| Author: |
Cristina Muntean, Martina Wolfová |
| Publication: |
Czech business weekly |
| Date: |
26. 3. 2007 |
As Czech companies expand abroad, they have to align their human resources policies with those of Western companies, says Martina Wolfová, manager of the human resource services department at consultancy PricewaterhouseCoopers Èeská republika (PwC). She explains how this is causing a domestic shift in HR principles.
With a chronically diminishing talent pool, Czech firms face strong competition from foreign companies, both locally and abroad. In their fight to recruit and retain the best people, companies are caught between the pressure of strong competitors and a fluid work force, mainly at the managerial level. Domestic companies are challenged to reshape their remuneration systems, and invest more in training people and in company culture. One key issue for company survival is to determine a suitable successor for a top manager.
After giving up the old communist system of “staff reserves“-which relied on a pool of candidates suitable for certain positions-to ensure managerial succession, Czech companies are looking now for a new HR model, Wolfová said. Expansion abroad is a major challenge for companies’ talent management and succession planning, she said. Other challenges are increasing HR’s efficiency and deciding what activities can be outsourced.
What strategies do companies expanding abroad apply to retain their people?
Companies realized that promoting internal resources is more effective than recruiting from outside. The companies need to retain the right people. Many companies [now] have talent management and succession planning on the agenda. It means identifying key people in the organization who have special skills and knowledge so they can be promoted later. The company sets up the process for succession planning, which is followed by development activities. ... The process is, of course, linked with people’s compensation.
Are domestic or foreign companies more active in implementing these new HR strategies?
The majority of foreign companies have had new HR strategies … on their agenda for many years. At some companies they’re mandatory in all subsidiaries. Local firms have already realized the importance of some of these processes and have tried to improve their [HR] strategies. Czech companies expanding abroad are the most active [in implementing new HR ideas]. They must behave like foreign companies. Company headquarters in the Czech Republic have to set the platform of guidelines for the markets where they make acquisitions in a similar way that foreign companies’ headquarters do in Western countries. For that, they need to define how the HR process will work, not only for the Czech Republic, but also for their daughter companies abroad. They need to behave like any other foreign company investing in a certain country and align their standards with those of their competitors.
What’s the key perk for retaining the best people in a company?
Many companies must re-engineer their remuneration system [so it] is fair internally, in comparison [relative] with other positions from the same company, and externally, in comparison with other salaries offered for a similar job on a market. The second question is how to link the remuneration with company strategy. The remuneration includes a fixed part and a variable part, which needs to be fair, but also needs to support the company’s strategy. If we have a sales employee, the bonus should be linked to selling. It’s the same for other business units in the organization.
What benefits are now more attractive to Czech employees?
I’ve never met anyone who left a company for another company because he or she didn’t receive pension insurance. It should be there, [but it isn’t crucial]. A computer, a car, a mobile phone or meal vouchers aren’t even considered benefits anymore. It’s normal to offer them. If everyone is doing it, then it’s not a benefit. Benefits for talented people should be cleverly defined. These people work a lot, so, for example, good medical insurance would make sense for them. Usually, these people earn a lot of money, so when they’re ill they take vacation time [instead of sick leave] because they can’t live with the current system of compensation during illness. If the company’s able to say it will compensate that person during illness with, let’s say, 70 percent of his or her salary, that would make a difference.
Is remuneration the only way to retain people?
Bonuses are short-term incentives. Retention requires both short- and long-term incentives. Companies introduced long-term incentives [such as receiving company shares] because they realized it’s too dangerous to lose an employee in whom they invested and who’s maybe working at a key project. Long-term incentives are usually designed based on long-term company performance or individual performance. But bonuses aren’t all. One pillar for retaining people is to set up a good, fair and clever remuneration system. The second pillar is growth. It’s not only about promotion. It means to give them space to grow as people and professionals. Part of this falls under training and development. … Some companies provide key employees with a mentor, a coach to spend time with them and motivate them to become better.
How can a company take advantage of investing into employee training?
A lot of companies try to measure the retention of investment from training. We often see this situation. You have good employees, willing to learn, and a good trainer; then, employees come back from the training to normal work and tell their bosses how enthusiastic they are about that training and how they would like to cascade the information to their colleagues. And the boss says, ‘Yes, but you have to hand me that report and you’re already late. Training is fine, it’s good, don’t forget it, but there isn’t time to share it with the other colleagues.’ This is wrong. You can’t say that a person is finished with training when the class is over. [It’s] finished when a person comes back from the training inspired and willing to implement new things and the company’s able to implement those new things.
What developments do you expect in the HR departments of Czech companies?
If I could say one word for HR, it’s ‘simplify.’ Make it understandable. It’s not science, it’s just common sense. If you have a business strategy, you need people to deliver it; these people need to be ready, they need to be motivated and should like to work for you. It’s a mixture of elements here, from remuneration, opportunities for growth and atmosphere in the company. A good atmosphere can become a strong competitive advantage. Another trend would be to get noncore HR activities [such as payroll, recruitment and assessment centers] out of the company. More and more companies outsource for cost cutting, confidentiality reasons or flexibility. HR should be the special means for delivering business strategy through people. There’s a competitive advantage. If a company’s strategy is simple, flexible, easy to administrate and clever, that company has all the advantages to succeed.
