For years HR has been viewed as a necessary but cost-based function – an operational role more than a strategic one. But if HR leaders want to truly influence the boardroom they must demonstrate that HR is not only essential but profit-driving, capable of transforming business outcomes
“Only 2% of FTSE 250 companies have an HR leader on their board, compared to 99% with a finance director,” stated Bobby Sandhu, senior relationship manager at the recent Lattiverse event run by AI-enhanced people platform Lattice. This signals a critical gap in strategic people leadership at the top. Why is this so, particularly when effective people management is foundational to an organisation’s success? To shift this narrative HR leaders must go beyond operational tasks, adopting a profit-centre mindset and reframing their work in terms of measurable business value.
Why HR must shift to profit-centre thinking
The core of this approach is reimagining HR as a profit-generating function rather than a cost centre. This mindset shift isn’t easy, but it’s crucial. According to The 2023 HR@Moore Survey of Chief Human Resource Officers from Darla Moore School of Business, University of South Carolina, this shift is underway. Among the eight key roles of a world-class CHRO as outlined by Gartner ‘Board’s Leader of Human Capital’ and ‘Driver of Culture and Purpose’ were rated as the most critical and differentiating, with 79% and 80% of CHROs respectively identifying these as one of the top two roles central to business success.
On the other hand, ‘Business Acumen’ was seen by 19% as just table stakes (though 38% said it was critical and differentiating) and the CHROs role as functional leader was rated the least impactful driver of business outcomes, with 27% rating it as table stakes.
A comparison to last year’s data further underscores this shift. In 2022 the accompanying report noted that CHROs were primarily seen as leaders of the HR function, focusing on maintaining operational excellence. By 2023 there was a clear increase in the emphasis on strategic workforce planning and a profit-driven mindset, indicating HR’s accelerating transformation into a driver of business outcomes rather than a purely supportive function.
This strategic pivot is supported by insights from IMD professor of governance Didier Cossin’s High Performance Boards: A Practical Guide to Improving and Energizing Your Governance, which highlights governance quality as a major factor in board effectiveness.
Cossin identifies areas such as strategy, risk and integrity as core responsibilities that directly overlap with HR’s remit, and he underscores the importance of integrating HR insights into governance. HR brings crucial insights on organisational health, culture and succession planning. By providing these insights HR leaders can strengthen board oversight and ensure that people considerations are central to high-level decision-making.
Guy Novik, CEO of US Air Tours, exemplifies this shift, describing how he came to view HR’s work through a capital-expenditure lens, expecting returns in tangible business outcomes rather than cost savings alone. Speaking at Lattiverse he said his ‘Damascene conversion’ was when he moved from looking at HR as a structural necessity and cost centre to being persuaded it could be a profit centre. “That was a dramatic change because everyone on the board is looking to see how quickly they can get a return on investment,” he says.
He calls on HR to present initiatives in terms of short-, medium-and long-term returns, positioning them alongside profit-driven departments. “See yourselves as a profit centre, not as a cost centre, and then all the same arguments that you're making about investment are the same arguments that the head of sales is making, the head of operations is making or the head of productivity is making,” he says.
To apply this profit-centre thinking HR leaders need to treat every major HR initiative – from talent acquisition to cultural change – as an investment that will drive measurable returns. This means defining and presenting the outcomes of HR initiatives in terms of business metrics: improved productivity, higher retention, faster innovation cycles and even customer satisfaction. When HR frames its strategies as short-, medium-, and long-term investments with clear ROI potential it positions itself alongside other profit-driven departments like sales or operations.
HR must translate data into insight, not just information
Effective HR doesn’t just generate data – it uses it to create strategic insights. Chelsea Coates, chief people officer at B2B research brand GWI, notes that: “Operational people teams produce data, but strategic people teams produce insight. It’s not just good enough any more to get the data and put it in front of people. You need to be able to tell a story with that data and help stakeholders understand the impact of it.”
Boards don’t need a flood of HR statistics, they need a narrative that connects those numbers to business priorities. HR leaders must become adept at storytelling with data, using it to shape and forecast business outcomes. For example, presenting a data point on employee turnover, not as an isolated figure but as part of a narrative showing the financial impact of reduced attrition, enhanced productivity and the positive ripple effect on customer experience. This storytelling approach allows HR to elevate its metrics into boardroom language – making data relatable, relevant and resonant.
One way to start is by mapping HR metrics to organisational goals. For instance, if high turnover in customer-facing roles leads to customer dissatisfaction, then retaining top talent in these roles can be quantified as a driver of revenue stability.At Lattiverse Premo Ojokojo, chief people officer at cross-border payment company AZA Finance, demonstrated the power of this approach first hand. “When I joined, HR was the ‘admin guy’... but if we understand the business we then know how to tailor our strategy and start thinking differently. I had to look at where we were having the most pain points, where managers were not agreeing to doing stuff,” she explains. For example, by aligning her strategy with core business needs Ojokojo achieved a dramatic reduction in attrition, from nearly 50% to just 2.5%. This kind of data-driven result has been instrumental in positioning HR as a valuable strategic partner within the business.
This shift from reporting data to interpreting it in a way that informs business decisions is essential to influencing the board. By translating HR data into compelling stories that align with business objectives HR leaders can underscore their role as growth enablers rather than support staff.
