“Why should I change something that’s working?”
A business owner recently asked me this question when discussing his company’s approach to human resources. The company, a medium-sized business, has a single HR coordinator responsible for benefits, compliance and onboarding.
“I know we could be doing more to develop our employees, but I can’t justify spending the money to build an HR team when our turnover rates are in line with the industry average. What we’re doing must be working.”
But is it?
It’s tempting for small and midsize business (SMB) owners, like the one above, to follow an old-school mindset to HR. The thinking goes like this: HR is a cost center, not a revenue generator. HR is the realm of tactical thinkers, not strategic leaders. HR is about managing paperwork and benefits, not forecasting talent needs and optimizing the employee experience.
But today’s tight talent market and dynamic business world demand a different approach.
Making The Case: Why SMBs Must Rethink HR
Assuming the status quo is “good enough” can be a costly assumption for SMB owners. Yes, the worst-case scenario of low productivity and talent loss may not come to pass. But settling for good enough means you’re missing out on a truly dynamic work environment that sparks innovation, helps employees reach their full potential and drives business success.
It’s a classic case of penny wise but pound foolish thinking. When HR is just about compliance, there’s no one actively managing your employer brand or protecting your employer reputation. The same problem applies to company culture. No one is in charge of developing and nurturing your company’s culture and ensuring your work environment aligns with this culture to drive employee engagement and business success. The upfront savings of keeping HR as lean as possible are limited. The lost potential of your company’s talent — and the risk of a poor employer brand hurting recruitment — is huge. Here’s another way of looking at it: Every hire costs your company money. Are you doing the most you can to grow these investments?
Adopting A Human Capital Mindset: Small Changes, Big Impact
Evolving your HR department doesn’t mean abandoning essential compliance functions. It does mean thinking beyond these essentials to truly invest in talent development, ensuring your best and brightest hires remain engaged and productive for years to come. These are three places to start:
1. Define your employer value proposition.
A clear employer value proposition is crucial for smaller businesses that can’t rely on well-known employer brands to boost their market reputation. Your value proposition answers the question, “Why do employees choose to work for our organization over another company?” Start with the value you think your business provides: Do employees choose your business because of the entrepreneurial work environment? Maybe it’s the opportunity to work on a variety of projects at once and build diverse skill sets.
Next, survey employees to determine if your assumptions match reality. Identifying a mismatch in expectations and reality is key to strengthening your employer brand and enhancing the overall employee experience, both improving future recruitment and minimizing the risk for turnover.
2. Map the employee journey.
You know your customer journey map backward and forward — what about your employee’s journey? An employee journey map breaks down the phases of interaction over the employee life cycle, including before, during and after employment.
Start by listing all touch points: How will a prospective employee learn about your business? How would they apply for a job? What happens during each interview round? Next, consider what happens during employment: Is there a structured onboarding process? What about performance assessments and leadership training? Finally, consider what happens when employees leave: Is there a formal exit interview and off-boarding? Do you maintain a positive relationship with past employees? Organizing these touch points and mapping the entire journey in a single location makes it easier to identify opportunities for improvement.
3. Empower your multipliers by removing barriers to success.
A star performer — the manager uniquely attuned to their team’s needs, the sales leader whose aggressive performance goals energize the whole department — can have a ripple effect on your entire organization. Researcher and executive advisor Liz Wiseman calls these star performers “multipliers,” individuals who use their intelligence to amplify the smarts and capabilities of the people around them. You may already have a budding multiplier in your organization, but are you allowing them to reach their full potential?
This is where an HR leader with a human capital mindset can make a difference. Ingrained company processes and structures can limit your multiplier’s ability to amplify others. HR can take an objective approach to evaluate these processes and structures, removing barriers to successful talent optimization and driving companywide performance improvements.
Whether you’re a company of 50, 500 or 5,000, talent and culture are the biggest drivers for business success. Rethinking your approach to HR signals that your company takes both seriously — and that you won’t settle for “good enough.”
