Improve the bottom line

The term “bottom line” used to be fairly innocuous. Tossed around in the boardroom, it hardly raised eyebrows or sent up any red flags. But since the beginning of the economic downturn, we’ve all become acutely aware of the term’s implications. In a global financial crisis, no longer is “bottom line” a stand alone phrase – it operates closely with terms like “retention” and “retrenchments”, and “salary freezes”.

The “bottom line” also cannot be solely associated with one department in the organisation any more. In the past, it might have referred specifically to finances but in the new order, people are crucial elements. Many practitioners say HR needs to play a significant role by being the critical link to their organisation’s success. Nanci Appleman-Vassil agrees.

A US-based executive coach, Appleman-Vassil will be at the HR Summit in Singapore to impart her ideas about HR’s influence on the bottom line. Although rooted in her experiences in the corporate world, Appleman-Vassil’s ideas are not mere musings. “All the research and experts in the field agree that companies that are good at leveraging their human capital have a significant financial advantage in today’s marketplace,” she says.

After all, who knows the people better than HR? In the business landscape of the 21st century, most organisations are incorporating business strategies which rely on the work of employees. People-centered initiatives ensure a competitive edge over companies still stuck in the traditional mindset of using a one-size-fits-all approach to management.

As Appleman-Vassil seeks to persuade conference delegates of HR’s untapped potential, some might wonder if HR isn’t already doing too much. In the wake of the financial crisis, HR has had to wear many hats – should it be taking on even more responsibilities? The answer is an emphatic ‘yes,’ especially whenever the bottom line can benefit.

HR professionals are often underestimated, especially in organisations where they play a fairly non-participatory role. Some refer to such HR departments as “the rubber stamps” or the “archives” of the organisation which are only seen during specifically HR-related tasks like recruitment and pay administration. Even in an era of innovation, the idea persists that HR functions can be reduced to checklists and do not often require individuality or creativity. This problem must be addressed to prevent a trend of outsourcing that has been gaining momentum over the past few years, Appleman-Vassil says.

An advocate of HR, Appleman-Vassil believes this department can do much more in the forefront than on the sidelines. She says HR professionals can add value in numerous ways. By being knowledgeable and providing solutions to the key issues facing organisations today, they help not just the company but the entire industry in which they work, she says.

In their management of rapid change, HR professionals lead organisations in tough times when quick decisions must be made. HR should also be seen as an asset if it can increase production, reduce costs and deliver on time and within budget.

Doing more with less

Of course, that’s all much easier said than done. Appleman-Vassil is well aware of the obstacles HR professionals face when trying to make changes in their organisations. Limitations and external circumstances don’t help either. HR professionals have to consider the larger culture of the organisation and how amenable it is to change. Furthermore, organisations are struggling to find equilibrium and stability in the wake of the economic downturn – and changes are not necessarily welcomed in such atmospheres.

“My clients continually share that they are doing more with less,” Appleman-Vassil says. HR is confronted with a multitude of challenges, particularly in basic functions that used to follow standard procedures. Staffing and talent management in particular have become difficult to manage. Not having the right people in place to do the work impacts the bottom line since the organisation is often already “lean and mean”.

Another worry is talent shortages. Appleman-Vassil cites the top careers of concern as engineers, machine operators, sales representatives, mechanics, IT staff and production operators. Since these shortages affect virtually every industry, there is reason to strengthen HR’s potential influence on the bottom line.

The concerns may be in the present but if HR downplays its role, the long-term implications may be more challenging to deal with. Employee retention is a future concern that Appleman-Vassil wants HR professionals to start thinking about now. “Employees are staying put now because the economy is so lousy,” she says. Research suggests that once the economy becomes more positive, many employees will look to leave their current organisations.

This is because compensation and benefit packages have been minimised to control costs in the past six to 12 months and, even with some expected increases, are unlikely to go back to previous levels. Unhappy employees will look to jump ship to another organisation. “Employee loyalty doesn’t exist like in the past,” Appleman-Vassil warns.

These issues will undoubtedly affect the bottom line of the organisation unless HR steps in and takes a more proactive role, Appleman-Vassil says.

“HR is being asked to be creative and think outside the box,” she adds. “Business as usual won’t work.” Participants at her HR Summit session, part of the Performance ROI stream, will have the opportunity to discuss current HR issues and explore some tools and techniques for adding value to their organisations.