By Nancy Painter

While it is generally accepted today that HR practitioners contribute to their employers’ bottom line, questions remain—such as how, and by how much. Switching the lens from the bottom line impact to top line practices readily reveals HR’s unique ability to drive and sustain business results.

Cori Maedel, CHRP

Strategic and Foundational HR
Strategic HR makes a company money, and foundational HR saves it money, according to Cori Maedel, CHRP, MBA, CEO of Jouta Performance, a Vancouver-based HR consultancy she founded seven and a half years ago.

Foundational HR includes such things as regulatory compliance, benefits administration and what are often thought of as more traditional HR areas. Strategic HR looks further than immediate needs, and has a much greater impact.

Maedel can cite plenty of concrete examples of how both types of HR have affected her clients’ bottom lines; examples range from saving $60,000 by following their own recently implemented employment agreements when terminating someone, to saving a company hundreds of thousands of dollars by implementing a solid recruitment process that increased retention and decreased the substantial costs associated with hiring new staff and bringing them onboard.

“Ninety-eight per cent of the businesses in B.C. are small or medium-sized, and many of them don’t understand what HR can do,” Maedel adds. “I knew HR was important, but until I ran my own business, I didn’t realize how critical it was.” She shares what she has learned through her consulting and teaching professional development programs.

Understanding Culture Key to Impact
Regardless of the size of the enterprise or organization, Maedel says, one of HR’s most important jobs is making sure everyone understands the culture they’re working in.

“We find that often organizations are not clear on their culture. If HR is not driving that, what are they doing?” she asks. “I firmly believe that culture eats strategy for breakfast. If employees don’t share a common culture, they won’t be able to achieve the strategy.”

She recalls one company that had lost sight of its culture, enabling a counter culture to form within its workplace. As a result, half of the 1,000 employees had to be replaced to get the company back on track, a huge hit to the bottom line that could have been prevented if culture had been clearly understood all along.

In another instance, the client company had values, but had neither defined nor communicated them. When the executive group members were asked describe those values, each gave a different answer.

For Maedel, the question is clear, “If you’re not in agreement, how can you drive the behaviour you expect from employees to reach your larger goals?” If employees don’t know what they are trying to achieve, she adds, they cannot be effective. Similarly, if HR does not know the ultimate goals, it can influence neither behaviour nor results.

Culture, Protection, Productivity
HR’s work brings together culture, protection and productivity, Maedel says. Protection is foundational, and has to be done to preserve the organization from risk. Moreover, culture has to be in place and understood before an HR strategy can be put in place, “and that’s what makes you money.”

According to Maedel, organizations have to critically examine programs like their performance appraisals. “Do you want performance development or performance management?” she asks. Development can motivate staff, as can rewards and recognition. “Sometimes people get a bonus without knowing why. They want to know what they have to do to get better. They need to know what they’re working toward. If employees see how their growth and development is connected to the success of the organization, they are motivated.”

She recalls a family-run business whose owners thought HR was a waste of time. It turned out that none of them shared the same vision for their business. “Once the vision was clear, they were finally working in unison, as a team. Then it was easy to put practices in place to support them.”

An analysis of their absence tracking system revealed that it was costing them $8,000 per month in lost productivity. That effort alone not only saved them a clear $5,000 per month, but exponentially more because resources were not being wasted tracking down paper as with the old system.

People Make Success Happen
In businesses of all sizes, HR definitely drives business results. To claim otherwise, says Caroline Schein, CHRP, VP of people and operations development for Boston Pizza International, “is like suggesting that an organization can be successful without people. Success doesn’t just happen; people make it happen.”

Caroline Schein, CHRP

“What, at its core, enables a business to be successful?” asks Schein. “People are the business, and we have to ask what enables the employees to be successful. HR drives business results most by removing the barriers that get in the way of people performing at their best. Organizations are successful when they understand the connection between strategy, people, performance and results.”

Culture can be a barrier if not nurtured, Schein adds. Conversely, as during her tenure with Future Shop and later Best Buy as director of workplace learning, it can achieve great things. When Best Buy bought Future Shop 20 years ago, the company decided to keep the two distinct brands and identities. However, a tremendous amount of effort was put into combining the cultures of the two organizations.

