Unlocking HR’s value chain across the enterprise

Authored by Chetan Jain, Jessica Britton, Victor Reyes, Zac Shaw, and Nicole Unis Senerth

In the dynamic world of Human Resources, achieving a full return on investment involves more than just selecting the right tools or services. It's about complementing these investments with sustainable practices and strategies that optimize HR's ability to assess the effectiveness of its services, adapt to changing business needs, and continuously innovate based on feedback.

In the first article of the series, Disrupting the status quo: The path to unlocking HR’s value, we explored the challenges HR leaders face in achieving the full return on their investments and looked at how leaders can unlock the potential in their investments. In this second installment, we explore three key areas where HR leaders can significantly enhance their value creation within the organization.

Three HR strategies to realize enterprise value

1. Promote agile talent management
   Today’s talent landscape is continuously evolving. As business needs change, workforce expectations have become a moving target and talent availability is a recurring conversation. Over the next three years, 73% of business executives anticipate continued talent shortages, and 70% of those respondents are getting creative in sourcing skills beyond mere job experience. HR can play a pivotal role in these scenarios by facilitating direct conversations to precisely define the talent requirements necessary for achieving business goals. By embracing agile talent management practices, HR not only supports but drives business value.
   
2. Optimize HR labor spend
   The average Fortune 500 company loses ~$30M in unplanned labor costs each year¹, so addressing these issues should be a priority. However, instead of focusing on cutting positions or wages, there are numerous overlooked strategies to right-size labor spend effectively. By strategically addressing both the demand and supply aspects of labor, organizations can realize substantial cost saving and enhance labor-demand alignment, thus delivering significant value to the organization.
   
   HR can partner with business leaders to strategically optimize labor spend by identifying and solving for associated hidden costs. For example, while overtime policies or timekeeping practices may seem inconsequential at the individual level, they can become a significant drain on spend across the organization.
   
3. Protect brand and promote workforce trust
   The impact of an organization's brand on its bottom line is profound, influencing not just customers but also the workforce. Despite this, less than 40% of organizational leaders report adequate governance and oversight of brand and reputation risks from their senior management.
   
   A strong, trustworthy brand not only helps in defending against external criticism, but also enhances employee engagement and loyalty. When employees believe their employer’s brand is high in the factors of trust, they are 1.5x more likely to defend their employer after someone’s criticism and 1.5x more likely to positively review their employer on a public website. Trusted companies also outperform their peers by up to 400%.

An investment framework to amplify HR’s impact
The surge in investment towards cloud-based technologies and the integration of advanced tools like Generative AI necessitates a strategic approach to HR investment focused on maximizing value creation through a solid foundation of technology, programs, and operating models.

Regardless of where your organization is in its HR transformation journey, the four cornerstones of HR investment outlined below can help safeguard the use of funds and strategic headcount, while optimizing value creation and ROI.

1. HR strategic priorities road mapping—Aligns HR strategy with business priorities and key results, ensuring investments in technology and programs are timely and relevant.
   
2. Portfolio management—Manages budget allocation, workforce headcount, and time prioritization in accordance with a strategic roadmap.
   
3. Governance and change control—Establishes a governance framework that ensures HR program transparency, design integrity, and risk mitigation.
   
4. Sustainment planning—Focuses on sustaining core applications, workforce experience, and operational effectiveness to maximize long-term value from investments.

What’s next?
In the next and final article of this 3-part series, we will explore additional HR strategies leaders can employ to unlock further value from their roles, ensuring that HR not only supports but actively drives business success.

Want a deeper look at HR value realization? Download Disrupting the status quo: The path to unlocking HR’s value.

Authors

• Chetan Jain
• Jessica Britton
• Victor Reyes
• Zac Shaw
• Nicole Unis Senerth

Contributors

• Carrie Fox
• Reem Janho
• David Clark
• Kevin Ma
• Andre Ainbinder

Endnotes:

1. Gallup, State of the global workplace: 2023 report, accessed December 1, 2023.