Published on February 10, 2009
TheWhitePaper* ISSUE 6 JUNE 2008 Engaging the Global Workforce: Bridging the Gap between Finance and Talent Management
TheWhitePaper* Table of Contents Introduction .................................................................................................... 3 Key Finding No. 1: .......................................................................................... 4 Human Resources must take a more strategic role in the business. Key Finding No. 2: .......................................................................................... 5 Employee recognition improves employee engagement, which increases retention and productivity, thereby positively affecting company performance. Key Finding No. 3: .......................................................................................... 7 Business leaders believe creating a universal recognition platform for global companies is difficult. Key Finding No. 4: .......................................................................................... 8 CFOs are not aware of how much they are currently spending on recognition programs. Key Finding No. 5: .......................................................................................... 9 The CTO and the CFO must work together to chart the course for the future. Summary ........................................................................................................ 10 Methodology ................................................................................................... 11 Demographics................................................................................................. 11 About Globoforce ............................................................................................ 12 2
TheWhitePaper* Introduction The link between workforce retention and company performance has become more quantifiable, and a new wave of HR executives is moving to the vanguard of corporate governance—the Chief Talent Officer (CTO). In the 21st Century, the question is no longer whether global changes in workforce dynamics im- Key findings of this study include: pact company performance, but how to be in front 1. Human Resources must take a more strategic role in the of these changes. One such change is the onset of business. baby-boomer retirement combined with decades of economic expansion and a tight labor market to cre- 2. Employee recognition drives engagement and therefore impacts ate a critical shortage of seasoned managers. recognition, retention and productivity on the bottom line. To lessen the impact of these changes, many com- 3. Creating a universal recognition platform for global companies panies have increased investment in succession is difficult. planning, employee retention and employee en- 4. CFOs are not aware of how much they are currently spending gagement. Such initiatives help to bridge the gap on recognition programs. between finance and talent management as the two departments collaborate to create business cases for 5. The CTO and the CFO must work together to chart the new processes, programs and technologies to track course for the future. their financial outcomes as it relates to their biggest investment in human capital. This report assesses the attitudes of business lead- ers towards the relationships between the CTO and the CFO, and their mutual role in engaging the glob- al workforce to adapt to the new global workforce trends. 3
TheWhitePaper* Key Finding No. 1 Human Resources must take a more strategic role in the business. Human Resources has come a long way from its days as the Personnel Department. The idea of HR’s role as merely a transactional or recordkeeping function is as outdated as the typewriter. substantiate ROI. Survey respondents overwhelm- Today, employees are the largest investment for an or- ingly agreed with this—91 percent said it is more ganization and, like any other investment, their value important than ever for HR to be accountable for needs to be understood, their performance measured what it spends. Almost as many respondents—88 and their skills amplified. As one survey respondent percent—said HR must embrace a more metric- explained, “HR holds the keys to the engine—the based standard for measurement. employees. Nothing is more important than what hap- pens on the front line. HR hires, trains and retains But how is HR doing in taking a strategic view? these folks, and it is vital that HR play a role in the The survey results indicate actions are not neces- strategic planning.” With this in mind, it comes as sarily following intent. Although 87 percent of re- no surprise that 87 percent of respondents said HR spondents believe HR should play a more strategic should play a more strategic role than in the past. role than in the past, only 63 percent of respon- dents believe HR has the right amount of input in As technology enables organizations to harness the strategic direction of the organization. Further- more data about employees, HR is not only expected more, fully one-third of respondents still believe to take a strategic position in the organization, but HR has too little say in overall business strategy. also to quantify its work with appropriate metrics to Human Resources Must Take a More Strategic Role in the Business HR has the right amount of input in the 63% company’s strategic direction HR has too little say in strategy 33% HR should play a more strategic role 87% than in the past HR must be accountable 91% for what it spends HR must embrace a more metric-based 88% standard for measurement 20 40 60 80 100 0 4
