Making a case for HR and the benefits to the bottom line

20th July 2015

Too many managers and business owners around the UK still perceive HR as being a fluffy, with limited, if any impact on an organisations profitability.

When we take a step back we can see that it’s the talent in a company’s different departments which drive the company’s profitability. Most managers and business owners recognise that a business is only as good as the people who work within it. HR is responsible for attracting those individuals, developing them and organising them strategically to maximise their output.

So if we take this as a given, it’s not too much of a leap to argue that a company’s HR strategy and those responsible for HR, are one of the most important constituents of a company’s structure because inevitably, this affects the profitability of the business.

Probably the most important way in which the HR department impacts on the employees is talent management. Talent management is all about attracting and developing the right talent for the business so they can better help the business achieve its goals.

Management within a business is core to the development of the team and delivery of HR strategy, so it’s important to think about leadership talent management, especially as leadership positions are proving to be difficult to fill for many businesses in the UK. Getting leadership right in many businesses is increasingly important as they grow out of the post-recessionary recovery period and strive to capitalise on the economies renewed growth.

Most business owners and managers understand that they need to attract managers and leaders into roles within their businesses however that’s not enough, it’s important to get the right fit for the business and the department. Getting the right person in a position is about assessing the leadership requirements and the personality types that would best fit the role.

When these different strategic elements come into line the beneficial effects on the businesses bottom line will unquestionably be seen and be quantifiable. Moreover there will be beneficial effects throughout the business because leaders within the business can raise the overall performance of the business by increasing the performance of other members of the team exponentially.

Strategic HR can also be used to create succession planning throughout the business. By understanding that employees, including management and leadership within the business will inevitably leave, and having a proper plan in place minimal disruption to the company’s productivity can be ensured.

More and more research suggests that employee engagement can increase business performance and productivity with a recent study by Hay Group suggesting that companies with high engagement scores have an average of 4.5 times the revenues of those companies with the lowest levels of employee engagement.

Of course improving employee engagement will also help retain staff mitigating some of the effects of employing new staff, which is one of the most costly processes businesses have to go through.

The crucial thing is making sure the HR strategy of the company is successfully aligned to the businesses overall strategy making sure the HR policy is lined up with the strategic goals of the business.

We’re in a period of rapid change in which the workforce and their skillsets are changing through pressures from the forces of automation. It can be easy to forget that a company is still made up of people and keeping those people within the business and working for the business is crucial to a business’ success.

If we accept that people are the key to a business’ success then we must assume that a strategic HR function must have a similar importance in a business that sales management and marketing management would have in developing the profitability of the business.

This is especially important when reviewing the position of leadership within a business, as the leadership is best placed to make a change but can often be the most intransigent.

It’s the role of the HR sector and HR professionals to continue making a case for HR and the benefits to the bottom line whilst embracing analytics through the use of tools such as HR software in order to demonstrate the business case for HR.