The CheckPoint HR Blog

3 Ways HR Impacts your Organization's Bottom Line

Posted by Denise Bauwens on Mon, Mar 20, 2017

HR impacts your bottom line
HR functions play a pivotal role in the performance and success of an organization.

When it comes to meeting your business goals and moving the organization toward its bottom line, it's important to make sure you are optimizing the appropriate processes and tracking the right metrics.

It's no news that human resources is a critical aspect of any company. HR ensures staff gets paid on time, your organization maintains compliance with various and ever-evolving industry regulations and that you're attracting and retaining top talent. Without HR, many major aspects of your company would collapse. And while few would dispute the importance of HR, many businesses tend to overlook the monumental role it plays in the organization's bottom line.

"Many people overlook the pivotal role HR plays in business strategy."

For better or for worse, the efficiency, strategy, effectiveness and functionality of the HR department significantly influences the performance and production of the entire organization. It does this in a number of ways - but below are the top three:

1. Drives policies and practices in the business
The requirements and standards employers are legally required to adhere to for compliance set the stage for certain policies and practices to be implemented. It's HR's responsibility to ensure they are regularly maintained. By maintaining compliance, HR reduces the risk of companies facing legal ramifications, having to pay costly penalties and fees for violations, as well as suffering reputation damage.

Additionally, the way employees are expected to behave, the description of job functions, workflow strategies and procedures - everything is nested in to the HR department and stems from that. If any major changes need to be made, it affects HR. 

2. Affects retention and engagement
It's nearly impossible to discuss employee retention without mixing in some talk about engagement. And there's a good reason for that: One largely hinges on the other. Bodies of research have demonstrated the importance satisfaction and engagement levels play in retention. In today's competitive landscape, with employees having more job opportunities available to them than ever, and employers struggling to keep their workforce committed and loyal to the company, optimizing HR processes to spark and maintain engagement should be a top priority.

For example, research conducted by Gallup found that there is a big difference between companies with engaged workers and those without: The latter are more likely to be leaving money on the table. In fact, according to the source, organizations that have higher levels of engagement tend to be productive and profitable than those who don't. They also are more likely to receive favorable reviews from their customers.

But what makes for an engaged employee? The list is endless. But, for time purposes, let's stick to the biggest ones:

  • Career advancements and development opportunities
  • Benefits and office perks
  • Rewards and recognition

All of these programs originate and transpire in the HR department.

bigstock-Meeting-Discussion-Talking-SMALL 121021895 SM.jpgHR influences the engagement, and therefore the productivity, of employees.

3. Cultivates corporate culture
Aside from things like career development and recognition programs, another factor that plays a big role in employee engagement is culture. Corporate culture can mean a lot of things. It's a buzzphrase that umbrellas many different aspects. But the fact that it's a broad and sometimes seemingly generalized term shouldn't undermine its importance.

The type of culture your business has will influence the type of candidates you attract. Unfortunately, this is something a lot of business struggle with. HR Dive reported that  part of the issue plaguing employers is their inability to clearly communicate to job seekers what they can expect working with them.

Obviously, it's important to find professionals who are a good fit not only for the role, but the jive well with the organization as well. If it's a good match, it's more likely that the hire won't lead to turnover. And HR has a pretty big – if not total – hand in achieving this. They are the middleman that is responsible for both attracting and vetting candidates to ensure it's a good fit.

As you can see, there are a lot of overlapping business and HR elements. The fact that HR functions play such an important role and influence over a business' bottom lines highlights the critical need to integrate the two sectors and better align HR functions with the overall business strategy. In this day in age, one of the only ways to do that is to leverage an integrated platform for streamlining many of the functions associated with both these areas. 

Related Resource: "Beyond HRIS: How HR and financial managers are re-thinking the way they manage people and information"

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Topics: human resources, HRIS, employee engagement