Strategic Omissions – High Impact Things That HR Should Be Doing (But Isn’t)

Our chaotic world requires continually adding new capabilities on top of our existing ones. And even though you may have little time and even less budget. Talent leaders need to find a way to identify and add the new capabilities that your changing environment requires. So, this article lists the top 10 strategic actions that HR currently omits but that talent management leaders should consider adding.

Strategic HR Additions – That Are Designed To Cover Our Current Omissions

It’s hard to argue against the fact that competitive pressures and a record speed of change are forcing HR to continually upgrade its capabilities. And that means constantly anticipating “next steps” and then adding the HR capabilities that allow you to better handle the emerging worlds of both HR and business. So, in that light, here is a list of the often omitted strategic capabilities and actions that modern HR functions may need to add. Actions that appear early in the list have the greatest potential business impact.

• Report the estimated dollar impacts of HR – few seem to realize it. But my research has found that by far the best way to increase HR’s budget and gain the attention of your corporate executives is to report the estimated dollar value of the business impacts generated by each of the primary HR sub-functions (i.e., recruiting, retention, internal movement, and development). You can ensure that the dollar estimate is more credible if you develop it jointly with both your CFO’s and your COO’s office. For example, stating that we have a 12% turnover rate likely won’t generate much executive concern. This pales in comparison to the response you will get when you state that every percentage-point increase in top-performer turnover costs the company $7.2 million. You can learn more about quantifying the dollar value of great HR here.

• Add a process for identifying bad managers – unfortunately, research reveals that an astonishing 82% of managers don’t have the talent required for the job. Because a team’s manager is often the highest influence factor in team performance, nearly 7 in 10 employees would quit if they had a bad manager. It’s a costly mistake for a corporation to automatically assume that all managers are effective and to lack a formal process for identifying, fixing, or removing bad managers. You can learn more about developing a bad manager identification process here.

• Developing a process for assigning new work to either humans or to technology is needed – in today’s world of ever-expanding technology. As much as 50% of all new work can now be done by technology (i.e., AI, software, and robotics) instead of people. So HR must be part of a new process that objectively determines whether new work should be done by employees or technology. Learn more about how to make better people versus technology decisions here.

• Increasing the performance of your workforce should be an added focus – most HR departments don’t even have a productivity function. So, if your executives expect an increase in productivity or performance, you need to add an HR focus on increasing employee and team performance. The goal of recruiting should be to increase team performance by hiring people who become above-average performers. The L&D and performance management processes should both be required to report the percentage increase in the performance of individual employees after they have been served by any HR function.

• A single overall measure of HR success is needed – in order to gain the attention of your executives, rather than reporting the current broad array of technical metrics. HR needs to work with corporate executives to identify the single metric that best represents the HR function’s overall performance. Often, that metric is the revenue per employee ratio or the dollars of labor costs that had to be spent in order to produce each $1000 in corporate revenue.

• Add a process for rewarding effective people management – I have found that one of the most effective ways to get managers to pay attention and spend more time on talent management is to measure and reward them for their talent management results. Yet a Conference Board study revealed that only 39% of companies reward managers for effective people management results. This failure to reward has significant consequences, not only because managers have such a large impact on team success but also because they are laser-focused on whatever is measured and rewarded. You can learn more details about rewarding managers for great talent results here.

• Create a standalone retention sub-function – losing top employees to turnover is one of the most costly failures in HR. Especially because nearly 78% of turnover is preventable. And unfortunately, turnover occurs more often. In most HR organizations, retention is owned by no one, so no one individual is ever held accountable for maintaining the target retention rate. And as a result, many retention efforts have a negligible impact. So, consider adding a standalone, data-driven retention team that prioritizes its efforts where they can have the greatest impact: on top-performing individual employees who are at risk of leaving. You can learn more about how to prevent devastating turnover here.

• Failure analysis is required after every major talent management disaster – if you expect to prevent major people-management problems from repeating themselves. It’s essential that you apply failure analysis to find out why each major problem occurred and how it can be prevented in the future. And even though both failure and root cause analysis are commonly applied in most business functions, they are unfortunately quite rare in HR. 

• Add a process for anticipating upcoming talent management problems – it’s sadly true that most workforce planning efforts have been a failure. However, despite this, HR managers still need at least “a heads up” alert on all major upcoming talent management problems and opportunities. Being alerted at the very least means managers won’t be surprised, so they will have time to prepare. To provide this heads-up, HR needs to add a formal process for identifying “the leading indicators” (or precursors) that appear just before a major talent problem becomes serious. This anticipation process should include predictive metrics and benchmarking of what is happening at your competitors. HR should also conduct risk analysis that covers both the potential costs and the probability that the predicted talent problem or opportunity will actually occur. You can learn more about risk management in HR here.

• Develop a “too many/too few” tipping point alerting process – there are several “tipping points” where an important talent management ratio is about to get out of balance. The tipping points that many senior managers want to watch can include when you have too many (a surplus) or too few employees. You might also want to be alerted when your ratio of managers to employees gets too low. Senior HR leaders may also want a process that issues an alert whenever the ratio of production to administrative employees becomes too high. And when you are about to over-hire or under-hire.

HR Functions Must Become More Businesslike

Within corporations, HR sub-functions like recruiting, retention, and internal movement are labeled as administrative. However, in direct contrast, in Major League Baseball (and in other sports). The same functions are instead labeled and funded as strategic and mission-critical. So if you are an HR leader who wants to be treated at this elevated level, you must add some of these businesslike practices and capabilities (i.e., dollar impacts, performance metrics, accountability, ROI). That will boost the status of your corporate HR to this elevated status.

Note: You can learn more about other common HR omissions here. And you can learn more about the elements of the next-generation HR function here.

Final Thoughts

In these hectic times, it’s common for leaders to devote most of their time to maintaining their current processes and capabilities, even when their changing environment and competitors’ actions may demand new work processes and management capabilities. So, to avoid falling behind your talent competitors and/or to gain a competitive advantage, I have found that it’s essential for smart leaders to set aside some time to make a list of the current talent management omissions that may soon require adding a new HR capability.

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Notes for the reader

This is the latest article from Dr. Sullivan, who was called “the Michael Jordan of Hiring” by Fast Company. You can subscribe to Dr. Sullivan’s Aggressive Talent Management newsletter (which focuses on recruiting tools, current recruiting opportunities, and recruiting trends). Here or by following him on LinkedIn.