A recent study found that the majority of CFOs (61 percent) say they don’t believe that HR impacts the bottom line, and shockingly, almost half of my HR peers agree. But with employee turnover costing US companies more than $600 billion in 2018, it’s clear that there is real business value in optimizing your talent management process to motivate your workforce and retain your best and brightest workers.
In too many organizations, HR is still viewed as a defensive function that exists to protect the business from its own employees. This stance shows up in outdated HR technology and practices that are built for compliance, rather than for proactively helping managers and employees align their work to top business priorities and actually improve their performance.
Ideally HR teams should be viewed as the powerplant that fuels business growth and innovation through activities including: performance management and employee development, building a feedback culture and securing the organization’s future with a strong leadership pipeline.
HR Combats Costly Turnover and Builds Talent Pipelines
This may come as a shock, but nearly half of all businesses don’t actually track what it costs them to recruit, hire and onboard new employees. Not having this critical data leads many business leaders to underestimate how much turnover is truly costing the business.
In order to lower turnover rates and avoid the loss of institutional knowledge and relationships, HR teams need to deploy a performance management process that keeps managers and employees talking about development and their careers within their current organizations. Key to this is shifting away from backward-looking annual evaluations towards a development-focused employee experience anchored in more frequent conversations between managers and their reports.
This continuous approach to performance management facilitates constant realignment around top business priorities and motivation of the entire workforce to achieve desired business outcomes. Combined with tech-driven innovations such as advanced analytics capabilities, HR teams that have adopted modern performance management practices like these are seeing the benefits of having up-to-the-moment insights about their talent to inform strategic activities like succession planning, retention, and building their leadership pipeline.
HR is Responsible for Creating an Engaging Employee Experience that Drives Needed Business Outcomes
Particularly for millennial employees, who now make up nearly half of the workforce, company culture is a major determining factor in their career choices. To that end, crafting an employee experience that fuels sustained motivation is one of HRs most critical responsibilities. The essential factors in motivation include: a sense of purpose through alignment on top company priorities, career development, and regular, crucial conversations around feedback from both managers and peers. These aren’t ‘nice-to-haves;’ engaged teams show 21 percent greater profitability, 17 percent higher productivity, and 10 percent higher customer ratings compared to disengaged teams.
In order for HR to deliver the needed employee experience, technology plays a major role. Today’s workforce expects their technology – even HR tech – to be intuitive and integrated seamlessly into their flow of work. Industry analyst Josh Bersin calls this “Employee Services Layer” the single most important technology investment HR can make.
When managers and employees are aligned around goals and business priorities, and equipped with the tools they need to make their conversations worthwhile for feedback and career development, companies ensure their long-term competitive advantage. HR is no longer a reactive or compliance-focused function – its role has evolved into a key player in corporate growth and innovation. It’s time for CFOs and leaders across organizations to view investments in HR not as a cost center but an opportunity to maximize the value of a company’s most important asset – its people.