For employers, having a great HR department drives economic performance, but having a poor HR department has negative outcomes. Business owners and leaders form any size and type of industry, need to place value into their HR departments. However even today, there are some business leaders and managers that merely consider HR as a necessary evil, or often wonder what value HR adds to their business. Today, many HR tasks can be outsourced, from payroll, staffing, recruiting, and most information about compensation are provided by tax experts and firms. Technology, such as routine automation and AI, are also streamlining business operations and HR tasks. The question of whether HR adds value, mostly is asked in companies with outdated HR departments. HR has dramatically changed over the last couple of decades from mere, payroll, benefits, staffing, and recruiting.
The Changing Role of HR
HR has moved from an administrative role with a limited scope into a business partner with a focus on strategic and value-add focus. HR has moved from transactional work to transformational work. HR today focuses on culture, performance management, organizational design, strategic planning, employer brand, etc. If a company’s HR is stuck in mere transactional work or mere administrative work, a company is not leveraging HR for a competitive advantage. HR professionals today need to have the business savvy and become the catalyst to spark change to achieve company objectives.
Strategic HR partners help develop and align strategies with business operations. They assist management in solving organizational issues. Strategic HR helps foster and create systems for measuring success, engagement, and workforce development. However, with new roles, there is a need for new tools and skills. Today’s HR needs to understand analytics and analysis; they need to understand organizational cultures. They need tools to analyze performance and people analytics. The more capable an HR department, the better the economic performance you can expect from a company.
Research in HR
Boston consulting conducted a survey in 2014-15 and discovered the following points.
- HR capabilities correlate with economic performance.
- Analytics and key performance indicators (KPIs) give HR a seat at the table.
BCG found that companies with strong HR capabilities in talent leadership, engagement, organizational culture, strategy planning, and analytics, had better economic performance. Getting these items right, by improving systems of accountability and performance management affects a company’s overall bottom line. In the report, they also show a strong correlation between KPIs and strategic HR in better economic performance. Measuring is key, using KPIs, OKRs, and other items to drive accountability, performance, and alignment.
BCG also identified three key items shared among top-performing companies. Great HR departments foster connections among stakeholders, both inside and outside the company to “improve operational and financial performance”. They make data-driven decisions and focus on priorities, by collecting data and gaining insights. Lastly, great HR departments are impactful, by using data (OKRs, KPIs, etc.), to drive and align objectives and strategic goals.
Tools and Skills for HR
If companies are stuck with outdated HR functions, or departments, they are losing out on a competitive advantage. HR departments need to embrace data analytics to gain insights to improve accountability, overall alignment, and performance. If a companies HR department is still mostly transactional or merely administrative, it is not adding much value. HR departments need to invest in data science training and hiring, and in systems for data analytics. These systems include performance management software, data analytics tools, and HRIS systems. beepHR, beepnow’s innovative HR solution with blockchain technology, helps them analyze the data effectively.