Did you know that a third of a business valuation is based on culture?
No doubt you’ve heard the famous Peter Drucker quote, “Culture eats strategy for breakfast.” It’s true. Culture is key. It encapsulates a business’s vision, values, performance, profitability and productivity.
Boards and CEOs look to their human resources manager for a clearly defined cultural strategy. They also want to know how this strategy will impact the strategy of the business. HR needs to demonstrate to leaders how it helps the organisation minimise risks, ensure they’re compliant, and that they have implemented sound governance systems and processes across the organisation.
How does your HR stack up?
As a business owner or leader, ask yourself the following:
- What data do you have that shows what your HR is doing?
- What’s your engagement satisfaction rate?
- What’s your staff turnover?
- What’s your reward, recognition and remuneration percentage?
- How many bonuses did you give to high-performing employees last year?
- Has HR defined their key performance indicators?
An effective HR upholds a business’s culture. It handles employee relations, manages talent, and administers programs that increase the effectiveness of a business.
Slow execution by function wastes about 31% of HR’s time. This time could be spent much more efficiently if organisational change wasn’t so slow, so HR and the business need to help each other. In particular, HR should help the C-suite to identify and develop talent that can manage change.
Skills for the future
Boards and CEOs are looking for change-management skills. They want HR to develop their staff into leaders in a digital world.
HR must realise that digital skills are vital for future success. Businesses must also understand that the future is specialised. In the future, only 30% of leadership capabilities will apply to any situation, while 70% will be niche and apply to specific situations.
In an uncertain business environment, workers can fear change. They may feel anxious about their position and future within the organisation, which can affect their performance and productivity. HR needs to empower them to speak up, and educate them about future technologies, skills and changes. Acknowledge that fear is OK, then equip your people with the information and support they need so they can move forward. This can be done through panels, workshops and team discussions.
Emotional intelligence and resilience are critical for businesses and individuals to succeed in a rapidly changing future.
Communicate value
Boards and CEOs also want HR to communicate its value to shareholders. HR must show how their initiatives deliver revenue and profit growth.
In other words, HR needs to get the numbers. They must have excellent analytical and numerical skills. They should be decision makers rather than advisors, and make a strategic contribution to the business rather than simply think strategically.
For an HR manager to be relevant, they need to speak and act like a CEO and aspire to one day be a CEO themselves. This means being an astute business partner and planner. They also need to understand the critical issues of succession planning, culture capability and strategy.
So, does your HR uphold your desired business culture and equip it to succeed in the future?
If you need an HR specialist to discuss your business’s needs, email me at corinne@tweakhr.com.au.