Forget bureaucracy! HR could be the key to your future commercial success

Why you shouldn’t underestimate the HR department

“What’s the only thing worse than one HR rep?” Asks Michael Scott, the fictitious regional manager of the Dunder Mifflin, Scranton branch, in the American version of The Office.

“Two HR reps,” his colleague answers.

“You get me,” Scott replies.

This may be a comedy, but it does highlight a lack of respect for HR which can often be replicated in real workplaces. People just don’t seem to understand HR.

“HR has, often rightly, been viewed as a cost centre that adds little to the business other than bureaucracy – a necessary evil in some eyes,” Dan Russon, services director at independent IT and business change professional services firm Xceed Group.

“This couldn’t be further from the truth. Effective HR that works as a business partner will increase the overall profitability of the company in many areas.”

There is a belief out there that if HR is to have a significant effect on the workplace in the future – it must concentrate on playing a more strategic role. A recent study carried out by KPMG and the Economist Intelligence Unit found that only 17% of those surveyed, think the HR professionals in their business prove their worth.

This is a worrying statistic for HR professionals but the research, titled ‘Rethinking Human Resources in a Changing World’, also found that 59% of executives believe that HR will grow in strategic importance over the next three years.

“There is a real opportunity for HR to become a commercially advantageous business support function in companies and there are businesses already taking advantages and using HR to it’s full potential,” says Barney Ely, director at Hays, the recruitment expert.

“Those that are still expecting HR to perform the more traditional roles and not incorporating them into strategic planning, are missing out as the HR function continues to change.”

So how can corporations best use their HR talent to drive profitability?

One of the main functions that HR can play is that of succession planning and making sure that a company has the skills it needs in the right places.

“Every organisation needs to understand where their future skills shortages will be and plan for them,” says Ely. “The HR function is well placed to look at succession planning and map out externally where skills can come from.”

Keeping talent within an organisation and promoting internally can have a  huge impact, not only on the cost of hiring from the outside but also in the loyalty of the employees who can begin to act like brand ambassadors.

“Our success as a business is down to the 150,000 people working in our stores, depots and offices all over the country,” says Mel Worth, head of resourcing at Sainsbury’s.

“They are the face of Sainsbury’s and crucial to our success. As well as creating jobs, we give people the right opportunities to succeed through various initiatives, such as our Trainee Manager Scheme and Graduate leadership programme. We’re very proud of the fact that a third of our store managers started with us before their nineteenth birthday, showing that if you work hard and have a genuine desire to succeed you can quickly rise to the top.”

Technology is driving this side of the HR role. In the KPMG survey, data analytics was singled out as a particular area of planned IT investment over the next few years with 57% of firms saying they already employ data analytics to identify future skills gaps.

“Our experience from working alongside some of the world’s biggest banks, has shown you need clarity in communicating suitable career paths for every employee in an organisation,”  says Xactium CEO, Andy Evans.

“Technology is available to help HR teams to locate and channel talent internally by collating data from all job descriptions. By aggregating the skills and capabilities of employees in one place, employees benefit from being able to see what lies ahead in their career and what they need to do in order to progress. In turn, employers are rewarded by retaining talented employees and save unnecessary cost in searching for external candidates.”

HR could also be used in the management of a companies social media strategy. Social media is often used to attract and retain talent through broad campaigns which take specialist skills and knowledge in social mechanics. If the HR function doesn’t have these skills, it could be beneficial to train them – giving HR a chance to use its core understanding of the business to reach a wider audience.

Change is also a major factor of businesses everywhere but this doesn’t have to be a difficult reality. Implementation of change is eased by communication and training where needed, something that HR can have a huge part to play in.

“Auto Enrolment is about to become a big thing for SMEs up and down the country,” says Ely.

“The HR department could take a huge burden off the financial department by taking care of the operational side of this. Traditionally SMEs rely on the FD and the financial function becomes prominent. HR used in conjunction with the financial department can get great results and create a real balance.”

It is incredibly important that HR doesn’t work in isolation and ties itself in with the business at all levels. It must challenge the stigma if all too often has by proving its worth.

“To ensure HR becomes more commercially minded you need it to be involved at each stage of executing a business plan – this well aid the company in moving forward by reducing risks,” says Camilla Hayes, HR manager at Markco Media.

This is a great time of uncertainty for many businesses with cost cutting and restructuring becoming a regular occurrence. Now is the time for HR to shine.

“Far from being an administrative function and financial burden, HR should be viewed by itself and other functions as the single most important function in the firm,” says Russon.

“When asked ‘what’s the most valuable/important part of your business?’ a great number of CEOs and chairmen answer ‘our people’. So why isn’t this always reflected in the respect or responsibility given to HR departments? If HR isn’t a full member of the board or executive committee it gives a clear message as to what is really valued.”