The Value Of HR To Your Business

Written by: Brady Drake

Photos by Hillary Ehlen

As of July, 2018, national unemployment was at 3.9 percent, North Dakota at 2.6 percent and Minnesota at 3 percent. There is no question that developing and maintaining adequate workforce is a common and ever-increasing struggle amongst companies in our region.

The current workforce shortage is inevitably a threat to all but a lucky few in the region. Today’s candidate expects more than just a competitive salary, good benefits and long-term career growth. To compete for the workforce of tomorrow, companies need to maintain an edge in culture, career satisfaction, corporate citizenship and, of course, a well-planned and documented career path. At the end of the day, employees need to go home at night satisfied.

In addition to the basic tenants of human resources, such as fostering a fair, safe and compliant workplace, companies need to offer tangible value to prospective employees, and stand out as an employer of choice to recruit, maintain and grow a capable workforce, and ultimately their business. Addressing these demands is crucial, even with the minute-to-minute cadence of today’s business environment. By no means could we ever cover all these topics in this article, we will address the importance of the strategic and financial value of a top-notch human resources function.

A Conversation Between Brenda and Dan

My home life consists of our four-year old daughter (Management), myself (Human Resources) and my husband (Finance), who happens to head-up the financial department at the Anne Carlsen Center, which is a regional organization with eight locations, employing more than 650 people. Believe me, the conversation about value comes up often at our dinner table.

Brenda: Assume that on-boarding, evaluation, training and development are healthy functions. What value does human resources provide to the bottom line?

Dan: From a financial standpoint, it’s important to know that human capital, e.g. employee expense is the primary expense to almost all organizations. Where the rubber meets the road with HR is in the data. Today’s business challenges occur in real-time, so getting broadsided by HR challenges that occurred even a month-ago can cause lasting financial damage. Teams need to know more than historical trends, they need to know what’s happening in real-time so they can respond. And often, they need intelligent strategies from their HR department to help fix them. For instance, if we have a strategy of growing our own specialized staff that’s working well, we want to make sure to send whatever financial resources that program needs to succeed. At Anne Carlsen Center, we count on our HR department to ensure those programs are working well. If the company is struggling to keep employees in a defined region or discipline, management is going to want to know about it, and we also need to know how to fix it. That’s where Human Resources comes in.

Brenda: Can you give me an example of how Human Resources has solved a financial challenge?

Dan: Driving financial performance is a complicated equation with human capital far and away the most important variable. The slightest bit of sophistication in HR can make a big difference financially. It’s no secret that understanding the organizations workforce to deliver sustainable, high-value benefits to employees help to increase engagement and lower turnover. Furthermore, as is often discussed, engaged employees perform better and are widely understood to be a measurable competitive advantage, especially as it leads to a better outcome for the client. Engaged employees who stick around longer don’t incur ongoing on-boarding costs, they accrue less overtime and are often far more productive. By efficiently managing human capital, the business is less prone to risk, it incurs less costs, such as overtime and, in many cases, the organization may be required to seek expensive, third party contractors to meet the needs of their clients.

Brenda: Business partner is a common buzzword used in human resources today. How is that similar to finance, and do we have similar responsibilities in the organization?

Dan: Absolutely, at Anne Carlsen Center, human resources is a trusted partner in providing actionable analysis, strategies and information to management. We need them at the table to solve these problems. Finance has a similar responsibility to have a deep understanding of the business and to translate the information we spend our time preparing. Management teams don’t have time for the debits and credits, that’s our job, just like management doesn’t always have time to research employment law. We both need to articulate our assessments in plain English to management and we need to weave our expertise interdepartmentally to provide the support we need.

“The great advantage that HR has in this area is that, ultimately, all strategy is executed by people – people who need to be supported, trained and equipped to fulfill the strategic vision. This is the real role of HR, and even though some people remain skeptical of its bottom-line importance, in fact, its relevance cannot be underestimated.” –“Why HR Really Does Add Value” -Brian Hults (Harvard Business Review, 2011)

Brenda: In today’s environment, many of the traditional HR functions are being outsourced, what is the current value of human resources to provide impact to an organization?

Dan: Outsourcing can be an important part of the overall business strategy, such as finding industry specific training and compliance resources for highly regulated organizations, like Anne Carlsen Center. Not to worry, HR professionals are increasingly valuable for their local knowledge, perspective and analysis to help solve the organizations most complicated problems. After all, one of the major issues facing companies today, is finding great employees. Put simply, it’s hard to outsource something that requires problem solving localized issues.

Where human resource provides ultimate value is understanding the human side of the story and knowing how to define and implement action plans throughout the organization to solve for the greatest of business challenges: human capital. Furthermore, the challenges human resources faces often intertwine with other functions within the organization. Partnering across the verticals to include human resources is bound to help drive the performance of your organization.

Brenda Johnson

Brenda Johnson

Brenda is an accomplished Talent and HR Leader valued for her proactive strategic capability with success in building high-performing organizational strategies for well-established organizations that directly impact the bottom-line. With more than 10 years of diverse industry experience, she brings extensive expertise in talent management, talent acquisition, program management, strategic human resources planning, management consulting, change management, human resource development, and training and development.

Dan Johnson

Dan Johnson

Chief Financial Officer, Anne Carlson Center

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Brady is the Editorial Director at Spotlight Media in Fargo, ND.