HR Management Value Proposition: A Tale of Friction Versus Flow

By Jean Center

Jean CenterAsk a CEO what he or she sees as the key sources of sustained economic value in their organization. According to the 2012 IBM CEO Study, 71 percent responded that it is human capital. Human capital is not the head count of people in organizations – it’s the collective value of the capabilities, knowledge, skills, life experiences, and motivation of an organizational workforce. Human resource management (HRM) is the internal business function that exists to ensure that an organization’s workforce communities thrive and the business achieves desired outcomes. Viewing employees as contributors, assets and critical resources versus costs or expendable resources directly impacts the focus of HRM and the ultimate value it delivers to the organization.

Unfortunately, many HR professionals focus on traditional versus strategic HRM. As transactional activities like payroll and benefits administration are automated and outsourced, the time is ripe for HR professionals to validate and shift their focus to the use of HRM practices to gain or keep a competitive advantage for the organization through the workforce.

Let’s compare two organizations (names have been changed) that are similar in many ways (publicly traded, workforce of thousands, multiple locations, etc.) yet very different in their HRM focus and ultimate business outcomes.

Although Friction Company calls their internal function the Human Capital Management Department, the total rewards team was overwhelmed with transactional activities. By not efficiently and effectively carrying out tactical activities, by not understanding the business value chain and not establishing internal partnerships with line managers, internal “friction” blocked services and, as a result, created unnecessary external regulatory exposure that the CEO had to deal with directly.

On the other hand, Flow Company’s CEO had a directive for the Human Resources department, which was to make the business units within this organization the best they could be. The focus for HR was to design management systems to ensure that human talent is used effectively and efficiently to accomplish business unit goals. HR within the Flow Company recognized business trends, forecasted potential obstacles to business success, challenged assumptions and offered a point of view. The HR function created “flow” for the organization to accomplish desired outcomes through the business units. As a result, Flow Company has been recognized on employee-nominated “best places to work” lists.

I believe that every HR professional, regardless of job level, can add value by focusing on being adaptive, innovative, anticipatory and proactive versus focusing on routine, traditional and reactive practices.

Jean Center is CEO and principal consultant with the Center Group, a trusted leader in human capital management, which she founded in 1998. Clients represent diverse industries that include emerging technology start-ups to established Fortune 500 companies. Jean is an Advisory Board member and instructor for the Human Resources Certificate Program at San Diego State University.

 

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