MHRM 6120 – Week 1

The big question of the day is whether or not HR should have “a seat at the table”.  I say, “why not?”  We all know that organizations are all about increasing profits for shareholders.  Study after study is indicating HR can have great influence on revenue.  For instance, four national surveys where 2800 firms responded indicated that where the organization implemented high performance work practices the organization obtained as much as $60,000 increase in profits, per employee.  If your organization has 100 employees, $60,000 per employee translates into a $600,000 increase.  Organizations that have shut down in the past year or two might have been able to survive with those kinds of revenue increases.

What is fascinating to me is that the possibility to increase profits doesn’t stop there.  HR’s ability to influence or make a difference on the bottom line lies in their ability to craft a strategic direction that ties directly into the organizations overall strategy.  Frankly, results are limited without HR sitting at the strategy table.   The impact they establish lies in the system and outcomes that are imbedded in this process.  What in the world do I mean by that?  What I mean is that the strategy HR employs, the goals and objects set forth, are identified as a direct result of the organizations goals and objectives.   This plan and action are then measured, monitored, and managed for maximum impact.

Starbucks, Limited Brands, and Best buy all provide great examples of how impactful this can be.  For instance, they all indicated that they know the value a .1% increase in employee engagement would be (Davenport, Harris, & Shapiro, 2010).  The annual increase for Best Buy with a .1% increase was $100,000 per year, per store (Davenport, Harris, & Shapiro, 2010, pp. 52).  How many stores does Best Buy own?  I’m not sure, but if it was only five, that yearly savings would amount to $500,000 per year.  We all know that Best Buy owns a lot more stores then five, which gives them a much bigger return on investment.

I believe the best HR departments in corporate America will craft HR Architects that embody strategy and function (Becker, Huselid, & Ulrich, 2001).  I don’t believe we can do without one or the other.  In fact, I believe that it takes both to be effective in escorting HR into a new realm of success defined by the 21rst Century.  HR function is what characterizes traditional HR.  However, strategic HR is required for crafting a competitive edge within the organization and turning HR into an asset versus a liability.  Whether the gain in profits is $100,000 or $600,000 it is an increase over the competition and another day, month, or year that contributes to current and future success of the organization.

Becker, B., Huselid, M. A., & Ulrich, D. (2001). The HR scorecard: Linking people, strategy, and performance. Boston, MA: Harvard Business School Press.

Davenport, T. H., Harris, J., & Shapiro, J. (2010). Competing on talent analytics. Harvard Business Review, 88(10), 52–58. Retrieved from the Walden Library using the Business Source Complete database:
http://proquest.umi.com.ezp.waldenulibrary.org/pqdweb?did=2155939191&sid=3&Fmt=2&clientId=70192&RQT=309&VName=PQD