Why are some companies thriving while others are struggling to stay in business? What is the distinctive difference between a good company and a truly great company? The answers to these questions can only be found when looking at what defines the company: its people. The people who make up a company are that organization’s unique and biggest asset. For most businesses, the workforce is also its largest expense, or better put, its largest investment.
At Sage, we believe that employees are the most important component in the quest to improve business results. It makes sense to treat employee-related expenses as an investment in the workforce. Like any other investment, this critical company investment must yield a healthy return.
We call that the Return on Employee Investment or ROEI. This white paper looks into investments that can help a company maximize the value of its workforce, and shows how technology can help improve ROEI and build a more profitable and successful business.
ROEI®: Return On Employee Investment® Increase Competitiveness Through Your ...Sage
Why are some companies thriving while others are struggling to stay in business? What is the distinctive difference between a good company and a truly great company? The answers to these questions can only be found when looking at what defines the company: its people. The people who make up a company are that organization’s unique and biggest asset. For most businesses, the workforce is also its largest expense, or better put, its largest investment.
At Sage, we believe that employees are the most important component in the quest to improve business results. It makes sense to treat employee-related expenses as an investment in the workforce. Like any other investment, this critical company investment must yield a healthy return. We call that the Return on Employee Investment® or ROEI®.
This white paper looks into investments that can help a company maximize the value of its workforce, and shows how technology can help improve ROEI and build a more profitable and successful business.
This document discusses how investing in employees can increase a company's competitiveness and success. It argues that employees are a company's biggest asset and largest investment. While employees cost money in wages and benefits, treating these expenses as investments that yield returns can improve business results. The document outlines how engaged employees are more productive, innovative, and loyal, leading to higher customer satisfaction, revenue, and profits. It also discusses how high employee turnover is very expensive for companies and how investing in retention strategies like recognition, training, and work environment can significantly reduce these replacement costs and improve the bottom line. Overall, the document advocates for viewing employees as investments rather than just expenses in order to maximize return on employee investment (ROEI) and competit
This document discusses employee attrition in the education industry. It defines attrition and attrition rate, and discusses reasons for attrition such as organizational factors, working environment, and opportunities elsewhere. It then outlines the methodology used for the research study and analyzes attrition trends. The costs of attrition for organizations are recruitment costs, training costs, and costs associated with replacing employees. The attrition rate can be calculated by taking the number of employees who left in a year divided by the average number of employees that year and multiplying by 100.
Read seven success stories of businesses that
improved productivity, reduced
employment risks, and cut insurance and HR overhead outsourcing their human resource functions.
The document discusses attrition rates at HCL Technologies. It provides background on HCL, outlines some key causes of attrition like lack of career growth opportunities and ineffective leadership. Some key findings from an employee satisfaction survey at HCL are presented, showing that 27% of employees expressed dissatisfaction, which could lead to increased attrition rates. The top two contributors to dissatisfaction were issues with career development and lack of proper recognition and rewards.
This document contains a summary of a presentation on evidence-based management and considering the mental models of leaders. It discusses how companies that emphasize the importance of people in communications with investors tend to be valued higher over time. Examples are given of how traditional performance management and budgeting systems may not incentivize the right behaviors. The concept of a "talent supply chain" and applying supply chain principles to retention is introduced. The relationship between talent quality, organization quality and strategic payoff is a recurring theme. The presentation emphasizes assessing where improvements in talent would make the biggest difference to pivotal organizational processes.
Why are some companies thriving while others are struggling to stay in business? What is the distinctive difference between a good company and a truly great company? The answers to these questions can only be found when looking at what defines the company: its people. The people who make up a company are that organization’s unique and biggest asset. For most businesses, the workforce is also its largest expense, or better put, its largest investment.
At Sage, we believe that employees are the most important component in the quest to improve business results. It makes sense to treat employee-related expenses as an investment in the workforce. Like any other investment, this critical company investment must yield a healthy return.
We call that the Return on Employee Investment or ROEI. This white paper looks into investments that can help a company maximize the value of its workforce, and shows how technology can help improve ROEI and build a more profitable and successful business.
ROEI®: Return On Employee Investment® Increase Competitiveness Through Your ...Sage
Why are some companies thriving while others are struggling to stay in business? What is the distinctive difference between a good company and a truly great company? The answers to these questions can only be found when looking at what defines the company: its people. The people who make up a company are that organization’s unique and biggest asset. For most businesses, the workforce is also its largest expense, or better put, its largest investment.
At Sage, we believe that employees are the most important component in the quest to improve business results. It makes sense to treat employee-related expenses as an investment in the workforce. Like any other investment, this critical company investment must yield a healthy return. We call that the Return on Employee Investment® or ROEI®.
This white paper looks into investments that can help a company maximize the value of its workforce, and shows how technology can help improve ROEI and build a more profitable and successful business.
This document discusses how investing in employees can increase a company's competitiveness and success. It argues that employees are a company's biggest asset and largest investment. While employees cost money in wages and benefits, treating these expenses as investments that yield returns can improve business results. The document outlines how engaged employees are more productive, innovative, and loyal, leading to higher customer satisfaction, revenue, and profits. It also discusses how high employee turnover is very expensive for companies and how investing in retention strategies like recognition, training, and work environment can significantly reduce these replacement costs and improve the bottom line. Overall, the document advocates for viewing employees as investments rather than just expenses in order to maximize return on employee investment (ROEI) and competit
This document discusses employee attrition in the education industry. It defines attrition and attrition rate, and discusses reasons for attrition such as organizational factors, working environment, and opportunities elsewhere. It then outlines the methodology used for the research study and analyzes attrition trends. The costs of attrition for organizations are recruitment costs, training costs, and costs associated with replacing employees. The attrition rate can be calculated by taking the number of employees who left in a year divided by the average number of employees that year and multiplying by 100.
Read seven success stories of businesses that
improved productivity, reduced
employment risks, and cut insurance and HR overhead outsourcing their human resource functions.
The document discusses attrition rates at HCL Technologies. It provides background on HCL, outlines some key causes of attrition like lack of career growth opportunities and ineffective leadership. Some key findings from an employee satisfaction survey at HCL are presented, showing that 27% of employees expressed dissatisfaction, which could lead to increased attrition rates. The top two contributors to dissatisfaction were issues with career development and lack of proper recognition and rewards.
This document contains a summary of a presentation on evidence-based management and considering the mental models of leaders. It discusses how companies that emphasize the importance of people in communications with investors tend to be valued higher over time. Examples are given of how traditional performance management and budgeting systems may not incentivize the right behaviors. The concept of a "talent supply chain" and applying supply chain principles to retention is introduced. The relationship between talent quality, organization quality and strategic payoff is a recurring theme. The presentation emphasizes assessing where improvements in talent would make the biggest difference to pivotal organizational processes.
2013 Engagement and Retention in 2013 by TalentKeepersElizabeth Lupfer
- Employee engagement and retention have become strategic priorities for most organizations as the economy stabilizes. Over 80% of organizations now budget for engagement initiatives.
- A "Best in Class" group of top organizations stands out for making engagement a top priority, holding leaders accountable, dedicating formal budgets, and establishing metrics to measure impact on business results.
- Retention is resurfacing as a priority as employees feel more confident. Nearly 60% of organizations expect job and career factors to be the main reason employees leave in 2013, an 11% increase from the prior year.
Factors Affecting Employee Retention in HCLShubham Mongia
HCL is a global technology company founded in 1976 with headquarters in Noida, India. The document discusses factors affecting employee retention at HCL. It finds that while HCL's attrition rate of 16.2% is high, the company is taking steps to reduce it such as improving work environment, salary, growth opportunities, and regular meetings. The conclusion is that new graduates joining HCL will help broaden work horizons and further lower the attrition rate over time.
