ROI of HR Policies

Peter Cappelli talks on the ROI on HR Policies in an article on HR Executive online.

He tells how a paper written by his Finance colleague Alex Edmans shares that In Does the Stock Market Misvalue Intangibles? Employee Satisfaction and Equity Prices, he found that the firms in this category in 1998 earned a rate of return that is double the market average by the end of 2005.

In a world where everything about public companies is driven by stock prices and where investment managers kill for one basis point improvement in portfolios, finding an attribute of firms that predicts a 100 percent gain in shareholder value -- that is 10,000 basis points -- is a truly stunning finding.

And unlike the "flavor of the month" findings from the world of consultants showing the performance effect of using this tool or that tool, these results are carefully done and credible. The question, though, is what do they mean for us?

In particular, what do they mean for people who are interested in human resources, especially for those who advocate that companies spend more time and money becoming better employers?

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Since this study found a lot of takers from the HR world, it does suggest the impact it can create on the future performance of the organization. Organizations that are typically " Best employers today" just go on to show that they would be more profitable than the market average. This also means that a foundation of profitability and productivity is set on the value / emphasis that organizations place on the talent.
However I would like to view it as a concerted effort to build the " Employer Brand" that can really make an impact here. I think this is the rise of HR Marketing and the important of marketing professionals in the HR function.

HR is being increasingly seen as the external face to the organization, this changed role is making it imperative on the organizations to ensure that adequate steps are taken to not just to ensure that employer brand is built but with Enterprise 2.0, we would see newer ways of employer branding. Would that mean that all organizations would be doing it, not really it would require an organization to reach a certain threshold before they can do anything in this area.

Gearing for Enterprise 2.0

World over the enterprise 2.0 hype seems to be catching up.
Organizations are making all possible attempts to be a part of or contribute to this hype.
However a look beyond the hype and you would realise not many organizations would have an iota of clue on how to make the best of this hype.

Lets look at some questions first

1. Is web 2.0 a corporate led or employee led initiative ?

2. Would web 2.0 impact my systems or my processes?

3. How would i be able to leverage corporate networks around the globe?

4. Would there be shared sources of information to leverage such networks ?

5. Who in the organization would be leading or driving enterprise 2.0 strategy.

These are tough questions and as more and more organizations engage time and resources some clarity around these should emerge.

So what should organizations do in the interim. Some of the following might help,
Analyse the workforce composition, this is essential to determine what strategies to use. For example, the age and the work profile would determine what kind of collaboration strategies would be effective. The distribution of workforce would determine whether close collaboration techniques would help.
Start now, because today is the best time to see how these strategies actually work. When organizations adopt the Enterprise 2.0 strategies in a big way; competitive pressures and internal forces would leave little time to experiment. Organizations that start today with a blog, wiki or any other tools would be in the best position to manage change and also leverage these tools in the best possible way going forward.

So where is the real impediment ? Thinking and systems. Organizations continue to live in silos. Enterprise 2.0 strategies implementation would mean a consolidated environment that can utilize the information gathered through various mechanisms. Another important factor would be to clearly understand business drivers, because they would determine how best organizations can use Enterprise 2.0 strategies be it blogging for customer, hr marketing, knowledge hotspots or wikis, mashups, social networks. It would be nice to see how all of these comes to reality !!, till then like you i am watching what organizations are doing on this front :)

Best of Luck - Michael Specht

This post is dedicated to a fellow blogger whom I have been following for a long time. Michael Specht incidentally has the same work background as me. HRIS, though i also like him am passionate about other issues in HR.
After the recession hit, he has lost his job and now starting on his own venture.
My heart feels for you, and here is from the blogger community wishing you all the best in your future endeavours!!!
We would love to keep hearing from you.

People Issues in Talent Management

I had discussed Talent Management and the approach or lack of it in my previous post(s). The issue remains in focus and recently a McKinsey study again goes onto prove that Talent Management if it exists is seldom understood by the top management or the leaders. So practicing and implementing it is a bigger challenge.
This study further goes onto state the following
1. 54 % feel Senior Managers dont spend quality time on Talent initiatives.
2. 52 % respondents feel Line Manager are not sufficiently committed to People development.
3. 51% respondents feel that organization is sliced and does not encourage meaningful collaboration.

These indicate that barriers to talent management are all people barriers. Its a mindset which prevents organizations to do something meaningful with their talent despite so much investment in this area.
Talent Management is a philosophy which stands to win if and only if it is backed by the C level. But its more than easy, with the pressures on day to day business, this is an area easily forgetten. Anyways people are not indespensible its said, right ? Perhaps wrong, today with the right balance on supply demand, organizations can afford to go light on such issues.
However, studies already point to the growing gap and when there is acute shortage of right type of skills , organizations would be forced to value talent more. Just wonder however if it would have been too late by then.
Time would definitely tell.