One of the career challenges HR executives face is being able to articulate the bottom-line difference they can make. In part, this is because very few of them focus on making those types of distinctions as their activities are non-strategic in nature. I recently became engaged to help hire a high-end HR executive who will make at least $150,000 per year. The reality is out of the 3,000 small to midsized companies that use our program, I’d be surprised if as many as five HR executives earn that type of income. Larger organizations justify the expense because they can spread it over a greater number of employees. Actually, the larger the organization, the lower the HR expense ratio per employee. According to Berntson and Associates, HR costs the average employer $1,000 to $1,500 per year. In a sense, if you have 50 employees, you have a $65,000 HR executive.
So here’s the challenge: Even if you’re a small to midsized company that doesn’t have $150,000 per year to pay an HR executive, you still need strategic HR initiatives! Otherwise, internal pressures will undermine your sales and marketing efforts.
If you doubt the return on investment of good HR practices, run your numbers on the HR That Works Cost Calculator. Even a conservative analysis will show the incredible opportunity available. However, you’ll need to make a commitment of both time and money to make it happen. Think of it this way: Suppose you remain “nonstrategic” in your HR practices. So what if you have poorly trained managers, below average employees, high claims, low productivity, and a ton of drama? Perhaps you’re familiar with this situation. In any case, there’s no reason not to “get” the importance of working on HR instead of just being in HR. Whether you have 10, 100 or 1,000 employees the need remains the same.
There are only three solutions:
- Use a program such as HR That Works and commit to a schedule to implement it.
- Hire a coach to help you implement a program such as HR That Works.
- Have third parties come in and do things for you (otherwise known as “fractional” HR).
What will be your next strategic HR objective – and how will you achieve it?