productivity which will lead to higher profits. Emphasising this point is key.
Indeed, BrightHR's research shows this to be the case, given their report shows a sharp rise in creativity, productivity, and motivation in those who have fun in work. Stress levels decrease too, all of which should lead to greater profits.
It is up to HR to change these perceptions and the best way to do this is by demonstrating a return on investment.
It is a point made by Vanessa Byrnes, Global Director of Client Services at Alexander Mann Solutions, who outlined the differing ways a return on investment could be displayed.
She said: "In order to really cement its position, it's important that HR teams demonstrate the return on investment they deliver - from reduction in cost per hire and the cost saving delivered as a result of increased retention levels, through to the financial impact of increased productivity of the workforce and business benefit of a positive employer brand."
"The key to breaking up this rigid thinking is having leaders with a broad range of experience of different areas of the business, potentially even of different companies and different industries. Drawing on that diversified experience gives a sense of whether an issue is structural or about behaviour, communication and a spirit of cooperation."
Broadly speaking, organisations that have HR professionals or departments leave these people alone to do their jobs. This is in part due to, according to CIPD, 'unique specialist knowledge' that non-professionals do not possess in order to check the quality of guidance given to the workforce or employers. These people therefore rely on such advice.
It requires a degree of trust to let HR carry out services and make decisions.
This is all well and good, and on one hand, giving this responsibility to get on with the job is great and shows a required level of trust. On the other hand though, this focus on one arm of the business and no other can be detrimental.
It leaves departments in a company unsure and distrustful of others, as Ian Dowd, Marketing Director at NGA HR, explains: "Over time, departments can become introspective and narrowly focused on their own priorities. "What does 'x' department do anyway?" is a common question across many organisations.
"This is fuelled by the fact that the more senior you become in an organisation, the more organisational structure becomes important."
This cycle needs to be broken in order to strengthen the importance of a HR department. Janice Haddon, founder of Morgan Redwood, advocates HR collaborating with business leaders to "demonstrate how policies and initiatives can underpin the business strategy.
"The right culture and people strategy can be what turns and organisation from average to the best in class," she said.
Ian Dowd at NGA HR suggests placing people from different departments into HR and vice versa. This way, there is a break in the 'rigid thinking' and a greater understanding of each other's tasks.
The key to breaking up this rigid thinking is having leaders with a broad range of experience of different areas of the business, potentially even of different companies and different industries.
This approach will not only result in giving the HR department a better understanding of the wider business context, but should also ensure the heads of companies will have greater knowledge about HR.
In order to really cement its position, it's important that HR teams demonstrate the return on investment they deliver.
Using data and analytics
This is something that, if businesses can be convinced to use, can unlock a great deal of potential in employees - a key role of HR according to BrightHR's Paul Harris is "to discover the brilliance in everyone and set it free."
It is certainly something that could benefit employers, not only in monitoring employee performance to see how this can be improved, but also to help with knowing where to take the business strategy.
Unfortunately, as Vanessa Byrnes told us: "There's been a common misconception among some business leaders that the function (of HR) is simply process driven and investment in technology and strategic workforce planning are 'nice to haves'."
Again, this highlights the need to change perceptions, but using data and empirical evidence is a sure-fire way for HR departments to maintain their importance within businesses.
Ian Dowd at NGA HR says HR departments have been guilty of previously using data as a backwards-looking tool to "justify their existence and their metaphorical, sometimes literal, seat at the table."
Instead, he argues HR departments should provide CEOs with accurate data in order to "support theories, suggestions and hypotheses that can be turned into informed decisions to take the business forward."
This can be information about entering new markets, helping employees understand strategy better, the length of time to hire new starters, or average length of service with a company. Supported by data, this can help employers to make important business decisions.
Not only that, it underpins the importance of the role played by HR departments and professionals.
There's been a common misconception among some business leaders that the function (of HR) is simply process driven and investment in technology and strategic workforce planning are 'nice to haves'.
With all the evidence, it is difficult to imagine how HR importance can be disregarded. There will be SMEs out there who don't have these departments, but the work they do to hire staff, maintain their happiness, implementing business decisions and reports are all examples of HR functions.
It is clear though that fresh approaches can be provided to re-energise HR and confirm its necessity within an organisation.
A common theme is the one underlined by NGA HR's Ian Dowd who said: "HR is now more than ever a critical business function." It shows how much of a key part HR plays in any company. With a few tweaks, that role can be even more prominent, as well as being fully appreciated by employers.
Written by John Train