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Human Capital Strategies In A Slow Recovery

Rising stakes for workforce management.

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Human Capital Strategies In A Slow Recovery

  1. 1. Human-Capital Strategies in a Slow Recovery THE FINANCE PERSPECTIVE ON WORKFORCE MANAGEMENTA report prepared by CFO Researchin collaboration with Paychex
  2. 2. Human-Capital Strategiesin a Slow RecoveryTHE FINANCE PERSPECTIVE ONWORKFORCE MANAGEMENTA report prepared by CFO Researchin collaboration with Paychex
  3. 3. Human-Capital Strategies in a Slow Recovery is published by CFO Publishing LLC, 51 Sleeper Street, Boston, MA02210. Please direct inquiries to Matt Surka at (617) 790 3211 or Research and Paychex developed hypotheses for this research jointly. Paychex funded the research andpublication of our findings.At CFO Research, Celina Rogers and Matt Surka directed the research, and Matt Surka wrote the report.August 2012Copyright © 2012 CFO Publishing LLC, which is solely responsible for its content. All rights reserved. No part of thisreport may be reproduced, stored in a retrieval system, or transmitted in any form, by any means, without writtenpermission.
  4. 4. Human-Capital Strategiesin a Slow Recovery Contents About this report 1 Rising stakes for workforce management 2 After cost control, building a better workforce 5 The need for a better-equipped HR department 8 A commitment to making better use of HR technology 9
  5. 5. Human-Capital Strategies in a Slow RecoveryAbout this reportIn July 2012, CFO Research conducted a survey Note: Percentages may not total 100%, due toamong senior finance executives at midsize rounding.U.S. companies to examine their views on thechallenges of maximizing workforce produc- Respondents work for companies in nearlytivity—both now and in the future. We sought every industry. The manufacturing sectorto gauge how companies are planning to (including industrial manufacturing and auto)improve their ability to manage their work- and nonprofit industries (including education,force, as well as find out more about how their religious, community services, and govern-human-capital strategies will take shape over ment) are particularly well represented.the next two years.We gathered a total of 164 complete surveyresponses. Respondents represent a broadrange of company segments, as follows:Annual revenueLess than $100 million 57%$100 million–$500 million 32%$500 million–$1 billion 6%$1 billion–$2 billion 3%$2 billion–$5 billion 1%$5 billion–$10 billion 0%$10 billion or more 1%Number of employees50–250 employees 50%250–500 employees 27%500–1,000 employees 23%TitlesChief financial officer 60%Controller 18%Director of finance 10%VP of finance 6%EVP or SVP of finance 4%Treasurer 1%Other 2% © C FO P U B LISHING 2012 1
  6. 6. Human-Capital Strategies in a Slow RecoveryA solid majority Rising stakes workforce management, working to fine-tuneof senior finance for workforce the increasingly critical balance between help- ing employees do more and carefully managingexecutives (64%) management a small, precious pool of resources.say that theircompanies are after an economic near-collapse, a tepid Companies’ workforces are growing, and the recovery, and persistent uncertainty through- need to extract greater value from that invest-planning to ramp out the world, no one could blame a CFO for ment in human capital is growing with them.up hiring over the feeling like nothing ever gets less difficult but Most companies are planning to increase thenext two years. more important. For companies in this economic pace of hiring over the next two years—even environment, the most important tasks seem as the average labor budget (measured as a only to become more difficult. This is certainly percentage of operating budget) remains some- true for workforce management—the processes, what steady, according to our research. A solid practices, and technologies that companies use majority of senior finance executives (64%) say to build their teams of employees into power- that their companies are planning to ramp up houses of productivity. Our survey of 164 senior hiring over the next two years. (See Figure 1.) finance executives at midsize U.S. companies Only a quarter of companies (25%) will keep the suggests that the stakes for developing and pace of hiring steady, and very few (10%) plan executing effective human-capital strategy are to decrease hiring. At the same time, two-thirds rising—and quickly. The finance executives of senior finance executives (67%) say that their responding to our survey point out that com- companies will be working with either the same panies will need to continue to do more with (49%) or lower (18%) levels of resource alloca- less over the next two years. As the difficulty tion to labor over the next two years, compared of maximizing employee productivity rises with today. (See Figure 1.) along with its importance, finance teams may be called upon to become especially involved in From these results, it’s clear that companies will face a substantial internal labor challenge over the next two years, as they strive to position their employees in a way that maximizes theirFigure 1. Companies’ Labor Plans Over the Next Two Years contribution to the business. But the mountingSurvey results suggest that most companies plan to increase the pace labor-strategy challenge doesn’t end at a compa-of hiring without increasing the share of resources allocated to labor. ny’s four walls, survey results indicate: companies will have to work harder not only to manage theirDecrease Stay the Same Increase existing workforce, but also to wrestle with their competitors for qualified employees. For example, several finance executives working at nonprofit/ education companies say that their companies have to spend more per employee than their com- Hiring 10% 25% 64% petitors “to attract and retain top talent” and “to be competitive in the marketplace.” The CEO of one nonprofit/education company went so far as Labor Budget 18% 49% 33% to declare “an unwritten rule as of now not to cut benefits,” according to the company’s CFO. 2 © C FO P U BL I S H I N G 2 0 1 2
