Think HR doesn’t impact the bottom line? Think again!

In the software industry, particularly in the startup arena, the focus tends to be on the product, services, and clients. Sometimes, the entire focus is on those areas, because they are the money makers, right? Too often, the “backoffice” is considered a necessary evil and a begrudged expense. Sure, HR is there to ensure that we adhere to protocols and employment laws and to make sure we get paid. But HR doesn’t really affect the bottom line. Right? Wrong! Let’s think about it a bit more.

Help define what culture means

Your company culture can make or break your business. The importance of having the right people on the bus can’t be underestimated. However, it is also crucial for everyone to understand what company culture is: the way people act when nobody’s watching. It’s knowing the right thing to do simply because everyone shares the same values. One of the biggest misconceptions I’ve encountered is that culture pertains to tread desks in the office, craft beers on tap, or a casual dress code. The moment when superficial things are confused with culture is when you need to intervene, and HR can be a valuable ally in this effort by asking employees (and candidates) to explain what culture means to them, what your company’s values are and how to measure alignment. After all, jeans and t-shirts, pool tables and free lunches won’t do anything to grow your company if the team doesn’t share the same values in terms of work ethic, empathy compassion, passion, humility, drive, and desire to always get better.

Identify the right candidates and help others to do the same

Any hire is a significant investment on several levels. The right hire can be a game changer, while the wrong hire can result in lost productivity and compromised morale, which inevitably negatively impacts the bottom line. HR plays a key role in recruiting the gamechangers who have the right skillset and aptitude, and, more importantly, the right attitude. But that’s not all. Your HR reps can help your team members become good interviewers. Solicit their advice and their help so that everyone interviewing, especially with regard to culture checks, knows the best questions to ask (hint: it’s not “What part of town do you live in?”) in order to determine if a candidate can excel in your company and can help your company excel.

Assist in developing compensation structure

Your HR manager has a lot of data at their fingertips and frequently researches emerging trends and compensations for each position. Is your current sales commission structure the optimal way to achieve your company’s revenue and profit goals? Is it fair to all parties involved? Is there a better way? Consider involving your HR manager in those discussions and let them help you come up with some new ideas and options.

Measure employee engagement and help make appropriate changes

One of the most misleading definitions of employee engagement is that it’s the level of employee happiness and enthusiasm. While this is an ideal outcome of engagement, it is not engagement itself. Employee engagement is measured by how closely the company’s goals and values are aligned with those of the employees. This is why it’s so important for your HR team to conduct engagement check-ins with each team member and to identify any areas that need to be addressed in order to identify and hopefully rectify any misalignments. For example, if someone expresses confusion about their career trajectory in the company, the HR manager should bring this to the attention of the manager and discuss if and how a path that benefits both the employee and the company can be mapped out. Or, if someone is unclear about how they can most strongly impact the revenue goals of the company, both the HR manager and the direct manager can help paint a better picture and provide action items. Misalignment can cost you dearly (literally), so HR taking charge through engagement check-ins is key.

Be smart about perks

HR typically presents a budget to the CEO that includes a breakdown of perks that the company offers to employees. These may include things like anniversary gifts, lunches, and professional development stipends. Perks don’t just include material things, but also company events, teleworking, and other social initiatives. It all sounds wonderful. The more perks you provide, the happier your employees will be and the better they’ll perform, right? Well, it’s not quite that simple. It takes skill to find the right balance and invest in the right things at the right time. For example, if your cultural climate is experiencing a shift towards taking things for granted instead of gratitude, it may be beneficial to focus on a reset and simplify the perks a little. Implementing the right things at the right time requires that HR has a keen understanding of the cultural pulse of the company, financial situation, and tracking towards company goals.

Your human resources department does so much more than clerical and legal work, so much more than keeping you in the clear from lawsuits. By championing your company values and ensuring alignment between individuals, their departments, and the business as a whole, HR has a significant impact on the bottom line.

What are your thoughts?