Human resources professionals have long sought a “seat at the table” that would elevate their professional status while providing crucial expertise to the C suite. Just how to gain that voice among an organization’s top leaders is an often-discussed topic. We asked Dr. Charles G. Capps, an associate professor of management at Lipscomb University in Nashville, Tennessee, for his thoughts on the topic.
by Charles G. Capps, Ph.D.
Associate Professor of Management, Lipscomb University
A consistent theme arises from my interviews and discussions with mid-level to C-suite HR professionals when asked, “How can HR gain a seat at the company’s strategy table?” Almost to a person the response has been, “It is imperative that HR understand the business!”
Further amplification of these discussions indicates the real importance of knowing how HR’s costs, processes, and initiatives affect a company’s bottom line. Too often HR is viewed as a debit rather than an investment. Rightly so!
As a discipline, we do not successfully demonstrate our myriad contributions to business success indicators. This is in part because we were not trained to think analytically. We shy away from mathematical calculations that show empirical relationships between HR initiatives and organizational performance data.
Financial wizards who hawk the company’s dollars are experts at determining how materials and production costs translate into sales and revenue. It is time for HR to begin thinking and acting like the wizards.
People initiatives have impact as well. There is a return on investment for recruiting, training, and performance management. As a discipline, we limit our thinking to how these processes influence turnover, engagement, and morale. True analytics means that we extend our focus beyond the “soft” elements to such indicators as productivity, revenue, profit, market share, and quality.
Analytics implies that we seek to understand—deeply and thoroughly—how our company’s products are generated and how each employee contributes to the process. Finally, analytics connotes a comprehensive understanding of how to effectively measure the relevant variables and conduct statistical techniques like correlation and regression analyses.
The magic is in showing the numbers! Reporting the existence of a significant statistical relationship between recruiting and customer loyalty is powerful. Stating “our data indicate 33 percent of increased revenue in 2012 is attributable to training activities” gains the attention of the C suite. Do you want more training dollars? Show how training affects what is important to the decision makers.
Matching needs with human competencies
Another way in which HR can demonstrate its understanding of the business is to ensure that it provides—through employees—the knowledge, skills, and abilities necessary to execute the company’s strategy. Foremost in this consideration is a solid command of the human competencies embedded in daily production processes.
From front-line employees to the CEO/president, it is imperative that HR maintain a catalog of the business-related proficiencies that facilitate a competitive advantage.
Sitting at the strategy table gives HR a firsthand look at where the company is heading. More importantly, HR’s presence mandates an assessment of the competencies required to correspond with the leaders’ vision. After all, it is our responsibility to ensure the company has the right personnel to act quickly and confidently.
HR should produce a competency-gap analysis. The strategic direction of the company will yield the list of talents needed for future business activities. This is often referred to as the “To Be” state. Concurrently, HR can develop the list of competencies that currently exist, commonly called the “As Is” state. When the “To Be” is compared to the “As Is,” the delta shows exactly the human resources needed to strengthened or add to the talent inventory.
Herein lies a significant way in which HR can gain in stature with the company and with employees. Competencies can be trained or bought. Ultimately this decision may be an economic consideration. But let’s assume the company will invest in some enhancement of existing employees’ skills. It’s a win-win for the company when this occurs.
Capitalizing on the win-win
Increased workforce capabilities will enable the company to achieve its future performance objectives. Concurrently, opportunities for training will signal employees that they are important resources worth an organization’s investment. When employees feel they are important to the company, research indicates performance, engagement, and commitment are increased.
In his book, The New HR Analytics: Predicting the Economic Value of Your Company’s Human Capital Investments, Dr. Jac Fitz-enz, a renowned expert in the field of human capital management, proposes knowing the workforce so well that company personnel are divided into four groups for “investment” purposes:
- Mission-critical—the small group that has the largest effect on performance and revenues.
- Differentiators—the group with unique skill sets that help to generate competitive advantage.
- Important—the operatives who keep the organization functioning day to day.
- Movable—those with capabilities that can be outsourced, retrained, transferred, or terminated.
Developing and maintaining this level of knowledge about the resident workforce competencies further enhances HR’s role among the company’s leaders and its employees. When change is impending, HR stands ready to answer the call for growth, reductions, or rebalancing. The strategic partner role is not only reinforced but invigorated.
Dr. Charles G. Capps, a retired lieutenant colonel from the United States Air Force, is an associate professor of management in the College of Business at Lipscomb University. He focuses his teaching, research, and consulting activities in the areas of human capital analytics, human resource management, and organizational assessment/change. He can be reached by email at firstname.lastname@example.org.