Aligning human resources and business: an overlooked formula for success.

Attracting and retaining the best and brightest employees is a challenge for any organization. Grappling with tight budgets, slow growth, and layoffs, today's organizations have awakened to a new reality.

The workforce is emerging as the most significant component of corporate competitiveness and financial performance. With this evolution, comes a new human performance challenge for business.

Downsizing, mass retirements and ineffective retention programs represent a financial and knowledge drain for business. For every employee lost, businesses lose years of collective experience. The workforce has evolved into arguably the biggest competitive differentiator for organizations in all industries.

Companies must take critical steps to build and maintain a successful HR strategy that addresses these business challenges.

In recent years, a growing body of research indicates that spending in human performance areas--training, knowledge management, performance management and advanced human resources practices--translates into bottom line growth.

More than one half (52 percent) of the executives surveyed in Accenture's recent study, "The High-Performance Workforce" study reported that the HR function is 'very critical' in executing the company's overall business strategy.

Many of the world's leading businesses have found success in aligning human resources with business goals, therefore sustaining a high-performance workforce.

Business leaders have become true believers in the value of workforce performance and its impact on bottom-line results. It was a top issue during the "boom" years, when attracting and retaining talent was the major concern, but it is no less important to them now. In fact, four of the top five issues in Accenture's "Executive Issues 2003" survey are workforce related with the report offering insights into what sets human performance leaders apart.

Organizations are increasingly focused on creating a supportive HR capability. HR is becoming more supportive of the business strategy by focusing more on improving human and organizational performance and reducing administrative and transactional efforts through automation or outsourcing. Over 40 percent of participants in the "High-Performance Workforce" study reported increased HR spending in 2002, and an equal percentage said they boosted their training budget in the same period.

Getting corporate buy-in is not as hard as it used to be for HR. In the "High-Performance Workforce" study, CEOs rated recruiting and retention programs as among the most important initiatives, with 91 percent believing these initiatives are somewhat or very important to achieving their company's top strategic priorities.

Human Resources professionals need to continue to educate senior executives through strategic training programs, on the value their workforce can bring by aligning HR processes to corporate business objectives.

Why Employees Stay

In today's labour market, corporations need to meet a new set of employee expectations. Money is no longer the sole motivator for choosing an employer. According to Accenture research, a stimulating, and rewarding, work environment and flexible scheduling are also key factors in the equation.

Research also demonstrates that the opportunity for continuous learning is important to recruits. A survey of graduating students and alumni conducted by the American National Association of Colleges and Employers showed that training opportunities were among the top three factors considered when deciding where to work (the other two are the opportunity for advancement and a good benefits package).

In most companies, executives believe there is a lack of critical workforce skills, workforce understanding of business or organizational strategy, and employee understanding of the connection between their jobs and overall corporate strategic priorities.

One recurring theme in the Accenture research was the need for employees to understand and feel part of an organization, and to know how their individual roles contribute to the organization as a whole. Retention strategies should focus on demonstrating to each individual employee how their role fits into the success of the firm.

Recognition is a key determinant in employee satisfaction and success. Whether it be positive feedback, formal recognition programs, time-off, changing job titles, or special assignments, recognition should be implemented as a complement to competitive salaries.

Finally, all HR departments should consistently measure employee progress through feedback from employees in order to promote continuous process improvement and effectiveness throughout the course of the employee life-cycle.

Building the Capabilities

Organizations today need to have the right set of HR tools in place, allowing employees to update their skills, access the HR information they need to do their job and answer personnel-related questions. These tools are bare minimum in today's HR world.

Technology including employee and manager self-serve portals, information management, performance measurement and enterprise resource planning (ERP) are all useful IT tools that help align HR strategy with business goals.

Measuring Success

So where should companies begin in measuring the business impact of their human performance, recruitment and retention investments? At a minimum, they must implement metrics that help them identify how their initiatives affect the way individuals or groups perform.

Such performance-improvement measures are critical to determining the return on investment for specific HR and training initiatives. Companies should continue using and refining them as part of their larger efforts to improve workforce performance.

The biggest impact of human resources strategy on financial performance will not be direct and instantaneous. Improvements will more likely occur incrementally, indirectly and over time, realized through the investments' effects on intermediate outcomes like productivity, quality and customer satisfaction rather than through sudden increases in share price.

Some companies are achieving success in this arena. These business leaders in human performance are aligning their workforces with customers; see the HR function, as well as the HR and training activities, as valuable and strategically important; measure the impact of HR and training investments against key business results; and use technology to improve workforce performance.

Organizations whose human resources and human capital development practices are both valued by employees and aligned with business strategy will achieve superior results in key business performance drivers such as productivity, innovation and customer satisfaction.

Alden Cuddihey is a Partner in the Government Operating Group and the Human Performance Service Line. He has spent the last 11 years working with a variety of federal and provincial governments as well as crown corporations. Alden has extensive experience in managing transformation projects" in large organizations. Specific areas of expertise include business process re-engineering, organizational design, and implementing large-scale change programs.