In my last post I started introducing New HR with discussing HR’s customers: Management, Shareholder, Customers, Employees as well as Unions/ Works Councils to better understand the requirements and environment HR faces in today’s world. Having discussed Management last time, today I will discuss Shareholders.
Shareholder
Before Ulrich introduced Shareholder as an important customer for HR, no external group (or semi-external) was really considered a customer of HR. Ulrich has changed that – and this was an important step for HR. Why? – Well, of course one can have different opinions on the importance of satisfying Shareholder’s expectations, but no one can neglect that a company without Shareholders would go cease to exist.
However, during my visits to different HR functions of different german, european or global companies I have not found more than a small trace that these HR functions take shareholders serious and really understand their expectations and work accordingly. So there is still quite a room for improvement. But before going into this topic, let’s start with why Shareholders are important customers for HR.
The connection is a fairly easy one. Shareholders have in general one or two main targets why they invest in a company. The first and in most cases only goal is to generate a good ROI, may it be through dividends or a rising share price. Sometimes an additional, sustainability focused goal is added and also actively promoted by the company. (just listen in to Apples last analysts call…). And HR is one of the functions to have an impact on these goals. Not a direct one, but an indirect impact. How?
Well, when it comes to the company’s external representation, HR plays a big role – through Recruiting and how HR is representing the company in building an outside view of the EVP (Employee Value Proposition). In addition, as already discussed in one of my earlier posts, HR should not be a backoffice function, but a performance support for the business functions. And the business functions in turn should generate a good margin to satisfy the Shareholders.
Ok, but why does HR then need to treat Shareholders as customers? – because Shareholders do not just by chance invest in a company. They do this because the believe in this company and its ability to generate an ROI. And HR needs to understand this “believe” what is it the Shareholders believe in? Is it quality? innovation? size? – whatever it is, this is what the company needs to deliver on and what HR a) needs to support and enable through processes and products as well as b) also shape and emphasize in its external recruiting market approach.
Sharholder’s reasons to invest in companies have changed over the period of the last 15 or so years – meaning since Ulrich discussed them. But, their importantce and how to treat them in general did not change.
This discussion has hopefully shown why Shareholders are important for HR and why HR needs to treat them as customers. In my next post I will highlight external Customers as customers of HR. Another group which was neglected pre-Ulrich.
Chief HR Officer 