“We looked at how people were different and how they were similar, for every business unit, not just HR. We had to manage change and its impact on people. We looked at people – their training, their bench strength, their orientation to the new world,” explains Schein. “It ended up very seamless and smooth, with minimal disruption. It could have been very ugly.”

Interestingly, Schein admits that she does not even see herself as an HR person. Her role includes training and development, operational systems and internal communication for Boston Pizza across Canada. “HR is woven through everything we do. It’s completely part of the strategic conversations, because whatever we want to achieve, one of my people has to make it happen,” she explains. “There is no separation.”

Every leader has an HR responsibility, Schein adds; otherwise they are not effective leaders. Employees set their own goals, but they must fit into the company’s strategic imperatives, which leaders must communicate.

“My philosophy is that HR is a mindset, a hat that leaders wear. We are there to coach and guide, to offer resources, best practices and tools,” says Schein. “We give branches the change to shine. We enlighten employees as to what right looks like. We facilitate it.”

The line is increasingly blurring between human resources and general good business practices, she adds. All departments are part of a successful business, but the commonality between them is their people. “We ensure people are equipped for success.”

Motivating Employees to Make a Difference
Keeping people performing at their best is dependent on salary, knowledge acquisition and transfer, change management, communications and good leadership, Schein says. Employees must be able to answer “Yes” to four simple questions:

• Do I fit?
• Do I belong?
• Can I make a difference?
• Can I learn and grow?

If they can, they are likely highly motivated to succeed and contribute, and so positively affect the organization’s bottom line.

Ensuring the Right Human Capital
Christine Maassen, CHRP, is the senior vice-president of Silverbirch Hotels and Resorts, and HRMA’s 2014 HR Professional of the Year. She sees HR as having several roles that directly affect an organization’s bottom line.

Christine Maassen, CHRP

“HR is the steward of the organization, maintaining compliance with general laws, labour laws, human rights, collective agreements. It’s a risk mitigation role, where we don’t expose the company to risks, many of them with financial costs, not even counting the human costs,” says Maassen.

As legislation has become more sophisticated, so has following it correctly. HR ensures that no situation arises that siphons off resources better committed to achieving the company’s strategy.

Although our economy is becoming more and more knowledge-based, Maassen says, people are still essential to supplying services or products to the end user or stakeholder. HR’s job is to make sure the organization has the human capital it requires to meet immediate needs and future needs to reach its strategic goals.

“We need to understand the organizational strategy and what it requires as human capital, then find ways to make it happen,” she says. Accordingly, HR must evaluate what is needed against what is available, and support people with the knowledge they need to fill their roles.

An Operational Point of View
Maassen ran food and beverage operations for 25 years, and hasn’t lost that view of business. “I still have both lenses with me, and I use both all the time. To know what the implications are in operations when you make a decision or recommendation—it’s a very rich combination.”

She cites the example of laying off staff so that hotels can be renovated and then re-opened. “It would have been easy to show up and say ‘you’re laid off’ and send people home, but we chose to give them three to four months of notice. It allowed people to say good-bye and together make their way, and become comfortable with not having a job.”

“Some of these loyal staff had never done a resume in their life,” says Maassen. “English was not their first language. So we supported them, prepared them, and it gave people the confidence that they would be okay. They left okay, not happy, but not distressed. Approximately 80 per cent of them had another job by the time we closed.”

To Know the Business Saves Money
In addition, and of no small measure, Maassen notes, the company saved $1.2 million by giving employees working notice rather than lump sum payments.

Understandably, Maassen maintains that the first thing HR has to do to drive business results is understand the business: what it is doing, its KPIs, what success looks like and the trends in the business area are all part of that understanding.

There are opportunities to save money for any organization. She recalls reducing the number of benefit plans from 27 to eight in one organization, saving it $400,000 per year.

To Drive the Business Requires Leadership
However, Maassen’s real passion is in the impact that HR can have on the leadership capacity of an organization through strategic recruitment and succession planning. As turnover and onboarding are expensive, a clear understanding of what is needed helps HR to get the right person and results.

The other side of the recruitment coin is developing leaders within the existing workforce: making sure employees are equipped with the tools they need, developing individuals for leadership roles, and displaying the right behaviours to bring out the best in people every day.

Maassen sees the need for leaders to engage and to lead in processes as a growing issue in HR. “It’s not easy to measure or quantify, but it is costing a fortune in organizations,” she says. “Moving the leadership needle is not easy to do.”

