The Ripple Effect: How Undervaluing HR Can Impact Corporate Success
When it comes to human resource management, HR managers play a vital role. The HR manager has a strong ability to manage operations and implement strategies. Human resource management grew over time, particularly in modern organizations during the global pandemic. It’s because HR operations became complex, and the HR department received more responsibilities.
Despite other HRM functions, recruitment and selection are among the most important. Organizations cannot operate without their employees and succeed without the right people. Therefore, HR managers need to implement the right recruitment and selection strategy. Even though other departments of organizations play a part in the recruitment process, it’s ultimately up to the HR team to ensure that the organization implements an effective staffing strategy.
Since the HR department of an organization oversees all the administrative functions, it significantly impacts all levels of a corporation. Without effective HR management, an organization will likely experience serious productivity and financial and legal issues, ultimately leading to failure.
The Role of HR in Organizational Success
Despite having a pivotal role, the HR department in the corporate world mostly works behind the scenes. Enlisted are some of the department’s several multifaceted roles in bringing organizational success.
Attracting and Retaining Top Talent
It’s essential for growth and success for any organization, regardless of its size and area of operations. An older study found that organizations with a strong talent recruiting strategy experienced revenue growth of 3.5 times. Therefore, organizations must build a diverse and skilled workforce to meet the challenges of the rapidly changing business environment. Hiring and retaining a team of motivated and highly skilled employees helps boost productivity, improves customer satisfaction, and earns a competitive edge in the market.
Building a Positive Work Culture
It is another essential factor leading to the success of an organization. According to a study, organizations with higher employee engagement have 23% higher profitability. Besides improving employee morale, organizations with positive cultures boost productivity, improve customer satisfaction, and reduce absenteeism and turnover. By fostering a culture of trust, respect, and inclusivity, human resource departments create an environment where the employees feel valued, motivated, and respected to contribute their best efforts.
Driving Business Strategy
Driving business strategy is vital for a thriving business, as it helps align the organization’s human capital with its overall business goals. According to Gartner, approximately 38% of HR leaders reported that their strategic planning process doesn’t align with the business strategic planning calendar. The HR departments across all organizations play a crucial role in identifying the skill gaps and designing and implementing programs to acquire and develop the skills that help the organizations achieve their goals.
Improving Organizational Performance
Besides achieving goals and increasing efficiency, improving organizational performance directly impacts the bottom line. A study conducted states that approximately 13% of managers and employees expressed that they believe in the usefulness of their organization’s PM System. Human resource managers play a crucial role in driving performance by managing and motivating their employees, designing and implementing systems and processes to measure and improve performance, and supporting development opportunities. It further helps organizations to improve performances at individual and team levels, leading to improved productivity and enhanced revenue and boosting success in achieving organizational goals. With effective performance management, organizations can identify areas for improvement and make necessary changes, allowing them to stay competitive in the long term.
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Underestimating HR: Signs and Consequences
Human Resources often finds itself unappreciated in most organizations, as its full potential remains untapped. We will discuss the subtle signs of HR underestimation and the extensive consequences it brings to the organization.
Signs of HR Underestimation
Organizations undermine HR without even realizing it. Some of the common signs of undermining HRM include the following.
Lack of Employee Engagement
Statistics show that 86% of organizational problems are due to a lack of effective communication and collaboration with the higher management. A failing HR department negatively impacts employee engagement through a lack of transparency and communication. Whenever employees feel that the management fails to keep them in the loop, they feel disconnected from the organization. A lack of recognition and appreciation contributes to disengagement.
Disapproval of Innovative Ideas
If an HR department does everything in its way to dismiss any other opinion, they are likely failing its employees. A responsible HR department must value their employees’ insights and aim to utilize the strengths of every employee and meet organizational goals.
