To Harm or Not to Harm: HR and The Bottom Line

To Harm or Not to Harm: HR and The Bottom Line

Alyzae Feroze, MPS: HR and Employment Relations

03/20/2016

            The work atmosphere in organizations nowadays is rapidly changing and evolving, especially with the introduction of cutting edge technology and globalization. These conspiring factors seem to have blasted a variety industries into a competitive whirlwind where getting a leg up on opponents is the key to success and survival. Human resources as a department often faces the challenge of delivering value to the organization and carries a stigma of having tangible costs, but not-so-tangible benefits. The fact is, a lot of companies have not yet realized the potential impact HR can have when it is viewed not only as tactical support, but rather an equal business partner involved with the strategic, legal, ethical, and financial features of the organization.  The question is, are there decisions that an HR professional should make which will harm a company’s bottom line? In my opinion yes, because it is in the organization’s best interest to view HR as an investment rather than an expense and the bottom line may be harmed in the short term but the long term results will outshine initial damage. As a result of potentially harming the bottom line, HR will also need to devise ways in which it can minimize negativity and maximize positivity when interacting with executive staff members. 

            Human resources professionals should make decisions that harm the bottom line because it provides organizations with the opportunity to rewire the way they perceive HR. In companies where HR is not valued, they view the function as an expense rather than an investment. Harming the bottom line to some extent makes taking the “plunge” or the risk in HR much more real and gives the impression of a consolidated commitment toward investing in HR. Furthermore, once the bottom line is harmed it forces more teamwork and collaboration amongst various departments to bring the line back up to standards again. Human capital is another reason why making HR an investment rather than expense is so meaningful. Recruiting the best employees and managing them in a way that helps them realize their full potential leads to a great deal of return on investment, namely job satisfaction, increased motivation, and lower turnover. Cultivating the best talent is also likely to result in better and more creative leadership as well as innovation. In summation, all of these positive outcomes translate into advantages over competition and show ways in which HR can significantly contribute to the organizations overall business goals and strategy. 

            Another reason why human resources professionals should make decisions that harm the bottom line is because although there may be short-term costs, the long-term benefits are well worth it. Companies that solely focus on the “cost-cutting game” and how to commoditize by slashing their personnel either in terms of numbers or competence, often face detrimental long-term effects, despite a few short-term gains. “First, it cuts the core talent that leads to value creation. Second, it trades short-term costs for long-term costs. Third, it diminishes the potential for real innovation” (Wright, 2005) For example, if cost cutting means less training and development for employees, then the results a few years down the line would most likely be confused employees, poor customer service, and eventually lower sales—all due to the fear of harming the bottom line. “The HR function certainly delivered short-term value through replacing their “capability” workforce with a “commodity” workforce. However, this action failed to deliver long-term value, as can be seen by their situation today.” (Wright, 2005)

            In terms of how human resources will interact with the rest of the staff after harming the bottom line, I believe that they will initially face a lot of skepticism, pressure, and hostility. HR’s goal should be to minimize the negativity and maximize positive aspects of the relationship. With that said, it is important that HR try to present as much quantifiable data and metrics as possible when they have the floor. This will make it easier for them to relate to the executive staff because they will be speaking to them in terms that are more meaningful to them. At the same time, HR should not by any means be modest about their accomplishments and proven results. This is their opportunity to reinforce their value build up image in the eyes of skeptics. Another way to make interactions more positive is by consistently providing examples of extremely successful organizations that emphasize HR and genuinely value what it brings to the table. Giving examples of how “role-model” organizations implement HR strategies should make HR more enticing to the skeptics because they most likely strive to imitate these organizations in other areas of business anyways. 

            It is also important that HR try to maintain an open dialog and not be so ridged; they should be try to be flexible when revising policies, procedures, and other standards because it will show the executive staff that the HR department is progressive, open to suggestions, and not stuck in time. In fact, being open to suggestions and then implementing them shows the executive staff that they too have say in how HR works and can also make meaningful changes that are beneficial to the organization as whole and in line with their overall business strategy. As a result, this creates more positivity in between HR and the executive staff and helps to minimize the negativity that may come up when HR makes decisions that harm the bottom line. Finally, it is vital that HR keep their goals aligned with the business strategy and constantly remind the executive staff of this notion. This earns them their seat and reflects their true value.  “Putting the word “strategic” into the human resource function would enhance its creditability in the eyes of the organization (and) a tighter linkage with corporate strategy would enhance the perceived value of the function.” (Schlesinger, 1983)

            In conclusion, organizations should be more open to allowing HR professionals to make decisions that harm the company’s bottom line because it allows for growth as well as sustainability. The work environment is constantly evolving and the competition is getting increasingly fierce. Investing in HR and allowing the department to harm the bottom line, not only strengthens commitment and teamwork, but it also leads to greater development which ultimately helps fight off competition. Harming the bottom line in the short-term for greater long-term benefits and viability is also a great trade off when looking at the big picture and over-all potential success of organization. Finally, HR is most likely to be on the defensive when interacting with executive staff initially, but their goal should be to increase positive interaction and minimize negativity.

References:

1.     Wright, P. M. and Snell, S. A. (2005), Partner or guardian? HR's challenge in balancing value and values. Hum. Resour. Manage., 44: 177–182. doi: 10.1002/hrm.20061

2.     Schlesinger, L. A. (1983). The normative underpinnings of human resource strategy. Human Resource Management, 22(1), 83. Retrieved from http://search.proquest.com.ezaccess.libraries.psu.edu/docview/1308642627?accountid=13158