Linking HR with your business strategy

Lizzie Buxton

Written By AdviserPlus

31st July 2019

Share on:

It’s no secret: a comprehensive HR plan is crucial for supporting business growth. From helping SMEs reach maturity to retaining world-class talent in global organisations, there are many business benefits to having great maternity, sick pay and holiday provisions.

But, these benefits must be weighed up against the costs. Marrying your HR strategy to business goals is a great way to maximise profits in the long term.

Here, we’ll walk you through the process of aligning the two strategies and will show you creative ways to make savings.

Our webinar offers more tips on ensuring HR policies support your business objectives.

Why HR and profits go hand-in-hand

Naturally, each layer of HR comes with a price tag. The more attractive your holiday, sickness and maternity policies, the more they will sometimes cost.

It is important to remember that generous company leave and benefit provisions rarely correlate with lower profits, though – because of how HR supports recruitment, retention and productivity, the opposite is often true.

Our Productivity Puzzle eBook identified several HR investments that boost productivity – including training, mental health support and even a reduction in working hours.

Few businesses can afford to strip their HR provisions to the bare bones since this can impact organisational health. At the same time, overspending and misspending are also unsustainable, so review your investments regularly.

Understanding the HR landscape

The first step to measuring the return on investment (ROI) of your HR policies is to understand how much each policy is costing your business. There are legal requirements about holiday entitlement, maternity leave and sick pay, but many organisations seek to attract the best people by going beyond these.

British businesses can claim back 92 per cent of the costs incurred by maternity pay through government initiatives, drastically reducing the bill. This is perhaps why a huge 48 per cent of British businesses offer enhanced maternity pay – something decision-makers should bear in mind.

Top-ups might involve covering a new mother’s full salary for the first six weeks. Or, you might pay an enhanced rate for a fixed period. How you offer benefits beyond the statutory minimum is a free choice – but that doesn’t mean all types of investments bring back the same return.

Take some time to research your competitors’ policies to know where the benchmark is set and where additional funds are best invested.

Defining your business objectives

Deciding how to enhance packages like maternity pay, sick pay and annual leave depends on your budget and company objectives. If driving workforce loyalty is a key part of your growth plan, you may need more generous provisions.

Likewise, if culture is a key business goal, then encouraging gender diversity is likely to also be an objective. Engaging with a diverse workforce means offering support to a wide variety of people – including new parents, people with disabilities and professionals who are motivated by flexibility.

Even if you think productivity comes before people, consider the unexpected consequences of stripping back policy provisions. For instance, offering only statutory sick pay (SSP) might encourage presenteeism, which can slow recovery times and keep productivity at a snail’s pace.

At the same time, reducing the cost of excessive absence is a common and valid business goal – especially since a huge 5.9 days’ work is lost per employee each year.

With your goals defined, how can you align those that compete? The trick is to get creative.

The best of both worlds: get creative with your policies

When your ambitions span people and profits, creatively managing absence costs can pay off. This might involve offering additional sick pay on a discretionary basis to support those in need while preventing overuse.

Be careful, though – you’ll need to lay down specific criteria and ensure decisions are consistent to avoid tribunal claims.

Creatively managing parental leave might mean asking new mothers to repay enhanced payments if they choose to leave the business. This helps to protect the objective of maternity pay – to support new mothers through a life-changing event so their contributions can continue.

There are also support mechanisms that don’t come with direct costs – these are gold dust for HR professionals with a tight grip on the purse strings. Flexible working, for instance, can work wonders for new parents and those recovering from ill-health.

When it comes to annual leave, remaining competitive means something different for each individual. Offering the opportunity to buy and sell holiday helps to ensure everyone’s needs are met – and it is cheaper than business-wide change since the cost of extra leave is absorbed by the employee.

Calculating ROI for HR

Adopting a balanced approach to HR – one that invests in people while keeping costs to a minimum – makes good business sense. While creative tricks help, you’ll need to run the numbers to see if they have paid off.

Of course, great HR software helps. With concrete data, analytics and insights, you can easily identify absence trends and see the impacts of policy changes.

It is important to take a long-term approach to HR metrics since the best benefits create a loyalty boost that lasts for years. The ability to analyse more variables also gives you a broader picture – take a look at our People Analytics technology to get started.

Do you want to learn more money-saving HR tips? Find out how to align people and profits by watching the full webinar today.

Speak to our HR experts

Call us today on

0844 327 2293

Contact us