In Good Times and Bad, HR as a Strategic Asset

How do you keep productivity up? The economic downturn has made strategically oriented human resources departments all the more important for companies. HR can help you address these problems, and implement changes that can keep them from happening again in the future.

The HR activities which would contribute the most value to your business include human capital management and acting as a strong partner in corporate and strategic planning. Good HR practices (and good HR professionals) can create value not only for employees but also for four other stakeholders, both inside and outside the company. They are: line managers, customers, investors and communities.

Value for managers
Line managers want to implement strategy, which may be globalization, customer intimacy, product innovation, reducing costs or some other practice to either increase revenues or decrease costs. HR delivers value when the practices align with strategies and help execute them. To turn strategy into sustained results, HR practices need to be incorporated into a set of organizational capabilities. These capabilities are what an organization is good at doing and what it is known for. HR professionals add value to line managers by helping to diagnose the right capabilities and build clear and specific action plans to implement them.

Value for customers
Customers will do business with suppliers who can meet their needs over time. When a company’s HR leaders cultivate stronger relationships with targeted customers, they increase the amount of business these customers do with the company. To accomplish this, HR practices are attuned to external customers. Wanting to be the employer of choice is insufficient. Be the employer of choice for employees our customers would choose. Customers set the criteria for who we hire. For example, take your performance appraisal forms to your best customers and ask them if you are measuring the behaviours and outcomes that they would most like to see in your employees. Align your HR practices with customer expectations.

Value for investors
Investors want to have confidence not only in past performance (financial indicators of performance), but also in future performance (intangible indicators of future confidence). Today, about 50 percent of a company’s market value is related to intangibles, which include having confidence in future earnings based on the company’s ability to meet expectations, communicating a clear strategy, developing core competencies and building the right organizational capabilities.

Value for Communities
Communities reflect the broader societal view of a firm’s reputation. HR can help an organization not only create but also improve its reputation, particularly where there is now increasing concern about social responsibility and sustainability. By focusing on reputation and the firm’s brand, HR professionals can help shape an organization’s internal culture and align it with external expectations. HR professionals may ask senior leaders, "What do we want to be known for by those who use our services?" A better reputation means that current employees may be more likely to stay with the firm. A good reputation can attract future employees to the firm. And a good reputation can attract more stakeholders to sustain relationships with the firm.

Contact

Lydia Wazir

Operations & Communications Coordinator

Schottenring 12 / 5. OG
1010 Vienna
AUSTRIA
Phone: 0043 1 401 40 458
lydia.wazir@neumann-inter.com