HR Does More Than Payroll — How to Become More Strategic and Why it’s Vital to Your Company
Authored by Ben Peterson
Here’s a truth we often seem to forget: people create value, not companies. People are the ones who have the capacity to be great and do great things, and these actions drive businesses forward. People are a company’s biggest asset, and therefore, the department that’s focused on people — HR — is also an invaluable component of the business.
HR done right is crucial to the success of any company. That’s why the department whose job it is to maximize human potential needs to be involved in business strategy and directly contribute to the goals of the overall business — not just fulfill transactional functions like payroll and benefits.
HR isn’t strategic, and it’s hurting your company
However, HR is not a strategic partner in most companies today. We’re experiencing a value perception crisis in which HR’s true potential is not perceived. Edward Lawler argued that in 2015, HR wasn’t involved in business strategy anymore now than it was 10 years ago. He wrote in a piece on Forbes, “HR spends less than 15 percent of its time as a strategic business partner.” When HR is involved, he says, organizations not only function better but can more easily implement strategic changes.
By not perceiving or leveraging HR as a strategic partner, businesses are losing money. The high-dollar cost in HR failure includes detrimental issues like high employee turnover, low employee engagement, decreases in sales and more. On the flipside, financially stronger organizations are strategic about their people and execute this strategy through the HR department to create attractive company cultures that lead to high productivity, profitability, and retention.
Where we can improve
We have a void to fill in the perception of HR, and we need to fill it fast. Gartner presented research calling out two large market opportunities within the HR space: first, strategic HR skills transformation and second, HCM technology to support HR strategy. Currently, many organizations are keeping their HR departments buried with menial operational tasks like company policy and compliance and recruiting via listing, interviewing and posting — many of which can be automated using HR software, as Gartner points out, to help free HR for strategic action.
It’s understandable that when a company is just starting, HR will be performing a lot of transactional work to set the foundation. But rather than waiting until they’re fully matured to think about making HR strategic, companies should feel more urgency to create higher business value through HR as soon as possible. Let’s move the curve from operational to strategic faster; your money and efficiency depend on it!
Getting to the top of the pyramid
Think of HR’s role as a pyramid. Basic operations like payroll form the base; general operations like reporting, talent acquisition, and compliance tracking are the second tier; and strategic operations like culture, engagement, employment brand, operational efficiency, internal influence and learning and development are the top tier. Most HR departments are still stuck at the base, while a few are working on building the second level. Fewer still make it to the top, where HR fulfills its true strategic potential. What they need is a way to boost themselves up from that broad, transactional first level into a more strategic role — a force multiplier. HR technology is the solution, not only for rising above the transactional level but for elevating mid-level practice to the top of the pyramid with metrics, reporting and added bandwidth. Technology can satisfy the operational and administrative demands as well as aid the strategic side of HR. That’s a win-win.
HR professionals want to be strategic partners, and they want to add high, strategic value, faster. By investing in technologies that help them get there, the HR department and the C-suite can gain mutual trust and collaborate to meet critical business goals. When it comes down to it, the business has to support the profession that supports its greatest asset: people.