HR and Lean: Transform your HR department from a cost center to a profit driver

Friday, June 3, 2016
When you think of your Lean HR, what work improvements come to mind?
Doing a better job at hiring, firing, performance reviews and benefits administration? If you are like the majority of businesses, those functions define the HR department. But what if the following words and phrases were used when considering your HR department: increased Valued Added Services, Return on Investment, Key Performance Indicators?
Most businesses consider HR as overhead. The department that is necessary, but really doesn’t affect the bottom line of the business. Or could it?
By transforming your HR department, you can move it from mostly a cost center to being a part of your business that has a real impact on your revenue and profitability. Sound too good to be true?  It doesn’t have to be. These 5 items are all part of transforming your HR department so that it becomes a driver of your corporate performance.
Consider the Role of the Department – Review the current responsibilities of the HR department. Make sure that their role definition meets the current needs of the business. It is important here to think about the business as a whole. HR professionals manage many of the key business processes that impact how your team members work and your overall culture (i.e., job role definitions, recruiting, on-boarding, training and development, performance management, reward systems, engagement, etc.). 
People are a part of just about every aspect of a business and continuous improvement. Too many times HR is left out of key business meetings and decisions based on a narrow definition of HR topics. It is time to change that mindset and get HR more involved in your improvement efforts and in a big way.
Better Skills Make Better Employees – Once you have an updated definition of the role that HR will play, it is time to evaluate your HR team and find out how they can best be further developed.
What skills and abilities does your HR team currently have? Interview your HR team to find out their current qualifications as well as any additional interests they have in supporting your business and improvement activities. Then you can identify any gaps between your current employees and your evolving definition.
To fill the gaps, make every effort to provide the training and support for those who want to increase their skills and the strategic impact they provide.  If you have HR team members that truly don’t want to improve the impact of their roles, you may need to find other work for them that isn’t as critical to your successful Lean transformation.  Don’t maintain a stance of being disappointed in your HR function; Be part of the solution.
Create Business Savvy HR Employees – Many times when someone works in HR, they only know of the programs they are directly supporting. They might hear about corporate initiatives to reduce costs and improve profits, but don’t see themselves as directly involved in the processes that make those things happen. Take some time to walk your HR folks through the business like a Business 101 course. Go over a P&L sheet; talk about the goals and initiatives that are in place.  
For example, HR people need to be clear about the business impact of a new hire’s role in reducing costs or improving revenue. If they supporting the hiring the next sales person, what is the revenue that sales person will bring into the company?  How much profit?  How do you know if the candidate will be successful (how much does it matter)?   The hire may easily be a multimillion dollar issue – not just a routine response to handling recruiting requests.
Raise the Performance Bar for HR – HR routinely oversees performance metrics and reviews of other departments, but how is the HR department performing? Are they meeting their goals? 
Are they being utilized to their full capability? In the majority of cases the answer is NO when it comes to fully utilizing what HR can contribute. 
Measure the value of their actions and how they impact the business. Tie HR performance to some or all of the Key Performance Indicators.  Remove or reduce the view of HR as a separate silo and bring them directly into your value streams.
This gives the department a direct measure of how what they are doing impacts the overall business. A good example of this is with regard to performance management systems. How is feedback or review systems driving key performance indicators? Are there gaps? How much will the business gain with better alignment between team member’s focus and critical goals?
Lean is based on strengthening value from the customer’s perspective – One of the best ways to determine how a service-based department is doing is to ask.  Continuous improvement always makes sure measure are in place for what needs to get better and is it.  Create a survey both for employees and for management to rate how well HR is performing. The most important part of the survey is to take the feedback and act upon it to improve service and teamwork throughout the organization.
The role of HR in Lean transformations will continue to be refined and redefined in the future.  Make sure your HR department understands your Lean practices and your business as a valued member of the team. Then you will be prepared for future needs.
Let’s face it: people are always going to be the central focus of continuous improvement. Who can better create the culture to sustain improvement than your HR professionals?
Cheryl Jekiel, AME Author
Founder, Lean Leadership Resource Center, Inc.