Why HR

by Brian Hults
Really Does Add Value
December 21, 2011

In light of today’s economic volatility and uncertainty every

aspect of business is being re-examined for its value in creating
and sustaining profitable growth. I’ve worked in human resources
for over 25 years, the past six with Newell Rubbermaid, and this is
not a new endeavor for me. Throughout my career, I have
consistently faced the question, “How does HR add value in a
business?” In many cases, this question is not asked politely.

Adding legitimacy to this skepticism are new technologies that

enable automation of routine transactions, offshoring and shared
service organizations that specialize in managing many tactical
elements of HR. Outside vendors are handling classic HR
functions like payroll, staffing and recruiting, and even equal
employment opportunities investigations, often at a lower price
and higher quality than companies can manage for themselves.
Even sacred and often arcane areas of HR such as executive
compensation are now largely guided by outsourced providers
who are experts in current tax and SEC regulations.

In this world flush with cheaper ways to fulfill traditional HR

tasks, is HR becoming obsolete?
Early in my career I was fortunate to help a large manufacturer
and distributor of construction and agricultural equipment
change the way it went to market in North America. In the mid-
1990s the small businesses that dominated both construction and
agriculture were being replaced by much larger corporate
competitors. As a result, procurement specialists who were much
more sophisticated than the small farmers and family
construction owners became my firm’s target, which required a
change in the way we sold. The company’s relationship-based
salespeople needed to become business people who understood
the applications of the machinery in their areas, the competitor’s
equipment, the company’s strengths and weaknesses, and the
economics of our distributors and customers in order to put
together multi-million dollar deals that delivered financial
benefits to all parties.

By utilizing basic HR tools like business process redesign,

organizational redesign, job redesign and competency model
development, we were able to more effectively align our selling
and support processes to the changing business realities of large-
scale farming and construction. Within the first year of our effort
net sales increased 27 percent while fixed costs were reduced by
40 percent. Not all fixed cost reductions were people. We
eliminated a number of decades-old field offices built to
accommodate railroads (which were no longer the dominant
distribution method,) and we redeployed 33% of our sales
personnel who were not able to execute the new selling process.
As would be expected, many of our sales people were very good at
support, but not as good as we needed them to be at business.

This success is an example of how, when properly applied and

executed, HR can have a significant and measurable impact on a
company. It’s important to note that the value added by HR in this
instance had little to do with what is classically considered core
HR work such as payroll, benefits administration, staffing, and
recruiting. Instead, the work was strategic in nature and created a
structure that allowed the business to succeed.

In order to add significant value to a business, HR must be able to

support and enable the execution of strategy through building
organizational capability. This is a role that cannot be automated,
shared as a service, offshored or outsourced. It comes from an
intimate knowledge of a business’s strategy and the existing
capabilities of the organization. The great advantage that HR has
in this area is that, ultimately, all strategy is executed by people –
people who need to be supported, trained and equipped to fulfill
the strategic vision. This is the real role of HR, and even though
some people remain skeptical of its bottom-line importance, in
fact its relevance cannot be underestimated.

In my current position at Newell Rubbermaid, we have gained

consensus among our senior leaders that the primary role of HR is
to build organizational capability to support the execution of
business strategy. Our leaders are so excited by this shift that they
want us to be able to execute against the new model of HR as soon
as possible.

From my experience, however, I’ve learned that this is not a

simple shift that happens overnight–it takes some time. To get
there, our HR department is applying the same principles of
business process redesign, organizational redesign, job redesign
and competency model development to our own function. We
have mapped competencies to each job and started to understand
the gaps between where we are today and where we want to be in
the future. We have also started to lay out a long-term
development process for our HR associates to teach them
everything from financial basics to strategic workforce planning.
We’re also using technology to relieve our staff from doing more
routine HR work so they can focus on building capabilities.
 Our approach is to not replace our current HR team with new
people or technologies, but to teach them the new skills required
for HR’s new role in today’s business environment. We
understand that this is a multi-year journey, but feel it is the right
approach for our business.

BH
Brian Hults is vice president for global
organization and people development at
Newell Rubbermaid.

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