By Jean Roque, President, Trupp HR.
You eat income statements for breakfast. Now you can master HR with equal vigor.
The growing cost and complexity of health care, financial impact of human capital decisions, and reduction in human resource staff has driven many companies to the decision of expanding the CFO’s role in the HR function. In fact, over the last three years, nearly 20 percent of senior financial professionals have expanded their responsibilities into HR decision-making (Robert Half Management Resources), which translates into less time focusing on the financial performance of the company and more time spent in areas that are not a core competency.
Although human resource activities are sometimes viewed as burdensome at best, the impact of HR-related activities, policies and decisions should not be taken lightly. Not only do these decisions substantially impact the health and profitability of the company, they also carry the real threat of personal liability. Since financial leaders are intimately aware of the importance of protecting the welfare of the company and its decision makers, this mindset should easily extend into HR responsibilities.
Short of becoming a human resource expert, how can leaders insure they are taking the proper steps to protect the well-being of the company and maximize their human capital ROI? Many financial leaders are turning to a familiar tool–the audit process. Extending the annual audit rhythm to include an audit of the human resource function is an ideal approach to building and validating organizational HR competency. A comprehensive HR audit addresses not only simple regulatory compliance, but identifies the more complex areas of expense reduction strategies, litigation risks, along with opportunities to increase profitability and employee productivity. Some of the more common areas explored during an HR audit are:
HR Audits reveal opportunities to reduce expenses
HR Audits identify compliance and litigation risks
HR Audits highlight opportunities to increase productivity and profitability
Successful HR audits actively involve company leaders in enhancing efficiency and performance through people. The audit starts with preparation, or the pre-audit stage, when records and documents are identified and gathered ahead of the on-site visit. When the on-site visit is launched, a business with 100 or fewer employees can estimate the review to last 2-3 days. Most importantly, leadership should be prepared to actively engage in the post-audit review meeting where key findings are shared and translated into a plan which defines priorities, implementation owners and the success measures that will be used to assess progress and ongoing performance. With a few simple strategies your company can harness savings, reduce financial exposure, and increase productivity while strengthening organization-wide HR competencies.