BALANCE SHEET
initiatives and functions today is the need to re-define HR from a traditional, bureaucratic, non-responsive ‘necessity’, to a true strategic partner, providing high-value added activities, and contributing in meaningful ways to the accomplishment of organisational objectives. HR transformation is hence at the top of the agenda for organisations focused on leveraging their people to positively impact their balance sheet. One of the most elusive areas for HR remains the establishment of a tangible link between people and profit. Demonstrating this link in a way that business leaders can understand, endorse and support remains a challenge. This process could begin by people managers and HR professionals trying to address a few fundamental questions: • How does the business make money or deliver on its objectives? • How do people affect the business’s ability to make money (positively or negatively)? • Who in the organisation has a direct impact on revenue? • What are the key tactics your organisation can employ to surpass competitors and increase profits? • How do people support or hinder these? • What changes must your organisation make to be more successful in the future? As this process of linking business strategy to people begins, a few key steps are useful: • Evaluate the tangible return on investment associated with your people • Be clear and objective when defining the value of your talent • Communicate messages that are relevant to leadership in terms they understand
Customer retention
33.4%
Developing and retaning potential leaders
30.5%
Improving product innovation and commercialization
27.7%
Top management succession
27.4%
Mergers/Acquisitions/Alliances
22.3%
Talent identification and growth
22.3%
Reducing costs
18.3%
Engaging employees in company’s vision/values/goals
17.7%
Launching new technology initiatives
17.5%
Making investment/allocation decisions
15.5%
Transferring knowledge, ideas and practices
13.2%
People-related issues
• Be flexible and quick in responding – business direction and objectives are always changing. Employee engagement initiatives linked to the above brought about by suitable HR transformation interventions have been seen to be key drivers of business value in successful organisations. They can lead to higher employee retention and productivity leading to customer satisfaction and better financial results. This however brings us to the key question of understanding whether employees in an organisation are already engaged or are we attempting to work on a non-existent problem? Do we know how our employees are feeling, what are they thinking or saying about the company? Employees in a recession-hit job market recently revealed that 56 percent of them were dissatisfied with their jobs; 57 percent believe their employers are exploiting the recession to drive longer hours and lower pay; 89 percent
Companies with more engaged employees have a higher retention rate of key staff, higher productivity and higher customer satisfaction, leading to achievement of business objectives.
have high levels of anxiety; 73 percent of survivors of layoffs are demoralised; 64 percent are demotivated; 48 percent say their productivity has been affected by fear of being laid off; and 54 percent will look for a new job when the economy improves. There is no ‘rocket science’ involved in HR systems design. The key lies in customisation and implementation. Some typical initiatives and practices found to be useful are as follows: • Merit-based incentives as opposed to adhoc or discretionary bonuses • Customised career-pathing and developmental opportunities • Work hard/play hard culture • Frequent performance feedback as opposed to year-end surprises • Opportunities to take risks and work on new ventures/projects (however small they may be) • Continuous and open dialogue – strong channels of formal communication • Innovative employee benefits and work/ life balance • Transparency and meritocracy Linking business strategy and results to people initiatives and systems is indeed a continuous process and the without doubt, the HR function in an organisation has a key role to play in enabling this. Kanchan Ghoshal is a director with KPMG, leading the People and Change Advisory Practice of the firm in Qatar and Bahrain. TheEDGE
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