It’s Time to Take a Strategic Look at Your HR Function

New year, new HR department.

I’m kidding, of course. But in the new year, we all make resolutions — some of us want to get back to the gym, some of us want to eat healthier, some of us may want to achieve some sort of personal goal, but this time of year always seems to lend itself to setting goals for yourself.

I would challenge readers, especially those in charge of the HR function, to take a thorough look at their HR function this year. I challenge you to look at how you implement your organization’s policies and procedures, how you eliminate liabilities and implement best practices, and how you educate your managers.

That’s what I’ll be talking about today.

When you take this thorough look at the HR function, you can really define how HR is contributing to the greater good of the organization. You may be able to reduce HR costs based on your findings, but probably the most important thing is that you’ll be able to find and solve problems smoothly.

Taking a look at HR is a practical way of finding things HR is doing well and improving upon them, as well as uncovering problem areas before they start to impact the organization as a whole.

There are a couple of things we can do when assessing the HR function. We could perhaps just focus on noncompliance, looking at policies and procedures to determine how well we’re complying with regulations. This isn’t a bad audit to do. It’s usually paperwork heavy, but the nice thing is that it will uncover if there are reasons why we’re not following our own policies and procedures— maybe they’re outdated and need updating.

Of course, we want to handle our legal liabilities. But this won’t get the bang we want in impacting the organization as a whole.

What is more important to look at is the HR climate in the organization. What I mean by that is, what impact are we having on employee motivation, morale, and job satisfaction?

This requires a deeper dive than just looking at policies and procedures as I mentioned above, but the benefits are much farther reaching.

If we look at absenteeism, safety records, employee opinion surveys, and other data, we get a better sense of the pulse of the organization, what’s going on in it, and what we as HR professionals can do to impact those things.

There are a couple of ways we can approach either of these types of audits. We can look at a comparative style— maybe there’s a company that you aspire to be like. Maybe they have a great reputation for how they take care of their people or they’re perceived as an employer of choice.

See if you’re able to chat with them to find out the types of goals they’re hoping to achieve, then take a look at how your company is doing in comparison.

There are pros and cons to every approach and, in this case, the pro is that you can get your hands-on best-in-class data. The con is that no two companies are alike, so how you interpret the data will depend exclusively on your own company’s culture.

Another way to approach this audit is to bring in an outside person. Having an unbiased third party come in to look at what’s really going on can be invaluable. Hiring the right auditor for your HR function is going to allow you to have someone who has seen many organizations with all their knowledge and experience. The con is that it will cost you money, so you’ll have to look at the value. Is the value they bring worth the cost investment?

The next approach is more scientific, what I like to call the statistical approach. We look at how we’re currently doing against our own goals. We may look at numbers like turnover or amount of overtime, comparing where we are to where we’d like to be. The pro of this approach is that it’s a really good yardstick for looking at our current state of affairs. The con is that we probably already know this information and we may not know what to do with it or how to move the numbers in the right direction.

Another approach is the compliance approach, where you look at things purely from a legal liability standpoint. We need to do this regularly in HR, and the pros are obvious— we don’t want to have discriminatory practices or break the law. The con is that this approach is very narrow-sighted. We can usually get ourselves in legal compliance rather easily but being in legal compliance doesn’t always translate to business results.

The final approach is an approach I like to call managing by objectives. You look at the goals set for your organization (not just numerical goals as above) and measure them against actual performance measures. This approach has a lot of really good pros, not the least of which is creating a yardstick for figuring out exactly where you are at any given point in time. The con is, again, that you may know this information and not understand how to impact it.

Regardless of the approach (and you could blend these styles), it’s not enough to just uncover problems. The purpose of assessing is to figure out a solution to those problems so HR can be a strategic contributor to the organization.

When I think about what I like to look at when assessing the HR function, I look at 8 distinct things:

1. HR roles. Look at the organizational chart and the roles each team member is playing, the overall headcount, and the HR information system. Look at who’s doing what and how many people are doing it.

2. Recruiting. Most organizations today are struggling to find key talent. Sometimes that’s because they’re in a challenging industry, and other times HR is its own worst enemy in how it recruits. So, look at your recruiting processes. Where and how are you advertising? What is the method folks use to come into the process (is it all online?) and determine if it works well.

For years we’re heard about the employee experience. Now, we’re hearing more about the applicant experience. Folks are using the applicant experience to determine if they even want an interview with you. Take a look and see if your recruiting processes are helping you, or hurting you.

3. Documentation. This one isn’t the most fun, but it’s important. Look at all the documents related to HR. Ask yourself: why are we filling out the documents we’re filling out and do they add value? Are they capturing the information we want?

4. Career management aspects of HR. What are we doing on a training and development front? Do you have plans in place to make sure your people have the best skills and know how to use them to better the organization?

5. Compensation and benefits. Compare your compensation and benefits to the market and what’s going on with others in your industry and geographic area. Determine how well your total rewards system is actually doing in motivating and then retaining the key talent your organization needs.

6. Performance management and evaluation systems. We’ve all heard a lot recently about scratching the annual performance review, and that’s a topic for another day. Regardless of how you feel about annual performance reviews, you must have some way to measure performance that’s not just on a piece of paper. It should actually help you manage what’s going on in your organization and how your people are helping the organization meet its goals.

7. Termination and other transitions. What does it look like when you’re offboarding an employee, whether that transition is involuntary, a retirement, or someone moving into a role with another organization?

We spend so much time looking at the onboarding process, getting people ready to be successful in the organization, that we sometimes forget that offboarding successfully can also help us keep a friend for life. This person may be moving to a future vendor, to a competitor of ours, or to an organization with whom we want to do business. That’s why we want our offboarding process to be every bit as organized as our onboarding structure.

8. Legal issues related to personnel policies. This is where we examine legality and ensure that we don’t have any gaps in state or federal compliance.

Ultimately, regardless of the approach we take, these 8 items have to be part of what we’re looking at. Failure to look at any one of those may leave us in a situation of not getting the full picture of what HR can do for the organization.

The whole reason we do this work is to uncover the ways in which HR can better align itself with the organization’s overall goals. If HR is going to be a strategic contributor, we have to be willing to look at ourselves with a critical eye and look for ways to improve.

Every other function in a business audits itself regularly. IT is under almost constant audit as they look at how to upgrade software and functionality. Finance and accounting undergo formal audits in many cases.

HR should be operating just like every other aspect of the business. Let’s look at how to improve processes and systems because HR really needs to be at the forefront of making sure the organization is hitting its goals through its people. If you need help in this area, give me a call at 717-314-3680 and let’s discuss how I can help you do just that: hit your organizational goals through the talent you have.