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HR's Promotion
April 07, 2008
White Paper: Human resource departments taking on more prominent role at many companies
By Alex Palmer
Human resource departments are gaining a central position in many companies' overall business strategies, according to a new white paper by the Economist Intelligence Unit, and members of the incentive and recognition industry agree.
"Human capital is the oil of the 21st century," says Steve Miranda, the chief human resource, strategic planning and diversity officer for the Society for Human Resource Management. "It is a resource that is becoming harder to find, it is a resource that is having a premium placed on it, and it is a resource that people are trying to find ways to secure a future supply of."
The paper, titled "Building an Integrated Talent Management Strategy," argues that instead of serving mainly administrative or support functions, human resource departments are now more often taking on critical duties of attracting, developing and retaining skilled employees, and serving an integral role in organizations' larger goals of growth and profitability. Building on its findings from several in-depth case studies of organizations in the technology, consulting, banking, retailing and government sectors, the study finds that people are increasingly seen as critical enablers of growth.
"Of course," was the general response from members of the incentive and recognition industry.
Miranda sees this as a fairly recent phenomenon, with human capital as the latest area that companies have pursued for a competitive advantage, much as a focus on workflow and organizational processes were in the 1980s, followed by the maximizing of economies of scale through mergers and acquisitions throughout the 1990s. "As price points have decreased around the world, business leaders are asking, 'What's the next source of my competitive advantage?'" says Miranda.
Some see this rise in strategic importance and wider integration of human resource efforts as an indication that employee rewards and recognition may be on a similar trajectory. Arnold Light, founder of The Light Group and currently a consultant for the Fire and Light Group, is one of them.
"We're seeing more and more incentive programs aligning with the goals of a corporation in terms of employees and their well-being," says Light. "Management is coming to realize that recognition is a key component of retention. It really has become crucial."
The report puts forth specific recommendations on developing an effective talent management and recognition strategy, particularly by integrating the performance management system to allow for consistent "talent mapping" and employee evaluation, "from the executive suite to the machine shop," as the report's editor, Dan Armstrong, puts it. According to Armstrong, "Businesses are developing enterprise-wide processes to ensure that the right employees and the right performance incentives are in place to execute strategy."
This could involve shifting to an electronic platform that tracks employee development and achievement, or simply laying out the organization's goals to workers at all levels. The white paper describes some of the best practices at the companies studied, including Denmark's Danske Bank, which uses performance-evaluation software that allows employees to view their progress and management to have a clear sense of its talent pool. Then there is Office Depot, where a "collective ownership of the hiring process" means potential employees are put through rigorous interviews to be sure they will fit into the company's team-oriented culture.
"There are functions that are strictly aligned to training and retention and recognition. All the elements that go into the reward program must be linked together clearly," says Light. "When a company has clearly defined goals and they are spelled out to an employee, there is a clear path, and [the employees] can work toward those goals, they are recognized in what they do, they want to do it right. There must be rewards that are commensurate with their value."
The full report is available at: www.eiu.com/sponsor/ oracle/talent
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