This document summarizes the findings of a 2013 research study on workforce trends and high performing organizations. Some key findings include:
1. Measures of trust, leadership, and collaboration rebounded significantly from low levels in 2012, especially in high performing companies.
2. Employee involvement and engagement increased dramatically, with nearly 60% of high performing companies reporting engaged, involved cultures.
3. Leaders in high performing companies were seen as more consistently modeling organizational values and walking the talk through predictable transparency.
4. Trust originates from leadership behaviors and a consistent tone at the top, which directly impacts employee engagement and retention.
This document discusses attrition and measures to control it. It defines attrition as the reduction of employees through retirement, resignation or death. It provides the formula to calculate attrition rate and examples. The business process outsourcing sector faces high attrition rates around 55% due to causes like lack of career growth, low salaries, and stressful work. Strategies to improve retention include incentives, training programs, flexible policies, and career counseling. The conclusion states the outsourcing industry may face staff shortages if attrition rates are not reduced from the current high levels of 50-60% to 10-15% through improved recruitment planning.
A study on reward and recognition program 2016Anand Yogesh
“People may forget words; People may forget actions; but people will always remember Respect, Recognition & Appreciation given to them publicly for their contributions....”
Best Practices in Consulting - Kennedy 2014Erik Wayton
This document discusses best practices for effectively managing HR administration in consulting firms. It notes that consulting firms face pressures to maintain profitability while costs rise. Direct costs associated with employees average around 60% of revenues. The complexity of managing different staffing models, from full-time employees to contractors, creates challenges for HR administration. While outsourcing some back-office functions can reduce costs, many firms realize benefits from keeping HR administration in-house. As consulting firms grow, transitioning to more structured HR management practices is important for sustaining growth and healthy profit margins.
Contingency staffing has become a mainstay in permanent workforce strategies for many companies. There are several reasons for this, including lower costs since contingent workers do not require benefits or paid time off. Companies also gain flexibility with this staffing model. However, companies must develop strategies to integrate contingent workers and make them feel valued in order to maximize their performance and minimize risks like decreased loyalty. Human resources departments play a key role in developing these strategies through collaboration, clearly defining roles, onboarding processes, and effective communication with contingent staff.
The document discusses how outsourcing human resource functions, known as human resource outsourcing (HRO), is becoming a key trend that is reshaping the future of HR departments. HRO can help organizations reduce costs while improving HR's strategic impact by standardizing, centralizing, and automating administrative HR processes. The document outlines the benefits of HRO such as cost savings, increased efficiency, and allowing HR to focus on more strategic priorities. It also discusses challenges such as change management and the need for clear communication during the implementation of HRO.
Achieving HR Excellence: A Global and Evidence-Based View - from May 30 Pres...Waldron
Achieving HR Excellence: A Global and Evidence-Based View. Powerpoint Deck from from May 30 Presentation with John Boudreau highlighting findings from his (and Ed Lawler\'s) forthcoming book.
The document proposes an outsourced leadership development program to improve organizational performance. It argues that most organizations lack internal resources for effective leadership programs and outlines a program including assessment, learning, and coaching. This program aims to increase employee engagement and discretionary effort through improving leadership effectiveness. Research cited shows high engagement correlates with increased productivity, customer satisfaction, retention, and financial performance. The value proposition is that outsourcing leadership development can yield a 6 to 1 return on investment by boosting engagement and discretionary effort through more effective leadership.
Outsourcing is when a firm contracts an independent contractor to perform certain tasks or activities. Common outsourced activities include IT, HR, manufacturing, and R&D. HR outsourcing involves an outside party performing some or all HR functions. While outsourcing can reduce costs and preserve culture, it can also result in loss of control and institutional knowledge. Managers generally outsource interactions and information gathering but not decision making. The type of outsourcing relationship depends on factors like asset specificity and uncertainty. HR outsourcing commonly includes payroll, benefits, workforce administration, and talent services like recruiting and training. Trust, confidentiality, commitment and flexibility are important factors in outsourcing relationships.
Predictive Analysis can help you Combat Employee Attrition! Learn how?Edureka!
This document discusses how predictive analytics can help combat employee attrition. It begins with an overview of business intelligence versus business analytics. Then, it covers predictive analytics concepts like types of analytics, domains where predictive analysis is used, and benefits for human resources analytics. Specific examples are given around using predictive modeling to identify attributes of employees likely to leave the organization.
Beyond best practice: enhancing results with bespoke HRETS plc
HR professionals can enhance results by developing "bespoke HR" practices tailored to their unique organization rather than solely following industry "best practices". Bespoke HR involves shaping practices and technologies to best fit the organization's culture, needs, and goals. This allows HR to develop competitive advantages through new, differentiated solutions. While best practices provide a starting point, blindly following them can hinder growth by ignoring an organization's specific context. Bespoke HR leads to more successful initiatives by designing practices that truly meet the business's aims.
Employee turnover and retention in banks was studied. Turnover refers to employees leaving and being replaced, while retention aims to keep valuable employees. High turnover can hurt productivity and profitability. Reasons for turnover include low pay, lack of career growth, and poor work environment or management. Banks can reduce turnover by offering competitive pay and benefits, training and development opportunities, and an engaging workplace culture with supportive supervision. The cost of employee turnover is high, so retention is important for banks to maintain a stable, skilled workforce.
The document discusses three key problems with the concept of "best practice" in talent management:
1. Many studies of successful companies have actually looked at companies that were lucky rather than genuinely remarkable, so the practices identified may not be what truly led to their success.
2. Research in the field often confuses causes of success with consequences, attributing practices to success when they may have just resulted from it.
3. Understanding the practices of currently successful companies has not helped predict future success, so the "best practices" approach has not proven useful for improving performance over time.
The document discusses the key role of human resources (HR) in organizations. It argues that HR is the "heartbeat" and "pacemaker" of any organization, managing human talent and keeping business processes rhythmic. HR is seen as a strategic partner rather than just an administrative function. The document emphasizes aligning HR processes like talent management to build an effective workforce and stay competitive in a changing business environment. It also discusses the importance of employee health, wellness programs, and matching talents to jobs for organizational success.
Investing in employees through strategic programs and technology can help companies maximize workforce value and improve Return on Employee Investment (ROEI). Engaged employees are more productive, innovative, and loyal, leading to higher customer satisfaction and business results. However, employee turnover is expensive, with replacement costs averaging 20-213% of salaries. Companies can reduce costs by lowering turnover through effective communication, work environment, recognition programs, training, and benefits. Investments that improve employee retention and engagement can yield significant savings by preventing replacement expenses and boosting productivity.
The HR Managers Guide to Employee EngagementSage HRMS
How can your company increase employee engagement and retain top performers? In this guide, we will examine some current statistics about employee engagement, show how employee engagement affects companies’ financial performance, and provide tips to effectively increase employee engagement at your company.
Research shows that high-performing cultures consistently deliver extraordinary results and outperform their peers. Culture determines how things are done, how people behave, and how value is created. As former IBM CEO Lou Gerstner states, “Culture isn't just one aspect of the game, it is the game.” Yet a high- performing culture is made up of employees that are healthy, self- governing, and high-performing themselves. Without leaders and employees that possess these qualities, there is little hope of positively transforming our organizations. This is why we believe that establishing a PLE culture is foundational to creating a long- term, sustainable, high-performing organizational culture.
C H A P T E R 1An Investment Perspective ofHuman Resource .docxjasoninnes20
C H A P T E R 1
An Investment Perspective of
Human Resource Management
Human Resources at Nordstrom
How can a retailer gain a competitive advantage in a cut-throat marketplace?
Middle- and high-end retailers generally locate in close proximity to each other
and often carry similar—but not identical—merchandise. Consequently their
sales and profit margins are usually in tandem. Nordstrom, however, has consis-
tently produced above-industry-average profits and continues to be profitable
when its competitors’ profits are falling or flat.
