Historically, HR hasn’t fully had a seat at the executive leadership table. They haven’t been deemed as vital as, say, Finance, when it comes to strategizing ways to increase profitability. HR’s focus is on people, not profits, right? They are the “feel good” section of the company who host “mandatory fun” events like corporate retreats and organize office perk programs. All those things can sound a lot like frivolous ways to distract employees from getting their work done, as far as the Finance department is concerned.
All those “frivolities” are really HR’s superpower, though. Personnel typically make up about 70% of average corporate budgets, meaning employees are the biggest investment a company makes on an ongoing basis. For good reason. The work done by employees at all levels has an immense impact on the success of the company. If products aren’t shipped on time, if customer service interactions are largely negative, or if overall quality falls because no one is engaged, the bottom line is affected in all the wrong ways. HR is the department best poised to make an impact on the employees and protect the bottom line from workplace sabotage.
Executive Leadership Teams would do well to listen to their CHROs more, but CHROs can also help themselves be heard by using a language CFOs know well. Take a page from Jerry Maguire and show them the money.
Investing in current employees now will end up saving the company money later. Only 36% of current US employees report being engaged in their work. Imagine what could be possible if that number were higher! Gallup recently reported that if companies can engage and retain existing employees, they will enjoy:
- 20% higher productivity
- 45% less turnover
- 70% higher safety record
- 41% lower absenteeism, and
- 21% greater profitability
Those are figures that will speak to any CFO. And collaborating with HR is the best way to implement widespread culture change - while ensuring profitable growth.
Engagement comes in all forms but is most effective when it is personalized - e.g. managers having conversations about employees' personal goals and ambitions with their direct reports on a regular basis. Company policies shifting to accommodate flexible hours or allowing employees to work from home more. Compensation packages that support employees’ long-term financial goals.
A good HR department will listen to employees’ needs and wants as well as work with leadership and managers to form and implement policy and procedure changes that increase employee engagement and retention. Engaged employees help increase profitability. Period.
It’s time for CHROs to change how they’re viewed in the executive suite. Show how the work done with employees positively impacts the bottom line. Positive metrics - increased retention, decreased absenteeism, upward employee satisfaction numbers - tell a more complete story of the ROI from employee compensation and can better reflect an increase in company profit. Suddenly, HR isn’t so frivolous.
Deliver smart compensation - and prove its return - transforming you from HR to hero.
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