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5 Reasons Why Human Resource Is The Most Important Job At Your Company

December 23, 2016


December 23, 2016

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Why Is Human Resource So Awesome?

Most people assume that the CFO (or whatever title the finance person goes by) is the most important job at a company. The reason for this assumption is simple: business success is often measured in financial terms. Since the CFO is often tasked with ensuring that the numbers add up, people automatically assume that their job is the most important in the company.

However, one person who thinks otherwise is former GE boss, Jack Welch. In his best-selling book, Winning, he singled out HR as far more important than the CFO. Using an analogy of a football team, he compared the HR to the head of player personnel and a CFO to the team accountant. He wrote:

“If you were running a sports team (like the Red Sox or Yankees), who would you like to hang out with – the head of player personnel or team accountant? Who would help you bring the best team to the field? Not the team accountant!”

“The same thing is true in business,” added Mr. Welch. He is certainly right. Human resource is far more important than finance. In fact, the human resource job is the most important in your company. Here are 5 reasons why.

1.  They Recruit Top Talent

“HR is the driving force behind what makes a great team” wrote Jack Welch. It does this by recruiting top talent for the team. Irrespective of the nature your business, having a great team will give you a competitive edge in your industry. In fact, the success of any company is directly proportional to the quality of its personnel.

Since it is the job of the HR to recruit top personnel, they have a direct impact on the overall success of the company. If you are in an innovation-driven business, top talent will unleash cutting-edge innovations which will help you to stay ahead of competitors. If you are in a service-oriented business, top talent will keep customers returning. Basically, by bringing in top talent, the HR ensures that your company is competitive, successful and profitable.

2.  They Execute Business Strategy

Some companies limit HR’s involvement to recruitment, training and compensation. As a result, they miss out on one of the most important contributions which HR can make i.e. the execution of business strategy.

HR can play an invaluable role in implementing your business strategy. They do this by transforming your strategic visions into actionable steps which can be executed by the employees. They then organize the employees into effective working teams and ensure that they are properly managed. In the end, it is HR which ensures that your strategic targets are achieved.

This is why one of the worst decisions which any company can makes is keeping HR out of strategic planning. Unfortunately, most companies make this mistake. If you intend to achieve your strategic vision with ease, make sure that your HR is involved from the onset. This will make it easier for them to translate the grand visions into simple steps which can be executed by your workers.

3.  They Maximize Employee Output

HR is responsible for ensuring that every employee performs to their full potential. They do this through a series of measures including keeping them motivated, providing training to sharpen their skills and disciplining those who step out of line. This ensures that you get the most out of your employees.

When employees are performing at their peak, the productivity of your company is also at its peak. This can translate into growth and profitability. In essence, by ensuring that your personnel perform at their optimum levels, HR can ensure that your company fulfils is true potential.

4. They Keep You In Compliance

Employee protection laws and regulations are among the most complex legislations which companies have to deal with. As such, they are among the easiest to inadvertently violate. They are also among the most favorite for attorneys and regulatory authorities to pursue. This is because they guarantee lots of press coverage (which is great for the attorneys and authorities) and offer the potential for huge financial settlements.

For companies, keeping on the right side of these legislations can be extremely difficult. This difficulty is graciously handled by the HR. Your HR is tasked with ensuring that your company is in compliance with both state and federal employee-related laws. This ranges from compensation and benefits to work hours and safety.

By ensuring your compliance, HR’s shield you from the negative publicity and financial costs which come from violating those laws. Compliance also often results into a better working experience which improves employee satisfaction, motivation and engagement.

5. They Can Lower Your Costs

Human resource costs are often among the highest which are faced by a company. The most obvious of such costs are compensation and benefits. However, a subtler but often very high cost is that of turnover and recruitment.

Your HR can help lower the costs of your compensation and benefits. They can do so by negotiating favorable payment terms with employees and their unions. They can also do so by finding creative ways of keeping employees motivated without having to resort to pay increases.

The HR can also help to lower the costs of turnover and recruitment. They can do this by recruiting people who are a perfect fit for your company. These are people whose values are in line with the company values and culture. They also do this by creating a favorable working environment which lowers incidences of turnover.

The bottom line is that your HR can help to lower your employee-related costs. This can ultimately increase your profit margins. As such, HR can play a critical role in improving the overall profitability of your company.

In a nutshell, the human resource is by far the most important in a company. Unless every task in your company is carried out by robots, the HR is the most important job in your company. Therefore, you need to ensure that they perform at their peak. There are three steps to ensure this.

The first is to ensure that the right person is at the head of HR. The second is to include HR in every important strategic decision making process in the company. The final step is to provide the HR with the full resources and authority to carry out their duties. Do this, and you will position your company on the fast-track to fulfilling its potential. Best Wishes!

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