Linking Strategic Educational Development to Business Goals Equals Workforce Optimization
A common refrain can be heard echoing down the halls of financial services firms as they work to emerge from a prolonged global economic slump: “Investing in our people is a top priority.”
Indeed, the findings of a recent Accenture survey of senior executives on issues relating to the workforce bear this out, placing human performance among the highest strategic priorities on corporate agendas around the world. Of the financial services executives participating in the survey, 86 percent said “people issues” are either significantly more or somewhat more important now, while only 4 percent indicated they are less important.
Yet despite such positive reinforcement, little progress is being made on the people front in the industry. A stunning 80 percent of financial services executives responding to the survey indicated that the vast majority of their employees (i.e., more than 75 percent of their overall workforces) don't possess the requisite skills to execute their jobs at an industry-leading level. Similarly, a shocking 90 percent of financial services executives reported that the great majority of their workforces don't fully understand the company's strategic priorities, and 87 percent said more than 75 percent of their employees don't understand the connection between their jobs and corporate strategy execution.
More than words required
Clearly, these findings point to the fact that financial services companies are not putting what they believe into practice. Whether it's because they are constantly distracted by other initiatives, or ultimately dissuaded by product lines or complex workforces, they have been guilty of paying lip service to people issues in the past.
Fortunately, the situation is changing rapidly, as organizations are beginning to put their money where their mouths are. The Accenture survey found that in the past year alone, 41 percent of financial services firms report increasing both their human resources (HR) budgets and their learning expenditures.
But as is so often the case, more money does not always solve the problem. Years of disjointed and often redundant corporate HR and learning programs have failed to improve employee and bottom-line performance. To avoid continued exposure to the risks of high employee turnover, low customer satisfaction, and a general failure to achieve corporate objectives, a new, comprehensive approach to HR and learning initiatives must be cultivated. This approach includes four critical elements:
- Tight linkage between the company's overall business goals and the organization's HR and learning strategies.
- Concentration on enhancing employees' knowledge, and also on building capabilities—and focusing those efforts on the functions that can have the greatest impact on the bottom line.
- Streamlined HR functions that can support the workforce efficiently and cost effectively.
- Systematic measurement of the return of HR and learning investments and their impact on corporate performance.
Tying the performance knot
To maximize return on investment and achieve targeted business goals, all HR and learning resources must be aligned directly with those goals. Capital One Financial Corporation is a good example of a company that has done an excellent job of tying its overall objectives to the capabilities that employees need to help the company achieve those objectives. One of the fastest-growing credit card institutions in the world, Capital One attributes its success to rigorous analyses of a wide range of critical data before funding any training initiative to ensure that the program clearly supports the company's strategic goals.
Such linkage is also critical in the HR arena. In fact, a number of companies are so convinced of the merits of aligning HR and business goals that they've transferred heads of successful business units to run the HR function, have elevated the head of HR to an executive- or board-level position, or, at the very least, have given these professionals a prominent seat at the strategy table. The resulting advantages of such moves raise the profile of the HR function and give it deeper insights into the day-to-day issues that business units grapple with. It also allows HR management to better frame HR and learning solutions and their value propositions in ways business units can understand, and instills greater credibility for HR among business unit leaders and employees alike.
Matching knowledge with capabilities
When addressing employees' needs, it's not enough to simply increase the knowledge base of each individual. To truly boost workforce performance, employees must also develop superior capabilities in their area of expertise. While it's accepted that all workforces are critical to a company's operations, some areas have a greater impact on each firm's bottom line than others—and so merit special attention.
For example, Banco Galicia, the third-largest bank in Argentina, has implemented a centralized eLearning solution for its 3,500 sales and service personnel to improve customer loyalty, the performance of its tellers, and its ability to launch new products. Seven months (and 67,000 course hours) later, employees can now distribute product information more consistently and effectively. Customer service and customer loyalty have improved dramatically, as has teller performance and transactional accuracy.
Likewise, one large US insurer is leading the way in the area of workforce improvement. The company's innovative, multifaceted program is geared to bring greater clarity to its underwriting appetite and better connect learning initiatives to company strategy and results generation. The program also is aimed at infusing performance management capabilities to enhance accountability and spur skill development, and implementing the appropriate technology to support, reinforce and optimize its workforce learning at every level.
Streamlining HR
Another significant factor in maximizing the return on workforce investment is minimizing the cost of servicing and managing that workforce—a challenge that falls squarely on the HR functions. To address this, several leading companies have adopted a new model for HR services that comprises self-service tools such as an intranet and an interactive voice response phone system (which provide employees the ability to deal with routine or simple issues on their own), as well as a call center staffed by HR generalists and case workers (who can handle more complex or advice-based inquiries).
Some companies have chosen to outsource parts or all of HR management to help maximize workforce ROI. Credit Agricole Indosuez (CAI), the investment banking arm of Paris-based Credit Agricole, outsourced its international HR management system-which supports 12,000 employees in 40 countries-to achieve better group- and business unit-level oversight of resources, and to increase information exchange among HR staff. As a result of the initiative, CAI can deliver consistent and streamlined HR services across a global platform, and can make quicker, more accurate organizational decisions.
Making it all add up
For firms to fully grasp how their workforce affects their bottom line, they must develop metrics that assess how various programs and initiatives influence the way individuals or groups operate–for instance, how much better a particular task is performed, how much faster a product comes to market or how much more productive a given workforce is as a result of a specifically targeted program.
In the future, such performance-improvement measures will give way to metrics that enable financial services organizations to establish a causal link between human performance, human capital processes and investments therein, as well as overall business performance. Citigroup is one organization that has made progress to this end. The company employs a balanced scorecard approach to support its belief that good people-management strategies and increased employee satisfaction produce improved financial results. In doing so, the firm has shown an inverse relationship between employee turnover and employee satisfaction, and a close relationship between employee satisfaction and customer satisfaction.
As recent history demonstrates, the most successful companies are those that can manage through “boom and bust” cycles with minimal disruption. A key to doing so is a comprehensive approach to human resources and learning that enables a company to teach and develop employees to capitalize on new business opportunities while managing and servicing the workforce cost effectively. Companies that embrace such a twofold approach will be much less likely to reduce staff during downturns and much better positioned to gain a competitive edge when economic conditions improve. Those that don't will continue to find themselves stuck on the hiring-and-layoff treadmill, unable to maximize return on investment in their most critical asset: their people.
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