Human Resources

3 Reasons Why HR is Critical to Your Company's Success

HR directors aren't usually considered a CEO's "right hand." But they should be.
3 Reasons Why HR is Critical to Your Company's Success
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Who is a CEO’s right hand? The VP of sales? The CFO? What about the head of HR?

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HR usually isn’t lumped into this "right-hand" category, and that's a shame because HR leaders are critical to the success of every organization. They do much more behind the scenes than many people realize. Without them, businesses wouldn’t have dedicated teams of talented people, and without people, there is no business.

Here are just a few of the ways HR staff are critical to the success of every organization -- and to every CEO:

They work to hire the best.

It sounds simple, but hiring is a deeply complex process. In fact, 48 percent of CEOs surveyed by CareerBuilder in 2015 said their companies had lost money due to inefficient recruiting. And that process isn’t getting any easier.

Among recruiters surveyed by Jobvite this year, 95 percent expected recruiting to be as or more challenging in 2017. But that’s where HR departments come in. They’re not trying to hire people as fast and cheaply as possible -- they’re looking for the best people for the job, and that saves money in the long run.

An HR department is more concerned with post-hire metrics like performance and retention of new hires than metrics that measure the hiring process, like cost and time-to-hire. This focus on the success of new employees is critical to the overall health of the organization as a whole.

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According to a report published by Gallup in May, turnover involving millennials alone costs the U.S. economy $30.5 billion annually. But when HR takes the time to find the best talent for the job, and then finds ways to keep these individuals satisfied, talent sticks around. Retention keeps companies moving forward while saving both time and money.

They’re focused on employee engagement.

Employee engagement is seen as one of the biggest workplace problems. Gallup’s 2013 State of the American Workplace survey of more than 350,000 respondents nationwide estimated that disengaged employees cost U.S. businesses between $450 billion and $550 billion each year in lost productivity.

But HR is on the case, leading the charge to make sure employees are engaged. Engagement, in fact, can be boiled down to just a few factors, including employee recognition, feedback, learning and development, plus compensation, benefits and work-life balance.

So, whether an HR department is finding new learning and development opportunities, collecting employee feedback with regular engagement surveys or developing recognition programs and incentives, the HR staff is always looking for the best engagement strategies to fit their employees and company culture.

And motivating, recognizing and engaging employees has a huge impact. Among employees surveyed by Globoforce in 2016, 82 percent said that when they feel appreciated and recognized, they feel more engaged, and 78 percent feel more productive.

Their insights improve the business.

HR has a unique view of the company and the people behind it, putting them in the perfect position to help make important business decisions. While the HR department isn’t traditionally thought of as a part of the strategy team, 65 percent of CEOs in the CareerBuilder survey said that, post-recession, HR opinions carry greater weight with senior management. What’s more, 73 percent said their HR leader had provided data that they had incorporated into their business strategy.

If things are working as they should, a company's HR department has a deep understanding of talent and how employees work, and tracks the data to back up their suggestions. More than half (57 percent) of CEOs in the CareerBuilder survey said HR executives can show ways to increase efficiencies and cut costs by better using the company’s human capital.

When the HR department and C-suite work together, the results are powerful. A 2014 survey by EY found that when companies boasted strong collaboration between HR and finance, they also reported higher earnings and stronger improvement across a range of HR metrics, such as employee engagement.

Related: Why You Need to Embrace the Big Data Trend in HR

Effective HR departments, then, help organizations get the most from their people, while also keeping those people happy. With HR's insights, employers can make smarter decisions on where and how to invest in their talent to benefit everyone.