A More Successful You: Applying Business Acumen to Solve Human Resource Problems. Mary Ellen Connolly

Transcription

1 A More Successful You: Applying Business Acumen to Solve Human Resource Problems Mary Ellen Connolly 1

2 WELCOME Adjunct HR Instructor Education Masters of Science HR Management, University of Maryland Bachelor of Arts, University of California, Berkeley Previous experience: Vice President, HR Career Counselor Workforce Development Specialist Retail Manager Realtor Inventory/Logistics Analyst Regional Sales Representative 2

3 TODAY S TOPICS What is Business Acumen? Why is it important to be a successful employee? How to understand your business and assess your organization s risks by performing a SWOT Analysis How to align organization s goals and problems with solutions/hr Initiatives How to calculate ROI (Return on Investment) on those HR Initiatives to prove value to your employer Helpful Steps to increasing your business acumen 3

4 LEARNING OUTCOME ****Challenge YOU to**** Raise your Level of Awareness ****to a bird s eye view!**** 4

5 BUSINESS ACUMEN IS: How your employer makes money or how they stay in business Thorough understanding of: What drives profitability and cash flow A market focused approach to the business An overall big picture understanding of the business and its interrelationships 5

6 BUSINESS ACUMEN IS: The knowledge and understanding of the financial, accounting, marketing and operational functions of an organization. * Society for Human Resource Management (SHRM) Business Literacy Glossary Keenness and quickness in understanding and dealing with a business situation * Wikipedia 6

7 1. Executive Level Thinking Think like a CEO See the Big Picture BUSINESS ACUMEN IS: 2. Business Savvy and Business Sense Make Good Decisions Perceptive of how actions/decisions impact goals 3. Business Management/Leadership How to Influence Others Communicate/Coordinate with all Levels Coach/Mentor/Lead Others towards success 4. Financial Management Revenue/Profit Risk Management Make your boss look good. (*My Dad) Goal: Make money or value for Owners or Shareholders *highered.mheducation.com7

8 WHY BUSINESS ACUMEN IS IMPORTANT: Emerged as a vehicle for improving financial performance and leadership development One strikingly consistent finding: Once people reach the C-suite, technical and functional expertise matters less than leadership skills and a strong grasp of business fundamentals. Chief information officers need to know how to create business models Chief financial officers - how to develop risk management strategies Chief human resource officers - how to design a succession plan and a talent structure that will provide a competitive edge For a successful team, hire people smarter than you! *Harvard Business Review 8

9 WHY BUSINESS ACUMEN IS IMPORTANT: In other words, the skills that help you climb to the top won t suffice once you get there We re beginning to see C-level executives who have more in common with their executive peers than they do with the people in the functions they run. And today members of senior management are expected not only to support the CEO on business strategies but also to offer their own insights and contribute to key decisions. *Harvard Business Review, The New Path to the C-Suite 9

10 WHY BUSINESS ACUMEN IS IMPORTANT: Your Job Depends on IT! The organization s jobs depend on IT! Organizations exist because people (AKA customers) need the product or service that the work produces. You are employed to do the work for customers. I don t know of a job where there are no customers or no employees. (*My Favorite CEO) 10

11 TODAY S TOPICS What is Business Acumen? Why is it important to be a successful employee? How to understand your business and assess your organization s risks by performing a SWOT Analysis How to align the organization s goals and problems with solution-based HR Initiatives How to calculate Return on Investment (ROI) on those HR Initiatives to prove value to your employer Helpful Steps to increasing your business acumen 11

12 WAYS TO UNDERSTAND YOUR BUSINESS Understand Mission, Vision, Values A mission statement Written declaration of the organization s core purpose Unchanged over time HOW you will get to where you want to be The organization s vision statement Outlines WHERE you want to be Communicates both the purpose and values of your business. The organization s values What supports the vision, shapes the culture Your company s principles, beliefs, or philosophy of values 12

13 WAYS TO UNDERSTAND YOUR BUSINESS Example: Coca Cola Company Mission Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference. 13

14 WAYS TO UNDERSTAND YOUR BUSINESS Example: Coca-Cola Company Vision Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization. 14

15 WAYS TO UNDERSTAND YOUR BUSINESS Live Our Values Example: Coca-Cola Company Values Our values serve as a compass for our actions and describe how we behave in the world. Leadership: The courage to shape a better future Collaboration: Leverage collective genius Integrity: Be real Accountability: If it is to be, it's up to me Passion: Committed in heart and mind Diversity: As inclusive as our brands Quality: What we do, we do well 15