The key to Nordstrom’s success lies with the different way it manages its
employees. Sales employees are known as “associates” and considered the orga-
nization’s most valuable asset. The company’s success is rooted in its strategy of
providing superlative customer service. Associates are encouraged to act as
entrepreneurs and build strong personal relationships with customers, or
“clients.” In fact, many clients shop only with a particular Nordstrom associate
and call in advance to determine the associates’ schedules or to make
appointments.
Nordstrom’s strategy involves a heavy investment in the organization’s sales
force. Nordstrom provides associates with extensive training on merchandising
and product lines and offers high compensation. Its commitment to its employ-
ees is evident from the fact that the company’s organization chart is depicted
inverse from that of a traditional retailer. Associates are at the highest level on
the chart, followed by department and merchandise managers and, finally,
executives. This depiction cements the organization’s philosophy that the
customer is king. All efforts of senior-, middle-, and lower-level managers should
support the efforts of the sales force.
L E A R N I N G
O B J E C T I V E S
• Understand the sources of
employee value
• Gain an appreciation of
the importance of human
capital and how it can
be measured
• Understand how
competitive advantage can
be achieved through
investment in employees
• Gain an appreciation of
metrics, their measures,
and their usefulness
• Understand the obstacles
that prevent organizations
from investing in their
employees
Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
E
ffective organizations are increasingly realizing that of the varied factors that contribute to perfor-
mance, the human element is clearly the most critical. Regardless of the size or nature of an organi-
zation, the activities it undertakes, and the environment in which it operates, its success is
determined by the decisions its employees make and ...
2013 Engagement and Retention in 2013 by TalentKeepersElizabeth Lupfer
- Employee engagement and retention have become strategic priorities for most organizations as the economy stabilizes. Over 80% of organizations now budget for engagement initiatives.
- A "Best in Class" group of top organizations stands out for making engagement a top priority, holding leaders accountable, dedicating formal budgets, and establishing metrics to measure impact on business results.
- Retention is resurfacing as a priority as employees feel more confident. Nearly 60% of organizations expect job and career factors to be the main reason employees leave in 2013, an 11% increase from the prior year.
Factors Affecting Employee Retention in HCLShubham Mongia
HCL is a global technology company founded in 1976 with headquarters in Noida, India. The document discusses factors affecting employee retention at HCL. It finds that while HCL's attrition rate of 16.2% is high, the company is taking steps to reduce it such as improving work environment, salary, growth opportunities, and regular meetings. The conclusion is that new graduates joining HCL will help broaden work horizons and further lower the attrition rate over time.
This document summarizes the findings of a 2013 research study on workforce trends and high performing organizations. Some key findings include:
1. Measures of trust, leadership, and collaboration rebounded significantly from low levels in 2012, especially in high performing companies.
2. Employee involvement and engagement increased dramatically, with nearly 60% of high performing companies reporting engaged, involved cultures.
3. Leaders in high performing companies were seen as more consistently modeling organizational values and walking the talk through predictable transparency.
4. Trust originates from leadership behaviors and a consistent tone at the top, which directly impacts employee engagement and retention.
This document discusses attrition and measures to control it. It defines attrition as the reduction of employees through retirement, resignation or death. It provides the formula to calculate attrition rate and examples. The business process outsourcing sector faces high attrition rates around 55% due to causes like lack of career growth, low salaries, and stressful work. Strategies to improve retention include incentives, training programs, flexible policies, and career counseling. The conclusion states the outsourcing industry may face staff shortages if attrition rates are not reduced from the current high levels of 50-60% to 10-15% through improved recruitment planning.
A study on reward and recognition program 2016Anand Yogesh
“People may forget words; People may forget actions; but people will always remember Respect, Recognition & Appreciation given to them publicly for their contributions....”
Best Practices in Consulting - Kennedy 2014Erik Wayton
This document discusses best practices for effectively managing HR administration in consulting firms. It notes that consulting firms face pressures to maintain profitability while costs rise. Direct costs associated with employees average around 60% of revenues. The complexity of managing different staffing models, from full-time employees to contractors, creates challenges for HR administration. While outsourcing some back-office functions can reduce costs, many firms realize benefits from keeping HR administration in-house. As consulting firms grow, transitioning to more structured HR management practices is important for sustaining growth and healthy profit margins.
Contingency staffing has become a mainstay in permanent workforce strategies for many companies. There are several reasons for this, including lower costs since contingent workers do not require benefits or paid time off. Companies also gain flexibility with this staffing model. However, companies must develop strategies to integrate contingent workers and make them feel valued in order to maximize their performance and minimize risks like decreased loyalty. Human resources departments play a key role in developing these strategies through collaboration, clearly defining roles, onboarding processes, and effective communication with contingent staff.
The document discusses how outsourcing human resource functions, known as human resource outsourcing (HRO), is becoming a key trend that is reshaping the future of HR departments. HRO can help organizations reduce costs while improving HR's strategic impact by standardizing, centralizing, and automating administrative HR processes. The document outlines the benefits of HRO such as cost savings, increased efficiency, and allowing HR to focus on more strategic priorities. It also discusses challenges such as change management and the need for clear communication during the implementation of HRO.
Achieving HR Excellence: A Global and Evidence-Based View - from May 30 Pres...Waldron
Achieving HR Excellence: A Global and Evidence-Based View. Powerpoint Deck from from May 30 Presentation with John Boudreau highlighting findings from his (and Ed Lawler\'s) forthcoming book.
The document proposes an outsourced leadership development program to improve organizational performance. It argues that most organizations lack internal resources for effective leadership programs and outlines a program including assessment, learning, and coaching. This program aims to increase employee engagement and discretionary effort through improving leadership effectiveness. Research cited shows high engagement correlates with increased productivity, customer satisfaction, retention, and financial performance. The value proposition is that outsourcing leadership development can yield a 6 to 1 return on investment by boosting engagement and discretionary effort through more effective leadership.
Outsourcing is when a firm contracts an independent contractor to perform certain tasks or activities. Common outsourced activities include IT, HR, manufacturing, and R&D. HR outsourcing involves an outside party performing some or all HR functions. While outsourcing can reduce costs and preserve culture, it can also result in loss of control and institutional knowledge. Managers generally outsource interactions and information gathering but not decision making. The type of outsourcing relationship depends on factors like asset specificity and uncertainty. HR outsourcing commonly includes payroll, benefits, workforce administration, and talent services like recruiting and training. Trust, confidentiality, commitment and flexibility are important factors in outsourcing relationships.
Predictive Analysis can help you Combat Employee Attrition! Learn how?Edureka!
This document discusses how predictive analytics can help combat employee attrition. It begins with an overview of business intelligence versus business analytics. Then, it covers predictive analytics concepts like types of analytics, domains where predictive analysis is used, and benefits for human resources analytics. Specific examples are given around using predictive modeling to identify attributes of employees likely to leave the organization.
Beyond best practice: enhancing results with bespoke HRETS plc
HR professionals can enhance results by developing "bespoke HR" practices tailored to their unique organization rather than solely following industry "best practices". Bespoke HR involves shaping practices and technologies to best fit the organization's culture, needs, and goals. This allows HR to develop competitive advantages through new, differentiated solutions. While best practices provide a starting point, blindly following them can hinder growth by ignoring an organization's specific context. Bespoke HR leads to more successful initiatives by designing practices that truly meet the business's aims.
Employee turnover and retention in banks was studied. Turnover refers to employees leaving and being replaced, while retention aims to keep valuable employees. High turnover can hurt productivity and profitability. Reasons for turnover include low pay, lack of career growth, and poor work environment or management. Banks can reduce turnover by offering competitive pay and benefits, training and development opportunities, and an engaging workplace culture with supportive supervision. The cost of employee turnover is high, so retention is important for banks to maintain a stable, skilled workforce.
