October 16, 2012

5 Ways HR Solutions Make Money

Years ago, two wise mentors opened my understanding about budgeting.  I remember being new to a dynamic, growing Company, and asking about the budgeting process.  My goal was to learn how to get funding for my latest intrepreneurial brainstorm.  They replied with a question; “what the heck is a budget,” they asked.  I told them that it’s a valuable process for planning how much money a department can spend.  It puts limits on costs like payroll, capital expenditures and other stuff.  One of them replied sharply – “wforecaste don’t do those around here.  That is bad for business, and it’s not what we are about!”

Of course, no self-respecting Business School graduate would let that comment go unquestioned.  After all, what kind of business doesn’t prepare and manage to a budget?  I asked for clarification, and that’s when the wisdom met the schooling.  “Budgets, the way you describe them, are focused on cutting the pie into smaller slices.  We’re all about making more pies,” they said.  “If your idea can help us to make more pies, we will find the money to pay for it.”   What I heard was simple and profound.  Impact the forecast and be a must have; remain a budget line item, and be a nice-to-have…at best.   That conversation changed forever the way I think about Human Resources. 

Every function in a business has to align with the top-line goals.  Here are 5 ways that HR can impact your forecast.

  1. Accountability.  If you have no way to manage accountability for performance, your forecast is just a wish list.  Effective HR Solutions build ways to keep your people accountable to achieve what’s on the forecast.  Performance reviews, effective documentation and meeting facilitation are a few ways that HR can drive accountability for performance.  If your Company struggles with accountability, you need HR help.

  2. Retaining Top Performers.  The results your Company achieves are driven by the collective contribution of your best people.  Retaining them is probably an implied assumption in your forecast.  What if they leave?  Probably, the performance you forecasted is not attainable.  A great HR Solution helps you to keep your Superstars in place, producing results for you.

  3. Success Profiling.  Some turnover is to be expected; in some cases, you may even want to create turnover.  Replacing underperforming employees with people like your Superstars is good for the forecast.  The best HR Solutions make that happen in your business.

  4. Stopping Avoidable Losses.  The costs of employee problems can take the floor out from under your forecast.  Think about the lost productivity associated with resolving employee grievances, difficult terminations, defending lawsuits, paying fines and other avoidable costs.  The legal landscape is always changing, producing new ways to separate your Company and its money.  By proactively reducing risks in these areas, effective HR Solutions keep your forecast on track.

  5. Incentives.  Attaching employee rewards to desired results is great for your forecast.  Rewards and incentives keep the right goals in front of your best performers.  Effective HR Solutions connect you with what your best people value.  HR helps you to get the largest return for your investment in salaries, wages and benefits.

If HR isn’t making more pies in your Company, it could be because someone is more focused on cutting slices than making pies.  Fire up the oven!

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