“The value of a business is a function of how well the financial capital and the intellectual capital are managed by the human capital. You’d better get the human capital part right.”
David Bookbinder, an American valuation expert and speaker in his book ‘THE NEW ROI’ writes this to show the causal connection between a successful, profitable business and HR management adopting employee engagement approaches.
So, how does HR Management lead to earning profits? Afterall you could just focus on a system of principles you ‘enforce’ on your employees as part of your business. Perhaps adjust targets for the sales team, improve product/service quality your business offers, task the marketing team to hatch and roll out trendy advertisements, have a cool company catchphrase as the cherry on top of the cake and get that money!
As David Bookbinder illustrates in his book: fail to take care of people in your business and they will fail to take care of your business. Human relationships matter (*not a statement of protest). Sometimes in an effort to boost sales and earn profits, organisations and businesses ignore employee satisfaction and wellbeing. Working overtime becomes an expected practice, break durations get cut, leave permissions become restrictive or conditioned, micromanagement escalates and so on.
The ‘Human’ aspect in HR management (HRM) constitutes of customers, employees, employers and anyone relating to your business or firm ergo effective HRM is complimentary to management of all other departments and yields, highly committed employees, satisfied customers and a profitable business with favourable reputation.
A meta-analysis conducted by Gallup found out through a survey that there was a 59% less turnover, 10% rise in customer ratings and 20% increase in sales in organizations where employee engagement is initiated and maintained. Simply put, with effective HR management, employees become highly engaged and in turn, build and improve customer’s relations with the organization.
This translates to profitability, a well-motivated productive workforce and satisfied customers. According to Forbes, HRM can therefore be seen from a profit centre perspective when business drivers such as employee retention, productivity, quality of work, efficiency, advocacy and customer satisfaction result to returns in a business’s growth, impact and healthy relationships.
At DiraHR Solutions, Human Resource Management is our part in your grow towards your business or organization’s objectives. Whether you already have a HR department and need to streamline its processes or if you are considering how this pans out for you, effective HRM will make your enterprise profitable, optimize your working environment and build healthier relationships.