Inefficient HR Processes
A failing HR department can experience inefficient HR processes for several reasons. Lack of consistency and standardization are the most common problems for inefficient processes. When each HR professional follows a different set of procedures, it’s difficult to track progress and identify the areas for improvement. Besides, a lack of automation also leads to inefficiencies. Manual processes, including filing and data entry, are time-consuming and error-prone, often slowing down HR processes.
Consequences of HR Underestimation
The consequences of HR estimation are manifold and encompass the following.
High Turnover Rates
Failure of the HR department of an organization directly affects the employees. Without proper human resource management, employee dissatisfaction is likely to go unnoticed. It forces the employees to find jobs elsewhere. In such a scenario, an effective exit interview with a qualified HR professional must address their motivation for quitting. In the absence of the meeting, there will be no one to pass the information, and serious company issues will remain unresolved, leading to high turnover rates.
Low Morale
Poor HR practices spread to all levels of an organization. The negative influences often include employee conflict, lack of recognition, inadequate training, and poor team building, among other issues. The prolonged lack of HR management strategy makes employees feel that negative situation within the organization is unlikely to improve and damages workplace morale.
Legal Issues
The HR department of an organization ensures that the organization complies with employment and labor laws. Besides, they design policies that ensure that all the employees in an organization receive equal and fair treatment. It’s important to have a policy protecting employees from wrongful termination, harassment, and discrimination. Organizations failing to distribute and update policies face serious legal problems.
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Employee Experience and Its Impact
Employee experience is an integral part of the HR department that hinges upon the department’s effectiveness. Here’s how employee experience relates to HR’s effectiveness and corporate success. These include:
Employee Satisfaction and Engagement
HR departments foster employee engagement and boost job satisfaction. Strategies adopted by the department often include implementing communication channels, offering regular feedback and recognition, and offering opportunities to employees for professional growth and development. Engaged workforces outperform others. According to a report, employees regularly communicating with each other are more productive, and highly engaged businesses achieved a 43% difference in turnover and a 23% difference in profitability.
Employee Wellness and Well-being
Employee wellness and well-being are other crucial factors that HR professionals must look after to boost employee experience. Today, most companies focus on the factor. Since employee burnout and stress are real problems, organizations are creating programs that offer their employees access to required resources.
Recognition and Feedback
Employees thriving in an excellent company culture feel recognized and comfortable, as it offers constructive feedback to others. Employee recognition programs reduce turnover rates by 31%. According to a report, 90% of employees reported staying with an organization that takes and acts on feedback.
HR’s Involvement in Risk Management, Compliance, and Ethical Leadership
Human resource management and risk management are simultaneous. HRD’s role extends into legal compliance and ethical leadership. Failure to recognize HR in these areas might lead to significant issues negatively influencing corporate success.
Legal Compliance
Human resources activities and policies must align with existing laws and regulations. Organizations must follow workplace safety and amended labor laws to stay on top of HR compliance. It involves ensuring all employee contracts agree with the applicable regulations.
Ethical Leadership
People do not quit jobs; they quit managers- the most common phrase that almost all professionals hear. Though most people think it cliché, there’s some truth to the words. An organization with shaky leadership might experience problems popping up in several areas. Eventually, the organization might start losing businesses, employees, and professional influence since the managers and leaders weren’t ethical in their profession.
Building a Robust HR Function
To avoid HR underestimation, organizations must adopt strategies that help in the effective cultivation of the HR department. It’s vital for HR professionals to step out of their comfort zones and prepare themselves for higher business roles. Enlisted are the ways to robust HR functions.
HR Investment
Nowadays, funding is a challenge for any corporate when it’s not related to top-line growth. HR must be better at being ahead of understanding the business and its drivers. It helps the professionals to understand the return on investment of the company and can predict the ways to contribute towards it.
Leadership and Navigation
Besides managing information, leadership also involves managing emotions. HR is the only key specialized area dealing with human factors. It’s their responsibility to connect them to a vision and inspire them to action.
