RPC HR Performance Digest

December 2009 / January 2010

WHAT WILL THE NEW YEAR BRING–AND WHAT WILL HR BRING TO THE NEW YEAR??

For some HR professionals, the New Year will bring a new outlook on the economy and a much needed shot of energy.  Most HR professionals I interact with are, quite frankly, tired.  They’re tired of putting out fires with employees, (such as squelching the rumors of layoffs) having to develop and execute reductions-in-force, prepare and administer severance packages, deal with the increase in EEOC charges and workplace investigations, etc.  Most HR professionals are simply tired of 2009!   It has been a really tough year–but it’s a year that has taught many in the profession a lesson: HR MUST be aligned with organizational metrics and have a clear understanding of a company’s financials.  Without that understanding, HR can’t show its value to senior leadership.  Why?  Because the initatives HR gets involved in aren’t creating a direct correlation with bottom-line.  And, without correlating HR’s value to the bottom line…HR department headcount is subject to a lot more scrutiny by senior leadership during labor cost reduction conversations.

As I travel the country and teach continuing education within the HR profession, I am still amazed at the lack of focus on organizational metrics–specifically the financials.  When I ask class participants this question: “how many of you know how to read your organization’s annual report, or at least read the P&L, Balance Sheet, and Statement of Cash Flow?”  The “yes” responses are less than 20 percent!!  Usually, the more senior professionals such as Directors or VP’s are the ones in attendance who have the financial knowledge and answer, “yes.”  However, when I ask them if they’ve ever done any development with their own staff to increase their knowledge of financials, the answer is always,”well…no, actually.”  What this means is that a good portion of HR professionals are operating in their roles with little knowledge of how their job impacts the bottom line.  And, it also means that without the knowledge of how to read the financials–they are completely unaware that their own job may be in jeopardy due to declining revenues or shrinking margins.  Lastly, it means that senior leaders in HR are not doing a good enough job of developing their own staff in order to increase departmental effectiveness.

So, what does HR need to bring into the New Year?  A strong focus on financial management education.   If you are a senior HR leader reading this digest, what this means is that you must take the initiative to partner with your HRD/L&D and/or Finance group to develop financial educational curriculum in 2010.

After the rough year we’ve had, it just makes sense to ensure HR is aligned with the numbers-”gurus” over in Finance.  In the process, HR shows a stronger commitment to supporting the organization through cost reduction measures, gaining efficiencies, driving profitability, etc.

In summary, 2009 taught HR how quickly–and how hard–companies can fall.  And, it taught HR professionals a lesson about personal performance and the need to align HR initiatives with organizational goals and measure HR’s impact on the bottom line.

Time will tell, but this author believes 2010 is going to be the Year of HR.  We’re going to increase our financial knowledge, align what we’re doing with the big picture, measure and quantify our effectiveness through the use of metrics, and validate that HR is a key player.

HAPPY NEW YEAR, HR!!!

Natalie Ivey, MBA, SPHR
HRD Consultant/Principal
rpchr.com