TheWhitePaper* Key Finding No. 2 Employee recognition improves employee engagement, which increases retention and productivity, thereby positively affecting company performance. Human Resources is frequently asked to provide a measurable benefit to the organization for employee engagement. In fact, the term employee engagement is so often discussed that it almost borders on cliché. As the Society for Human Resource Management With this in mind, it is not surprising employee engage- (SHRM) Foundation Report “Employee Engagement ment, productivity and retention issues are clearly on and Commitment” defined it, employee engagement the minds of survey respondents. When asked which is a worker’s satisfaction with their work and pride in HR metrics they consider most important in guiding their employer and “the extent to which people enjoy corporate strategy, the top replies were focused on en- and believe in their work and the perception that the gagement, retention and productivity issues. table.”1 employer values what they bring to the The most important HR metrics for respondents were employee engagement at 71.4 percent, employee In 2007, the International School of Human Capital productivity at 62.9 percent, and human capital ROI Management Faculty of Employee Engagement de- at 57.1 percent. Interestingly, employee satisfaction fined employee engagement as an output-based con- surveys, training ROI and turnover rate all returned cept that describes how aligned and committed em- at 55.7 percent. ployees are to the company, such that they are at their most productive.2 Most Important HR Metrics Generally, definitions of employee engagement de- scribe an employee attitude that results in a behavior that positively benefits the company. Although some Employee engagement 71% may still wonder how something so intangible can be measured, the proliferation of performance manage- Employee productivity 63% ment software and the increasing capability to mea- sure employee attitudes through surveys are making Human capital ROI 57% the naysayers fewer in number. Turnover rate 56% The financial benefits of engaged employees have been conclusively established in many surveys.3 But Training ROI 56% the data reports the same idea—engaged employees Employee satisfaction surveys are more likely to be high performing employees and 56% less likely to leave their current organization.4 0 20 40 60 80 100 1http://shrm.org/foundation/1006employeeengagementonlinereport.pdf 2http://www.valuentis.com/Publications/Journal/JoAHCM_VOL1NO1_2007_EmployeeEngagementarticle.pdf 3http://www.workforce.com/tools/whitepapers/TheNewROI_of_HR.pdf 4http://shrm.org/foundation/1006employeeengagementonlinereport.pdf 5
TheWhitePaper* * 98.5 percent agreed employee engagement Respondents also understand recognition plays a vital role in attracting and retaining employees. A increased employee retention and productivity clear majority—78.8 percent—said recognition was * 97 percent agreed employee retention and an important attraction and retention tool. productivity have a positive impact on company When asked why, one survey respondent put it best: performance “Our company understands the benefit of having a * 93.9 percent agreed employee recognition im- performance-based recognition program and how it proved employee engagement. helps drive employee engagement. Ultimately, it leads to satisfied customers, and, if you have satisfied cus- tomers, they are more likely to purchase again.” When asked to put it all together, respondents were near unanimous in their belief that employee recog- nition improves engagement and productivity, which affects the bottom line. Attitudes About Recognition, Engagement, Productivity and Retention Employee engagement increased 99% employee retention and productivity Employee retention and productivity have a 97% positive impact on company performance Employee recognition improved 94% employee engagement Recognition is an important 79% attraction & retention tool 0 20 40 60 80 100 6
TheWhitePaper* Key Finding No. 3 Business leaders believe creating a universal recognition platform for global companies is difficult. Motivating and engaging employees is challenging enough when they share a common office, language and culture. As global business operations cross international borders, those challenges increase dramatically. The majority, or 80% of, respondents believe address- As stated before, survey respondents understand ing the needs of global employees is difficult. Almost employee recognition is a key component in engage- as many—76.6 percent—also find it difficult to recruit ment and retention, 58 percent of respondents said and retain the right talent at the right location. creating a universal recognition platform for a global organization was difficult. As difficult as recruiting and retention may be, sur- vey respondents are also aware these things matter. Evidently, this challenge has also prevented many More than 55% of survey respondents cited recruit- organizations from implementing a truly global rec- ing and retention of the right talent at the right loca- ognition solution. Even though 88 percent of respon- tion as the one issue with the greatest effect on their dents said their organization has an employee rec- organization. ognition program in place, only 66 percent said they have a universal recognition platform. Developing a Global Recognition System Is Difficult My organization has an 88% employee recognition platform My organization has a 66% universal recognition platform Addressing the needs of 80% global employees is difficult Recruiting and retaining the right 77% talent at the right location is difficult Recruiting and retaining the right talent at the right 55% location has the greatest effect on the organization Creating a universal recognition platform 58% for a global organization is difficult 0 20 40 60 80 100 7
