Joey Price is CEO of Jumpstart:HR, a workplace culture-focused HR consulting firm and host of the While We Were Working weekly podcast.
In my years as a professional consultant, I’ve learned to spot the difference between thriving organizations and underperforming ones rather quickly. Sometimes I can tell from the first interaction on a call. Other times it becomes apparent once we’re in a rhythm with the full team. At some point in our engagement, corporates tend to show me and my team “how they really are” and if they want to build a winning workforce culture.
What’s the secret behind high-performing organizations? They are most keenly aware of the critical role that their organization’s human resources function plays in activating its overall success. If you think human resources is just a support system (*cough* “back office” *cough*) for your business, it’s time to reimagine your relationship. HR is a key driver of growth and competitiveness.
Here are five key reasons why HR is essential to organizational success and how leveraging its full potential can impact your business in a positive way.
1. Attracting And Retaining Top Talent
Attracting and retaining top talent is essential for the growth and success of any business. An older study found that organizations with a strong talent recruiting strategy saw 3.5 times the revenue growth than those without. Building a diverse and skilled workforce is crucial for meeting the challenges of a rapidly changing business environment. A team of motivated and highly skilled employees can lead to increased productivity, improved customer satisfaction, and a competitive edge in the marketplace.
Reducing turnover is another key benefit of effective recruitment and retention strategies. The cost of replacing an employee “can range from one-half to two times the employee’s annual salary,” according to Gallup. Investing in effective recruitment and retention strategies can help businesses attract and retain the best talent, which is essential for long-term success. The HR function plays a vital role in this process, by finding not only candidates with the right skills and experience but also those who align with the company’s culture and values. By building a strong and diverse workforce, organizations can better equip themselves to meet the challenges of a rapidly changing business environment and retain top talent.
2. Building A Positive Workplace Culture
Building a positive workplace culture is essential for the success of any business. This aspect of growing your organization is truly the sweet spot of effective HR. No one is thinking about the entire organization except the HR function. According to a study by Gallup, organizations with high employee engagement have 23% higher profitability. A positive culture not only improves employee morale, but it also has been shown to increase productivity, reduce absenteeism and turnover, and improve customer satisfaction. By fostering a culture of trust, respect and inclusivity, businesses can create an environment where employees feel valued, respected and motivated to contribute their best efforts. This not only benefits the employees but also makes the company an attractive destination for top talent, which is essential for long-term success. The HR function plays a crucial role in creating and maintaining a positive and engaging workplace culture.
3. Managing And Mitigating Risk
Managing and mitigating risk is a critical need for thriving businesses as it is essential for protecting the organization’s reputation, stability and long-term success. Sadly, not every organization relies on risk management procedures, and while the data is older, one survey gives a glimpse into what the practice of these procedures can look like. A 2017 survey from PMI showed that 26% of respondents used risk management practices “sometimes” and 34% of respondents used risk management practices “often.” The HR function plays a vital role in this process by ensuring compliance with labor laws and regulations, identifying potential areas of liability and implementing procedures to mitigate them. This not only helps to protect the organization from costly fines and lawsuits but also helps maintain trust with customers, shareholders and other stakeholders. By effectively managing and mitigating risk, organizations can ensure their long-term stability and success.
4. Driving Business Strategy
Driving business strategy is a critical need for thriving businesses as it helps align the organization’s human capital with its overall business goals. According to Gartner, “38% of HR leaders state that their HR strategic planning process is not aligned to the business strategic planning calendar, and changes are not triggered by shifts in the business plans.” The HR function plays a crucial role in this process by identifying the skills and capabilities that the organization needs to achieve its goals and developing and implementing programs to acquire and develop those skills. By aligning HR initiatives with the business strategy, organizations can ensure that they have the right people, with the right skills, in the right roles, to achieve their goals. This not only helps organizations stay competitive in a rapidly changing business environment but also creates a clear direction and vision for the organization that all employees can work toward.
5. Improving Organizational Performance
Improving organizational performance is not only essential for achieving goals and increasing efficiency, but it also has a direct impact on the bottom line. According to The People IQ study, 13% of managers and workers expressed the belief that their organization’s PM system is useful. The HR function plays a critical role in driving this performance by managing and motivating employees, creating systems and processes to measure and improve performance and providing development opportunities. By implementing effective performance management systems and providing development opportunities, organizations can improve the performance of individual employees, teams and the organization as a whole. This can ultimately lead to improved productivity, increased revenue and greater success in achieving organizational goals. Additionally, effective performance management can also help organizations identify areas for improvement and make necessary changes, allowing them to stay competitive in the long term.
In conclusion, the HR function is a critical driver of growth and competitiveness for any organization. By leveraging the full potential of the HR function, organizations can attract and retain top talent, build a positive workplace culture, manage and mitigate risk, drive business strategy and improve organizational performance. Remember, investing in the HR function is not just a cost, but an opportunity for your business to thrive and succeed.