  7. 7. Human-Capital Strategies in a Slow RecoveryFigure 2. Competition for Qualified Employees Over the Next Two YearsCompetition in the labor market will become more intense over the next two years, sayfinance executives. Less Intense No Change More Intense 8% 19% 74%Currently, most companies (55%) say that they of being based in a lower-salary region are notare facing moderate competition for qualified without drawbacks, however, as companiesemployees, and an additional 24% say that in these areas often struggle to find high-skillcompetition for qualified employees is intense. employees. “It is difficult to bring skilled/spe-Despite persistently high unemployment, finding cialized employees to a small rural community,”the right people is a challenge, say finance says the director of finance at a midsize agri-executives. “We find it difficult to find highly culture company. Companies based in or nearskilled people with the combination of the exact cities tend to face the opposite trade-off: greaterskill set and experience that we are looking for,” access to highly qualified employees at the costsays the CFO of a midsize hospitality/leisure of greater competition for labor and higher sal-company, adding that the problem is “probably ary expectations. Although the specific barriersnot unique to us.” to effective hiring and employee retention vary by region, no region is without its challenges.Of course, hiring challenges tend to be closelytied with company location, as respondents For most companies, attracting the right peopleobserve in open-response questions. Salary is already tough—and it will only becomeexpectations vary by region, for example. tougher in the years ahead, say senior finance“Most of our competitors are located in south- executives. Survey results suggest that the battleern states and they do not pay anywhere near in the labor market is poised to become increas-what we have to pay in the Midwest to retain ingly fierce over the next two years: 74% ofgood talent,” says the CFO of a midsize food/ senior finance executives say that competitionbeverages/consumer packaged goods com- for qualified employees is likely to become morepany. Many other respondents—both those in intense, and only 8% see it becoming at all eas-higher-salary regions and those in lower-salary ier. (See Figure 2 on page 3.) In open-responseregions—confirm this point. The advantages questions, survey respondents reference the © C FO P U B LISHING 2012 3
  8. 8. Human-Capital Strategies in a Slow Recovery74% of senior two dimensions of this rising competition for their subset of the labor market may be on the labor—greater demand and shrinking supply— decline. Opinions on the causes of the shrink-finance and offer explanations for both. ing labor supply vary, with respondents offer-executives say ing explanations related to their industry, thethat competition Greater demand for labor. “As the economy region in which their company is based, andfor qualified improves and companies start to hire, it will be the aging workforce. Although some causes more of a challenge to find good people,” says of the labor shortage may be more and moreemployees is the CFO of a midsize banking services firm. localized than others (one CFO at a manu-likely to become Other respondents express similar views, and in facturing company, for example, points to anmore intense many cases they indicate that greater demand ongoing “workforce exodus” from the state inover the next two for highly skilled workers, in particular, will which the company is based), finance execu-years. pose the greatest challenge. According to sur- tives have their eye on longer-term trends as vey data, most companies (55%) will primarily well. The CFO of a midsize banking services hire high-skill workers over the next two years; firm predicts, “As the workforce ages we will only 21% will hire primarily low-skill workers. see some of the people who are qualified Two major trends underpin these results: first, leave the workforce—and I fear they will be persistent interest in automating or outsourc- difficult to replace.” ing production processes, and second, the need to direct labor resources to the technical In order to stay competitive, companies may workers, knowledge workers, and managers need to push back against both short– and who they deem likely to produce the greatest long-term trends. Doing more to find and gains in overall workforce productivity. “We are develop the right people isn’t a task that developing new strategic products requiring companies can afford to bow out of. A solid highly experienced employees,” says the CFO of majority of respondents