With an uncertain economic climate and budget-tightening prevalent, business managers are increasingly recognising the importance of human resource factors as key to their strategic success. However, most are failing to adequately measure the contribution of the HR and training function to their organisation.
Those are the key findings of new research from management consultancy Accenture, who interviewed 200 senior executives from around the world about their strategic priorities. Top of the list were ‘attracting and retaining skilled staff’, ‘changing organisational culture and employee attitudes’, ‘changing leadership and management behaviours’ and ‘improving workforce performance’, all of which were viewed as more important than ‘industry consolidation’, ‘cost reduction’ and ‘competitive pressures’ by most respondents.
Howver, despite the fact that three in four respondents (74 percent) reported that people-related issues are more important to a company’s success than they were a year ago, more than a third of respondents were failing to measure the impact of HR initiatives on staff retention, employee satisfaction or productivity. Furthermore, the survey revealed a lack of communication was likely to be impacting upon the ability of employees to work collectively to achieve organisational goals, as only 12% of respondents thought the majority of their employees understood company business strategy, and just 17% thought most of their employees understood the connection between their job role and company strategy.
“Since people are the greatest competitive asset for most companies, senior executives must create an environment in which staff can thrive,” said Peter Cheese, managing partner of Accenture’s Human Performance service line. “Investments in human resources, training and development enhance employee satisfaction and improve workforce performance, but measuring the impact of those investments is key to ensuring companies’ ongoing success.”
One Response
The holy grail – measurement of stakeholder attitudes
One of the most challenging aspects of this question is ‘How can an organisation measure the impact of employee focussed initatives.?’
There are a number of formal and informal methods for looking at various stakeholder attitudes, including employees, customers, suppliers etc. However, the difficulty has been in trying to establish a result that could be measured objectively; for example what impact does employee attitudes have on profits, cost reduction, etc?
In 1997, The Harvard Business Review published the results of work done at Sears, Roebuck and Company. In the 1990s the company looked at three elements:
1. How employees felt about working at Sears.
2. How employee behaviour affected customers’ shopping experience and
3. How customers’ shopping experience affected profits.
After extensive work examining employee attitudes, looking at other companies best practice and identifying issues that were important to customers, Sears began the task of rebuilding. Their objective was to “make Sears a compelling place to shop, work and invest.”
The results of their work is unique in that it demonstrated that if you could increase staff satisfaction by 5 units, customer satisfaction would increase by 1.3 units, and the hard evidence was manifest as a 0.5% increase in profits.
This work has been pivotal in demonstrating the employee – customer – profit chain, and how it can impact the long term viability of an organisation.
In addition to this work there is also evidence of how organistions that are stakeholder driven have a Return on Investment of approx 32%. By comparison, cost driven organisations are shown to return 14-16%. An example of the demise of the cost driven organisation in this situation today is the airline industry.
An industry that tends to be more stakeholder driven is the pharmaceutical industry where a greater emphasis has been placed on customer and employee satisfaction.
Anne Dowling