By Holly Kortright
To be a true strategic business partner to executives, the HR department must take a business-oriented approach to the human capital side of the organization, says Kortright. She shares what it means to be an HR leader who is a strategic business partner engaged in creating the future.
Kortright is Senior Vice president of Human Resources for Deltek, Inc., a 1700-person global organization.
From speaking the language of your company leaders to understanding the need for growth and education, an effective HR leader will gain respect and can bring positive change to the business.
As a CHRO, it is critical to think and act in the best interest of the business. At my company, we do financial reporting on a quarterly basis. In addition, every department has to submit a forecast every two weeks about where it stands against its quarterly revenue, margin and profitability goals. We have to dynamically track all of this and make adjustments, sometimes in real-time.
From an HR and human capital standpoint, we have to look at labor, recruiting and management costs … who we are hiring, how much they cost, whether they are focused on the correct priorities, etc. We also need to ensure that we leverage our talent across our business units. This constant cycle of review allows us to determine if we have the right people in the right places, or if we have gaps to fill.
Understanding how to evaluate human capital and how it affects the business is a vital skill, particularly in companies like software firms where labor costs can represent 60 percent of total costs. Because our people are such a large part of our expense structure, senior leaders take a great interest in forecasting and ability to fill open positions. It requires a CHRO to be much more in tune with what is going on in each line of business, in each function, and how labor impacts what the company is delivering, from both a revenue and profitability standpoint.
Talent and Culture Architect
As a CHRO, it is crucial to understand and demonstrate the value that culture and talent development can have on the organization. Working to ensure that on-the-job development, training and coaching are available and utilized at all levels is critical.
Setting up a coaching program that includes CEO participation is vital to organizational success. The programs I have created are robust and target the high-potentials and talented employees who may be taking on new, larger leadership roles.
Through coaching, an HR team also can accelerate the company’s succession planning process as it changes and grows. Approaching a talent development program with questions such as:
- How do we look at successors?
- How do we ensure we are going to have the right talent in place for the future?
- How do we place our top talent in the most critical roles for the company?
- How do we stretch and grow our high-potential talent with cross-functional assignments?
This approach will not only help you improve employee engagement and development, but also will help the HR Department contribute to the company’s bottom line.
As companies evolve, so must the HR strategies and programs that support business goals and cultural alignment.
At a previous organization, we moved from a flat, entrepreneurial culture to a more structured, hierarchical one due to acquisitions and regional/global growth.
Employees had to be educated that they would have future career opportunities and continue to be aggressively compensated for strong performance through these changes.
Our goal was to capture the entrepreneurial spirit already in the DNA of the company culture and find a middle ground between that and the hierarchy needed to come up with a new culture that would work with the changing structure, philosophies and practices that were needed for expanding to be a larger player in a broader industry.
One of the biggest challenges in moving from a private business to a publicly held company is honoring the success that the company realized to get it to this position and preserving the success that employees had with customers. This, however, isn’t as easy as it may sound. I suggest a multipronged approach to achieving this goal.
First, I suggest looking for best practices that have worked locally and leveraging them globally. This demonstrates that we’re serious about respecting individual contributions and recognizing that a lot of people did a lot of great work to get us to this point. This can help soften resistance to changes you may then ask people to make.
Second, I recommend building a competency model and performance management process to align employees to the business strategy and goals. This includes an evaluation process which sets employee goals/expectations, feedback and even compensation. This enables you to create an accepted common language in which to discuss, evaluate, monitor and align performance.
With leadership support, we leverage the competency model and performance management process to define and discuss business priorities and what’s important for business development, to increase revenue and to drive organizational alignment.
We also educate employees so they will understand how their jobs fit into the larger picture and align themselves with business priorities so that we are all rowing in the same direction.
Through creating these key human capital processes and our systematic review of the business forecasts and results, we discovered that some employees were focused on individual products that were not driving the most revenue. At the same time, the amount of time and energy spent on different customer segments was not aligned to revenue and profitability.
We had to analyze our customers and products from a return-on-investment standpoint and segment our customers based on revenue and profitability. This transformation happened over years, not months, and it came about as a result of information sharing: getting people to understand that there were different ways to satisfy every customer. We have made great progress in balancing customers’ needs, the needs of the business, available resources and profitability.
As one of the CEO’s key strategic advisors, I am relied upon to know the pulse of the talent, what is going on, the morale of our employees and the impact of morale on the company. The CEO relies on me to help manage the talent – the human capital – to make sure we have the right talent for where we need to go and to make sure that we are managing performance effectively.