The New Year signals a fresh start. And January is a great time for businesses and their respective departments to plan the year ahead.
Sales, Marketing and Finance often take centre stage when it comes to devising and communicating their strategy. Their plans are directly linked to revenue and profitability, so they tend to get more air-time in the leadership strategy meeting.
Annoyingly HR departments often get a bit overlooked and are seen in a break/fix capacity rather than part of the strategic discussion. But in many businesses, the biggest collective overhead is payroll so it seems odd for strategy not to be more focused on people. Specifics should include how employee initiatives contribute to the success of the business, how the growth of the organisation is powered by the right hiring and how retention will impact the bottom line.
In this article we outline 5 ways that HR can contribute to making the business more profitable. They'll help give HR an amplified voice at the leadership table and help other team leaders understand the strategic value that HR brings to the company.
Strategic Workforce Planning
What HR does: HR teams need to analyse current and future workforce needs, ensuring the organisation has the right talent in the right roles at the right time. This involves identifying skill gaps, succession planning, and optimising workforce costs.
Impact on profits: By ensuring the business is never under- or overstaffed and equipping teams with the skills needed to execute the business strategy, HR reduces costs associated with hiring delays, poor recruitment decisions, or productivity bottlenecks.
Improving Employee Performance and Productivity
What HR does: HR implements performance management systems, clear goal-setting frameworks (like OKRs or KPIs), and continuous feedback loops. Additionally, they train managers to lead teams effectively and encourage high performance.
Impact on profits: Enhanced productivity directly contributes to better operational efficiency, higher output, and improved customer satisfaction, all of which boost revenue generation and reduce operational waste.
Reducing Employee Turnover
What HR does: HR creates engagement programs, offers competitive compensation and benefits packages, and fosters a positive workplace culture. There should be a big focus on 'employer brand' that provides many good reasons to join and stay with the business. Conducting "stay interviews" and exit interviews helps identify reasons for turnover and implement corrective measures.
Impact on profits: Lower turnover reduces hiring and training costs, ensures knowledge retention, and maintains continuity in client relationships, which supports stable revenue streams.
Attracting Top Talent
What HR does: HR develops employer branding strategies and recruitment pipelines to attract high-caliber candidates who align with the company’s mission and growth objectives.
Impact on profits: Skilled employees bring innovation, efficiency, and expertise that drive better business outcomes. Attracting the right talent minimises costly hiring mistakes and accelerates the company’s ability to execute its strategy effectively.
Driving Innovation Through Learning and Development
What HR does: HR invests in up-skilling and re-skilling employees to prepare them for emerging challenges and technologies. This includes facilitating continuous learning and fostering a culture of innovation.
Impact on profits: Employees with updated skills can innovate processes, improve product/service offerings, and adapt to market changes, giving the company a competitive edge and boosting its bottom line.
By aligning its initiatives with business goals, HR can transform from a support function into a strategic partner that directly contributes to profitability and sustainable growth. This approach enables HR teams to amplify their voice at strategy meetings and be seen as a critical contributor to revenue and profitability across the business.