TheWhitePaper* Key Finding No. 4 CFOs are not aware of how much they are currently spending on recognition programs. Even though nearly everyone agrees HR and Finance need to be on the same page, only 58 percent of respondents say this is the case in their organization. When asked if their CFO was aware of how much their organization spends on recognition programs, the response was the same with 58 percent agreeing with the statement. In fact, many respondents did not believe their orga- The final proposal will be reviewed by a global steer- nization was taking the necessary steps to measure ing group for presentation to the CFO.” and quantify engagement and other HR functions. Even though best practice suggests Finance is the Only 52 percent said their organization had a metric business unit that should require ROI, few survey re- or plan for measuring the effect of employee engage- spondents indicated Finance was taking a leading role. ment on company performance. Only 36 percent of those surveyed said Finance made One respondent articulated why HR must do a better the final decision to create business and ROI cases to job to justify its investments and suggested a best justify an investment in new processes, programs or practice: “HR plays a key role in establishing the technologies for the HR department, as opposed to 46 business case and instigating the research for new percent who reported HR made the final decision. Also, processes or systems. This will lead to a larger scale only 22 percent said their CFO was involved in review- feasibility study where Finance resources are used to ing and approving all HR metrics in their company. consider ROI and other key financial requirements. HR, Finance Not on the Same Page HR & Finance are on the same page 58% CFO aware of recognition program spend 58% Metric/plan in place to measure effect of employee 52% engagement on company performance Finance makes final decision to create business and 36% ROI cases for HR process/technology investments HR makes final decision to create business & ROI 46% cases for process/technology investments CFO is involved in reviewing and 22% approving all HR metrics 0 20 40 60 80 100 8
TheWhitePaper* Key Finding No. 5 The CTO and the CFO must work together to chart the course for the future. Because Human Resources is expected to measure the performance of the human capital investment, it comes as no surprise that the work of the Chief Talent Officer would draw the attention of the Chief Financial Officer. Survey respondents overwhelmingly understand this, However, there is a disconnect. In spite of the near- and 95 percent believe the CTO and the CFO should unanimous agreement that the CTO and the CFO work together to chart a course for the future. As one re- need to work as a team, only 58 percent of sur- spondent explained, “Alignment by these two key sup- vey respondents said this was currently the case in port executives is critical for charting the right course their organization. and staying on course. Human capital is also the larg- In an environment where nearly everyone agrees est cost in the organization and the largest competitive that HR and Finance need to collaborate, yet only advantage and tool to win in the marketplace.” slightly more than half say this is happening, room for improvement clearly exists. HR and Finance Should Work Together. But Do They? CTO and CFO should work together to 95% chart a course for the future The CTO and CFO actually do work together 58% to drive employee recognition 0 20 40 60 80 100 9
TheWhitePaper* Summary * Align Recognition with Corporate Values for Business leaders understand HR has the power to Global Understanding: Businesses can derive transform an organization by taking a strategic view and using technology to implement a measurable employee additional strategic benefits from a recognition engagement solution that generates real results. They program that rewards behaviors consistent with also understand employee recognition can improve company values. Not only is this virtually the only employee engagement and—by extension—their bot- way to bring values alive every day for a ll employ- tom line, shareholder value, customer retention and ees in a large company, it gives the organization a the ability to retain and recruit new employees. measurable way to see if employees understand the values and if the values are gaining traction Even though business leaders recognize the value across a global organization. and competitive advantage engaged employees of- * Offer Everyone an Opportunity to Participate: fer, they also realize implementing a universal rec- ognition platform for global companies presents a Open the recognition program to all employees, serious challenge. How do you develop a recognition not just the elite