The document discusses three key problems with the concept of "best practice" in talent management:
1. Many studies of successful companies have actually looked at companies that were lucky rather than genuinely remarkable, so the practices identified may not be what truly led to their success.
2. Research in the field often confuses causes of success with consequences, attributing practices to success when they may have just resulted from it.
3. Understanding the practices of currently successful companies has not helped predict future success, so the "best practices" approach has not proven useful for improving performance over time.
The document discusses the key role of human resources (HR) in organizations. It argues that HR is the "heartbeat" and "pacemaker" of any organization, managing human talent and keeping business processes rhythmic. HR is seen as a strategic partner rather than just an administrative function. The document emphasizes aligning HR processes like talent management to build an effective workforce and stay competitive in a changing business environment. It also discusses the importance of employee health, wellness programs, and matching talents to jobs for organizational success.
Investing in employees through strategic programs and technology can help companies maximize workforce value and improve Return on Employee Investment (ROEI). Engaged employees are more productive, innovative, and loyal, leading to higher customer satisfaction and business results. However, employee turnover is expensive, with replacement costs averaging 20-213% of salaries. Companies can reduce costs by lowering turnover through effective communication, work environment, recognition programs, training, and benefits. Investments that improve employee retention and engagement can yield significant savings by preventing replacement expenses and boosting productivity.
The HR Managers Guide to Employee EngagementSage HRMS
How can your company increase employee engagement and retain top performers? In this guide, we will examine some current statistics about employee engagement, show how employee engagement affects companies’ financial performance, and provide tips to effectively increase employee engagement at your company.
Research shows that high-performing cultures consistently deliver extraordinary results and outperform their peers. Culture determines how things are done, how people behave, and how value is created. As former IBM CEO Lou Gerstner states, “Culture isn't just one aspect of the game, it is the game.” Yet a high- performing culture is made up of employees that are healthy, self- governing, and high-performing themselves. Without leaders and employees that possess these qualities, there is little hope of positively transforming our organizations. This is why we believe that establishing a PLE culture is foundational to creating a long- term, sustainable, high-performing organizational culture.
C H A P T E R 1An Investment Perspective ofHuman Resource .docxjasoninnes20
C H A P T E R 1
An Investment Perspective of
Human Resource Management
Human Resources at Nordstrom
How can a retailer gain a competitive advantage in a cut-throat marketplace?
Middle- and high-end retailers generally locate in close proximity to each other
and often carry similar—but not identical—merchandise. Consequently their
sales and profit margins are usually in tandem. Nordstrom, however, has consis-
tently produced above-industry-average profits and continues to be profitable
when its competitors’ profits are falling or flat.
The key to Nordstrom’s success lies with the different way it manages its
employees. Sales employees are known as “associates” and considered the orga-
nization’s most valuable asset. The company’s success is rooted in its strategy of
providing superlative customer service. Associates are encouraged to act as
entrepreneurs and build strong personal relationships with customers, or
“clients.” In fact, many clients shop only with a particular Nordstrom associate
and call in advance to determine the associates’ schedules or to make
appointments.
Nordstrom’s strategy involves a heavy investment in the organization’s sales
force. Nordstrom provides associates with extensive training on merchandising
and product lines and offers high compensation. Its commitment to its employ-
ees is evident from the fact that the company’s organization chart is depicted
inverse from that of a traditional retailer. Associates are at the highest level on
the chart, followed by department and merchandise managers and, finally,
executives. This depiction cements the organization’s philosophy that the
customer is king. All efforts of senior-, middle-, and lower-level managers should
support the efforts of the sales force.
L E A R N I N G
O B J E C T I V E S
• Understand the sources of
employee value
• Gain an appreciation of
the importance of human
capital and how it can
be measured
• Understand how
competitive advantage can
be achieved through
investment in employees
• Gain an appreciation of
metrics, their measures,
and their usefulness
• Understand the obstacles
that prevent organizations
from investing in their
employees
Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
E
ffective organizations are increasingly realizing that of the varied factors that contribute to perfor-
mance, the human element is clearly the most critical. Regardless of the size or nature of an organi-
zation, the activities it undertakes, and the environment in which it operates, its success is
determined by the decisions its employees make and ...
Issues of performance and rewardsmanagementSelf-employed
This document discusses several compensation practices and their potential impacts. It notes that forced performance distributions can demotivate solid performers and encourage dysfunctional behaviors by managers. It also discusses how backloading compensation to reward tenure can benefit both employees and employers by incentivizing knowledge accumulation. The document recommends piloting any new programs and carefully considering both intended and unintended impacts of compensation changes through monitoring and research.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The document discusses employee engagement and organizational stress. It describes an employee engagement program that involves conducting an organizational stress audit to identify stressors impacting employee performance, motivation and productivity. The audit examines 30 common stressors across 7 categories. The engagement program then develops a strategy to address the stressors through remedies like process redesign, technology solutions, career progression opportunities and management style adjustments in order to reengage employees and boost productivity. The document emphasizes that stress has significant financial costs to organizations through increased absenteeism, sickness and reduced performance.
Leaders play a key role in employee engagement by connecting employees' work to the organization's values and mission. The document discusses how engaged employees are more productive, healthier, and less likely to leave their jobs. It also outlines the functional and psychological factors that influence engagement, including ensuring employees have the resources, training, and autonomy to do meaningful work. Wise leaders recognize employees' contributions, foster a sense of belonging, and help employees find purpose in order to maximize engagement.
Himanshu Kapadia's The Employment Relationship: Crucial Challenges for HR udaysalunkhe
The document discusses the changing nature of the employment relationship and the challenges this poses for human resource management. Key changes include less job security and lifelong loyalty between employers and employees. This dynamic requires HR to focus on retention, motivation, and developing talent. Challenges for HR include maintaining trust, managing the psychological contract, ensuring employee well-being, sharing information fairly, and fostering involvement. Failure to meet employee expectations can harm commitment and increase turnover. Overall, the employment relationship requires empathy from both employers and employees to perform at their best.
Himanshu kapadia the employment relationship crucial challenges for hrudaysalunkhe
This document discusses the changing nature of the employment relationship and the challenges this poses for human resource management. It notes that the business environment is changing rapidly due to factors like globalization and technology. As a result, the traditional lifelong employment relationship between employers and employees has broken down, with both sides now expecting less loyalty from the other. This has implications for HR practices like retaining talent. Maintaining trust, managing psychological contracts, ensuring fairness and employee involvement will be important for sustaining healthy employment relationships in the future. A breakdown in this relationship can lead to issues like lack of commitment, absenteeism and ultimately increased turnover costs.
This document discusses how HR practices can drive corporate profits. It provides examples from research and case studies of companies that have linked specific HR investments to increased financial performance.
1) Studies show that employee-involvement practices within HR's scope, like training and rewards programs, correlate with higher returns on sales, assets, investments and equity. When employees are involved in goal-setting and understand how their work impacts profits, performance improves.
2) Profitable companies communicate extensively, involve employees in goal-setting, help employees understand how their jobs affect profits and pay, share financial gains with employees, distribute HR responsibilities throughout the organization, and focus on investing in human capital rather than just cost-cutting.
1. The document discusses how companies can increase employee productivity and skills through investment in education programs. It argues that replacing experienced workers is risky and costly, so companies should focus on improving existing employees.
2. The author proposes that companies formally and informally train employees, foster engagement through competitive activities and social events, and provide leadership that clearly explains the rationale for educational initiatives in order to increase productivity.
3. Research shows that employee engagement correlates to increased business outcomes, so companies should determine each individual's skills needs, motivate them through reason, authority and compassion, and encourage an open and competitive mindset to continually improve workers.