16 WAYS TO UNDERSTAND YOUR BUSINESS Understand Financial Management Goals Primary Goal = Make money or add value for owners/ shareholders Possible Financial Goals 1. Risk Management Survive Avoid Financial Distress/Bankruptcy 2. Profitability Manage Costs Maximize Profits Maintain Steady Earnings/Growth What keeps your boss up at night? 16

17 WAYS TO UNDERSTAND YOUR BUSINESS SWOT ANALYSIS Identifies the strengths, weaknesses, opportunities, and threats (SWOT) for your business. 17

18 SWOT ANALYSIS A process where the management team identifies the internal and external factors that will affect the company's future performance. The company's strengths and weaknesses are the internal factors. External factors=opportunities and threats 18

19 SWOT ANALYSIS This information can help you outline goals and strategies for your business and marketing efforts. It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you. Planning Tool for Short Term and Long Term Best Practice: Conduct once a year with leaders and communicate with organization 19

20 SWOT ANALYSIS Product/ Service Offering Brand/ Marketing Staff/ HR Finance Operations/ Management Market Strengths Weaknesses Opportunities Threats Free assistance at (SBA supported) 20

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22 YOUR EMPLOYER S PROBLEMS During the SWOT Analysis, ASK: Can any of your organization s strengths help with improving the weaknesses or combatting the threats? 22

23 YOUR EMPLOYER S GOALS Based on the information, what are the short term goals/next steps? Based on the information, what are the long term goals/next steps? 23

24 HR Department CASE Example You are the HR Director for Company ABC. You and the rest of the Executive Team are conducting the annual strategic planning session. Company ABC s Organizational Goals have been defined as the following: Grow Company Increase Revenue/Profit Develop a Culture of Trust/Employee Engagement How would you identify the HR goals to align with and achieve the company s goals? 24

25 Strengths IDENTIFYING SOLUTIONS First, we conduct an Internal SWOT For our company s HR Function + Our people are the revenue. + Our automated staffing processes are efficient and maximize revenue/profit and minimize costs of vacancies. Weaknesses High Turnover at some work locations increases overtime costs and minimizes revenue/profit due to vacancies. Poor leadership at some locations correlates to high turnover. No leadership talent pipeline. Must hire externally. Some staffing processes are not automated and cause longer vacancy to hire time thus minimizing revenue stream. 25

26 IDENTIFYING SOLUTIONS Second, we conduct an External SWOT For the HR function Opportunities + Our HRIS is a robust system and cache of all employees. + Our HRIS has additional automated features (ie., Manager Self Service and skills inventory) to increase process efficiencies. + ISO Certification for Critical HR processes underway. Threats Limited qualified candidate pool in some areas. Junior leaders with limited training time for leadership. Increased rising benefits costs to attract/retain qualified talent. 26

27 IDENTIFYING SOLUTIONS Third, we ask if any of your organization s strengths can help with improving the weaknesses or combatting the threats? Strengths Our People Our HRIS Our Critical Processes Opportunities HRIS is robust system HRIS lists all employees Standardization of HR processes underway Weaknesses High turnover No leadership pipeline Some processes not automated Threats Ltd. Qualified candidates Junior leaders Rising benefits costs for employee retention 27

28 IDENTIFYING SOLUTIONS After identifying organizational goals and conducting SWOT analysis: Look for initiatives/projects/actions to help achieve and align with those goals. We developed our Human Resources Operational Business Plan. Lists: HR Strategic Goals Increase Speed to Market with Human Capital Empower People to Drive Growth Initiatives Metrics to measure progress and goal achievement 28

29 IDENTIFYING SOLUTIONS HR Goal #1: Increase Speed to Market with Human Capital Initiatives Project Leader Action Steps Progress Metrics Goals Build Talent Pipeline Achieve ISO Certification -HR Crit Processes HR Process Training HR Efficiencies w/ HRIS Headcount to Need Positions filled Internally Time to Fill Turnover 90% 50%/qtr 30 days 20% 29

30 IDENTIFYING SOLUTIONS HR Goal #2: Empower People to Drive Growth Sub-Goal Project Leader Action Steps Progress Metrics Goals Develop Trust Culture Controllable Turnover Retention <20%/year >1 year Develop Virtual Work Model By Year End Develop Leadership Competencies/ Training By Year End Streamline Benefits Plans # of Benefits Plans Reduce from 17 to 5 30

31 How to get your plan underway. After strategic planning, SWOT analysis, developing HR goals and initiatives, how are you going to sell this plan to the CEO and rest of the Executive Team? Best Practice: Conduct a Business Case Study for any initiatives with investment dollars needed. (hbr.org) 31