agree that “Over the a pharmaceutical/biotechnology company. next two years, our ability to attract, develop, and retain qualified employees will be an Survey respondents also observe that finding important source of competitive advantage employees to fill specialized roles often proves for my company.” Almost half (48%) agree to be more of a challenge than filling roles that strongly that their companies will seek to require fewer qualifications. “To date, we have derive a great deal of competitive advantage not had an issue hiring the production staff,” from their human-capital strategy, and an says one controller at a midsize manufacturing additional 38% agree to at least some extent. company. “Our issues arise when it comes to hiring a more skilled worker/manager.” Such observations may become more common over ➽the bottom line Finding the right the next few years, suggests the VP of finance people—and keeping them—will become at an entertainment/leisure company: “Com- substantially more difficult over the next two petition for [technical] employees will con- years, survey results suggest. At the same tinue to increase as the economy improves.” time, the share of resources that companies allocate to labor is likely to remain steady. Shrinking pool of qualified applicants. This adds up to an all-too-familiar imperative: Some respondents express concerns that the continue to do more with less. number of qualified potential employees in 4 © C FO P U BL I S H I N G 2 0 1 2
  9. 9. Human-Capital Strategies in a Slow RecoveryAfter cost control, for maximizing workforce productivity: Most companiesbuilding a better maximizing output and minimizing input. These two strategies are, of course, anything (61%) willworkforce but mutually exclusive; they represent two primarily focus sides of a single mission, and neither one could on maximizinghow will companies approach the labor be effective without the other. With this in the output ofchallenges that lie ahead? Although our mind, however, we set out to determine which their workforce:research confirms that companies plan of the two strategies companies are most likelyto catch these challenges in a classic pin- to focus on over the next two years. According improving theircer—working to reduce labor costs on one to our research, most companies (61%) will ability to recruit,side and maximize workforce output on the focus primarily on maximizing the output of retain, train,other—deeper analysis of the data suggests a their workforce: improving their ability to and developmore nuanced story. Finance executives sug- recruit, retain, train, and develop employees. employees.gest that workforce management starts with (See Figure 3.) Few (26%) will focus primarilydeveloping robust systems and processes for on minimizing the cost of their workforce,managing labor costs. The next step—the step which includes improving their ability tothat most companies will focus on over the manage employee time and attendance, benefitsnext few years, according to finance execu- costs, expenses, and labor-related taxes.tives—involves working to improve employeeperformance, training, and development. Although companies are, of course, interested in both increasing labor output and decreasingIn our survey, we presented senior finance labor input, our data suggests that improve-executives with two broad strategies ment efforts will center on the output side ofFigure 3. Which strategy for maximizing workforce productivity will your companyfocus on over the next two years? Minimizing Workforce Cost… …Or Maximizing Workforce Output? Improving ability to manage employee time Improving ability to recruit, retain, train, and attendance, benefits costs, expenses, and/or develop employees and/or labor-related taxes 2% 2% 11% 11% 26% 26% 61% 61% Note: 11% of respondents chose, “Neither of these statements describes our approach,” and 2% answered, “Not sure.” © C FO P U B LISHING 2012 5
  10. 10. Human-Capital Strategies in a Slow RecoveryFigure 4. Over the next two years, will your company work to improve its ability to _________________?Although companies will work to improve multiple aspects of workforce management, survey results suggest that theywill prioritize maximizing employee output by managing performance and promoting training and development. Manage Employee Train and Develop Manage Employee Performance Employees Time and Attendance YES 85% 82% 55%Controlling costs the equation. Asked about their companies’ the foundation to support other aspects of work- plans for each component of these strategies force management. Simply put, controlling costsis step one; for workforce management, finance executives is step one; everything else is step two. Manyeverything else confirm that their companies will take on the respondents indicate that their companies haveis step two. task of maximizing workforce productivity already implemented new systems and practices from multiple directions. In particular, finance for managing employee time and attendance—in executives say their companies will seek to some cases very recently. “We just implemented boost output by improving both their abil- [new systems] six months ago,” says the CFO of ity to manage employee performance and to a warehousing/transportation company. Other train and develop employees (85% and 82% of respondents offer similar responses, saying that respondents, respectively). At the same