The document discusses employee retention, including its definition, importance, and evolution over time. It begins by defining employee retention as an organization's ability to retain employees and the strategies used to do so. It then discusses the importance of retention for reducing costs and maintaining organizational knowledge. The document traces the evolution of retention from a focus on employee satisfaction in the 1970s-80s to a greater focus on engagement and linking it to business outcomes starting in the 1990s. It also discusses drivers of engagement like trust and the future of sustaining engagement.
This document discusses employee attrition in the education industry. It defines attrition and attrition rate, and discusses reasons for attrition such as organizational factors, working environment, and opportunities elsewhere. It also discusses the costs of attrition for companies, including recruitment costs and training costs to replace employees who leave. The document then provides a formula to calculate attrition rate in an organization.
This document discusses employee attrition in the education industry. It begins with definitions of attrition and attrition rate. It then discusses the costs of attrition for companies, including recruitment costs and training costs to replace employees that leave. The document outlines a methodology for calculating attrition rate for an organization. It analyzes trends in attrition rates for an unnamed company over multiple years. Finally, it lists references used in the document, including academic books, articles, company publications, and websites.
Organizations must develop effective talent retention strategies to retain their most valuable employees. Treating talent retention as an isolated HR task is not enough - it must be a company-wide priority. Developing a culture where employees feel valued and invested in their work helps encourage retention. A successful retention strategy identifies critical roles, understands employees' needs, and ensures human capital programs like training, rewards, and career development opportunities are aligned to keep talented individuals engaged and committed to the organization over the long term. Regularly evaluating retention metrics and the overall talent management process helps organizations optimize their ability to retain top performers.
Employee engagement involves committing employees to an organization's business goals and values. It starts with managers clearly sharing business information and seeking employee input to improve the business. Engaged employees are fully committed to the organization's success. Engagement boosts business outcomes like higher service levels, safer workplaces, and lower turnover. Factors that boost engagement include achievement, camaraderie among coworkers, and fair treatment. Benefits of engagement include higher performance, innovation, advocacy, and lower absenteeism. The study aims to evaluate engagement practices at a software company and understand how to increase engagement.
1) The document discusses the importance of strategic personnel management for professional services organizations to improve business outcomes, financial performance, and customer satisfaction. It emphasizes creating a team of engaged employees who are leaders and innovators.
2) It recommends evaluating employees to determine who is highly utilized and their potential, and developing clear plans to improve low performers or remove obstacles if growth is not possible. Engaging employees involves challenging assignments that allow skills development and understanding individual passions.
3) The document also stresses enhancing employee relevancy through training, and fostering innovation not just in technologies but also more efficient work processes. Strategic personnel management that addresses engagement, enhancement and excellence will increase profitability by retaining talented staff and attracting new
The document discusses various aspects of human resource management. It covers topics such as the difference between personnel management and HRM, stages of recruitment, evaluating recruitment methods of two companies, linking rewards to employee motivation, and determining pay through job analysis. HRM aims to leverage employees' skills and contributes to organizational success. Effective recruitment and compensation practices are important for attracting and retaining talented workers.
As part of Mercer's commitment to providing clients with research-based solutions, Mercer’s employee research group conducts a series of national studies around the globe, entitled What’s Working™.
These studies allow us to analyze national trends regarding employee perceptions and to identify the key drivers of employee engagement – by country and on a global basis.
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Sage HRMS ROEI: return on employee investment
1. Sage HRMS I White Paper
ROEI™: Return On Employee Investment™
How to Achieve It and How to Benefit From It
2. Sage HRMS
Table of Contents:
Introduction................................................................................................................................ 1
Investing in Employees................................................................................................ 1
Cost Versus Investment......................................................................................................2
The Advantages of Engaged Employees.........................................................................2
Employee Replacement Costs.................................................................................... 4
How to Increase Employee Retention....................................................................... 6
Information
Communication
Work Environment
Employee Recognition
Training
Compensation and Benefits
The Cost of Sick Leave................................................................................................. 9
How to Reduce Sick Leave........................................................................................... 9
Wellness Programs
Information
Managing Talent........................................................................................................... 11
The Whole Picture........................................................................................................ 12
Addendum A: The Real Cost of Replacing An Employee....................................... 13
3. Introduction
Sage HRMS
Why are some companies thriving while others struggle to stay in business? What is the
distinctive difference between a good company and a truly great company? The answers to
these questions can only be found when looking at what defines the company: its people. The
people who make up a company are that organization’s unique and biggest asset. For most
businesses, the workforce is also its largest expense, or better put, its largest investment.
At Sage, we believe that employees are the most important component in the quest to improve
business results. It makes sense to treat employee-related expenses as an investment
in the workforce. Like any other investment, this critical company investment must
yield a healthy return. We call that the Return on Employee Investment™
or ROEI™.
“The best way
This white paper looks into investments that can help a company maximize
the value of its workforce, and how technology can help improve ROEI
and build a more profitable and successful business.
Investing in Employees
for a company to
increase competitiveness
is to invest in
its employees.”
A company is as good as its employees. We are used to talking about a
company as if the organization itself is a person. But an organization does not
generate ideas, does not give service, and by itself is neither efficient nor
productive. People make all of those things happen.
Johnny Laurent
Vice President and General Manager
Sage Employer Solutions
Companies are accustomed to paying competitive wages and good benefits to attract
talented managers and professionals. Yet often relatively little attention is paid to creating the
best circumstances for each individual in the organization to perform at his or her best potential.
The effectiveness of HR-related technology or programs is regularly assessed in an isolated
manner. Human Resource Management Systems (HRMS) are judged by how much more efficient
the HR worker becomes and how the software helps the HR department accomplish daily tasks.
The Return on Investment (ROI) is measured as a result of the total costs saved or efficiency
gained, divided by the Total Cost of Ownership (TCO).
But this approach is old fashioned and doesn’t do justice to the real value modern human resource
management brings to finding and retaining talented employees. From recruiting to on-boarding,
from motivating and developing talent to supporting people managers and creating an engaged
workforce, the effectiveness of employee management has a direct impact on business results and
competitiveness.
The cost of employee management technology is actually an investment in employees. These
investments will reward the company with a return that will impress any CFO.
1
4. Cost Versus Investment
Sage HRMS
Each and every employee costs money. Organizations pay their employees wages and benefits.
There is also infrastructure cost, including office space, tools and equipment, administration,
and other employee-related costs. Those are necessary costs, but are not always investments.
An investment is a cost that creates future value and pays out over time.1 In other words, an
investment in the workforce should help employees achieve their full potential, improve their
motivation, and strengthen engagement.
When a carpenter needs a saw, he has the option to purchase the cheapest one. Or he can
achieve better results and get more years of use out of a higher quality professiona-grade tool.
Similarly, the HR professional has his or her own “toolbox” when it comes to optimizing the
company’s workforce. Strategic investments in the organization and its employees can make
a huge contribution to the bottom line. The right investments can both prevent unnecessary
expenses, such as high employee turnover, and boost the productivity of the workforce by better
engaging the employees.-
The Advantages of Engaged Employees
Employee engagement is “the level of commitment and involvement an employee has towards
their organization and its values.”2 Organizations that can establish trust between the workforce
and management and between coworkers, create an engaged workforce and the benefits that go
along with it.
For organizations, the difference between engaged and disengaged workers can equate to
success or failure. Disengaged employees are estimated to cost the U.S. economy as much as
$350 billion per year in lost productivity, accidents, theft, and turnover.3
A major opportunity for corporate performance improvement and employee retention lies in
engaging the workforce to drive better customer engagement, better revenue and higher profits.
As Allan Schweyer recently noted:
“Most leaders and organizations know the difference between a fully engaged worker and one
that is marginally engaged or disengaged. The former brim with enthusiasm, they contribute
ideas, are optimistic about the company and its future, are seldom absent from work,
they typically stay with the organization longer, and are among the organization’s most
valuable ambassadors.”4
Investing in employee engagement increases workforce retention and thus decreases employee
turnover costs. But the advantages of engaged employees goes far beyond the reduction of the
turnover rate. Increasing employee engagement correlates directly with a positive impact on key
business metrics.
