Joy Price is the CEO of Jumpstart:HR , an HR consulting firm specializing in corporate culture, and the weekly We Worked podcast.
In my years as a professional consultant, I have learned fairly quickly to differentiate between thriving and underperforming organizations. Sometimes I understand calls from the first contact. Other times, it's obvious when we're in tune with the rest of the team. At some point in our commitment, the company showed me and my team "what they really are" and whether they want to build a successful work culture.
What's the secret to high-performance organizations? They are keenly aware of the critical role the HR function of their organization plays in their overall success. If you think HR is just a support system for your business (*cough* "back office" *cough*), it's time to rethink your relationship. Human capital is a key factor for growth and competitiveness.
Here are five top reasons why HR is critical to organizational success, and how tapping into its full potential can positively impact your business.
1. Attract and retain the best talent
Attracting and retaining the best talent is critical to the growth and success of any business. Previous research has shown that companies with a strong hiring strategy earn 3.5 times more revenue than those without. Building a diverse and skilled workforce is critical to meeting the challenges of a rapidly changing business environment. A team of highly skilled and motivated employees can lead to higher productivity, greater customer satisfaction and a competitive advantage in the marketplace.
Reducing employee turnover is another important benefit of an effective recruitment and retention strategy. According to Gallup, "the cost of replacing an employee can range from one-half to two times the employee's annual salary." Investing in an effective recruitment and retention strategy can help companies attract and retain the best talent, which is critical for long-term success. Human resources plays an important role in this process, not only finding candidates with the right skills and experience, but also those who fit the culture and values of the company. By building a strong and diverse workforce, organizations can be better equipped to face the challenges of a rapidly changing business environment and retain the best talent.
2. Create a positive workplace culture
Fostering a positive workplace culture is critical to the success of any business. This aspect of growing your organization is truly a golden point for effective human resources. No one can imagine an entire organization without a personnel management function. According to a Gallup study, highly engaged companies generate 23% more revenue. A positive culture not only boosts employee morale, it increases productivity, reduces absenteeism and turnover, and increases customer satisfaction. By creating a culture of trust, respect and inclusion, companies can create an environment where employees feel valued, respected and motivated to give their best. This not only benefits employees, but also makes the company an attractive venue for the best talent, which is critical for long-term success. The HR function plays a critical role in creating and maintaining a positive and engaging work culture.
3. Risk Management and Mitigation
Risk management and mitigation is an essential requirement for business growth, as it is essential to protect an organization's reputation, stability and long-term success. Unfortunately, not all organizations trust risk management systems, and although the data is out of date, the research provides insight into what these systems may be in practice. PMI's 2017 survey found that 26% of respondents "sometimes" use risk management practices, and 34% of respondents "often". Human Resources plays a critical role in this process, ensuring compliance with labor laws and regulations, identifying potential areas of responsibility, and implementing procedures to mitigate them. This not only helps protect organizations from costly fines and lawsuits, but also helps maintain the trust of customers, shareholders and other stakeholders. By managing and mitigating risks effectively, organizations can ensure their long-term sustainability and success.
4. Promote the trading strategy
Developing a business strategy is an important requirement for a growing company as it helps align an organization's human resources with overall business goals. According to Gartner, "38% of HR leaders say their strategic HR planning process is not aligned with the business strategic planning calendar, and change is not driven by changes to business plans." The human resources function plays a critical role in this process by identifying the skills and abilities needed to achieve organizational goals and developing and implementing programs to acquire and develop these skills. By aligning HR initiatives with business strategy, organizations can ensure they have the right people with the right skills in the right roles to achieve their goals. This not only helps to stay competitive in a rapidly changing business environment, but also creates a clear direction and vision for the organization that all employees can strive towards.
5. Increase organizational efficiency
Improving organizational performance is not only necessary to achieve goals and increase efficiency, but also directly affects the bottom line. According to the People IQ study, 13% of managers and employees find their organization's project management system useful. The HR function plays a critical role in driving this performance by managing and motivating employees, creating systems and processes to measure and improve performance, and providing growth opportunities. By providing the opportunity to implement and develop an effective performance management system, organizations can improve the performance of individuals, teams and the entire organization. Ultimately, this can lead to increased productivity, increased revenue and better achievement of organizational goals. Additionally, effective performance management can help organizations identify areas for improvement and make the necessary changes to remain competitive over the long term.
In conclusion, the HR function is an important factor in the growth and competitiveness of any organization. By utilizing the full potential of human resources, organizations can attract and retain the best talent, create a positive work culture, manage and mitigate risks, develop business strategies, and improve organizational performance. Remember that investing in the HR function is not just an expense, but an opportunity for your business to grow and succeed.
The Forbes HR Council is an invite-only organization for HR leaders from all industries. What are my rights?