time, they “have already taken steps to do this” and more than half of respondents (55%) say their “already use new software to manage employee companies will move to control labor costs by time and attendance.” Among the companies improving their time and attendance manage- that are not planning to further improve their ment. (See Figure 4.) Taken together, these ability to manage time and attendance, many results confirm that labor cost-control remains may have spent the last several years focusing important—but senior finance executives also intently on the cost dimension of workforce pro- recognize its limits. ductivity. “With several years of the Great Reces- sion behind us, we have squeezed about all the The rationale behind this arrangement of labor juice we’re going to get from that orange,” says a priorities varies by company and industry, but controller at a midsize construction company. the explanations offered by senior finance execu- tives in open-response questions tend to support Nonetheless, some companies are still catch- the idea that building robust processes for ing up on time-and-attendance management. managing employee time and attendance forms For example, the CFO of a midsize hospitality/ 6 © C FO P U BL I S H I N G 2 0 1 2
  11. 11. Human-Capital Strategies in a Slow Recoveryleisure company says that the company “need[s] the watchwords going forward in health care.” “The rewards forto do a better job with employees’ punching in The CFO of a midsize manufacturing company retaining highlyand out correctly.” Similarly, the VP of finance at suggests that the rising importance of focusinga nonprofit company says, “We’ve had problems on employee development may have roots in productivein our lower-skilled retail staff, so we’re imple- the mind-set of employees—those both current employees arementing bio-timeclocks.” At a midsize staffing and prospective. “Employees nowadays attain tremendous, andcompany, “managing employee time and atten- much job satisfaction from career development, the costs ofdance will become a lot more critical so that we so it is critical that they see themselves givenkeep a tight rein on our profit margins,” accord- the opportunity to grow on the job,” this CFO losing suching to the company’s controller. argues. The CFO adds, however, that redou- employees bling efforts to train and develop employees, are just asOnce a sufficiently cost-minded foundation is far from being merely a means of satisfying significant.”in place, companies may find that they have employee expectations, has long-term advan- —CFO, MIDSIZEmore resources to spare on maximizing the tages for a company: “It is beneficial to have a NONPROFIT FIRMoutput of their workforce. In open-response group of well-trained ‘veterans’ to effectivelyquestions, finance executives confirm the ris- guide the ‘rookies’ and newcomers so as toing importance of managing employee perfor- achieve seamless assimilation/transition.”mance. Some respondents explain that strivingto improve employee performance represents If the desire for learning and growing is trulya valuable means of staving off external pres- on the rise among employees, the interests ofsures. At a midsize nonprofit firm, for example, employees and employers may be aligning more“Productivity gains and quality improvement than ever before. At a midsize manufacturer,are important to our ability to maintain fiscal “Training existing staff adds to our culture ofsustainability and our competitiveness in the employee empowerment,” according to theface of health-care reforms,” according to the company’s CFO. “For relatively minimal invest-company’s CFO. Another company—a midsize ment, our staff learns new skills, keeps up onmanufacturer—relies on boosting employee changing regulations, and is exposed to differ-performance in order to compensate for neces- ent ways of thinking about old problems.” Bothsary increases in compensation. “Manufactur- companies and employees stand to benefit froming efficiency is a major component of our a greater focus on employee development. Thecosts,” says the company’s CFO. “We have to task falls to finance executives and their peers inmanage efficiency to at least offset wage and other functions and business units to ensure thatbenefit increases, as we do not have the ability employees’ desire to learn and grow is matchedto pass on price increases to the customer.” with an opportunity to do so.Respondents to our survey also emphasize the ➽the bottom line CFOs are lookingneed to improve practices for employee train- forward to maintaining labor cost savings real-ing and development. “With personnel costs ized in the course of the downturn. But theymaking up 75% of our total operating budget, recognize that, after several years of intensethe rewards for retaining highly productive focus on cost management, their companies willemployees are tremendous, and the costs of need to invest in training and development andlosing such employees are just as significant,” employee-performance management in order tosays the CFO of a midsize nonprofit company. continue to boost productivity.“Employee development and retention are © C FO P U B LISHING 2012 7