few. This overcomes the skepti- system to motivate employees that crosses borders, cal concerns of employees, such as those made languages and cultures? by one survey respondent: “Employee recogni- tion programs have been tried in the past and As the leading provider of on-demand strategic have become popularity contests. Many who reward and recognition solutions for global com- work very hard and keep their mouths shut panies, Globoforce suggests these best practices don’t ever get recognized, and those in the developed in partnership with the world’s largest limelight get recognized over and over again.” and most diverse companies: By offering everyone an opportunity to participate * Establish a Clear, Global Strategy for Recognition: in the recognition program through peer-to-peer Strategic recognition delivers a clear financial and options in addition to the more traditional manag- cultural return. Fragmented, disparate programs er-to-subordinate model, companies can begin to and systems undermine those benefits. Global fine-tune their culture and social architecture to companies need global strategies that treat all em- align with the company’s values and mission. ployees consistently in a transparent, auditable and measurable way across the program. * Motivate and Acknowledge All Employees with the Power of Individual Choice: True choice ca- * Secure Executive Sponsorship with Defined ters to the demographics of a worldwide, multi- Goals: Like all other global strategic initiatives, generational workforce with millions of options recognition must also be managed using a pro- that are culturally appropriate, meaningful and cess such as Six Sigma’s DMAIC guidelines or memorable to the individual recipient. Meaning- other operational excellence program. Organiza- ful reward options reinforce the power of the rec- tions must hold managers accountable for suc- ognition moment with a lasting item that reminds cess by setting measurable goals for frequency the recipient the company values him or her. of recognition, program adoption, budget, speed and employee satisfaction scores. 10
TheWhitePaper* Methodology The survey was sent via email to HR and Finance conclusions of this report and will be used only in professionals during the first quarter of 2008. Over this aggregate analysis. 266 responses were received. Each respondent an- The Key Findings herein are based at the 95 percent swered the questionnaire via an online survey tool confidence level with a +/- 10% margin of error. and was assured of his or her confidentiality. Their responses were used to drive the results and Demographics Respondents Roles C-Level 6% 18% VP 57% The demographic composition of the respondent 19% Director pool provides a representative sample of global 2000 organizations. All of the respondents are from orga- Manager nizations with more than 10,000 employees engaged in global operations. Industry Participation The majority of respondents were between the ages High Tech of 30-49; 43.8 percent were male and 56.3 percent Mfg/Aerospace & Defense were female. Finance/Insurance BioTech/Pharma/Healthcare 16.4% Respondents represented a variety of roles within 22.4% Bus. and Prof. Services 10.6% their organization. Transportation 6.1% 17.2% 5.9% The industries represented by respondents were Utilities/Oil & Gas 5.9% Retail/Wholesale Trade also varied. Consumer Packaged Goods 2.4% Over 80 percent of respondents had responsibilities 3.6% Education 2.4% 3.6% 3.5% within the broad category of human resources while Hotels/Restaurants/Leisure 20 percent had responsibilities outside of HR. Other Job Responsibilities 20% Outside HR 80% HR 11
About Globoforce Globoforce is the leading worldwide provider of on-demand strategic reward and recognition solutions for Global 2000 companies. Globo- force’s flexible and efficient recognition tool can scale from one user to millions of users with ease, offering global companies a powerful and secure solution to implement and manage their companywide or divisional employee recognition programs. Through a dynamic, easy-to-use, on-demand technology platform, Globoforce transforms the way companies engage, motivate and empower their workforces across the world. Co-headquartered in Southborough, Mass., and Dublin, Ireland, Globoforce was recently selected by the Great Place to Work® Institute as one of the “50 Best Companies to Work For.” Globoforce won a 2007 Process Innovation Award for the creative deployment of Dow Chemical’s global, on-demand employee recognition program. Globoforce also won Human Resource Executive magazine’s coveted “Top HR Product of the Year” award in 2004 for its revolutionary on-demand software solution. Some of Globoforce’s world-class customers utilizing this enterprise- class solution include Amgen, Avnet, Dow Chemical, Intuit, Procter & Gamble and Reuters. www.globoforce.com. Globoforce (North America) Reservoir Corporate Center 144 Turnpike Road, Suite 310, Southborough, MA 01772 USA Phone: +1 (888) 7-GFORCE (436723) Fax: +1 (508) 357 8964 Email: email@example.com Globoforce (Europe) 6 Beckett Way, Park West Business Park, Dublin 12, Ireland. Phone: +353 1 625 8800 Fax: +353 1 625 8880 Email: firstname.lastname@example.org © 2008, Globoforce Limited. All rights reserved. No portion of this publication may be reproduced in any form without express written permission from Globoforce.
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