Managing Value, Part 2b: Acquiring Resources

The basic function of every business is to acquire raw materials and transform them into finished goods. Last week I wrote about purchasing as the primary function for acquiring resources. This week I want to look at the human resource function which plays a critical role in acquiring staffing resources, especially for businesses in the service industry. So what does it look like, in HR if the management strategy is to maximize adding value to the end product?

Human Resources

The human resource function is not considered to be a direct link on the value chain for most organizations. However, maybe it should be since the cost of acquiring, training, and retaining good employees is significant for every company especially those in service industries. Organizational culture can be defined as a set of shared values, and beliefs that govern how people behave, having an impact on things like how they dress, communicate and perform their jobs. Our company, Solution Source, is a business software consulting firm. All our staff are incredibly important to the culture of the company and the value of the product we sell. We learned the hard way that poor hires and/or high turn-over create costs that can seriously choke an organizations ability to thrive. While hiring people that you wouldn’t mind going out and having a drink with after the interview might work part of the time knowing a lot more about your potential employee before you hire them significantly increases everyone’s chance for success. We use two different tools, the Culture Index and the Profile XT, to give us information about the candidate’s personality and abilities. These tools provide information that help guide our interview process and aid in understanding how the candidate fits our organizational culture. The best way to add value in the hiring process is to know enough about the candidate to understand how they can be successful in your company which ultimately makes the company successful.

Long-term retention of high quality employees is quite possibly the most significant way to add value in the HR function. At Solution Source we are deliberate about creating community through things like fantasy sports leagues in the office and carry in meals at special times like Thanksgiving. But our biggest cultural success has been adopting an “open book” management style. Adopted from the book “The Great Game of Business”, the philosophy is that if employees understand how their success impacts the business success everyone wins. Each month the entire company reviews the income statement and balance sheet together and every employee can explain the financial status of the organization and how their work impacts the performance of the company. Managing for value in HR can be done in different ways and there is no single solution but being deliberate about finding the right solution for your company is a worthwhile pursuit.

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