systematicHR

In a constant barrage of surveys that tell us:

• Higher Engagement, Higher Profits
• Better HR, Better Profits
• Better Talent Acquisition, Better Profits
• Better HR Service Delivery, Better Profits

I could go on and on. The problem is that while all of these are true, none of these strategies will yield higher profits because none of them alone are causal to the profit statement. Each one may play a small (very small) role in the overall profitability of the organization, but not much more. I’m reminded by this from reading another cnn.com article that highlights a Cornell University and Gevity survey stating:

The study, which surveyed 323 small businesses, reported that superior HR and management decisions could mean the difference between an explosive business and a sluggish one. Companies that met all its criteria had an average revenue growth rate 22 times higher than those that didn’t meet any, a profit rate 47 times higher – and one-sixteenth the turnover rate. ((Davermann, Myrlande, September 22, 2006. “Why HR = Higher Revenues.” Retrieved from cnn.com on September 25, 2006))

Let’s face the hard facts. What this survey shows us is not that improved HR function yields higher profits, but that companies with improved diligence in making management decisions about administration, process, service delivery, product development, marketing…

A = C, and B = C, therefore A = B

It works in math, but not in management. What management reality says is that good management practices lead to profitability. Coincidentally, good management practices also means that your HR is probably better at their job too. But don’t confuse the causal effect of management with that of HR. The cause of profits is the overall practice of management companywide – not in a single department like HR.