1
Oxford Dictionaries—an act of devoting time , effort, or energy to a particular undertaking with the expectation of a
worthwhile result: the time spent in attending the seminar is an investment in our professional futures.
2 Nitin Vazirani, “Employee Engagement,” Working Paper for the SIES College of Management Studies, 2007.
3 Allan Schweyer, “The Economics of Engagement,” Human Capital Institute and Enterprise Engagement Alliance,
June 2009, p.1.
4 Allan Schweyer, “The Economics of Engagement,” Human Capital Institute and Enterprise Engagement Alliance,
June 2009, p.2.
2
5. Sage HRMS
According to Schweyer, engaged employees:5
•
•
•
•
•
•
•
Work more effectively, instead of just working more.
Find ways to improve.
Share information with colleagues.
Develop creative solutions.
Provide suggestions.
Speak up for the organization.
Try harder to meet customers’ needs, leading to repeat business.
Numerous studies show a direct correlation between employee engagement and business results:
• A 2008 Blessing White study demonstrated a correlation between engagement and
retention—85% of engaged employees planned to remain with their employer for ten or
more months.6
• Towers Perrin discovered that high-engagement firms grow their earnings-per-share
(EPS) at a faster rate (28%) while low-engagement firms experienced an average EPS
growth rate decline of 11.2%.7
•
The Center for Human Resource Strategy at Rutgers University found that highly
engaged business units were on average 3.4 times more effective financially than units
who were less engaged. This paper also found that when disengaged, workers can cost
the company in lost productivity and negatively affect customer relationships.8
•
A report by the Society of Human Resource Management (SHRM) estimates that by
strengthening engagement, Molson Coors saved more than $1.7 million in one year—
citing one example where the average cost of a “safety incident” for an engaged
employee was $63, compared with the average of $392 for a disengaged employee.9
• Hewitt found that highly engaged firms had a total shareholder return that was 19% higher
than average in 2009. In low-engagement organizations, total shareholder return was
actually 44% below average.10
5 Schweyer, p.5.
6 BlessingWhite, Inc., “The State of Employee Engagement,” 2008, p.1.
7 Towers Perrin, “Closing the Engagement Gap: A Roadmap for Driving Superior Business Performance,” Global Workforce
Study, 2007-2008, p.5.
8 Castellano, William, “A New Framework of Employee Engagement,” Center for Human Resource Strategy at Rutgers
University.”
9 Robert J. Vance, Employee Engagement and Commitment, SHRM, 2006, p.2, 23.
10 Hewitt Associates, “Hewitt Analysis Shows Steady Decline in Global Employee Engagement Levels,” press release,
July 29, 2010
3
6. Employee Replacement Costs
Sage HRMS
The investment in an employee starts even before the actual hiring of the employee and the
recruitment and onboarding costs involved go way beyond just posting a job opening or hiring a
recruitment agency. Costs associated with replacing a departing employee include:
• Recruiting
• Interviewing
• Hiring
• Orientation
• Training
• Compensation and benefits while training
• Lost productivity
• Administrative costs
Employee turnover is a very high and often an underestimated cost for employers. This cost does
not simply represent wages and materials, but also includes recruitment costs, loss of productivity,
impacts on team morale, and other more subtle expenses.
In 2006, Ross Blake of Retention Associates summarized several studies that estimated the cost
of replacing an employee:
• The Society for Human Resource Management (SHRM) estimates that it costs $3,500 to
replace an $8.00 per hour employee. SHRM’s figures were the lowest of 17 nationally
respected companies who calculated the cost.
• Other sources provide these estimates: It costs you between 30% and 50% of the annual
salary of entry-level employees, 150% of middle-level employees, and up to 400% for
specialized, high-level employees!11
These numbers represent averages. The replacement of the highest performing employees
could cost significantly more, for the loss of productivity is much greater. To calculate the cost of
replacing an employee at your company, use the calculator in Addendum 1 of this paper.
The average turnover rate for all industries in the United States was 18.7% in 2008 and dropped to
16.3% in 2009 as a result of the economic downturn.12 The weakening economy and job market
appeared to discourage employees from seeking other job opportunities, as turnover rates shrank
for employers in every category of industry and workforce size, and in every region of the country.
So called “best in class” companies typically have employee turnover of no more than 5%.13
11 Ross Blake, “Employee Retention: What Employee Turnover Really Costs Your Company,” WebProNews.com,
July 24, 2006.
12 Compdata, “Compensation Data Survey”, 2008 and 2009.
13 Bureau of National Affairs
4
7. A quick calculation shows that investing in the reduction of employee turnover can result in a significant
cost reduction:
Number of Employees
Sage HRMS
300
Average Salary
Cost to Replace
Upper Management
10%
$150,000
300% $450,000
Middle Management
25%
$80,000
150% $120,000
Rest
65%
$35,000
18.7%
$4,590,383
5%
$1,227,375
Turnover Rate Average
Best in Class
30%
$10,500
Cost Per Year
$3,363,008
Turnover Rate From
12%
Turnover Rate To
10%
Difference
$2,945,700
Cost Per Year
$2,454,750
$490,950
Difference
Figure 1: Cost of Employee Turnover
As you can see, employee turnover is incredibly expensive. Investing in increasing employee retention
prevents a significant amount of replacement-related costs. In the case above, a reduction in employee
turnover of 2 percentage points (from 12% to 10%) results is a cost reduction of almost $500,000. With
the same number of employees, implementing retention strategies that turn an average turnover rate into
a “best in class” rate would yield a savings of nearly $3.4 million!
5
8. How to Increase Employee Retention
Sage HRMS
While some turnover is unavoidable and to some extent even desirable, turnover among your top
performers is largely avoidable. And it is certainly worth the investment.
People don’t necessarily tell the whole truth in exit interviews about why they are leaving. Managers
should, of course, know in advance who is leaving and why. The International Association of
Administrative Professionals compiled a list of the top reasons why employees leave their jobs, taken
from the book, The 7 Hidden Reasons Employees Leave: How To Recognize The Subtle Signs and Act
Before It’s Too Late by Leigh Branham (2005):14
• Poor Management—uncaring and unprofessional managers; overworking staff; no respect, not
listening, putting people in wrong jobs; speed over quality; poor manager selection processes.
• Lack of Career Growth and Advancement Opportunities—no perceivable career paths; not
posting job openings or filling from within; favoritism or unfair promotions.
• Poor Communications—problems communicating top-down and between departments; after
mergers; between facilities.
• Pay—paid undermarket or less than contributions warrant; pay inequities; slow raises; favoritism
for bonuses/raises; ineffective appraisals.
• Lack of Recognition—that says it all.
• Poor Senior Leadership—not listening, asking, or investing in employees; unresponsiveness
and isolation; mixed messages.
• Lack of Training—nonexistent or superficial training; nothing for new hires, managers, or to
move up.
• Excessive Workload—doing more with less; sacrificing quality and customer service for
numbers.
• Lack of Tools and Resources—insufficient, malfunctioning, outdated, equipment/supplies;
overwork without relief.
• Lack of Teamwork—poor coworker cooperation/commitment; lack of interdepartmental
coordination.
A high turnover rate is likely due to a combination of reasons. Thus, increasing employee retention also
requires a combination of measures. Employees will be motivated to stay at a company when they
feel comfortable, well respected, fairly compensated, and (dependent on position and character) see
possibilities for growth and personal development. Here are some of the areas an employer can invest in
to lower the employee turnover rate:
14
1. Information
2. Communication
3. Work environment
4. Employee engagement
5. Employee recognition
6. Training
7. Compensation and benefits
IAAP (International Association of Administrative Personnel), “The Real Reason Why Employees Leave,” iiap-hq.com,
accessed March 1, 2011.
