I have heard
more than one human resources professional express some frustration for not having
a seat at the executive leadership table. This is only natural. The demands placed on human resource
professionals are great. The employment world
has become increasingly complex. Competition
for quality staffing today imposes procedural sophistication onto any employer
that hopes to survive. Hiring, training,
paying and separating employees have become a major departmental assignment for
almost every employer. Indeed, many
larger organizations have an HR executive.
But including HR in the leadership ring doesn’t always seem to be a
priority in some circles.
There is one
way that the stature of the HR world may be elevated. Perceptions may change when HR begins to apply
their acumen to targeting the bottom line of the organization itself. And I’m hardly referring to simply keeping
the budget in mind. Instead, it’s more
about the capital investments. That is; human capital investments.
The human
resources professional plays an impactful role in the performance of the
organization, in spite of generally not being considered a leader. The chief officers of the organization rely
on HR to make certain that each employee is hired, trained, paid and separated
in a fashion that will keep the organization out of the court room. That is their ultimate challenge. The only other primary fire that their ‘feet
are held to’ is much the same as with everyone else in the organization. They must adhere to the budget.
But what if
the HR pro were to think more in terms of being a revenue generator for the
company? Consider that very few
organizations have a budget for employee turnover. Many don’t even know what their turnover
percentage is. Many don’t want to know. Worse yet, many don’t know how much it costs
them every time they lose an employee. And even more frightening is that I’d actually
heard a corporate leader say that they really didn’t want to know! It’s often expressed as a cost of doing
business that they must simply absorb.
The Harvard
business review published a massive 20-year study which dramatically identified
Job Fit as the most critical factor
in determining an individual’s success as an employee. Knowing this, it seems reasonable that the HR
professional’s primary and ultimate function would be identifying the right
person for the right job. This also means that the protocol for selecting
a job candidate should be insightfully structured. Consider the due diligence required to predict
a long term successful employee. The
U.S. Department of Labor identifies the following criteria for predicting job
success; the right cognitive skills, personal on-the-job behavior, and the
candidate’s interest in the duties of the position. To accomplish this, here are some
time-honored practices that should be applied and re-evaluated frequently.
- A carefully crafted Job Description must be generated to accurately identify the duties to be performed and the qualifications necessary for the position.
- Who initially reviews the application and resume? Is the reviewer qualified to know what to look for?
- Are background investigations necessary and if so, how thorough must they be?
- Is there an effective evaluation and assessment incorporated into the process? Do they provide reliable information that is valid for predicting performance for the position?
- Who conducts the interview? What information and philosophy is really incorporated into the interview? How many interviews/levels should be included?
Think about this:
You have 50 employees. You have a
20% turnover rate, replacing 10 employees every year. The average annual salary is $35,000. Using the conservative formula of 150% cost
per employee who must be replaced, that’s $525K a year that may or may not be
in the budget. If HR could minimally maintain
that new turnover rate of 16%, that would be a savings of almost $105,000!
That is a payroll savings of over 21%. Imagine what that means to the leadership of
an organization? They may see it as just
lucky. But when HR can sustain this savings and even drop the turnover rate
lower, it becomes more evident of the creative leadership skills that it
possesses. Like good leadership
everywhere, their strength lies in their ability to make a positive impact on
their ROI; a return on the human capital investment.