  12. 12. Human-Capital Strategies in a Slow RecoveryMost senior The need for a proportion (32%) describe it as “not veryfinance better-equipped effective.” The remaining respondents (49%) fall in the middle, describing their companies’executives (64%) HR department HR function as only “somewhat effective.”anticipate thattheir companies’ as improving workforce management The problem, according to many finance becomes increasingly critical, finance execu- executives, is that companies have thus farHR function will tives recognize that their companies will need struggled to position their HR function toplay a greater role to improve the effectiveness of HR if they be able to contribute to high-value maximizing want to make much headway. Companies will For example, finance executives acknowledgeworkforce ask more of their HR functions in the years that HR is often underresourced, which inproductivity over ahead, survey results indicate. Most senior turn detracts from HR’s ability to develop finance executives (64%) anticipate that their and execute human-capital strategy. “Our HRthe next two companies’ HR function will play a greater function is too busy on the administrative sideyears. role in maximizing workforce productivity and not as involved on the strategic or tactical over the next two years. side,” says the CFO of a midsize hospitality/ entertainment company. At another company At some companies, say respondents in open- in the same industry, “[HR] is one person, [so] response questions, HR is well positioned to there’s no time for anything beyond process- support the workforce-management objectives ing payroll and benefits,” according to the of the entire company. “[HR managers] view company’s CFO. Organizational problems may themselves as customer service to the organi- compound this issue, hindering HR’s access to zation with immediate and total satisfaction strategic discussion. The director of finance the goal,” says the CFO of a construction/ at a chemicals/utilities company says that HR property-management company. “If they can- executives at the company “are not proactive not handle something immediately, they pro- in seeking out the needs of the other depart- vide a timeframe for delivery, gain acceptance ments and are often ‘out of the loop’ on situa- of that timeframe, then deliver as promised.” A tions in which they should be involved.” handful of respondents express similar levels of satisfaction with HR at their companies. Interestingly, despite many finance executives’ suggestion in open-ended responses that HR But although a segment of companies have lacks the staff and resources to truly contribute already pushed their HR function up to where value to the business, survey results indicate it needs to be, the majority of companies still that HR efficiency is a concern for a substan- have a long way to go. Most senior finance tial number of senior finance executives. Only executives in our survey indicate that their 13% of senior finance executives describe the companies’ HR function currently lacks the efficiency and cost-effectiveness of HR adminis- levels of effectiveness that may prove increas- tration at their company as “excellent”; a much ingly necessary over the next two years. Few larger proportion—29%—say that the efficiency senior finance executives (12%) describe their of HR at their companies is in need of improve- companies’ HR function as “very effective” at ment. (It should be noted, however, that a supporting their efforts to maximize over- majority of respondents—56%—view their HR all workforce productivity; a much greater efficiency as at least “adequate.”) 8 © C FO P U BL I S H I N G 2 0 1 2
  13. 13. Human-Capital Strategies in a Slow RecoveryBut our survey also suggests that finance Survey results suggest that companies will Sixty percent ofexecutives are much less concerned with the focus on improving their HR functions companies areabsolute amount of resources consumed by the through better use of technology. PresentedHR function, and much more concerned that with a list of steps that companies might take likely to makethose resources are deployed to higher-value in order to better position their HR function better use of HRwork. Companies seeking to improve the over- to contribute to maximizing overall workforce technology overall effectiveness of their HR function, then, are productivity, a majority of senior finance the nextplanning to take a close look at resource allo- executives (60%) say that their companies arecation within HR: how are HR executives and most likely to make better use of technology two years,managers spending their time and attention? for HR (e.g., web-based self-service, say financeMore important, how can HR make better use automated HR reporting) over the next two executives.of its existing resources? The answer to this years. (See Figure 5 on page 10.) Improvingquestion, for most finance executives, lies in HR processes follows somewhat distantlyhelping HR make better use of technology. (45% of respondents). “The complexity of our payroll requirements has created too many ➽ the bottom line Companies will manual processes,” says the CFO of a midsize depend on HR to help increase productivity manufacturing company. “This is an area we by developing their workforces—but many need to spend time automating.” CFOs say their HR teams are currently underresourced. CFOs see a growing need to A controller at one midsize manufacturing better equip their HR departments to meet company suggests that making better use of these requirements. HR technology represents an effective way to meet the rising imperative to do more with