Business Acumen
Strategic decisions play a very important role in business to overcome competitors, and therefore, it’s essential for any organization. With the quick change of people, processes, and practices, adopting strategic decisions helps an organization to blend with it. Therefore, it’s essential for HR professionals to understand how HR policies and practices contribute to the strategic objectives of the organization.
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Case Studies and Corporate Failures
Real-world case studies and corporate failures that underestimated HR and experienced substantial setbacks offer valuable insights into the consequences of undervaluing HR.
Disability Discrimination at Weston Homes
Theoretically, professionals are aware of the importance of handling disability accommodations; however, when it comes to practice, the reality is different. Weston Homes erred when handling accommodations for an employee with diabetes, costing them a hefty compensation of 14,000 pounds. The claimant, Carr, brought allegations of discrimination and harassment resulting from adjustments required to manage her diabetes.
She didn’t disclose her condition during the interview, as she managed the condition to a degree that wouldn’t affect her career. The claimant soon became aware of an email discussion between managers about her condition and commented on her condition. Her line manager asked her to meet with a representative, who asked her detailed questions. Later, a judge stated the manager to be excessive, invasive, and heavy-handed.
Although the HR tried defending her, stating that they would learn more about the disease, the judge ruled out the same, stating it to be inappropriate. The managers then introduced Carr to the first-aiders and included her condition in the introduction. The organization kept creating trouble and embarrassment for Carr and later fired her.
According to the law, the organization’s HR team must make reasonable adjustments when working with employees with disabilities. Targeting someone due to their medical conditions becomes illegal. In this case, it was surprising for the manager to find out about the condition instead of a formal disclosure. However, an employee isn’t obliged to do so and must inform the disability of the employer when requesting adjustments.
Above all, when firing an employee, employers must document specific instances as examples. A firing must never come as a surprise for a low-performing employee. Every employee must receive warnings and opportunities to improve the same. HR professionals must work together with managers to effectively document issues and plan improvements.
Valuing HR: The Path to Corporate Success
To reverse the ripple effect of HR underestimation, organizations must recognize HR’s true value and potential within their structure. Enlisted are a few actionable strategies that make HR a strategic partner with the organization.
Strategic Alignment
The strategic business partners’ role often becomes thankless, as organizations expect them to solve and intervene in all people-related issues. HR professionals can change this by using an appropriate action research approach. They can use the approach to collaborate with the stakeholders, gain their input, and build a collaborative agenda. As strategic business partners, HR professionals must prioritize their tasks to reflect the strategic goals of the business leaders, deny the requests that fail to add value to the role and use the metrics to track the results.
Business Knowledge
It’s essential for HR professionals to learn more about the organization’s business, its mission and vision, its product and services, its customers, and its capabilities to make the business successful. Organizational development focuses on offering solutions specific to a business context, making it crucial for professionals to have a deep understanding of the business context. When HR professionals speak the language of the business and offer solutions to meet specific needs, they offer value.
Process Expertise
As strategic business partners, HR professionals must be able to distinguish between Expert Support and Process Support. While they offer expertise from an HR perspective, an organization also requires Process support about how to accomplish business goals. HR professionals must utilize OD facilitation skills. These skills help in understanding the needs, bringing in stakeholders, creating an environment of inclusion and participation, facilitating powerful conversations, and aligning strategies towards agreed goals.
Manage Change
Implementing changes is the most significant challenge leaders face. It ranges from simple process change to organizational transformation. Organizational development focuses on facilitating modifications. HR strategic partners must understand the process and context of the change, the reactions of the people experiencing the change, and the ways to work with the business leaders to adapt to the change.
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Conclusion
The article explored the profound consequences of undervaluing HR and its ripple effect on organizational success. It underscored the pivotal role that HR plays in shaping and sustaining corporate success. It further urges organizations to reassess and elevate the status of HR, recognizing it as the critical architect of prosperity in today’s corporate landscape.
