Becoming a more effective HR business partner can be accomplished by selecting the project that will facilitate the best business value for the company and/or division.
Before proceeding, it is important to clarify two major terms. First, real business value is achieved primarily when an HR project is directly-related to the achievement of one of the company or division’s specific business objectives regarding financial, operating or strategic matters.
Typically, it is achieved to a far lesser degree by improving an existing HR program or service which is usually only indirectly-related to the business in general. Secondly, being directly-related means that the HR project is in support of a specific business objective which has a direct impact on increasing sales, improving cash flow, reducing costs, improving productivity, enhancing customer care, fostering new product development and market introduction, and so on. In other words, the business.
Four Steps to Becoming a More effective HR Business Partner
Step 1 – Spend most of your time and effort understanding the company and/or division’s business-related matters, and how HR might facilitate them, rather than achieving incremental improvements in existing HR programs and services.
When industry experts in the field of HR business partnership ask various practitioners questions regarding what HR projects they are implementing within their company and/or division, here are some of the typical responses.
- Instituted an improved recruiting and interviewing process in an effort to hire the best possible people.
- Installed an upgraded talent management software package to better monitor the compensation equity and development plans of all key management employees.
- Implemented a benefit enhancement that is designed to better attract and retain key technical and management employees.
- Conducted a management training program designed to improve critical soft skills.
While these and similar projects are likely viable ones, they are only indirectly-related to the business in general and can be successfully designed and implemented by the appropriate HR department staff with only minimal involvement of the HR Business Partner. HR Business Partners should avoid spending a lot of time on such projects until a detailed examination of business objectives and needs is completed.
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Step 2 – Enhance your practical knowledge or acumen in the financial, operating and strategic aspects of the business.
First, the following data on the above aspects of the business should be compiled every fiscal year and placed into a reusable template, preferably at the end of the last fiscal year and just before the start of the new one.
When collecting this data, the HR Business Partner must temporarily take off the HR hat and put on your business person’s hat. Such data gives the HR Business Partner the added advantage of being able to interact with the CEO and line executives solely on the business aspects of these items, as one business person to another, in addition to any interactions on the HR related aspects of any appropriate implementation.
Financial
- Net Sales or Revenue
- Operating Profit - both dollar and percent of net sales or revenue
- Net income - both dollar and percent of sales or revenue
- Net earnings (income) per share
- Cash Flow - dollar amount
- Major capital expenditures
Sales/Revenue
- Top ten customers by dollar sales volume
- Top ten products by gross profit margin percentage
- Major sales contracts up for renewal
- Customer Service improvement metrics
R&D and Product Development
- Major product development programs to be launched in the next few years
- New year product introduction and launch with the expected sales volume increase
- New year existing product enhancements with the expected sales volume increase
- Expected quality, reliability and performance specification improvements
Manufacturing
- Key quality improvement metric(s)
- Production efficiency improvement metric(s)
- Production scheduling improvement metric(s)
- Cost control improvement effort(s)
- Key Purchasing improvement metric(s)
- Key Inventory Control improvement metric(s)
Strategic Planning
- Anticipated acquisitions and their expected financial and market results
- Expected new product and/or market introductions
- Expected amounts of net income and earnings per share improvement
Secondly, the HR Business Partner should have a meeting with the CFO to understand the key numbers in:
(a) the company’s current Income and Cash Flow Statements, and Balance Sheet
(b) the company’s upcoming fiscal year financial priorities.
Then they should meet with the Chief Operating Officer (COO) to understand the key financial and operating business objectives of the company and/or division. Lastly, meet with the CEO to clarify the strategic business objectives for the company.
Step 3 – Understand the specific financial, operating and strategic business objectives for the company in the upcoming fiscal year that top management is committed to achieving for the Board of Directors and shareholders.
Preferably, these business objectives should be identified and catalogued just before the start of the fiscal year to give the HR Business Partner the entire fiscal year to provide one or more innovative HR projects that will facilitate the successful achievement of the objective. These annual business objectives represent a significant opportunity for HR to implement projects that are directly-related to the business, rather than one that is improving an existing program or service which is only indirectly-related to it.
Here are some examples of typical business objectives.
Financial Objectives
. To improve earnings per share from “X” to “Y” dollars/share.
. To increase cash flow by “Z” dollars.
Operating Objectives
. To reduce time-to-market for product “A” by 30%.
. To improve customer care to exceed industry standards.
Strategic Objectives
. To develop 20 general managers who can operate a $50M/year business.
. To increase sales 20% by acquiring a business that uses an important new technology.
Step 4 – Identify and implement innovative HR projects that are directly-related to the achievement of a specific business objective.
For each of the above business objectives, here are some examples of such HR projects.
Financial Objectives
“To improve earnings per share from “X” to “Y” dollars/share.”
- With Finance, implement a Cost Control/Profit Improvement workshop to identify and quantify potential cost savings and profit improvement opportunities.
- With Engineering and Marketing, implement a product Improvement workshop to identify product and service innovations that can help gain market share and/or reduce product cost.
“To increase cash flow by “Z” dollars.”
- Train Sales staff how to resolve and collect outstanding receivables to bring in more cash.
- With Manufacturing, implement an Inventory Reduction workshop to identify and quantify items that can be eliminated, reduced or replaced by less expensive ones.
Operating Objectives
“To reduce time-to-market for product “A” by 30%.”
- With Engineering and Marketing, implement team efforts to reengineer and streamline the entire design and launch cycle. Retrain management on key changes.
- Conduct a Project Management workshop to ensure that this project, and all subsequent product development projects, are achieved on time.
“To improve customer care to exceed industry standards.”
- With Customer Care, survey outside and company experts to catalog new key service principles, standards, measures and reporting requirements.
- Determine the new key skills areas required for success and assess the competency level of current staff on all required skills.
- Identify new positions and retraining that is needed for all staff on new principles, standards, processes, measures and reporting requirements.
- Review findings with top management and acquire implementation approval.
Strategic Objectives
“To develop 20 general managers who can operate a $50M/year business.”
- With outside experts, develop a seminar workshop that covers strategic planning, financial management, product/market development, sales and leadership.
- Set up a personalized development plan for each general manager.
- Review the entire compensation package for each general manager annually.
“To increase sales 20% by acquiring a business that uses an important new technology.”
- Update the Sales Incentive plan to recognize the new technology and improved profit.
- With sales, evaluate the competency level of the sales staff in the new technology.
- Evaluate the current recruiting sources in the new technology and identify new ones.
- Review findings with top management and acquire implementation approval.
Conclusion
Almost every Chief Human Resources Officer or HR Leader desires the same goal – a seat at the C-Suite table as an equal business partner to the finance and line executives – but few achieve it. How often have we heard that CEOs and line executives do not respect HR leaders because of their lack of business acumen concerning the company and/or division’s financial, operating and strategic matters? This lack of respect is the primary reason why the CHRO or HR Leader has not acquired that much desired seat!
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To acquire such a seat, the CHRO or HR Leader must EARN that respect by directly participating with line executives in the achievement of business objectives, while effectively and efficiently fulfilling its administrative duties. If this is accomplished, it will bring the HR function into the operational mainstream. If not, the function will be doomed to its current reputation of being considered only as an administrative afterthought.
Except for the CHRO, the HR Business Partner has the best opportunity to raise the business profile and reputation of the entire function.
The main question is whether the HR Business Partner wants to accept the difficult and somewhat risky challenge of working with the appropriate line executive to help achieve a specific business objective that is critical to business success OR simply remain in their warm and cozy administrative position far away from the risky and hectic real-life aspects of the business?