Executives everywhere are trying to balance protecting margins and funding growth. Maximizing their organization’s human capital may be the key to achieving both goals.
Economic uncertainty, labor shortages and proving ROI have only made it more difficult for execs to ensure their organization has the right skills and capacity to execute business priorities. As a result, greater focus has been put on internal talent as a strategic lever to manage labor costs and build capacity.
But optimal workforce management requires more than financial discipline. It requires a strong partnership with the function that understands your people best: HR.
“Business gets done through people, and, at its best, HR is propelling people — and the business — forward,” says David Wayner, vice president of service operations, Insperity HRScale at Insperity. Most executives recognize that connection. In fact, 87% agree HR programs influence profitability, according to a recent survey by Insperity and HR Dive’s Studio by Informa TechTarget.
Yet HR leaders don’t always have the support they need to maximize that impact. The survey also found that 64% of executives say receiving executive support is not challenging, whereas 51% of HR leaders say it’s at least somewhat challenging. That gap in perception presents a timely opportunity for CFOs to change course and work more closely with people leaders to get the most out of the business’s biggest investment: its people.
5 ways to maximize your human capital — with HR’s help
1. Get a clear view of your existing talent
Understanding the talent you already have is critical to getting the most from your workforce. Tap your HR leader and HCM system to gain visibility into employees’ skills, leadership potential and engagement.
“If you have an HCM system that truly captures the entire talent picture of your employees, you can leverage that data to ensure you really understand the talent at the table and where their resources can best be used to focus on business results,” explains Maria Jugin, manager, HR consultant services at Insperity.
That insight matters to the business. With 88% of executives citing talent attraction and retention and 79% citing workforce skills and capabilities as the HR initiatives most influential to major business decisions, talent data can help inform how to adjust and optimize your workforce.
2. Build your talent pipeline before you need it
A strong internal pipeline helps your organization prepare for future business needs. Amid historic labor market shrinkage, it’s more important than ever.
The survey uncovered that when asked where HR has the greatest opportunity to drive business impact, executives ranked elevating leadership and succession planning at the top. Work together with your HR leader to strengthen your succession planning strategy to avoid future workplace gaps. Start with your talent data and stakeholder feedback to identify high-potential employees. From there, review what you’re doing to take care of that pipeline — from learning and development to recognition — to build your talent pipeline from within.
Mentorship matters, too. To Wayner, high-potential employees should have an identified mentor, and strong leaders should be looking for opportunities to mentor talent within and outside of their reporting structure.
3. Use talent data to reduce business risk
Talent data can give you visibility into where your workforce is strongest and where vulnerabilities may exist. “When you look at metrics like turnover, rate of internal transfer and rate of succession within an organization, you can really see where you’re struggling and where you’re thriving,” says Jugin.
That data can help you get ahead of future risk. Take generational makeup, for example. A highly tenured workforce may bring deep institutional knowledge, but it can also create succession risk if there isn’t a strong pipeline behind employees approaching retirement, explains Jugin.
Jugin also suggests ensuring your data reflects every time someone makes a move within your organization — from moving into a new position to moving to a new city. Each change can surface insights before they become business problems.
4. Invest in infrastructure that propels your business
Audit your existing HR and HCM systems to see if they’re moving you forward or holding you back. For example, assess whether you can currently move from the attraction phase all the way through retirement within a single, seamless system.
This capability becomes increasingly important as organizations scale. As Jugin points out, a system that makes sense at 50 employees may no longer work at 250 or 450. “Having a product that can scale with you is key,” she emphasizes.
Pay special attention to fragmentation, which can limit your organization's effective use of human capital. Wayner saw this firsthand with a 2,000-person company that had very simple capabilities they could not realize because their processes were stuck in fragmented systems.
5. Create more capacity for strategic HR
Executives rely on HR leaders to drive long-term growth through talent, but may underestimate the administrative obstacles in the way. The survey data showed that 63% of executives say administrative burdens hinder HR’s ability to operate strategically not at all or not too much. In contrast, 64% of HR leaders say they hinder it at least somewhat.
The disconnect presents an opportunity to create better conditions for people leaders, enabling them to help you get the most out of your people. Whether through better systems, stronger vendor partnerships or greater executive sponsorship, “a business needs to look at the administrative demands that hold HR back from being strategic,” says Jugin. “With more capacity, HR can step into that strategic seat more seamlessly.”
Take the long view on your talent
Economic and workforce challenges will only continue to complicate efforts to keep labor costs under control. That’s why the prudent approach is to change perception, or, as Jugin puts it, “to look at talent as a holistic picture instead of a moment in time.”
When you understand the talent you have, proactively build from within and adopt smart systems that scale with you, you can make decisions confidently about what the business needs to succeed — today and five years from now.
But getting there requires more than good talent data and cost-management strategies. It requires a strong partnership with your people leader. To truly maximize your organization’s human capital, you have to maximize your partnership with HR.
And maximizing your partnership requires understanding what the C-Suite still misunderstands about the HR function. Download the full survey report to narrow the gap and learn more about how you can lean on HR as a true strategic partner.
