Professional Code ‘Human Resource Professional or HR Professional’ indicates that this profession entails working with the Business Makers that are ‘People’. Do we, thus, realize how much of an important role we have to play for Business? Or do we just think of it as a litany of clerical issues that form part of the Human Resources of the Company? Things are changing day by day. What is being demanded of HR professionals around the world is also changing and expanding. Today, HR professionals do not only concentrate on traditional HR functions, but also concentrate on business and strategic decision making and value adding functions.
One of the major trends today is for HR professionals to be STRATEGIC. In lieu of the same, what are some of the SHIFTs we need to ensure for matching the demands of Strategic HRM? Let us look at the following:
Service Focused to Value focused: Traditional HR is service focused. Most HR professionals concentrate on delivering service to other employees of the organisation or to our clients. Their mindset is to serve others. However, we need to change this. As HR managers, we are not only tasked with servicing others but are also responsible for value adding activities/functions of the organisation. We should contribute more towards the adding value to our organisations.
Subjective Analysis to Objective Analysis: HR professionals focus on subjective issues most of the time. They feel strongly about subjective analysis, subjective assessment, subjective designing, and focus on theory in most of the cases. We need to shift from this state. We should focus on objective analysis and assessment. We should always try to convert subjective issues into objective to make them more transparent and easier to measure. For this purpose, the major focus of HR professionals should be on an objective oriented Performance Management System in the areas of Recruitment, Talent Development and Success or Outcome Measurment. For example:
- Service Focused to Value Focused
- Subjective Analysis to Objective Analysis
- Alphabet to Number
- Non-financial to Financial
- Staff Function to Line Function
- Executor to Designer
Setting number oriented Key Performance Indicators [KPI] like:
- Return on Investment [ROI]
- Return on Asset [ROA]
- Net Promoter Score [NPS]
- Absenteeism Bradford Factor
- Customer Lifetime Value [CLV]
- Customer Conversion Rate [CCR]
- Customer Satisfaction Index [CSI]
- Return on Capital Employed [ROCE]
- Cash Conversion Cycle [CCC]
- Cash Flow Conversion Ratio [CFCR]
- Human Capital Value Added [HCVA]
- Salary Competitiveness Ratio [SCR]
Also, it is essential to accurately establish the link between the correct individual and the right KPI. For example: Consider restaurant business – Customer Satisfaction index [CSI] is a KPI for waiters. Suppose a waiter serves the food after 2 hours of placing the order. You rate the waiter 0 out of 10 for the same. So, the KPI of waiter is not achieved. But if you think deeply about who is actually responsible for that, you will find that the chef delayed preparing the food on time. So, the waiter risks losing his job for no fault of his. This is an example of how an HR professional may set KPI with the WRONG link. Hence, it is highly necessary to link the RIGHT KPI with the RIGHT Person.
Alphabet to Number: It is assumed that HR professionals are more competent with alphabets rather than numbers. This suggests that they are very good in drafting and weak in calculation. They are, thus, assigned to those activities which are word focused and not number focused. However, the business balance sheet is generated in numbers and business stakeholders are highly habituated with using numbers. Therefore, HR professionals must focus on numbers. We must be competent in NUMBERS, in addition to alphabets.
Non-financial to Financial: It was long believed that the value of HR initiatives cannot be measured in financial terms – like job satisfaction, working environment, learning & growth, etc. But recent trends in HR have shown that most initiatives can be measured in monetary values. These initiatives are directly or indirectly linked with financial benefit. In fact, we can all agree that all employees work towards achieving the ultimate goal of an organisation – PROFIT. So, every body’s performance should be linked with the profit of the company. In this regard, it is HIGHTIME for HR Professionals to learn BALANCE SHEET ANALYSIS. Balance sheet analysis will help HR personnel assist the Management to take strategic decisions in line with organisational business performance. HR planning should be linked with Business Planning. Thus, if HR personnel cannot analyse Balance Sheets, they will be unable to contribute to Strategic Decision Making. In order to prove ourselves as STRATEGISTS or Internal CONSULTANTS for an organisation, we need to have proper and sufficient knowledge and expertise to analyse FINANCIAL issues of the business.
Staff Function to Line Function: Traditionally, we feel that HR personnel are meant to perform HR functions only. However, it is time for us to think of HRM as ‘HR for Business’. So, we should change our mindset that dictate that HR personnel are meant for staff function. Rather, we have to believe and prove that HR professionals are meant for line function. We can contribute to Business Generation and Profit Maximization in different ways.
Executor to Designer: Traditionally, HR personnel were treated as Business Policy Executors. But strategic HR demands that HR should be involved in Business Policy Preparation and not just execution. Thus, HR personnel should be involved in Business Policy Making matters as well, and not just be limited to execution. Only once the different competencies mentioned earlier are achieved can HR personnel claim to be involved in policy making areas.
Therefore, if HR professional focus on the above mentioned issues, they can successfully place themselves as strategists for an organisation which is the ultimate goal for strategic HRM. For this, HR professionals need to become competent in different aspects of the modern concepts of Human Resource Management and Human Capital Management.