II) REVENUE NOT COSTS
CEO's are laser focused on increasing revenues (top line growth), profit and the stock price. The measure everything in either dollars or numbers. HR executives seldom see the relationship between HR and profits, revenue and the stock price. When they do focus on money it's almost always on cost savings. For example saving HR costs (when they make a less than 1 percent of the total company's revenues) are unlikely to have any strategic impact on the business. HR often measures the cost of the hire (COH) when the COH is generally less than 5% of the revenue generated by each employee during a year.

Beware, it's not acceptable to focus on only half of the business equation (expenditures). HR needs to focus on the "other more important half generating revenue, profit and increasing the stock price! For some reason HR never takes the time to measure the revenue generated by hiring and retaining top performers compared to the revenue generated by a newly hired average performer.

In contrast to the relatively minuscule HR budget over 60 percent of the total variable costs of most corporations go to people costs (salaries and benefits). However, HR routinely fails to measure or demonstrate the return on investment (ROI) that great people practices can yield. Everyone knows in their mind that recruiting, incenting and hiring top talent can dramatically increase revenues but HR has failed to quantify that impact.

"This would include... running (HR) operations based on return on investment" CEO of Cisco Systems

HR action steps
•  Quantify the revenue generation differential between top and average performers
•  Calculate your "people profit ratio" (which is the number of cents of profit generated for each dollar spent on people costs)
•  Identify and target the jobs and employees that generate the most revenue and profit
•  Calculate the ROI on each HR function and focus on those with a high return (and drop those with a low return)
•  Shift HR resources and emphasis to programs that have a positive business impact rather than putting resources into administration, processes and other low value areas

BE FOREWARNED
This article is designed to make you think. It is by design critical of many in the HR profession (even though generally HR people don't take kindly to criticism). I realize you can't easily generalize about all HR professionals but my research and observations have shown that we are in fact different. I don't believe it's in our DNA but rather it's a result of a history of promoting people with a lack of line management experience and business degrees. I've been in HR for over 30 years. I've served as a Chief Talent Officer for a Fortune 500 company, a professor in a business school and a CEO. During that time, I've found that when you interview or observe CEO's you find that they are dramatically different then "we are. They are generally aggressive types that try to make a big splash and enjoy the direct line of fire while too many HR executives are happy as staff officers. Unfortunately, if we choose to remain comfortable as part of "overhead we may also be simultaneously degrading the importance of the "people function to the level of purchasing, accounting and shipping. If VP's of HR are to become future CEO's and business leaders we need to look at our perspective, our thinking and our language and then dramatically shift it so it comes more into alignment with the approach taken by senior business executives!.