The Essential Role of HR Leadership in Business

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Successful small-business owners place great value on the role of human resources. Referring to functions such as recruiting, hiring, optimizing employee performance, and improving workplace culture, HR manages your most valuable asset: your people.

“By attracting talent that fits the culture of your company and providing continuous development opportunities for employees, HR leaders help build a motivated and skilled workforce,” says Jorge Titinger, founder and CEO of Titinger Consulting, a leadership and management training firm.

Here’s how HR leadership can play an essential role in your business and can directly affect your company’s performance and success.

Why Is HR Leadership Important?

What is the role of human resources and why is HR leadership important? With its focus on recruiting and retaining employees and developing a positive workplace culture, HR leadership acts as the backbone and lifeblood of a company.

“Strong HR leadership is crucial for the success of an organization,” says Daniel Boscaljon, an executive coach and founder of the Healthy Relationship Academy. His company partners with businesses to provide training on creating better workplace environments by developing relationship skills.

“HR leaders who show a commitment to creating a genuine sense of community within an organization end up attracting better talent and decreasing turnover,” says Boscaljon. “This is especially true in small businesses where HR focuses on creating an environment that is friendly, supportive, and professional.”

What Is the Purpose of Human Resource Strategy?

Business human resources can be critical to a company’s smooth functioning because “HR often serves as the intersection between workers and management,” says Boscaljon.

Human resources can be key to organization and people management. If you can create an effective human resource strategy, you can help ensure a productive and engaged workforce.

“Organizational success requires strong HR leadership because this ensures people feel supported and motivated and occupy positions to which they are well suited,” says Jessica Bane, managing director of GoPromotional, an online retailer carrying branded promotional products. “This is especially true for small businesses, which take into account every contribution made by each employee toward the overall success of the company.”

“Having the right human resources personnel in place is critical to your company’s success and scalability." —Geneviève Retzlaff, founder and CEO, Grow Better Together 

At heart, in addition to helping to ensure a company is a good place to work, an effective human resource strategy aims to help every employee move in one direction toward the company’s goals, believes Bane. “An effective human resource strategy ensures that employees’ goals are consistent with organizational objectives,” she says.

“HR leaders make it their business to see things through the lens of the employee, while also balancing the view of the world from the eyes of management,” adds Cheryl Naumann, chief human resources officer at University of Phoenix. “Maintaining that delicate balance is critical to a company’s smooth operation and success.”

Benefits of HR Leadership

Human resources leadership can provide a variety of benefits for small businesses. These perks may include tactical tasks such as recruitment, pay, and benefits, and the strategic side of company operations, including organization development and workforce planning.

“When the tactical side of HR is working well, it is magical,” says Mary Barnes, founder and CEO of Evolve Your Performance. Her company provides change management solutions for small businesses. “Hiring managers are happy because they are easily able to recruit and onboard high-quality employees, which means operations can grow,” says Barnes. “Employees are also happy, because payroll and benefits are seamless.”

Additional benefits of the role of human resources include:

Improved Workplace Culture

A human resources program helps ensure a positive workplace culture that nurtures all employees. “Implementing a better workplace culture is the key to overall growth, happiness, and longevity for everyone connected to the business,” says Boscaljon.

“HR supports a company in building a workplace where people can be themselves, find a sense of belonging, and where they have the necessary conditions to perform well and do their best work,” says Geneviève Retzlaff, a professional certified coach and founder and CEO of Grow Better Together. Her company assists businesses with setting up HR processes.

Enhanced Employee Experience

“Effective HR leaders foster a positive and inclusive work environment,” says Titinger. “They implement engagement and retention strategies, such as employee recognition and development programs that lead to higher productivity and lower turnover rates.”

Strategic Alignment and Vision

Sometimes business owners get so caught up in the day-to-day running of their companies, they lose sight of their intended vision. Effective HR helps ensure that company goals are kept in sight and steps are taken to meet those goals.

Enhanced Operational Efficiency

“Strong HR leadership streamlines HR processes, improves efficiency, and leverages data-driven insights for informed decision-making,” says Titinger.

By managing and motivating personnel, HR can simultaneously create systems and processes that measure employee performance with the aim of improving performance and providing positive feedback. All of this can lead to improved productivity across the board, allowing your company to remain competitive.

Proactive Management and Mitigation of Risks

When you keep an eye on stress points and potential weaknesses, you can prevent problems. A good HR team can help ensure company policies meant to mitigate risk and ensure stability are followed and that when problems do arise, they are dealt with quickly and efficiently.

Risks of Not Having Strong HR Leadership

Not prioritizing human resources may negatively impact the flow of your business. Failing to incorporate business human resources can pose the following risks.

Compromised Workplace Culture

When a company lacks strong HR leadership, the attitude in the workplace can suffer and the environment can become toxic, believes Boscaljon. “The most resentful and negative employees tend to rule, the best employees tend to leave, and the employees that would have been great contributors end up being tasked with picking up increasing amounts of work until they’re burned out and exhausted,” he says.

Inconsistent Employee Policies

When no HR is heading up policymaking, there may be confusion and unfair, inconsistent treatment of employees, which can harm morale and productivity.

Poor Talent Acquisition and Retention

“Ineffective hiring and retention strategies can result in high turnover rates, disrupting operations and increasing costs,” says Titinger.

Disengaged Employees

“Lack of investment in employee satisfaction and development can result in disengaged employees, reducing productivity and increasing turnover rates,” says Titinger.

How Human Resources Leadership Can Drive Value

Prioritizing human resources can help add tremendous value to your business. Wherever humans are involved in your business, attention to HR can help ensure smooth, efficient operation and a productive, pleasant work environment.

When looking at the role of human resources, an important function includes employee education. Effective HR leadership can help ensure, for instance, that employees have opportunities for reskilling and upskilling. These training methods can be valuable to your business as you work to keep up with the ever-changing, competitive times.

How HR Can Transform a Business

HR can be a powerful tool for transforming a business and creating future desired changes for the company. Small businesses that embrace human resources leadership can reap many benefits, including uplifted, satisfied employees, a productive workforce, and the ability to quickly and efficiently manage new business models.

“Strong HR leadership helps create the changes in management that end up transforming the entire workplace culture,” says Boscaljon. “Organizations that will flourish over the next 10 years recognize the importance of creating workplace cultures that drive productivity by supporting employees as whole persons – not just as roles within a corporate structure.”

“Human resources is indispensable for any organization aiming to achieve sustained success,” says Titinger. “Human resources leadership aligns HR strategies with business goals, fosters a positive and inclusive workplace culture, drives continuous improvement, and enhances operational efficiency. By addressing these critical areas, HR leaders transform organizations, creating environments where employees can thrive, innovate, and contribute to the company's long-term success.”

Recruiting Top Talent

An effective HR team can help recruit top talent for your company. They can devise a recruitment system that includes enticements for potential employees, including competitive perks and benefits. They can also create interview questions for assessing top talent that can help ensure candidates would make good employees.

From interviewing candidates to implementing strategic growth options, “your company’s HR is a valuable partner in business growth,” says Retzlaff. “Having the right human resources personnel in place is critical to your company’s success and scalability. An effective HR executive will have a 360-view of the entire company and build a strong alignment between people and business strategies.”

Photo: Getty Images

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