High performing HR in the world of finance
High-performing businesses understand the competitive advantage offered by a deeply aligned HR strategy. So how is HR best utilised to boost performance?
It wasn’t so long ago that HR people didn’t get along with finance people, said Rhonda Brighton-Hall, non-executive director of the Australian Human Resources Institute. One department was about people, the other about numbers. And in many businesses the CEO felt that HR was simply a box that needed to be ticked, a piece of legislation that had to be obeyed.
What a difference a decade makes.
These days the businesses that bake HR in to their most vital strategies, research tells us, are boosting culture, improving performance and attracting, and retaining the finest talent.
“The trio of relationships that is increasingly understood to be incredibly important is the CEO, CFO and HRO,” said Rhonda, also a lecturer on the future of work and leadership, within the Australian Graduate School of Management.
“Those three roles are a very powerful triangle and there has been research coming out of Harvard Business School, and UNSW Australia Business School, to confirm that. The reality is that the competitive advantage in a business comes when finance and HR finally work together.”
The CFO not only has their finger on the pulse of the financial state of the business, but also has the perfect level of understanding to make excellent decisions on investment within the business, Rhonda said. That understanding builds a more sustainable and longer-term view of the business, which is what people-planning is all about.
Getting the HR right
If HR in a business is not making a serious difference then something is wrong, said Rhonda. So how do you get it to work?
“First of all, don't do HR for HR’s sake,” she said. “Instead the HR strategy should be deeply in alignment with the business and its strategies, ideas and opportunities for the future.
“Every business has a couple of tight priorities that are immediately relevant, that are aligned to specific strategies. And every business should have a headline goal, aligned to the business purpose or vision, that they would like to achieve. They might want to improve customer service satisfaction, so that is where the HR strategy should begin. Everything you do with people should be based around that ambition.”
You’re lining the HR function up to a business objective, as opposed to a process objective.
Great HR policies and processes, Rhonda said, begin with the business’s headline strategy and are built deeply into everything to do with its people. It is not just about hiring and firing, but permeates throughout every level of the organisation, meaning that all layers of company leadership deeply understand the value of the HR proposition and are aligned to achieving those goals.
HR must develop an understanding of the unique capabilities the business will require to achieve its aims, and must build a pipeline to deliver those capabilities.
“You’re lining the HR function up to a business objective, as opposed to a process objective,” Rhonda said. “So you don’t just develop a talent process because you can. You develop a talent process because the business requires a specific level of capability and particular types of strengths. The talent process is aligned to the capabilities that are required to achieve the very purpose of the business.”
Such strategic HR thinking not only drives hiring, training, mentoring, leadership and so much more within the business, it also makes the success of the HR function measurable against goals that are vital to the organisation’s performance.
In service industries in particular, so much business success comes down to the performance of individuals within the organisation and it is for HR to drive this performance.
“People treated well, valued and developed properly will perform better than they would if you didn’t do that,” said Rhonda. “The right people treated the right way will deliver on performance. It’s that simple.”