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Employee Productivity is the Primary Objective of the HR Department
The Human Resources department at most companies has many responsibilities and the value it brings to an organization can vary from company to company. Let’s discuss some common responsibilities of HR departments to determine if these functions are the primary focus and whether or not they bring value to the department and organization.
The human resources department is responsible for providing and communicating company benefits, monitoring corporate compliance with government regulations, and, in many companies, managing the payroll systems and ensuring competitive compensation plans. These are just a few of the many responsibilities of a Human Resources department.
But what should be the primary responsibility of the Human Resources department? I suppose you could say that it would be different for every company and perhaps this is a good answer. If the Human Resources function, mission, vision and objectives are in line with those of senior management, then I suppose one could say that the Human Resources function is fulfilling its role.
However, I am not entirely comfortable with this answer. Recognizing that very few senior executives such as the CEO and COO come from a solid human resources background, how do we ensure that HR policies, procedures and programs are meeting the needs of the organization?
Well, let’s look at this question in another way. What would happen if there was no Human Resources department in the company? How would employees get paid? How would the company plan, negotiate, communicate and manage employee benefits? How would the company recruit new employees?
Temporary placement services, headhunters, payroll administration companies, benefits brokers, Professional Employer Organizations (PEO’S) and other third party administrators exist because they specialize in one particular function (normally done by a company’s HR department) and normally do their one specialized function very well.
This does not mean that HR departments should outsource as many functions as possible. On the contrary, HR should concentrate directly on the issues that most relate to improving employee productivity.
So, while the payroll, benefits administration and recruitment effort are important to a company, are they the most important functions of the Human Resources department? I do not think so. I believe the #1, most essential function of the Human Resources department is to help make the workforce more efficient and productive.
Human Resources departments are considered “staff functions” by many organizations instead of a “line function”. What does this mean to most organizations? It means that “staff functions” do NOT directly contribute to the profitability of a business but are simply there to support those employees who directly contribute to the profitability of a business - “line functions”.
Therefore, during a downturn in the economy, it is very common for “staff functions” such as Human Resources to be one of the first departments that senior management looks to make cutbacks with since the department does not directly impact profitability.
However, if the #1 priority of the Human Resources department is to help make all the employees more productive and efficient, this department might be the last department targeted in a downturn since the overall function makes the whole organization more profitable.
What are the best ways HR can affect the productivity of the entire company’s workforce? In the absence of explicit instructions from senior management, the HR department should examine how it can best make all the company employees more productive. Perhaps focusing on development, communication and management of performance management systems, 360 degree focus groups, succession planning platforms and other productivity and performance management tools are a better use of HR department resources than the normal tasks most associated with HR departments (recruitment, payroll, benefits).
What to do now:
- If senior management does not give specific direction to the contrary, HR should focus its strategy primarily on helping to make the employee population more productive and efficient.
- Develop an HR “department description” that focuses on tasks that support the improvement of employee productivity and efficiency. Share the “department job description” or function with senior management to ensure your thoughts remain in-line with the senior management team.
- If a function does not support the overall objective of increasing employee productivity and efficiency, then have a discussion as to whether the function can be dropped altogether. If the function can’t be dropped entirely, determine whether there is another department within the company that is better able to fulfill the function. Discuss whether it can be done more efficiently by a third party company. Eliminate or transfer any function that does not support the overall objective of increasing employee productivity.
- Develop specialized HR employees who concentrate on improving the HR functions that most closely relate to improving overall employee productivity.
- Determine what metrics should be utilized to measure the HR department’s effectiveness on employee productivity. Examples might include: a) Total production output divided by # of employees; b) Total production output divided by total employee costs; c) Total revenue divided by # employees. There are many other metrics that could be utilized to measure changes in workforce productivity.
- Confirm choices and decisions with senior management so that the future strategic objectives of the HR department are in-line with corporate goals. This will also ensure that senior management agrees with decisions concerning dropping functions or changing functions to another department or to a third party administrator.
In conclusion, improving employee productivity should be the main objective of human resources. HR departments need to review the function of their department to make sure all responsibilities assigned to the department help to achieve the main objective in enhancing employee productivity to impact profitability. Any function that does not relate to the main objective of improving employee productivity should be eliminated, outsourced or accomplished in a manner that does not utilize much in the way of HR resources and budget.
