Board begins to see value of HR

Effective
benchmarking can reveal the dramatic impact a well-run HR department can have
on a company’s staff turnover and profitability.

One
successful chief executive, whose company has benefited from having its HR policies
and performance analysed, said, “I now know that our employee turnover has
fallen from almost 16 per cent overall to 13.5 per cent in the past six months
– achieved in an area of low unemployment and against a background of difficult
recruitment conditions. 

“The
saving direct to the bottom line for this year alone will be, we reckon,
equivalent to at least £250,000.”

This
quote represented the first stage in the main board’s recognition that the HR
function was adding value.

It
has progressed to explore and develop a range of personnel initiatives that
went on to reduce both absenteeism and grievances.

The
HR manager was able to identify areas of weakness by checking against national
and industry benchmarking databases.

This
was achieved by starting to measure, record and compare issues such as
turnover, recruitment time and cost, absenteeism, disciplinary cases and
grievances, training time and cost.

More
importantly, she was able to identify internal comparative data and the
underlying difficulties with individual areas of the company, structural issues
and management style.

Suggesting
solutions on a site-by-site and departmental basis, she gained rapid acceptance
of some quite radical and valuable new HR procedures.

The
power of the straightforward comparative data gathered, which could be seen to
relate to corporate profitability, was immense. Access was gained to
departments that for years had ploughed their own furrows and which had
virtually ignored all but the most pressing HR requirements.

Obviously,
not all managers feel comfortable with the measurement and benchmarking
process. By definition, 50 per cent or more will be at or below the median
data-line, so the study must not be seen as simply a scoring process.

The
greatest likelihood of success will be achieved by the application of subtle
change management skills.

By
Derek Burn, partner, MCG Consulting Group dab@mcghr.com

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