32 CALCULATING ROI Meet ROI On paper, ROI could not be simpler. To calculate it, you simply take the gain (or benefit) of an investment, subtract the cost of the investment (or money needed for initiative), and divide the total by the cost of the investment. ROI (percentage) = (Gains Cost)/Cost ROI in Years = Costs/Savings Read more: FYI On ROI: A Guide To Calculating Return On Investment Investopedia Follow us: Investopedia on Facebook 32

33 CALCULATING ROI Simple calculation - bottom line return of any investment. One major factor that doesn't appear in an ROI calculation is time. Imagine investment A with an ROI of 1,000% and investment B with an ROI of 50%. Easy call put your money in the 1,000% one. But, what if investment A takes 30 years to pay off and investment B pays off in a month? The Bottom Line = ROI is a useful starting point for sizing up any investment. Remember that ROI is a historical measure, meaning it calculates all the past returns. An investment can do very well in the past and still falter in the future. 33

34 CALCULATING ROI in HR ROI of human capital = organization's net revenue (gross revenue after deducting operating expenses, salaries and benefits) / cost of salaries and benefits. ROI of a particular program = [calculate the value of the specific program itself] /costs of implementing the program For example, if a new/expanded automated HRIS to speed hiring process results in decreased amount of time spent, calculate the value of the saved man-hours (wages) and divide that by the costs of the HRIS or expanded system. Coordinate with other experts in Accounting, IT, Operations 34

35 Example: Growth from 120 Positions New: 1. Map/list all steps in hiring process and align w/ responsible party and technology used per step. 2. Calculate how long each step takes to perform and multiple by responsible party s burdened labor hr rate/task time. 3. Compare reduced time necessary to complete all steps with proposed new technology/investment/automated forms/less manual efforts. V2H Process/ Position Filled Time to Complete Cost Current Process 8.88 hours $ Annual Savings (filling 420 positions) Proposed Process 4.92 hours $ Savings 3.96 hours $73.33 $30,

36 Example: Conduct ROI 1. Add Savings Direct Labor V2H Process Labor Hrs Saved Automated Forms Labor Hrs Saved $30, $10, Net Annual Savings $41, Less Investment Costs HRIS Licenses for HR users $3, Forms Customization Costs $5, Manager Self Service Function $ IT Direct Labor Hrs/Set Up $ alert customization cost $ Web-based Requisitions $ Training Labor Hours $ Total Investment $9, Est. ROI in Years=cost/savings.24 (2 ½ months) Est. ROI=Tot. Savings from Project/Total Project Costs % 36

37 ROI Explained Net Annual Savings $41, Total One-Time Investment (Project Costs) $9, Est. ROI in Years=cost/savings.24 (2½months) Est. ROI=Tot. Savings from Project/Total Project Costs % 1. These costs are one-time investment for company. 2. Training hours for manager self service included. 3. Even though the costs total $9,938.98, the savings far outweigh the costs by a 400% ROI. 4. The breakeven point (the time the company recoups their onetime investment is 2 ½ months). From that point on, the company continues to realize that net savings each year. 5. Over a 4 year period, the company will have saved $166, by implementing the automated features of the HRIS. 37

38 STEPS TO INCREASE BUSINESS ACUMEN 1. Read. Everything. Different business functions. Does your manager subscribe to business magazines? 1. Attend Meetings. Does your manager invite you? Take minutes at meetings? During the meetings really listen, take notes on anything you don t understand so that you can research later. 2. Educate Yourself. Do you know the difference between net worth, net income, profit, revenue, capital, and equity? Learn how to read a financial statement. 3. Learn from Others. Shadow others and learn from leaders in other functions. Does your employer have a mentor program? Coordinate w/ other Departments Always! 38

39 STEPS TO INCREASE BUSINESS ACUMEN 5. Practice. Get yourself or your team involved in rotations in other parts of the organization or project to broaden your business acumen. Add Coordinator to the end of your job title ALWAYS! 6. Training. Is your manager supportive of your training needs? Ask that you attend training courses on the areas that you could improve, for example business finance or process management. 7. Performance Appraisal. Demonstrate to your manager that not only do you understand the company s strategy, but you are also implementing it into your own work by thinking strategically. This depth of knowledge will show you consider the bigger picture. 39

40 Understand Business Acumen Bird s Eye View How your employer makes money Understand/Identify Business / Solutions SWOT Analysis Align Organization s Goals w/ HR Initiatives How to Calculate ROI Helpful Steps to Increase Your Business Acumen 40

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