For years HR has settled in to the description of a ‘cost center’ along with our marketing, customer service and research and development colleagues, among others. We’ve understood how important it is to manage those costs, lest we be seen as creating unnecessary fat from which our finance leaders would look to trim at budget time.
How many HR people does it take to support the business and keep everyone happy? These are among the questions which are asked of HR - or perhaps behind our backs.
And, even when HR leaders manage to incorporate language such as ROI and cost benefit ratios, we’re still looked at with a jaundiced eye and the belief that we’re ultimately sucking the dollars out of the bottom-line.
I’ve often said that HR can and must shift the description from cost center to ‘revenue enabler’ as a start. The function has a tremendous ability to impact the bottom-line of any business. Our subject matter expertise must be focused on doing just that. Rather than simply filling jobs with a one-size-fits-all recruiting mentality, we need to give special attention to the roles directly responsible for generating revenue. While we’re partners to all clients in the business, those among them who are bringing in the revenue need premium service such that vacancies in their areas don’t hurt the overall enterprise. Every day a job remains vacant in those areas is another day of lost revenue opportunity.
How do you demonstrate this business impact, or revenue enablement as an HR professional? There are several ways:
Perform a business process improvement on your talent acquisition function to reduce the number of vacancy days by a targeted percentage for all sales and other revenue generating roles.
Team your best HR partners with the clients responsible for revenue generation in order to ensure that any barriers to high performance are attacked relentlessly, if not proactively.
Find ways to accelerate the ‘ramp up’ time for new hires in key areas through superior onboarding.
Create customized retention strategies for your highest performers, particularly those ‘keepers’ in your revenue generating departments.
Before you capture this for action as an HR leader, know that demonstrating the business impact and your role as a revenue enabler is not enough! Business leaders create value in all forms for their company, but the monetary value created serves as the lifeblood. So, how can HR contribute to that lifeblood beyond the examples noted above? Answer: by monetizing their assets.
Monetizing assets in HR is not a new phenomenon but the concept is still considered rare and experimental. This reticence, in my view, is not only because we need more case studies around monetizing assets in HR – but because HR departments are so bogged down by day-to-day activities that we have no energy to think about it. (The first step to address that is to take those activities not clearly moving the needle off-the-plate).
Intangible assets in HR (i.e. leadership development, etc.) are squarely under the control of the creative and savvy HR professional. We need to find ways to monetize them wherever and whenever possible. I personally had a built-in opportunity at a prior organization whose mission was actually to provide human resource consulting services to clients across the United States. Hence, it was perfectly logical for me to contribute to contracts as part of a project team serving external clients, providing human resource services based on my 22+ years of experience.
However, even if you have to create these opportunities at your own company from ground zero, you should be encouraged to know that your creativity and innovation can be packaged for a greater good! Other companies want the benefit of your living laboratory – people want to know what you’ve created and how they might be able to incorporate it. Disney, for example, packages its leadership and orientation programs for sale – branding it as the ‘Disney approach’ to these programs. The buyer is then provided with a program, in their case from a well-known brand, from which they can learn and customize. Similarly, Xerox sells their HR intellectual assets in the areas of engagement and workforce diversity.
Sales from these programs may not fully cover their costs, but they represent a sea-change for the HR professional who can now contribute to the bottom-line of their business through their subject matter expertise. Any learnings gleaned from these client services can then be brought back to HR teams allowing them to sharpen their tools even further.
Some companies have spun-off those programs to sit under the line businesses – and, guess who goes into the line businesses with them? HR professionals who make this shift into the business units to manage these client programs can now truly operate as business leaders first, HR leaders second - well positioned to drive marketing and sales efforts! That’s a refreshing shift.
HR has a long runway in this area of revenue generation but it is indeed a far cry from simply a cost center. We can – and should – be business partners, in every sense.