How Can HR Create Value

Value Creation by HR is a hot topic these days. Voices in the board room are loud and clear, and if you are a fly on the wall in a management board meeting you will often hear them say, “gone are the days when HR as function used to predominantly add value (due to its larger focus on administrative and transactional activities). Expectation is that, like marketing, sales or research and development, etc – HR has to start creating value in business and if it cannot create value than its best suited to sit outside the organisation with an outsourced service provider of transactional activities”.

When @tanvi_gautam (Dr. Tanvi Gautam) the founder and host of #IndiaHRChat invited me to lead one of her monthly chats in April this year, I readily agreed and suggested this topic to her. She very kindly agreed and we created an opportunity and a platform to discuss “HR and Value Creation” on the popular and fast growing #IndiaHRChat platform, on Twitter, on 27th of April, 2013. This blog post is a summary of the discussions and learning from that twitter chat.

A nicely moderated and well attended #tag chat on twitter to me is like experiencing Samudra Manthan or Ksheera Sagara Mathanam (Churning of the Ocean is a famous period in the ancient Indian mythology. The story appears in  Mahabharata) http://en.wikipedia.org/wiki/Samudra_manthan

The #IndiaHRChat that evening commenced, with a lot of anticipation and excitement. The moment of euphoria soon transformed into an intense and rich discussion that was essentially spread out answering and discussing several structured questions, which were circulated to all invitees to read and prepare. The outcome of our rich discussions and diverse viewpoints are summarized as follows:

First question focused on; what does value creation by HR look like? I initiated the chat by sharing the popular definition of value creation –”performance of actions that significantly increase the worth of products, services, solutions, brands”. The definition was supported by a fair number of examples, which people could connect to and many viewpoints and responses started pouring in. @Anand__Pillai – Anand Pillai, CLO Reliance Industries proposed a broader perspective to link value creation to the society by the organization. This discussion was taken to another level by Dr. Tanvi Gautam where she mentioned about various levels at which the value creation happens. Many other rich viewpoints were shared over the how part of inspiring performance, creating vision and moving people to action as value creation.  More or less all of us agreed to the fact that value creation is about going beyond the obvious and creating value to the organization with a human touch. Then came another pearl of wisdom from @rajeevchopra – Rajeev Chopra, CEO Philips India who said, – “grow people, grow business = creating value”. The discussions over the first question concluded when @_mansoor1 – Mansoor, who heads TA at Philips Innovation Campus in Bangalore mentioned the 3D’s of value creation – Customers, Business & Employees. By now many HR and Business leaders had joined the chat and like any other top-notch Twitter chat ideas and viewpoints were flowing freely and interaction had reached a high level; it was perfect time to move to the next question.

“HR, like a magnifying glass, needs to bring focus to an organization’s efforts. It’s a thread that makes a necklace out of the pearls” – Shamik Vora (@shamikv)

The event moved a step further with second question inviting discussions on the difference between value creation and value addition.  “Value addition is an incremental and one of the many steps towards creation of value. “Value creation is more holistic as compared to value addition” was a common theme that emerged and there were many examples shared of what value addition is and what value creation is. Everyone seemed to agree on a simple fact that value creation is what definitively impacts the customers positively and keeps the organisation perpetual. Then a good question was raised; which of the two, value creation or value addition is more important? Many viewpoints were shared and most agreed that both are important and though organisations and HR professionals are rather good at value addition they need to get better at value creation. @sundertrg – Sunder Ramachandran, Head of Learning at JLT drew a beautiful analogy about M&A – Value creation is like a big acquisition successful from HR point of view, whilst value addition is more bolts on the activity of M&A which makes it successful. Another example shared was hiring people by talent acquisition is value addition but when they work towards and build a strong employer brand – that brand building is value creation.  @RajeevChopra made a final remark “The important thing is- everyone can and must strive to add value in their own way but aligned to the larger goal”.

