At risk of alienating peers in my field, I’ve often written about my disdain for the traditional notion of human resources. I don’t take that approach to intentionally instigate; rather, I have been on a career-long quest to understand - and with best efforts- execute a model of true people strategy. In other words, I shun the transactional, traditional approach to human resources. The big question is why. For me, it’s quite simple. I believe in approaching the human elements of a business from the vantage point that people are assets in a company; not liabilities.
I’ve been fortunate to work in healthy, hypergrowth companies my entire career. I admittedly have not lived through major restructurings or mass layoffs. And while these efforts are often centered on increasing profit by tackling the biggest ticket items (think salaries, benefits, and other costly perks), these items that fall smack in the middle of the HR budget put employees squarely in the position of being liabilities. Technically speaking, salaries fall under the “liability” column on the balance sheet...but this approach as an “employee is a liability” relates to how we engage with our people as well. We do well, you get decent pay. We don’t do well, no raise for you.
When HR focuses the emphasis on reducing the liability, that results in keeping salaries low, minimizing training, not caring about development, etc. And while companies have certainly been operating this way for a long time, the world has shifted. The transactional approach isn’t just antiquated; it’s just plain bad for the bottom line.
It’s now a necessity to move your thinking of your people from the “liabilities” column to the “assets” column.
THE COST OF NOT HAVING ENGAGEMENT
Consider the cost associated with recruiting, hiring, and training up new employees. When people are engaged and performing, you're not constantly under pressure to be backfilling those who are leaving due to dissatisfaction, low performance because they were never boarded properly, etc. In addition to the significant cost to the company, there is the impact on the customer. It’s hard to create an impactful customer relationship when both the direct and indirect relationships are constantly changing. Not only is the service level reduced, but it creates the perception your company doesn’t have it’s act together.
THE COST OF NOT INVESTING IN YOUR PEOPLE
I appreciate not every business leader subscribes to the idea that by investing in your people can actually lower your costs and maximize your profits. How is that possible? Consider this: When I joined Rapid7 nearly eight years ago, one the biggest challenges we were facing at the time was having promoted fantastic young talent into management roles...and not training them properly to actually play those roles well. It took us a while to figure out the best way to manage this, but we ultimately opted to invest money in hiring a fantastic trainer to tackle this, rather than keep throwing money at ineffective outside training. This approach proved to be such a good approach, we decided to increase the investment and add a few more people to this team, focusing on impactful onboarding, leadership training and the like. Not only have we seen a huge uptick in productivity, but we have also seen engagement increase and our lowest attrition rates in years. Bottom line: When you take money away from people in the form of their compensation, benefits, etc. you are creating a dynamic that isn’t just bad for them in terms of low morale and decreased productivity, you also create a scenario for your customers that ultimately affects your bottom line.
THE BENEFIT OF HUMAN CONNECTION
Since my first job, I’ve loathed the term “human resources.” Not only do I think it reduces people in your company down to traditional resources like my printer or a copy machine, I believe it centers the attention to your people as a liability rather than an asset. The more service-oriented your company is the more this shift in thinking matters. While technology enables us in so many ways, customers actually enjoy dealing with a competent human being who creates a positive experience for them. When companies invest in providing the right experience for their people, their customers benefit greatly. That results in positive top and bottom line growth. What business doesn’t want that?!
Every business wants to maximize profits. However, when they focus solely on maximizing margins, minimizing salaries, benefits, training and the like, they miss the big picture. People are the lifeblood of your company. By making smart choices to invest in them you aren’t just creating a stronger, healthier environment for them; you are investing in your business’s ultimate success.
“Train your people well enough so they can leave, treat them well enough so they don’t want to.” - Richard Branson