The business of HR is business

All employees in the organization - regardless of function or position - need to know how to measure the value they add to the business. Then, everyone can focus on the same thing - making money for the company.

Ask managers what their greatest asset is in business, and undoubtedly they will answer with the conditioned response: "People are our greatest asset." I happen to agree with that, but I'm amazed that not many managers treat people as business assets.

We're able to figure out what cost - as a percentage of total spending - human resources comprise, but we seldom measure the return on asset of human resources. If an engineer determines that a new piece of equipment is needed to increase productivity - thus adding dollars to the bottom line - chances are 99 out of 100 that his or her manager will want to see justification for the purchase, or the return on investment.

But how do we measure the contribution of a human resource? Shouldn't the measurement be the same as for the new piece of equipment? How much, in dollars and cents, are we contributing to the bottom line?

WHAT IS OUR ADDED VALUE?

Corporations today have adopted catchy psycholinguistic phrases to make employees feel like part of the business. Shouldn't we - as associates, business partners or whatever term you want to use in place of employees - understand what is going on in the business?

If I'm in business with someone, I would want to know how the business is doing financially - where we could be more efficient, cut costs, increase sales and obtain repeat sales. In other words, my entire focus would be on ways of making more money.

DOLLARS AND CENTS

We measure quality and productivity and usually report them as a percentage. "We met our schedule of producing X widgets with a 97 percent quality yield" are the words heard at monthly employee meetings across the United States. Great, but what does that mean financially?

People want to know what they did, personally. "How did I help the company make money? How much money did I earn for the company?"

Knowing how much money you helped earn is more powerful than knowing how many things were produced at a certain quality level. Of course, they are related, but does any annual report include the number of widgets produced? Every line item is dollars.

If you want business associates, then train, educate and inform employees in the ways of business. Associates and business partners need to think, behave and communicate as business women and men.

The goal is to have people think about how their performance, activities and decisions add value. If there is no value in doing it, why do it? When people start thinking about "their" money and "their" responsibilities, they will start to think about their jobs differently. Then we will truly have associates and business partners.

Alan Bush is the director of HR at Phoenix Finishing Corp., in Gaffney, S.C. His organizational development experience includes designing, developing and implementing performance management systems.

COPYRIGHT 1996 Society for Human Resource Management
COPYRIGHT 2004 Gale Group