How HR can build alliances with key stakeholders
Moore’s research finds that CHROs are dedicating substantial time to focusing on the issues that matter at board. The 2023 report shows that CHROs are now focusing their most effort on improving strategic workforce planning, executive succession and building and managing the talent pipeline. Building alliances with key board members and C-suite peers is essential for HR to influence these strategic areas effectively.
Ojokojo describes how finding allies within the boardroom helped her achieve critical buy-in for HR initiatives. She identified that the chief financial, risk and technology officers were key initial stakeholders . “I started working on those divisions, and by the time I got them up to scratch it then became easier to sell the strategy to everyone else,” she explains.
For HR leaders, this means identifying board members who are open to HR’s vision and working closely with them to demonstrate HR’s alignment with their objectives. In fact, the 2023 survey highlights that aligning HR processes with business needs is now among the areas CHROs are focusing on most to improve their impact on organisational strategy. Such alignment ensures that HR’s strategic goals resonate with the business’s broader objectives, making HR more visible and valued in the boardroom.
As well as building alliances Coates emphasises the need to tailor boardroom presentations to resonate with each member. No one-size-fits-all presentation will capture every board member’s attention, she says, so “when you're going into the room it's important to think about actually who's in there…so I know that this person’s going to care about the numbers, that one cares about the impact in five years and so on.” Knowing that before going in changes the whole conversation and enables HR leaders to deliver impactful, relevant insights.
Reframe HR as a growth driver in times of change
Today’s business environment calls for resilience and adaptability, especially in times of crisis or recovery. HR leaders must demonstrate how investing in people strategy fuels both stability and growth. For example, Lattice’s 2024 People Strategy report shows that organisations impacted by layoffs often experience a four to 12-month lag in productivity, yet boards frequently expect recovery within three months. HR’s role is to manage these expectations and show how a well-supported workforce can expedite recovery and enhance long-term growth.
To do this HR needs to present its programmes not only as supportive measures but as drivers of operational efficiency, cost savings and cultural strength. In Novik’s words, HR leaders should present themselves as “salespeople” – articulate, persuasive and prepared with rigorous research. This may mean referencing external benchmarks or partnering with research institutions to underscore the credibility of HR’s growth strategies.
In 2022 CHROs reported that time spent on executive compensation had dropped significantly, with DEI and culture rising in focus. This change reinforces the message that HR’s value proposition is shifting from cost management to a central role in fostering resilience, inclusivity and adaptability – essential qualities for growth.
Consistency and transparency: the pillars of cultural change
Cultural transformation is one of HR’s most strategic roles, with consistency and transparency as the foundations of this work. Moore’s 2022 CHRO survey reflected this growing need, with culture and engagement found to be among the most-discussed topics between CHROs and their boards, showing how boards are increasingly interested in the business impact of HR’s cultural initiatives. In its 2023 survey CHROs identified driving culture and purpose as their strongest capability, with 21% rating their function as best-in-class and 49% as better than most, totalling 70% in the top two rating categories.
At Lattiverse Perry Hamilton, head of HR and EDI at Norwich City Football Club, shared his approach to sustainable culture, especially in a fast-paced, high-turnover environment like football. “When it comes to driving cultural change, it's consistency, it's transparency and it's patience,” he says. .” He stresses the importance of clear, consistent messaging from leadership to reinforce cultural values, cautioning that: “Engagement doesn’t come from double standards.”
Regularly updating the board on cultural metrics – from engagement scores to productivity impacts – allows HR leaders to demonstrate how cultural initiatives are contributing to the bottom line. By focusing on transparency in reporting and communicating cultural impact, HR leaders solidify its reputation as trustworthy, strategic partners capable of steering long-term change.
HR’s call to action
HR’s place in the boardroom depends on its ability to redefine itself from an operational necessity to a strategic, profit-driving function. As Hamilton says, HR’s strength lies in its unique cross-departmental reach. ‘HR is the bridge across the organisation. We understand the work. And when we understand the work then we are the voice in the room that says, that's a fantastic idea but have you considered how it's going to impact over there?” It’s by demonstrating how changes affect all parts of the organisation that HR gets listened to, he asserts.
Ojokojo reinforces this point, noting that when you consistently show results based on the strategy you’ve put out, you will be trusted easily. Consistent, data-driven results help HR build credibility and gain the autonomy needed to bring impactful initiatives to the board.
For HR leaders seeking a stronger voice in the boardroom this transformation begins with adopting a profit-centre mindset. Approach every initiative with an eye on ROI, translate data into insights, build alliances that reinforce HR’s vision and demonstrate HR’s capacity for driving growth. By reimagining HR as a core driver of profit and resilience today’s HR leaders can help shape business strategy – not from the sidelines but from the centre of the boardroom itself.
Top Tips for on how to create a profit-centre mindset in HR
- Translate data into insights: Data isn’t enough. HR must turn numbers into narratives that highlight business impact, from reduced turnover costs to improvements in customer satisfaction
- Invest in analytics that demonstrate ROI: Use advanced HR technology to link metrics like engagement and productivity to financial outcomes, showing how HR impacts growth
- Position initiatives with measurable returns: Frame programmes in short, medium and long-term benefits to align with business goals and show ROI potential
- Build alliances with key C-suite players: Identify board allies who value HR’s insights and work closely with them to embed HR’s strategic goals into the wider business agenda.