Human resources professionals must develop several core competencies to adapt to the changing and increasingly strategic role of HR, according to two experts who led a recent BLR audio conference.
During the 90-minute audio conference, Deborah Saks, president of 1 Source Consulting, and Ronald Adler, president and CEO of Laurdan Associates, Inc., offered listeners tips to ensure that they are adapting to the new role of HR.
Saks said HR must understand their company's business and markets and how to examine problems. She said HR should be adept at strategic thinking, critical analysis, root-cause analysis, and conducting pilots of programs. She said HR should see itself as a business leader and run the HR department as a business.
Adler agreed that it is critical for HR to learn the business, saying HR should be able to answer these questions:
- How does the organization make money?
- What costs reduce revenue?
- What factors affect the bottom line?
- Who are the organization's stakeholders, customers, and constituents?
- What risk factors does the organization face?
- What are the organizations biggest opportunities?
- What talent does the organization have or need for the future?
In order to adapt to its changing role, HR should also develop closer relationships with the chief financial officer, chief technical officer, and chief executive officer, Saks said.
She said HR must know what the CEO wants in the HR leadership position. She said research has shown that CEOs are looking for HR to be able to dissect profits and losses, keep up with CEOs in talking business, maintain credibility with the board, and have a very high IQ. CEOs also want HR to add shareholder value, coach and train management team, and understand real data. In addition, CEOs want HR leaders who bring their own perspective, have experience in a variety of environments, and have excellent ethics to make good choices and to stick with them.
Adler said HR must also know what keeps CEOs up at night. He said the topics on CEOs minds include growing shareholder value, increasing competitiveness, improving cash flow, aligning corporate objectives with human capital decisions, improving productivity, reducing costs, and boosting profitability. He said there's is growing recognition among CEOs that human capital distinguishes their companies from their competition.
Another core competency needed in the changing role of HR is metrics, Adler said. Adler said HR metrics should be business metrics and measure what's important to the company. Before using metrics, HR must determine the objective of HR metrics and understand and define the scope of what HR measures, he said.
Adler offered some examples of key HR metrics, including:
- State unemployment insurance tax rate. He said this metric can give HR a glimpse of how the company is doing compared with others.
- Recruitment metrics. He offered examples such as a measurement of time to productivity, percent of applicants hired, and new-hire quality.
- Turnover and retention metrics.
- Risk-related metrics.
- Return on investment.
- Return on human capital. HR measures this by taking operational profit and dividing it by total employment-related costs.
Adler identified benchmarking as a third competency for HR to develop. He said benchmarking requires more than just making comparisons. He said HR must also know why there are differences. The fourth competency is reporting, he said.
Purchase the CD version of the audio conference, which is called HR Metrics: New Core Competencies You Need to Become Your CEO's Strategic Partner.