6
9. Information
Sage HRMS
It is clear that no manager can make informed decisions without proper information. HR or employee
analytics can help management decide where to invest, identify the top performers, determine what
employees need to best perform, and what they value. Analytics also provide a consistent way to
monitor the results of any measure taken.
Modern human resource management systems contain a wealth of information that can give managers
and executives the insight needed to make the best possible decisions about the workforce.
Communication
A lack of (or poor) communication, both top-down and between teams or peers, causes frustration
and misdirected energy. Company values, the company vision and mission, job expectations, and
performance feedback are not just “nice to know,” but essential for any employee to function well.
HR departments can greatly enhance company communication by publishing company values, vision
and mission. Provide easy access to the company handbook. Make use of the technology for employee
self-service portals and performance appraisal systems and encourage employees to use these available
resources.
Work Environment
According to a 2007 article in BusinessWeek magazine:
“A survey conducted online in 2006 by San Francisco design firm Gensler found that of more
than 2,000 workers around the U.S., two-thirds believe they are more efficient when they work
closely with their colleagues. But 30% said that their workplace doesn’t promote spontaneous
interaction and collaboration—a sentiment that’s leading many companies to rethink the office
environment. In some cases, that means fashioning quiet enclaves where two people can meet;
in others, it means a company basketball court for pickup games. But the goal is always the same:
to stimulate interaction among coworkers and let the business profit from the creative flow of ideas
and high morale.”15
Widespread usage of social media and web 2.0 technologies has proven that these spontaneous
interactions and collaborations are no longer limited by physical borders. Employee collaboration
and business social networking have already demonstrated value in terms of improved employee
performance, creativity, communication, and “informal learning.”
The work environment is also positively affected by tools that help employees find relevant information.
From a human resource perspective, a self-service portal is such a tool: It empowers the employees, and
it not only allows them to view their personal information, but also provides the capability for employees
to make requests for changes to certain types of information and view and control their benefit
enrollment. Employees want to be self-sufficient and be able to do their jobs more efficiently.
Employee Recognition
Most companies reward employees and recognize a job well done with a combination of compensation
and benefits. But there are many more tools in the employee reward arsenal. To compete in the global
workforce environment, an effective employee recognition program is a necessity.
Recognition delivers appreciation or acknowledgement of an individual’s or team’s performance. It can
be informal or formal. Employee recognition programs usually consist of rewards, awards, and incentives.
Many studies have been conducted and reports written on the effects of employee recognition
programs, and the metrics on the ROI for these programs vary from report to report. The common
conclusion is that employee recognition has a positive effect on employee engagement and job
performance and can contribute to increased business value.
15
Douglas MacMillan, “Rethinking the Office Environment,” Bloomberg BusinessWeek, October 15, 2007.
7
10. Successful recognition programs motivate workers in ways that increase their level of engagement.
According to the Human Capital Institute (HCI), “best practices” for applying recognition programs
include:16
Sage HRMS
• Creating a culture of recognition in the workplace that includes both formal and informal methods
of recognition.
• Making sure that employees get rewarded in a way that is valuable to them by providing a wide
variety of recognition rewards. Emphasizing higher quality performance, rather than just increased
amount of effort.
• Recognizing employees frequently to maintain consistent engagement.
• Ensuring that rewards are linked solidly to business objectives and/or desired business cultural
values.
HR technology can help managers know when performance goals have been met and merit employee
recognition. In addition, self-service technology can help the HR team communicate an employee’s
successes to coworkers.
Training
Effective training and development programs are excellent instruments to reduce employee turnover.
When employees feel like their careers can develop no further at an organization, it is often time to
leave. Good training programs can help your employees learn the skills needed for new projects and
challenges, or even a higher position within the company.
There’s another way that training can help increase employee retention—management training.
Managers with poor leadership and people skills often drive away the most talented top performers. Train
great managers and your company will enjoy better engagement and lower turnover. Offering training
and development programs is a smart way to invest in the future value of employees and a proven
method to increase employee retention. An HRMS can help the HR team plan employee training goals
and programs, as well as track critical certifications and skill sets. In this way, the HR department can
become a partner to employees and managers, helping to ensure top performers don’t get stuck in a
career rut.
Compensation and Benefits
Without an adequate and competitive package of compensation and benefits, it is difficult for any
company to hire or retain top talent. The challenge for small business owners is figuring out how much
their competitors pay, and what package of benefits deliver the best retention results. If the main goal is
to motivate talent to stay with the company, in other words to create “stickines,” it is important to choose
a balanced package of benefits from many available programs:
• Work/life balance: Holidays, paid time off, flexible work arrangements
• Financial security: Retirement plans, pensions, disability insurance, life insurance
• Health and medical insurances: Health insurance, dental, vision, flexible spending or health
savings accounts, gym memberships
• Career development/personal growth: Tuition reimbursement, onsite lectures, computer-based
training subscriptions
• Other: Discounted auto, home, or pet insurance, savings clubs for shopping, employee loan
programs to purchase computers.
16
Douglas MacMillan, “Rethinking the Office Environment,” Bloomberg BusinessWeek, October 15, 2007.
8
11. Each company has to find its own balance of mandatory and voluntary benefits. It’s safe to say
that the best employees will not stay long in a job that is either significantly undercompensated, or
obviously lacking in benefits. Most surveys show employees rate healthcare benefits higher than most
other benefits, aside from salary. But after ensuring that the big items are included in your package,
don’t overlook the possibility that a smaller and inexpensive perk might be a unique offering that your
employees would value.
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An HRMS can help organizations determine the most popular benefits programs by tracking what is
most selected by employees during open enrollment. It can also help you generate reports about the
cost trends of your benefits programs based on current, historical, and projected benefits data.
The Cost of Sick Leave
Sick leave is a necessary benefit for all employees. If employers didn’t offer sick leave, they would
accelerate health problems and the spread of illness, thereby lowering productivity and morale. However,
missed work time and increased insurance costs also hurt companies.
According to CCH Incorporated, a company that produces electronic and print products for the tax,
legal, securities, insurance, human resources, healthcare, and small business markets, unscheduled
absenteeism can cost up to an average of $602 per employee, per year.17
This cost does not include indirect costs such as overtime pay to the employees who fill in, pay for
temporary workers, missed deadlines, lost sales, sinking morale, and lower productivity. Indirect costs
can add up to 25% to direct costs.18
How to Reduce Sick Leave
Whether above average use of sick leave is health-related or due to a pattern of abuse, a company can
actively reduce absenteeism through intelligent investments. Employee wellness programs can promote
better health and management of chronic conditions. And an HRMS can make information about
absences available to managers, so it’s easier to identify possible patterns of abuse and address them
with employees.
Absenteeism is also an area where improvements in employee engagement can reduce company
expenses. A study in the U.K. showed that 30% of sick leave is partly the result of stress-related anxiety
and depression. Motivated and engaged employees are eight times less likely to suffer from stress and
depression.19
Wellness Programs
According to wellness program expert and author, John Bates:20
“Programs and policies that promote healthy behaviors may make a big difference on staff member
wellness and have an impact on the corporation’s bottom line. Studies have shown that for every
dollar invested in corporate wellness/wellness programs, there were savings ranging from $1.49 to
$4.91 with a median savings of $3.14.”*
*U.S. Department of Health and Human Services, 2003.
17
18
19
20
Maureen Smith, “Sick Leave Abuse: A Chronic Workplace Ill?” About.com, accessed March 1, 2011.
Smith.
Health and Safety Executive, www.hse.gov.uk
John Bates, “What is a Worksite Wellness Program?” Selfgrowth.com, accessed March 1, 2011.
9
12. In other words, the return on this employee investment is better than 300%! Bates goes on to provide
other useful statistics:
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In fact, according to a Worksite Wellness Program literature review posted in Health Promotion
Practitioner Journal:
• 19 studies found a 28.3% reduction in sick leave.
