HR the most important business function - and here’s why

HR the most important business function - and here’s why..png

In Canada and globally, human resources as a business function has gone through much change over the past couple of decades. Once called the personnel department with a focus mostly on paying employees it now rarely focuses on the actual mechanics of paying (Accounting or an outsourced payroll provider being more typical). Instead it is about ensuring the people working with and for the organization are the best possible and they are productive collectively for the overall company. Given this, and the importance of what you call something in how people perceive it, some modern alternative names for the Human Resources department include People & Culture, Human Capital and Internal Engagement.

We've discussed before specific aspects of HR such as sourcing talent, onboarding or compensation - in this article we will take a high level view of why HR is the most important business function and key to your company's success. When we work with our clients to develop their business plan and strategy - the three key areas are sales & marketing, operations and finance. HR is the major component of operations and will vary in complexity based on the size, growth rate, your amount of automation / mechanization, and where your company is on the scale of building internally to buying externally the products and services you'll provide customers. Even if you are strictly focused on outsourcing production, branding and a distributor network - thinking of this external supply chain through an HR lens rather than just procurement can vastly improve your outcomes. Therefore, instead of thinking of HR as just the culture and compliance team, let's think of HR as how you'll maximize the value of the various people your company interacts with.

Understanding People

Each person has their own motivations, experiences and abilities. Being able to tap into those and find a way to align the work you need done with what they can do will reduce frustration and errors while increasing productive and positive outcomes (including innovation and multiplier effects). From Daniel Pink's research, people have three types of motivations - autonomy, mastery and purpose. Typically one will be stronger for the individual and helps drive them to stay with and strive for the organization. This is also why money, once basic needs are taken care of, becomes less of a motivator. This equally applies to knowledge workers (head), blue-collar (hands) and caregiver (heart) type roles. It can also be very stressful for people to be in a situation where their motivator is not addressed:

  • People who speak of "soul crushing work" likely aren't having their Purpose driver met

  • Complaints of "micromanaging" are more likely from Autonomy driven people

  • While some employees are happy to have idle time, those that seek Mastery are annoyed by "busy work"   

Using this information, you can frame the contract requirements, supply conditions and employee expectations for the people you work with in a way that better motivates them through the tight deadlines, change orders and stretch assignments you need of them. Let's dig into a couple examples...    

An external example

Your company relies on a network of distributors who are physically located many time zones away. The norm of your industry and the country is they are given very favourable payment terms so it is not unusual that you ship them product with no down payment and then 4-6 months later receive payment from them after they have sold and collected payments from their sub distributors and end users. In some countries and cultures (such as Canada) this type of arrangement would be tightly monitored and risk mitigation done through contracts and insurance. But in others, the personal relationship that is built and nurtured is what is more reliable than attempting to use the court system or the undeveloped collections and repossession professionals.

While the distributors aren't employees, it is highly beneficial to learn what motivates them, what their personal goals are and how a continued relationship with you can meet those needs. If your product is in the healthcare sector and they are motivated strongly by Purpose, speaking to the increasingly positive impact they'll have in their community can help ensure they stay focused for the long-term. If however, they a driven by Mastery, then framing your conversations around targets so they can take on larger orders once they prove themselves with initial small batches will likely have a bigger impact. You may also decide to only work with the Purpose driven vendors as they'll stick out the tough times longer than those that are only in the distributor profession for the Autonomy it provides. Autonomy driven people may jump to another product and leave yours unsold (and with outstanding accounts receivable / bad debt).

An internal example

Where we see the most angst for entrepreneurs is that first employee. Moving from consultants and contractors to a true employee comes with it many questions and worries. Will you have enough work for them? Will they be worth the initial extra work it takes to hire and train them? Will they treat the customers, represent the brand and nurture the product / service like they were their own? All of these are in the realm of value HR can bring. Specific speciality areas within the HR toolbox can be used to answer these questions:

  • Defining the role and key responsibility areas is an Organizational Design speciality.

  • Recruitment will find you the best employee that your budget allows

  • Learning and development (aka training) can have a well paced and integrated plan for them to learn what they need and by the right time.

  • Some of the transactional aspects of HR can take care of compliance needs like checking their legal right to work (Social Insurance Number and if applicable their work permit), enrolment to Worker's Compensation Insurance, and payments like Employment Insurance and Canada Pension Plan

  • And then the motivations, goal alignment and building of a personal relationship that are part of Employee Relations, Performance Management and Total Rewards are utilized

This people focus - internally and externally - is why we find human resources to be the most important business function for your company. BrightGo Solutions offers human resources and business solutions - we give equal weight as we find without the HR then a business will stagnate and never reach its true potential. Have additional questions or ready to get started on accelerating your business via people? Contact BrightGo Solutions and let’s start a partnership together.