HR has often been viewed as managing simplistic transactional or administrative tasks for its employees, a perspective that is long outdated, but one which still has to be overcome. The truth is that a well-structured, effective, and highly functioning HR department has so much more to offer. Its initiatives are intentionally and strategically aligned with that of the organization.
HR can add value to the organization and increase bottom-line results through succession planning and development of its employees, managing performance and compensation analyses, influencing company culture, maximizing retention and reducing turnover, ensuring legal compliance, and most importantly, fostering employee engagement. Howard Schultz, a retired CEO of Starbucks, was quoted in the New York Times, as saying, “The discipline I believe so strongly in is HR, and it’s the last discipline that gets funded. Marketing, manufacturing—all these things are important. But more often than not, the head of HR does not have a seat at the table. Big mistake.”
Some companies have taken a shortcut and have pulled a historically financial or legal businessperson into the seat of Chief Human Resources Officer (CHRO) or Chief People Officer (CPO). Despite a finance leader’s expertise in gaining revenue, or a lawyer’s ability to avoid lawsuit, a trained and experienced HR Leader can offer oversight into these areas, in addition to maintaining focus on the organization’s human capital and how to effectively leverage their talent to gain results. If that isn’t enough, consider these statistics. Research shows that when HR is included in strategic planning, the organization has 40 percent less turnover, 38 percent higher engagement, and more than double the revenue per employee when compared with companies that do not include HR in the C-Suite.
One study demonstrated that companies with highly engaged employees experienced 2.3 times greater revenue growth over a three-year period than companies with average employee engagement. Additionally, the collaboration in the C-Suite fosters a culture of trust and transparency, demonstrating the organization’s commitment to putting its employees first. The reality is that the employees of an organization are vital to achieving the company’s vision and goals. HR has to self-advocate to develop a strong partnership with company executives to demonstrate how valuable they are in making the C-Suite more effective.
Sources:- HRMC – Reasons Why HR Should be Part of the C-Suite: https://hrmc.com/reasons-why-hr-should-be-part-of-the-c-suite/
- Harvard Business Review – The New Path to the C-Suite: https://hbr.org/2011/03/the-new-path-to-the-c-suite
By Jennifer Durham, SHRM-SCP