less. “HR will upgrade its systems and processes to better meet our needs withoutA commitment to adding staff,” says the controller. This pointmaking better use likely resonates with finance and HR execu- tives alike, as our research indicates that mostof HR technology companies (64%) will allocate the same amount of resources to their HR departmentsthroughout our survey, finance as they have over the past five years. (A hand-executives consistently indicate that the pri- ful [6%] will go so far as to reduce the share ofmary barrier to a more-effective HR function— resources allocated to HR.) Finance executivesand the issue their companies are most likely to believe that making better use of HR systemsaddress over the next two years—is ineffective will help their companies respond to mountingIT systems for HR. Respondents indicate that pressures even as HR and labor budgets holdtheir HR functions depend too heavily on man- steady. “By using HR technology more effec-ual processes, with three quarters of finance tively, I believe we can overcome many of theexecutives (74%) agreeing that their companies’ shortcomings [of our HR function],” says theHR function is currently burdened with too CFO of a midsize hospitality/leisure company.many manual tasks. A majority (53%) also agreethat supervisors at their companies are bur- In the course of striving to make better usedened with too many manual HR processes. of technology for HR, many companies are © C FO P U B LISHING 2012 9
  14. 14. Human-Capital Strategies in a Slow RecoveryFigure 5. What steps is your company most likely to take to better position HR to contribute to maximizingworkforce productivity over the next two years?Survey results indicate that most companies will strive tomake better use of HR technology over the next two years.(Respondents were asked toselect up to three responses) 13% 15% 20% 33% 45% 60% Make better Reorganize the Enhance HR Enable supervisors Improve/ Making better use of HR function staffing to better perform Streamline HR use of technology outsourcing HR-related activites processes for HR for HR turning to third-party, web-based HR software. move. One midsize nonprofit company is cur- Our research suggests that senior finance rently “in the process of implementing an HR executives recognize the value in adopting software program that will allow us on-demand this kind of software. Among senior finance information on employees,” according to the executives at companies that have not yet company’s CFO. Other companies are push- adopted third-party, web-based software ing forward at their own pace. “We are slow applications for a variety of HR processes, to change, but we have a relatively new HR most agree that using such applications would director who is trying to get more computer- improve overall workforce productivity ized,” says the director of finance at a banking at their company. (See Table on page 11.) services firm. The CFO of a midsize nonprofit Finance executives responding to our survey company notes that the company is “currently identify time and attendance management, in the process of assessing the efficiency and paperless payroll, access to forms and policies, cost-effectiveness” of HR technologies. and employee training and development as activities that are particularly conducive to As with any systems-improvement project, automation through web-based applications. however, implementation of new technology is only one part of the change; companies also When it comes to implementing new HR need to train and encourage employees to use systems, many companies are already on the the systems effectively. At a midsize food/ 10 © C FO PU BL I S H I N G 2 0 1 2
  15. 15. Human-Capital Strategies in a Slow Recoverybeverages/consumer packaged goods com- in person and provide the personal touch that Implementingpany, according to the company’s CFO, “some matches the culture created by the owners/ self-service[aspects of enrolling new employees] are done founders of this company.” By contrast, theelectronically, but not all of them. Our soft- controller at another midsize manufacturing technologyware supports that capability, but HR wants company says that employees may no longer constitutesto be hands-on with all employees.” A CFO at be looking for face-to-face discussions with a carefulanother food/beverages/CPG company says HR as often as they once did. “These days balancing act.bluntly, “We need to convince HR to utilize the almost everyone has access to the Internet,”software that we already own.” explains this controller. “It is much more convenient to log something on a website thanMost senior finance executives (63%) favor schedule a meeting with an HR person.”the use of web-based HR self-service forsupervisors and/or employees at their ➽ the bottom line CFOs sense thatcompanies, lending further support to the their HR departments are too heavilyidea that companies will meet current and burdened with manual processes—and theyfuture labor challenges primarily through the aim to resolve that problem by helping HRuse of new technologies. But although finance to make better use of technology over theexecutives identify value in web-based self- next two years.service for HR, they also acknowledge thatthe value of such technology is, as the CFOof an automotive dealer puts it, “situational.Some things are best answered in a self-serviceenvironment, but others need to be