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As the times are changing, a greater number of companies continue to see unprecedented growth – they have slowly but gradually come to realize the importance & impact of human capital. Gone is the era when the only role of Human Resource Managers was administrative.
Today, HR has moved beyond the one-way monotonous transactions like scheduling interviews, coordinating, rolling out offer letters, and other administrative responsibilities. Human Resource Management has a LOT to do with technology, future planning, making strategic decisions, talent management & engagement. If you look back, you can see how vastly HR trends have changed in the past year.
Why Human Resource Management is of Interest to the CEO?
CEOs and business leaders agree, more than ever, that investing in human capital is as important, urgent and necessary as watching the top line and bottom line of any organization.
Concepts like workload analysis, work-life balance, market trend analysis, keeping tabs on the new upcoming roles, proper enforcement of labour laws, and implementing employee-friendly policies are instrumental in the success of any organization.
For a CEO to shape a company’s vision and near future, discussions about its people/employees need to be on the table. This is only possible if the Head of HR or the CHRO reports directly to the CEO. This reduces the “middlemen” or rather multiple layers of middle management and allows the business leader to understand the needs of the employees and address the pain points to become a better leader.
Top 4 reasons why the people in charge of Human Resources and People Management must report to the CEO:
1. Direct Connect with Employees
As mentioned earlier, having a direct connection with the workforce is the best way a leader can function. It allows them to get an instant pulse of its people and get first-hand feedback on company policies, processes and platforms. The fewer the middlemen, the lesser will be the chances of a message getting distorted. Hence, it makes absolute sense for the Head of HR to be in constant touch with the CEO.
Are the employees overworked? Are the employees underpaid? What is their happiness quotient? Is your company a great place to work in? How productive is the environment at work? Is there disguised unemployment? These are some of the important issues a futuristic leader must have satisfactory answers to.
2. Expectation setting and Employee morale
When a CEO says that employees’ performance is directly indicative of the company’s performance, employees feel valued, and this instils a stronger sense of responsibility in them. Studies have shown that when employees know they have access to the CEO or top management and are able to get firsthand downloads from them about where the company is headed – it boosts their morale like nothing else.
3. Employees are the first customers
Employees prove to be great first customers. Companies today are launching newer products, new versions of existing products/services, platforms, digital entertainment zones, mobile applications and whatnot. Any new venture will need beta testing and focus group discussions. And what’s better than engaging in a dialogue with their employees? This way – employees are sure to feel pampered, and the company will also get first-hand honest feedback at zero additional cost and promotions.
4. Favourable Financial Outcomes
Employing new talents on the loss of the old ones can more than often be a big challenge for managers as it involves a huge sum of time and money. Alternatively, investing in retaining the current employees by enforcing employee-friendly policies can be of great advantage to the organisation’s overall financial management. Employee Engagement strategies have repeatedly been found as one of the best ways to increase productivity and retention. well-being of employees as well as higher profits.
Having said all the above points, if a business leader decides to put their thoughts together and implement these suggestions – intertwining the business and HR strategy, then they will easily see a spike in employee productivity and a highly engaged workforce.
In the current scenario, the Human Resource Manager’s job description has drastically changed from that of simply acquiring new talents to the more reformed Employment Management and Engagement. If an organization’s plan is to expand, then the HR plan would be to increase relevant hiring. If an organization’s plan is to reduce its size and presence, then the role of the HR Manager would be cut down on its workforce size.
If an organization has done exceedingly well, then the Human Resource Manager’s plan could be a 100% pay-out of Performance-linked Incentive. If an organization is reaching the maturity stage of business operations, then the HR plan would be to start succession planning. It is as simple and directly proportional as that!
The Way Forward
Valuing human capital is not a one-time activity. It needs to become a part of your organisation’s culture and everyday dealings. To do so, dialogue needs to be initiated between the CEO/top-level management and the CHRO/ Head of the Human Resources department of the company. Unless the top leader doesn’t echo the same thoughts, they will not trickle down in the organization’s structure.
CEOs valuing thought leadership are interested not only in making profits but also in devising and implementing strategies that can give birth to innovation and establish a positive company culture. Most of the leading MNCs and Fortune 500 companies, such as Mercer, Pepsi, Facebook, Google, Reliance, Capgemini, Deloitte, L&T, and leading NBFCs, have their CHROs and HR Heads reporting to the CEO.
May it’s time to follow suit and see the difference for yourself?