“When you create, you also add but it’s not always the case vice versa” – Zenobia Madon (@ZenobiaMadon)

The “Samundra Manthan” (The Twitter chat) was at its peak by now. The question we began discussing now was; how can HR create that value? I emphasized the importance and need of remaining strategically focused and partnering with business to understand the needs of the business and then create value in business – as compared to being transactionally focused.  @Anand__PIllai stressed on bringing ‘Human’ back to HR. We couldn’t have agreed more to his thoughts. Value creation is possible only if we are ‘human or people centric’ coz it’s all about people and its people who create value. Whilst we were focusing on the details and other examples of value creation,  @armaan_seth – Armaan Seth, HR Head of Consumer Lifestyle Philips India brought our attention to a very interesting and broader insight of creating a culture where value creation is possible by one and all. HR can create value for the Organization and its Employees by creating an environment of Transparency, Recognition, Empowerment, and Learning. As rightly mentioned by @Anand__Pillai, “Create value by having a Roman holiday experience in a Line Function & see and experience things more broadly”. Then @Sairee – Ms Sairee Chahal – Leading expert in Diversity and Inclusion and leader at Flexi Moms – made a very good point saying that, HR can add value by making change easier than expected for everyone – by building culture and competency for managing complex change HR can definitely create value.  @rajeevchopra added that, HR should “help build the organization for today, and tomorrow. This will be a good area to create value”. I concluded by stating the importance of understanding the levers for driving a profitable business growth and the cost and profit architecture of the company. It was my opinion that, it’s very important for any HR professional to understand business, its profit architecture and the three important levers of a commercial business – Pricing, Costs and Customer’s value perception of your product, service, solution or brand. I have had the privilege of taking a roman holiday and working for a few years in line roles – in manufacturing and operations & sales and marketing and I found that experience very useful in becoming an effective HR business partner.

“If you can understand business, you can never participate in value creation” – Kavi (@_kavi)

“HR should act like Radar. It should be able to sense and act quickly”- Amit Sharma(@amitssays)

It is always good to know both sides of the coin. So, after an intense discussion filled with rapid fire, rich and valuable tweets on how HR can create value, we moved to the next question, how does HR end up destroying value? We received a number of responses illustrating the ways HR professionals end up destroying values in an organization. Everyone agreed to the fact that one of the biggest value destruction activities has been the inability of HR to partner with business and co-create the business strategy and mostly being too focused internally. Another point which came up repeatedly in the chat was that of HR being a police post and having a command and control mind-set. This kind of attitude definitely erodes the value creation capability of HR.  If we wish to bring new perspectives, we need to conform to new templates and allow employees to propagate them in the organization. Give people precedence over processes and stop throwing the rulebook at people is the best way possible! I made a point saying that, HR people not starting to and continuing to learn also affects their ability to become professionals who can create value. So HR has to start and keep learning in the most effective manner.

“When HR plans and budgets don’t get funding approval, when HR is not able to get any investment in headcount in HR or for their own development. Indicates you are not credible enough!!”- @indianyash

“HR can destroy value if it does not constantly learn and unlearn. And “I know it all’ attitude can be dangerous” – @ZenobiaMadon

Since we are well equipped with what it takes to create/destroy value in the organization, it becomes imperative to measure value created by HR in terms of both tangible and intangible benefits. Supporting opinions were voiced in the chat by many – When HR is entrusted with strategic initiatives and an equal importance is given to HR head in business meetings, when HR is applauded proactively by business and when goals are shared by HR and business leaders makes it very evident that HR has created value in the organization. To add to it, @GautamGhosh – Gautam Ghosh – General Manager HR and Head of Social Media in HR Philips India  and @Abhinav_Kamra – Abhinav Kamra, HR Intern at Philips India suggested terrific customer centric solutions, @GautamGhosh mentioned the Philips way of measuring effectiveness by the NPS method.  Employee Satisfaction can be a very effective way of measuring impact. The energy and engagement of the HR folks themselves is a big indicator of whether they are creating value.  At times failure can be a measure of success added @Tanvi_Gautam.

Finally, I concluded by emphasizing that the ultimate measure of Value creation by HR is Business leaders crediting HR for the superior performance of business; Value can be intrinsic as well as extrinsic and an effective way of measurement has to carter to both.