handled Table. Would using third-party web-based software applicationsface-to-face with an employee and HR person.” for HR processes improve your company’s ability to maximizeSeveral other senior finance executives workforce productivity?emphasize the importance of preserving Finance executives see value in using third-party, web-based softwareHR’s identity as a “face-to-face, interpersonal for a wide range of HR processes.function” in open-response questions.Taken together, finance executives’ plans for HR Process YES NOand concerns with web-based HR self-service Time and attendance management 71% 29%suggest that implementing such technologyconstitutes a careful balancing act. Companies Paperless payroll 68% 32%can err in either direction, over-automating Access to forms and policies 68% 32%a fundamentally interpersonal department orresisting the use of web-based HR self-service Training/Employee development 68% 32%in areas where it may be the best option. Performance tracking/review 65% 35%The decision often comes down to companyculture. At one midsize manufacturing Benefits, open enrollment, and administration 65% 35%company, for example, HR self-service might Applicant recruiting/tracking 61% 39%conflict with employee expectations, says thecompany’s CFO: “Our company is still small Labor compliance 61% 39%enough for us to provide these HR services Ad-hoc, HR-related employee queries 57% 43% © C FO P U B LISHING 2012 11
  16. 16. Human-Capital Strategies in a Slow RecoveryAt many the task of building strong teams of employees—and giving them what they needcompanies, the to help them do more for the business—isn’tinternal mandate getting any easier, our research suggests. Butto improve finance and HR executives alike may find that,workforce at many companies, the internal mandate to improve workforce management is rising alongmanagement is with the difficulty and importance of doingrising along with the job as well as possible. Finance executivesthe difficulty and are keeping a sharp watch on labor challengesimportance of both current and looming, and they recog-doing the job as nize the pressing need to better support their companies’ efforts to maximize workforcewell as possible. productivity. The workforce-management goals of finance, HR, and the business units may be converging on one idea: the practices of the past will not be enough to take on the challenges of the imminent future. Finding the seed of opportunity in this notion may be the first step for companies committed to making the most of one of their most important invest- ments—the investment in their people. 12 © C FO PU BL I S H I N G 2 0 1 2
  17. 17. Human-Capital Strategies in a Slow RecoverySponsor’s perspectivewhen we first discussed this study with Many senior finance executives report eitherCFO Research, we had some idea of the having plans to implement these solutions in thefuture conditions that senior finance execu- near future, or that they have already done so.tives might be expecting. These conditionsincluded a slower than expected economic User adoption of web-based HR software wasrecovery, increased competition, and rising identified as a concern among respondents. Atinflationary pressures. Paychex, we became aware of this issue early in the game, when mid-market clients firstWhere the research surprised us was in the approached us about offering web services.number of points on which senior finance As a result, we’ve made our comprehensiveexecutives are largely in agreement: service packages as easy and intuitive to use as possible. In fact, our latest web services aren Labor performance as a key designed to be easily configured to meet future competitive strategy needs that we either haven’t been asked forn Plans to steadily ramp up hiring yet, or haven’t thought of ourselves.n Emphasis on skills, recruiting, training, development, and retention About Paychex, Inc.n Leveraging workplace technology Paychex, Inc. is a leading provider of payroll, (pages 9–11 in this report) human resource, and benefits outsourcing solutions for small– to medium-sized busi-Leveraging skilled labor appears to be the stra- nesses. Paychex One-Source Solutions offerstegic imperative in a slow economy. Yet, the midsize organizations a complete range ofmajority of respondents are not planning to scalable employer solutions that cover theincrease compensation or internal HR budgets entire employee lifecycle. Industry-leading,over the next two years. web-based solutions include recruiting, hiring, benefits, training and performance, time andClearly, managers of human resources will labor, payroll and tax administration, expenseneed to find creative ways to do more with reporting, and employee/manager self-service.less, and web technologies may be the silver Service delivery includes specialized onsitebullet. The Paychex-CFO survey indicates the support, HR administrative outsourcing, con-following approval rankings for web-based sulting, and employee that could help them achieve this:Time and attendance management 71%Paperless payroll 68% To learn more about Paychex One-SourceAccess to forms and policies 68% Solutions for midsize companies, visit us atTraining/Employee development 68%Performance tracking/review 65% www.paychex.comBenefits, open enrollment,and administration 65%Recruiting and applicant tracking 61%Labor compliance 61%Ad-hoc, HR-related employee queries 57% © C FO P U B LISHING 2012 13