• 16 studies demonstrated a 5.6:1 return on investment.
• 23 demonstrated a 26.1% reduction in health care costs.
• 4 demonstrated a 30% reduction in direct health care and workers’ compensation claims.21
Information
To fight against a pattern of sick leave abuse, you’ll need the right information, supplied to both
managers and employees. To start off, employers need to have a clear absence policy that is readily
accessible to all employees, along with the employee handbook. Going through absence rules and
processes should be part of the onboarding process.
Technology can be very helpful in this area:
• Business process automation tools can dramatically increase the quality of the onboarding
process for all new employees. These tools ensure employees and managers follow time-off
procedures, consistent with corporate policies.
• Employee self-service portals or the company intranet are good places to store the company
handbook.
In order to confidently talk with or discipline employees who have attendance problems, it is not enough
to have a clearly written policy. Managers also need information that proves possible abuse or above
normal patterns of sick leave. Sick leave statistics are needed at the individual employee level and the
departmental or company level. Here again, an HRMS solution can identify patterns of abuse and also
help report absenteeism results to employees and their managers:
• An HRMS system including time-off management and manager self-service functionality keeps
management informed. Employees can also see their accurate and up-to-date allowance for sick
days.
• The usage of data-monitoring software can automatically generate alerts to managers that signal
the breach of any given predefined threshold. That way managers will be notified if and when
their attention is required.
• Dashboards and graphical representation can show management in one glance how well the
company, department, or team is doing in terms of sick leave.
21 John Bates, “What is a Worksite Wellness Program?” Selfgrowth.com, accessed March 1, 2011.
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13. Managing Talent
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A 2007 article in Harvard Business Review concluded:
“Those organizations that invest more in talent management significantly outperform their
competition across every measure of business—including earnings per share, gross profit margin,
and market capitalization per employee.”22
Talent management and planning has been one of the hottest topics among business executives and
has become a core component of the workforce strategy. And for good reason: More and more of a
company’s value is based on intangibles generated by talent. From intellectual property to customer
satisfaction, 80% of a company’s valuation is now intangible.23
Talent management refers to the process of developing and integrating new workers, developing and
retaining current workers, and attracting highly skilled workers to work for a company. Keeping the
workforce engaged is one positive effect of investing in modern talent management. Tracking and
managing the development of the employees. Skilled workers only become top performers when their
goals are aligned with business objectives and their energy is directed at the right targets.
Talent management is much more than just a performance appraisal tool or process. That’s only one of
the components of modern talent management. A total talent management solution should also address:
1. Alignment with business goals.
A company needs to make sure it has the business aligned around its strategy. It has been
estimated that up to 95% of people don’t understand their role within the organization.24 Simply
put, when people keep working hard on whatever they think is important, the chances are it is not
the work needed to achieve the desired outcome. Another indicates that 37% of a strategy’s
potential is lost due to poor alignment.25
2. People performance.
The typical business that used performance appraisal and management software shows a
reduction of low performers, while the percentage of high performers in the company goes up.
An improvement factor of 5.4% in productivity as a result of implementing performance appraisal
and management software is not uncommon.26 A talent management solution may also include
functionality to plan and track employee training and development. Acquiring new skills can
improve employee performance, as well as boost worker engagement.
You will be able to measure the impact of a talent management solution on your company’s ROEI in
three areas:
1. Cost savings: The automation of manual processes saves time, and the increased focus on
talent management reduces turnover.
2. Revenue growth: You will more easily identify the best internal candidates for open leadership
jobs and position your company for success.
3. Improved employee productivity: Better talent management enables your organization to retain
more high performers, thus improving productivity.
22
23
24
25
26
.,
Schweyer, inside cover.
Erik Berggren and Lars Dalgaard, “Return on Execution,” a SuccessFactors Research Whitepaper, 2006, p.5.
Robert S. Kaplan and David B. Norton, The Balanced Scorecard, Harvard Business Press, 1996.
Michael C. Mankins and Richard Steele, “Turning Great Strategy into Great Performance, Harvard Business Review, 2005.
Erik Berggren and Keith Messick, “Moving Mountains,” a SuccessFactors Research Whitepaper, 2009.
11
14. The Whole Picture
Sage HRMS
Most executives would be the first to tell you that the success of their businesses depends on their
employees. People are a critical asset that needs to be cultivated and properly managed. Without the
right employees, businesses will not grow, become more profitable, or generate new ideas.
In this context, it is only logical to conclude that a company’s workforce is not merely a necessary
expense, but also an investment in future competitiveness and earnings. Much research supports
the idea that keeping employees engaged and motivated, as well as retaining the best performing
employees over the long term, have positive effects on corporate financial results.
Investing in employees affects the bottom line in two ways. First, it reduces employee turnover, sick
leave, and healthcare costs. Second, investments in employee engagement programs, training, talent
management, information and decision support, communication, wellness programs, and technology all
have a positive effect on workforce performance and productivity.
In this light, it’s time to reexamine the benefits of HR-related technology such as Human Resource
Management Systems (HRMS) and Talent Management solutions. Traditionally, these systems were
thought of as cost reduction tools, saving time and automating routine administration to raise productivity
within the HR department itself. An HRMS certainly does deliver that result. But when viewed as part of
an investment in a competitive workforce, it can do much more.
Through employee self-service, training development, and compensation and benefits management,
HRMS and Talent Management can provide the tools to help keep employees engaged and satisfied.
These systems also deliver the analytics to help managers and executives examine trends, support
business decisions, and plan for future organizational changes.
Investing in an HRMS system, integrated with performance management, learning and training, tools
for decision support, self-service portals, and more is an investment in the most important asset of
the organization: its employees. And the return on the investment in employees can turn a struggling
company into a winner.
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15. Sage HRMS
Addendum A: The Real Cost of Replacing an Employee
Separation Costs
Exit Interview
$18
15-min. prep; 30-min. interview; 15-min. follow-up @ $18/hr.
Termination Administration
$36
2 hrs. @ $18/hr.
Separation/Severance Pay
$1,360
Any Increase in Unemployment Compensation $272
Loss of Productivity
Marginal rate increase + tax
$1,686
Vacancy Costs
2 wks.
$800
Cost of Additional Overtime
$1,920
20 hrs. @ $24/hr. for 4 wks.
Cost of Temporary Help
$1,800
21 hrs. @ $30/hr. for 3 wks.
Minus Wages+Benefits Saved Due to Vacancy $(2,040)
$2,480
$54
3 wks. @ $560/wk.
Replacement Costs
Preemployment Administrative Expenses
3 hrs.@ $18/hr.
Cost of Attracting Applicants
$1,000
Ads, agencies, and staff time
Cost of Entrance Interviews
$120
5 interviews of 1 hr. @ $24/hr.
Testing Costs (Drugs, Medical, Personality)
$64
Aptitude, skill, drug testing
Reference Check
$80
Background Investigation
$180
Staff Costs
$36
Travel and Moving Expenses
$-
Information Gathering
$64
Medical Exams
2 hrs. @ $18/hr. + 2 hrs. @ $14/hr.
$150
$1,748
Onboarding and Orientation
Admin, Benefit Enrollment, and so on
One 30-min. meeting with 3 people @ $24/person
$18
Orientation
1 hr. @ $18/hr.
$28
1 hr. @ $18/hr. + $10 orientation materials
(brochures, policies)
$46
Training
Formal Training + Literature Cost
Informal Training
$1,500
$656
$2,156
Ramp-up Costs
Management Attention
Productivity Differential
$385
$2,000
Total Cost of Replacement
Mentoring, socializing, OJT-2 days @ $24/hr.+2 days @ $17/hr.
4 hours extra per week for 4 weeks @ $24/hr.
Learning curve
$2,384
$10,500
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