Today, most managers would claim that their organization’s human capital is their most important asset. However, few can claim that HR is the most important business partner when strategic decisions are being made. Companies are now facing new challenges as disruptive technologies evolve, markets get more global and the talent pool gets smaller. To meet these challenges, the companies will need HR as a strategic partner. For this to be possible HR managers will need a clear view of current capabilities, which areas that have potential to grow and how to tailor efforts to make this growth happen.
Better HR capabilities means better financial performance
A report from BCG (the Boston Consulting Group) published December 2014 shows a clear correlation between a company’s HR capabilities and its financial performance. The most successful people companies outperformed the market by nearly 100 percent! The real difference between the most financially successful companies and the ones scraping rock bottom is not just the effort invested in HR. Most importantly, the divide is caused by the unsuccessful companies’ failure to invest in the most important issues.
This suggests that the companies are unaware of which areas are currently failing and which areas has the most potential to improve. And even if they know, they lack the knowledge and the tools to fix these issues and realize the potential.
When the HR managers do not know what areas to prioritize and how to do it, they are left with no way to demonstrate the business impact of HR. HR managers are consequently left without a seat at the table for strategic discussions. A costly consequence for companies who perceive the human capital as the most important asset.
Bringing data and analytics into HR
The only way to get HR back to the table is to quantify the HR arguments. This means a break with the norm of soft arguments and a welcome to a new norm where HR arguments are driven by data and analytics. The BCG report shows a strong correlation between a consistent use of measurement tools and profit – and there is a clear reason for this. By clinging to the use of soft arguments, the stereotypes of HR only being a function for soft aspects like training and development are being extended. At the same time, HR’s vital role in improving workforce productivity and planning is completely neglected.
But how do we do that? How do we quantify HR and how do we bring HR to a seat at the table for strategic decisions?
First and foremost, the company has to ask its own employees. The employees as a sum will most often know better than anyone else how the company is really performing in regard to the different HR areas. From there the company will need a way to sort these opinions, identify the most important issues and address the most urgent ones.
As my colleague, Ronnie, introduced in a blog post last year (http://go-grow.dk/blog/change/) this is the problem that we are trying to solve.
Our solution is called Lacuro; a new online platform launching in February. Lacuro and its primary tool PotentialMåling gives the opportunity to measure exactly which issues in an organization that are the most important and urgent. It does this by surveying the ones who knows the most, the employees. Using the survey data it quantifies their opinions to make it perfectly clear for the management where to focus the effort and investments.
It provides HR with the solid arguments needed and gives a perfect opportunity to measure on a consistent basis, proving how HR are making improvements. Finally, Lacuro does not just leave the company with numbers showing where to invest but also provides a set of tools showing exactly how to attack these challenges.
Our hope is that this will help HR back as a strategic partner, helping companies to face and grow beyond today’s demanding and ever-changing challenges.