The Art of HR Consultation: Navigating Organizational Gaps and Cultivating Change

 

Consulting Process

Consultation involves providing guidance to organizational stakeholders. It requires the ability to diagnose problems or identify opportunities, develop effective solutions, win support for the solutions, and then implement them effectively. For HR, guidance often involves using HR expertise to improve the organization's performance so that it can take advantage of opportunities and achieve strategic objectives.

The Consultation and Analytical Aptitude competencies combine to equip HR professionals to be organizational problem solvers, presenting sound, evidence-based proposals to leaders to improve performance, as shown in this case.

HR identifies a turnover trend in a particular business segment-specifically, a higher rate of turnover than should be expected. The head of the segment wants to know why this is happening and suggests that the fault might be in the candidates who are put forward for the roles.

Drawing on her analytical skills, an HR professional gathers pertinent data and information about the segment's workforce: which roles are most affected, the demands placed on workers in the high-turnover roles, and other aspects of the segment's work, including comparisons with other roles within the segment and in similar areas elsewhere in the organization. HR finds that the employees were all identified as potentially solid hires, with appropriate skills and competencies, that there were no red flags raised related to employee satisfaction or performance, nor were the employees involved in any disciplinary processes. This suggests that the fault does not lie with the hiring process. HR engages the functional managers in further discussion and uncovers the fact that the turnover positions are all very high-stress and that the segment has a tendency to treat all work as urgent and time-sensitive. There are strict deadlines, and many unexpected activities often arise and force the individuals to work quickly and without breaks.

Analyzing their findings, HR identifies the causes that contributed to the high turnover. Using this data, HR then works with the managers and the employees to identify new ways to approach the work that will relieve some of the tension, increase breathing space, and also provide time for breaks-that is, to make the employees feel like they are not in a constant, never-ending sprint.

The new methodologies take time to implement, but HR continues to consult and work with the managers and the employees to assess the effectiveness of the changes and to overcome any obstacles that might impede progress until the new approaches become routine practice.

Consulting Model

Throughout the four steps that make up the consulting model, one of HR's key responsibilities is communication with and management of stakeholders. A stakeholder is anyone whose work or experience is affected by the potential outcome of a change initiative-including employees, managers, vendors, and customers.

From Blueprint to Boardroom: The Indispensable Business Documents for Modern HR

 

Key Business Documents for HR Professionals

Human Resources professionals ought to be intimately acquainted with a diverse array of nonfinancial business documentation. These resources serve as invaluable wellsprings of intelligence, instrumental in informing and refining strategic objectives and operational blueprints.

• Business Plan: This foundational document serves as the organizational equivalent of a business case, articulating the very raison d'être of the enterprise—its core purpose, what it was brought into existence to accomplish or realize. A comprehensive business plan meticulously details the entity's structural framework, its marketing schema, and its prospective financial trajectories.

• Strategic Plan: This seminal document delineates the methodology by which an organization intends to fulfill its overarching purpose. It meticulously encompasses the mission and vision statements; specific strategic objectives, overarching goals, and actionable initiatives; alongside pertinent budgetary allocations. Representing a more granular iteration of a business plan, it offers an enhanced degree of specificity and detail. Strategic plans can, moreover, incorporate granular specifics regarding Key Performance Indicators (KPIs).

• Organizational Chart: This diagrammatic representation visually depicts the hierarchical structure inherent within an organization. It furnishes critical insights into reporting lines and other interdependencies between individual personnel, functional units, and various departments. Such charts prove eminently beneficial to HR, enabling an astute assessment of whether the organization possesses the requisite number of suitably skilled employees optimally positioned in appropriate roles. For geographically dispersed entities, the organizational chart emerges as an exemplary instrument for meticulously tracking employee locations and their precise integration within the overarching structure and hierarchy.

From Intangibles to Income: Decoding Nonfinancial Measures and Optimizing Your Sales Pipeline

 

Nonfinancial Performance Measures

Nonfinancial measures delve into organizational shifts not directly expressed in monetary terms, yet whose impacts can be quantified to reveal their financial implications. These crucial indicators may encompass:

• Market Share: An indicator of competitive prowess.

• Social Responsibility Achievements: Demonstrating commitment to broader societal well-being.

• Efficiency: Reflecting the effective utilization of cutting-edge technology and streamlined processes.

• Activity Ratios: Metrics assessing how efficiently resources are deployed to generate profit. Examples include inventory turnover, average inventory age, average collection and payment periods, and asset turnover.

• Employee Retention and Job Satisfaction: Gauging workforce stability and morale.

• Employee Engagement: Measuring the level of commitment and involvement employees have with their work and the organization.

• Market Position: This broad category can include several key factors:

  • Reputation among investors, consumers, governments, and political entities.

  • Consumer brand awareness.

  • A recognizable employer brand, which is instrumental in recruiting and hiring.

  • A reputation for quality, robust customer relations, and innovation.

A SWOT analysis (strengths, weaknesses, opportunities, threats) is invaluable for pinpointing which of these measures (or others not listed) are most pertinent to an organization's strategic goals. It also highlights areas that could benefit from additional resources to achieve objectives or capitalize on identified opportunities.

Financial and Nonfinancial Ratios as Indicators of Business Health

Financial ratios are another important tool that can be used to analyze an organization's performance. A financial ratio compares two values; the result is a useful measure that can be compared to benchmarks of financial performance.

One argument against excessive use of financial measures is that they can overemphasize the importance of short-term results. Viewing financial results as trends can help lessen this effect.

In addition, financial measures must always be used within the context of a specific industry. Profit margins, for example, are very different in financial services than they are in manufacturing consumer goods. Part of the discussion with colleagues from finance should include understanding industry metrics and how the organization compares with similar enterprises.

Exhibit lists some common financial ratios and describes their significance and how they are calculated. We have already mentioned some of these ratios in our discussion of the income statement.

From Numbers to Insights: Financial Reports That Drive Business Decisions

 HR professionals should become familiar with key financial statements that the organization and its stakeholders use to measure the organization's health and to plan actions-the balance sheet, the income statement, and the cash flow statement. These statements are integrated. Information from one is used in creating the other statements.

Understanding the financial statements helps the HR professional:

Understand the perspectives of internal and external stakeholders. HR professionals can better understand the economic issues driving management decisions (for example, poor profit margins relative to industry, inadequate cash flow to cover wages, large deductions from gross sales caused by returns). Investors analyze financial statements to gauge growth opportunities and identify risks, such as too much debt.

Identify opportunities for HR to improve the organization's financial performance (for example, developing new competencies aligned with financial goals). The HR function can better fulfill its consultation role to organizational leadership.

Understand factors that may affect HR strategies. For example, weak revenue may affect executive compensation. Poor cash flow or ability to incur debt may limit internal investments in a new HR information system.

A good way to gain financial perspective and understanding is to consult with colleagues in finance. Meeting regularly with a financial officer will increase an HR professional's understanding of the financial values driving strategy and operations. It is also an opportunity to learn about the challenges facing the financial managers and consider ways HR activities might help. These discussions may create an influential ally and advisor when crafting HR initiatives.

Balance Sheet

The balance sheet is one indicator of the organization's financial health. It is a statement of the organization's financial position- its assets, liabilities, and equity- at a particular time. Exhibit 39 displays the balance sheets of a fictional company on December 31 of two consecutive years. We will refer to this sample throughout the following description of the balance sheet.

The key word in the term "balance sheet" is "balance." In accounting, all transactions should be balanced: Any money entered as an asset is balanced by offsetting liabilities. To illustrate this, consider that, in our example, ABC's factory buildings and land are valued in year 2 at $59,600,000. This asset is balanced by a note to a bank for, let's say, 60% of its value, or $35,760,000. The remainder of the asset's value, $23,840,000, is considered equity value held by ABC's owners and shareholders.