“The true measure of value creation comes at 3 levels – intellectual, emotional and yes maybe even spiritual” – @Tanvi_Gautam

Time was flying and so were very rich and meaningful tweets. Next up was the penultimate question of this discussion, what competencies will the future HR professional need to be able to create value? The responses and suggestions were simply amazing and really insightful. Some competencies highlighted during the discussion were Business Understanding,  Domain knowledge, Customer Insights, Customer centricity, Brand Building, Design Thinking, Creating Learning Organizations, Culture Building, Leadership Development, Strategic thinking, Analytical Skills (analyze and predict), Change champion, Coaching skills, Critiquing skills, Technology proponent and so on. Folks agreed that HR needs to become more agile and proactive to deal with ambiguities and anticipate business needs better and faster. The need for capability building in the area of value creation was well expressed and discussed.

“HR taking the lead in cementing the link between growing people and growing business”- @RajeevChopra

“Staying current, scanning the horizon & contextually bringing it back to the organization is hugely valued & sought!   Stand up for people. Talk business. Hear the unspoken. Smell the change! That makes a difference!” – @_Kavi

And then came the time for the last discussion question. It was hard to believe but yes, we were in the last 10 mins of this amazing discussion. The gears shifted to understanding what must change on the business side for HR to be able to create value. Amazed to see that most of them were speaking the same language. Business and line leaders should demand value creation from HR and also coach and develop HR to deliver on their expectations and demands. @RajeevChopra as a CEO appreciated the value of HR and warned those who fail to recognize the value HR. @Anand__Pillai further added and said, “Business shouldn’t treat HR as a scapegoat. Ultimately, it’s a handshake; business is as much HR, as HR is business”!

This twitter chat was indeed delightful and enlightening. It was a superb learning experience for all of us. This one hour resulted in no less than a brilliant knowledge repository. @GautamGhosh then shared the statistics of the chat, there were more than 1000 tweets, which had made circa 1 million impressions and he later tweeted the storify of the same.

“Business is hungry and waiting for long for HR to create value. They should get more impatient and demanding” – @IndianYash

“What must change in the Business Side? For starters, we must be all on one side!” – @_Kavi

I also want to thank my colleague and friend @KaleleSuchita – Ms Suchita Kalele who helped me capture the key points of the chat and drafted this blog post. So for all practical purposes she is my co-author for this post. Thank you Suchita.

More about #IndiaHRChat:

#IndiaHR chat is a monthly HR chat series chaired by prominent HR leaders in the Industry. The idea is to facilitate learning by engaging the HR executives from diverse industries, in a live discussion forum.  Watch out for the next #IndiaHRChat on 26th of June, 2013 at 7.00 pm IST – Topic : Leadership Culture from within.

Finally I take my hat off and a bow to @Tanvi_Gautam the founder and host of #IndiaHRChat for creating such a powerful learning and sharing platform known as #IndiaHRChat.

 Einstein Quote's

Einstein quote. Credit to imnotjustagirl.com

6 thoughts on “How Can HR Create Value

  1. Its indeed a very nice read sir. I think its clear to almost everyone that in the field of sustainability we need an evolutionary leap into the “wholeness mindset”.this involves asking how we regenerate and bringing more of what we need without degrading what is already there. We cant grow a business without growing the people who are working there. Personal development is one of the most effective tool to generate exponential sales, profits and shareholder value

  2. Excellent Post. Much needed, must READ and very Valuable, Thanks Yashwant,
    For all practical purposes, when the business environment is same for all the companies, only some succeed. One of the reason for the success remains the PEOPLE and its invariably that we learn and appreciate about HR practices of the successful organization. This goes on to demonstrate how important a role HR plays in the success of the organization.
    Thi

  3. Hello there! This article could not be written much better!
    Looking at this article reminds me of my previous roommate!
    He always kept preaching about this. I most certainly will send this information to him.
    Pretty sure he’ll have a good read. Thanks for sharing!

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