An Intelligent Workforce Needs Flexibility
Today’s workplace is full of intelligent workers, many of them highly educated, who need to be mobilized and engaged. “We need to keep people committed to the organization and its goals,” Maassen says.

Along with their knowledge, employees and organizations need flexibility and the ability to move quickly, she adds. “One of our competitors recently announced that it was providing free internet for all clients. That simple email triggered quite a few reactions and decisions on our part. You need to have a workforce that can move quickly.”

The bottom line in contributing to the organization’s bottom line, Maassen explains, is “to know the business inside and out before you show up as an HR practitioner, so you can relate to and are motivated by their needs.”

More About People than Function
Gord Orlikow, CHRP, MPA, senior client partner at Korn Ferry, could not agree more. In fact, he encourages HR practitioners to take on occasional rotational assignments in new areas to gain a better understanding of their business.

Gord Orlikow, CHRP

“We see non-HR people placed in lead HR roles; my view of that is that the more senior you go in an organization, the more it’s all about the people than the functional discipline,” Orlikow says.

“HR people too often consider themselves slightly outside the business. For example, the term ‘HR business partner.’ There’s no finance or sales ‘partner.’ They’re embedded within the leadership,” he explains. “It’s essential that HR sees itself as being as deeply embedded in the leadership team as any other department in the business. HR must understand how to drive the business’s bottom line.”

HR professionals are increasingly expected to be more focused, rigorous and sophisticated in their approach, Orlikow says, including a more analytical approach that uses metrics to identify and predict trends.

Defensive and Proactive HR
Orlikow sees HR making a contribution to the bottom line in two areas: defensive and offensive/proactive. Defensive areas are those seen as traditional HR responsibilities: driving down costs by decreasing absenteeism and turnover, improving benefits administration, promoting continuous improvement through programs such as LEAN.

This work can have a direct impact on the bottom line, Orlikow says, while cautioning HR not to get caught in the ‘service trap’—in which is supports the organization or colleagues but does not push back. In short, he believes HR practitioners need to display business acumen.

Alternatively, offensive or proactive HR helps drive growth, as well as manage and accelerate change, making a robust contribution to the strategic direction of the organization. One of its major responsibilities is identifying and grooming leaders for 10 to 15 years down the road.

Making sure everyone is aligned with vision, values and strategic direction is also key. “HR has an influencing role in managing, moulding and shaping the organization’s values, ethics and culture,” Orlikow says, “more so than any other department around the executive table.”

One role that falls to top HR professionals in many organizations is being a sounding board for their boss and peers. “You have to be comfortable and confident, skilled in speaking the truth to power. It’s a very challenging role,” Orlikow says.

B.C. Success Stories
He points to various businesses where HR has had profound effects on the bottom line.
Vancity, Canada’s largest community credit union, has its values very profoundly aligned within its organization which contributes to its success. HSBC, headquartered in Vancouver, emphasizes diversity in its culture. By its nature of being an international organization, much of its key customer segment has family or business interests in other parts of the world, so diversity is important to them; HSBC is a leader in that business area.

“Kal-Tire is a another great B.C. success story,” Orlikow continues. “They have a huge commitment to the customer and to internal development. It’s very deeply imbedded in the organization, and HR leads that. With their deep commitment to promoting from within, new leaders are able to hit the ground running. They have a common, consistent set of expectations, and a high commitment. They put in a lot of incremental effort to achieve that, and they hold each other accountable.”

The resource sector learned in the 1990s and 2000s that it needed to develop talent internally, he says. GoldCorp demands a premium in the marketplace because the calibre of its leadership team is so strong.

HR Agenda is THE Agenda
“That’s not accidental. They work at that,” says Orlikow. “We work with the best known and many unheard-of organizations. For those CEOS, boards and CFOs, the HR agenda is really THE agenda. They understand fundamentally that the employee population is their source of competitive advantage.”

More and more, companies are understanding that talent drives everything else—that it really is all about people. CEOs are looking to HR for compelling strategy and talent management, to differentiate and nurture performance and potential.

There is no question that HR contributes to the bottom line, Orlikow says, and it doesn’t even need to be discussed. “It’s time to move on and just do it. Deliver the goods, and good things will happen.”

Nancy Painter is a freelance business writer and a member of International Association of Business Communicators.

(PeopleTalk Winter 2014)