From finding workers to incorporating technology, from finding new sales and distribution channels to redefining the supply chain, nearly every aspect of your business is changing. The bottom line: you’re groping for answers.
Those answers might be found within your own company in an unlikely place the human resources department.
“The more that we can home grow or attract great talent into the region makes our Northeast Ohio organizations more competitive,” says Patrick Perry, president of the Employers Resource Council. “It isn’t just the fact that we have wonderful sports teams here and great culture and revitalization, you still have to have a great place to do business. And if you’re going to have a great place to do business, you better have a wonderful talent base, and that stretches from health care to information technology to sports teams to manufacturing to retail and financial institutions and biotechnology.
“Northeast Ohio is one of the richest in terms of industry diversity, which provides us a competitive advantage from an attraction ability to bring in good talent, because you have multiple opportunities with the 22 contiguous counties that make up Northeast Ohio.”
The main struggle for area businesses is how to best take advantage of this bounty.
“Northeast Ohio is probably one of the leading regions as far as human resource management in the country for a couple of reasons,” says Perry. “There is incredible strength in local HR professional societies. There are about 13 different professional societies in town that are long standing and have a strong active membership. (Also) there are a number of leading edge initiatives in Northeast Ohio.”
A well-structured company has a human resources department woven through every nook and cranny. It is that important.
“An HR department should be fully integrated into the entire organization,” says Perry. “If organizations are not doing that today, typically they’re hurting somewhere. The organizations that we see today that are truly competitive in their industries one of the common denominators is that they have a strong HR function.
“That HR function typically reports, if not to the CEO, to a key senior management position that can make decisions quickly.”
Simply defined, HR consists of benefits and compensation. Money isn’t always the answer, though it’s not likely your employees would refuse a raise. But there may be things they’re looking for that are far more important. That’s something Perry’s found as part of a growing trend.
Employees have objectives beyond greater salaries. Often, they are looking out for their futures, which are tied to the projects they’re working on today. And that is, of course, tied to their co-workers. So one thing they want is not just competent co-workers, but people who can excel.
There’s just one problem with that today, you’ll encounter problems just finding enough workers to staff your company completely. According to a survey conducted by the ERC for SBN, nearly half of all Northeast Ohio companies say their greatest problem is attracting and retaining quality employees.
“What’s happening is when you don’t have a great place to work, and with the shrinking talent pool that’s out there, and unemployment is at it’s lowest level, you’ve got a war for talent going on,” Perry says. “Any organizations that are solely focused on the bottom line and have ignored good HR management are starting to feel the pain. The two go hand in hand today.”
So what should companies do to make sure they get the most from their HR function?
Understand HR’s role
Your human resources department is there to ensure that there is a foundation of good fundamental compensation and benefits programs, and to oversee workplace practices and policies that treat people fairly internally and are externally competitive. HR also makes sure the organization is compliant with local state and federal employment laws, Perry says.
Finally, the HR department ensures that the organization is managing risk from a safety standpoint, legal standpoint and also from an insurance standpoint whether that risk is workers’ compensation, Employment Practices Liability Insurance or errors and omissions insurance.
“It all depends on that particular organization,” he says. “The bottom line is that the HR professional today wears multiple hats. In addition to some of those basic (duties) which involve both traditional and very proactive programs and practices, an organization should look to HR to be the eyes and ears of the organization, an ambassador of the organization, a liaison between management and nonmanagement employees, an internal salesperson.”
To that end, Perry has a suggestion that may shock many traditionalists.
“We are now seeing some organizations elevate their HR position to a staff member who attends board meetings,” he says. “The board members get much more in tune with what’s going on in the organization through the HR function than they may have been before. In fact, we’re big advocates that there should be a strong HR representation on the board, meaning the senior HR person or someone who handles that particular function should be at most board meetings providing a board report.”
It may be difficult to find numbers that underscore the significance of HR professionals. In fact, not one of the companies that responded to the SBN/ERC survey identified anyone in the HR department as the most important person in their organization.
Before you discount that, consider that less than one-third claimed the president of the company was the most important person in the organization.
So how do you locate the right person to fill such a vital role?
Business owners “need to identify a talented HR professional who has a pretty good background in many of the areas; perhaps they are a jack-of-all-trades, master of none,” Perry says. “An HR person today juggles many hats. They must be able to communicate the same message to hourly, middle management, senior management and board members in a way that makes sense to each one of those organizational levels and still stay within the law.
“They must be able to maintain a correct ethical position and be accurate. On top of that, the HR person should have good business acumen. The better HR people in town are those who can often play a key component in a business’ strategic planning and business planning processes.”
Weigh the benefits
Benefits are one of the most important aspects of your compensation package.
“(Employees) are becoming more savvy, but I don’t think, necessarily, that they’re becoming more demanding of those offerings,” says Laura Sullivan, director of HR support services for the Employers Resource Council and a Certified Employee Benefits Specialist. “They’re becoming smarter because they realize how much of an impact these benefits have.”
And when employees get smarter, their employers must, also.
“Larger corporations or the more technologically adept corporations are the most advanced in their HR practices, including benefits,” Sullivan says. “The reason for that is because they usually have more ability financially to provide for some of these benefits. For years, they’ve provided standard benefits and now people are looking for some other new kinds of resources like concierge sources and things like that. And the smaller companies are more concerned about wages.”
Where does that leave those smaller companies?
“They’re not as concerned about benefits, but they really should be,” Sullivan says. “There are a lot of things out there that they could be doing more of that would allow their employees to access benefits that wouldn’t cost them anything. Sometimes they just don’t look around for that. Usually it’s the owner of the company ... there are so many resources that you have to look into things like this, and they’re concerned about their operations, much more their bottom line.
“That takes up almost 100 percent of their focus and benefits. The whole employment relationship is almost ancillary, which is too bad.”
That doesn’t mean, however, that benefits are useful only for bringing top talent through the door.
“Just as you can attract people by offering extras, you can retain them because they might be able to go somewhere else for the same pay and probably comparable surroundings, atmosphere and management, but maybe they have something else,” Sullivan says. “People are very aware that sounds nice, but (say), ‘Am I really going to utilize this? Will it benefit me? And is it significant to me?’
“If it’s significant pretty much if you look at traditional benefits health insurance, life insurance, disability those things that keep your security those are the things that are most important.”
Whether it’s benefits, compensation, attraction, retention or any other of the myriad roles your HR professional plays, the most important thing you can do is listen.
“The HR professional today has to be well-trained, has to keep up to date with their profession,” Perry says. “The key is that the HR person needs to be able take those laws, look at the business plan, the objectives and goals of the organization, and help integrate all of that so an organization can perform legally, ethically, morally, accurately and also make it a great place to work.
“It is a lot on a person’s plate, because you’re trying to marry several on the surface conflicting issues.”
How important is it to get it right? Perry puts it bluntly.
“Today an organization that does not have HR involved in strategic planning or in business planning, my guess is that they have increased their business’s chance of failure.”
How to reach: Employers Resource Council, (216) 696-3636
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN.