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When preparing annual budgets, most CHROs face a difficult dilemma. What will most effectively demonstrate the HR value to the business? Should the budget be allotted to technology investments or perhaps to supporting the business instead?
I sat down with Annelies den Boer, Chief HR Officer at Speakap, to learn how she tackles this challenge.
Ania Osinska-Bulloff: Why is there a HR budget dilemma in the first place?
Annelies den Boer: In my experience, HR is rarely a budget owner and instead, shops for budget at different departments. Secondly, a lot of times HR is treated with a certain stereotype in mind: the caretakers, the soft side of the business. They themselves are more comfortable in that caretaker role. You are what you believe and eventually, a lot of HR professionals feel like it isn’t their role to look at the business and revenue generation, but rather keep everybody happy and excelling.
Ania: A self-fulfilling prophecy. It’s like that classroom experiment, when kids who were reminded they can’t keep their classroom clean, were doing just that: keeping their classroom untidy.
Annelies: It’s the connection between belief and behavior. One impacts the other. A lot of HR individuals don't feel comfortable with the business and hard data, or financial side of an organization. And a lot of times they end up reporting to Ops, as part of one big support organization. The problem is, that’s typically the overhead. That’s where the cuts happen first. By removing the business outlook, you just uninvited yourself from the boardroom.
Ania: Let’s talk a bit more about the significance of HR in a business. Many progressive CEOs declare Chief Happiness Officers, Chief People Officers, Chief Heart Officers, etc. their number two’s in the organization. Is this attitude still an exception, rather than a rule?
Annelies: It’s an ideal situation for an HR organization and a very fortunate place to be. Typically, though, if business doesn’t do well, HR goes. Suddenly your HR team, struggling with a shortage of people, becomes reactive and can no longer steer the business. Your people insights and facilitating people to do the best they can is juxtaposed with revenue developments, and HR needs to remind everybody that these deliverables, in the end, are done by people.
Ania: What does it take to get HR to sit in the boardroom then? To be treated like an equal business partner, versus overhead?
Annelies: Without data, HR will be considered the soft side of business, invisible to the shareholders. My advice is to be analytical, come up with supporting numbers, and give insights. At Speakap we’re moving, in my opinion, to an ideal situation. We have a product owner and a commercial owner sitting in the boardroom, and a strong finance professional who is the back-bone of the organization and can answer questions such as: are we healthy as a business? And the fourth pillar, HR, focusing on how we can grow, and if the people are growing along with the business.
Ania: How does this impact the HR budget dilemma?
Annelies: To get the supporting numbers, you need to have access to tech in every step of the way. The problem is, tech gets expensive because often you pay per employee. As you grow, you need an increasingly bigger budget. Next, you need to bring your employees up to speed so they can use the tech you just invested in. Once you have your system in place it’s incredibly time-consuming to move the whole organization to use another new system. You find work-arounds, like five excel sheets with data and you tell yourself, oh, it’s fine, we’re fine working like this! And as HR you depend on those systems heavily: payroll, recruiting, onboarding checklists, feedback and performance tools… They all need to work well and be administered effectively and fairly. Otherwise, the already heavy workload becomes even heavier.
Lastly, note that the people analytics role is on the rise. It’s a new position focused on analyzing employee data and that says something. Looking at the data supplied by technology is an opportunity.
Ania: What do you prioritize, Technology or Business Support, in the HR budget?
Annelies: The technology investment, because it’s scalable. As HR you’ll always be the facilitator of the business, more of an influencer than owner or controller. To prove your value, you need insights. Whether it’s recruiting data, such as how much time it takes to hire, what’s the status of a current funnel, or onboarding data. You need to have an analytical mindset to understand what this data means for your rapidly changing organization. Armed with this information, aware of who’s your audience in the boardroom and what motivates them, you should be able to convince whoever you need as you drive home your point.
Ania: And how do you keep that seat for HR in the boardroom?
Annelies: Ask for it, and then own it. HR may be considered a nice-to-have department, but if organized well, it saves everybody time, and can become the most impactful on the business outcome.