How to explain the value of HR to your CEO

Author: PM editorial | Date: 12 Jun 2017

Make sure your leaders know what you can do and how the organisation will profit

Enlightened businesses are acutely aware of the difference an empowered HR department can make to the bottom line – by ensuring employees are engaged and optimised, corporate values are realistic and understood, recruitment and workforce planning needs are attended to and the organisation has a strong strategic view on where it is going and the people who will get it there.

But if HR doesn’t have regular access to the very top of the organisation, it’s possible that the CEO may not understand what the function is delivering, or what it is capable of. Charles Caldwell, HR director at the English Schools Foundation in Hong Kong and a consultant and futurist who has worked with a range of businesses, suggests there are three key ways to address this imbalance. And they all start with having a strong grip on data.

First, make your CEO is aware of external trends in your sector. “One trend might be rising attrition or changing demographics within an industry that could be signalling a potential future shortage of available talent,” says Caldwell. “Another could be the shifting technology landscape for talent acquisition.”

Next, demonstrate in-depth knowledge of employee trends your leaders may be unaware of. “There are many traditional people metrics that companies measure, but HR professionals need to be creative about looking at deeper metrics,” says Caldwell.

“For example, a traditional metric is attrition, but you could look deeper and break down the attrition into years of tenure, or even revenue generated. A statistic such as ‘10 per cent of the sales people we lost in the last year generated 40 per cent of the company’s revenue from the previous year’ could be important.

“If the statistic is significant, and you can tell a CEO why these people are leaving, they are likely to sit up and take notice not only of the statistic, but of HR’s value.”

Many businesses today are listening not just to staff surveys but also to internal social networks, says Caldwell. They are building complex pictures of the real ‘influencers’ within organisations who solve problems, generate revenue or reduce attrition.

By feeding into such information, HR departments can revolutionise the way they think about succession planning and broader talent management. Finally, HR professionals need deep insights into how business strategy and results connect to people, as well as a granular knowledge of how the business operates.

Caldwell cites his past experience with a company that had increasing sales quotas but severe attrition, with most new sales staff leaving after less than 18 months: “It was obvious there was a problem and it was even more obvious where the problem sat. But no one wanted to confront it.”

After intense study of attrition and tenure data, Caldwell predicted that 93 sales people would leave the following year. He spent the next nine months interviewing staff to find out why they were leaving, then showed the management team the year-to-date attrition.

He was almost exactly right: 92 individuals had left. “Fortunately, this was a show stopper for the executive team,” he says. “Huge efforts were made to arrest attrition and within six to 12 months it had dropped dramatically. However, none of this would have been possible without data analytics and creating a compelling, believable story out of the data.”