Getting your people management policies and practices into shape
Clever companies strive to create value for their businesses through their people. The challenge in doing this is that while companies usually consider people to be their greatest asset, they are also the most expensive resource to attract, maintain, motivate and retain.
Key areas of employment-related cost include :
- Recruitment where the costs are often up to 20% of salary
- Salaries and benefits which are usually the largest cost of a business
- Training and development costs which depend on the type of business you are in but can be quite high
- Total replacement costs when you lose someone - which can be up to two to three times their salary cost.
So how do clever companies create value through their people? Well, in our experience, they do three things:
- Employment Legislation
- Aligning Strategies for People and Business
- Creating a fun, performing culture
Employment Legislation
Firstly, clever companies minimise the risks to their business and people by ensuring that they comply with employment-related legislation. This is not as easy as it might sound. There is a myriad of legislation that affects employment; and it's often expensive to ensure compliance.
Companies who ignore compliance with employment legislation do so at their own peril. The consequences of failing to comply can be serious and include potential litigation from regulatory authorities, which can result in prosecution, fines and associated negative publicity. But perhaps the worst outcome is the potential for widespread employee dissatisfaction, which may lead to complaints and union involvement - altogether a very unproductive and damaging scenario for any company.
Aligning Strategies for People and Business
Secondly, clever companies make sure that their business and people strategies and plans are aligned and integrated.
PricewaterhouseCoopers recently completed its Global Human Capital Survey, which received 1056 responses from 47 countries including New Zealand and Australia. The resulting extensive information database has allowed us the opportunity to investigate similarities and differences between Australasia and the rest of the world. In doing so, we've been able to benchmark the performance of Australasian organisations against the people management strategies of the world's leading organisations.
We know from this research that companies with a documented people strategy and plan, aligned to the business plan, have higher employee productivity and higher profit margins. We believe this is a by-product of the thinking and talking you do when you're linking your approach to people with your overall business approach.
To ensure your HR strategies are aligned with your business strategies, you need to be asking yourself:
- What are our business goals?
- What are the key issues for the future growth of the business? What are the resulting implications for the type of people we need and how are we going to develop or acquire those types of skills?
Are our internal people policies and processes going to help or hinder achievement of our business goals given the growth issues we face?
Creating a fun, performing culture
And thirdly, clever companies design and implement HR policies and practices to create an enjoyable performance culture. By this we mean that people feel challenged by their work and rewarded for their effort, and as a result want to stay with the company.
Achieving this type of work culture comes from the way you treat and manage your people as it is the detail of the particular policies you put in place. Of these policies, the most influential are performance management and rewards.
There are a huge range of initiatives that companies can look to for creating a vibrant, healthy workplace. Of course different initiatives will suit different companies more than others. We've put together the following collection of initiatives to highlight some standout examples.
- Performance Management Philosophy and Practice
Many companies are going back to basics with their performance management systems. Rather than concentrating on software-driven processes with nice forms on the screen, there is a trend to concentrating on ensuring there is effective communication between managers and staff. With this comes the need for simple coaching frameworks to guide that communication and those discussions so that mutual expectations about performance and rewards, are clear. The returns for a more simplified performance coaching process are enormous if it leads to better relationships at work.
- Health Promotion Programmes
Many of our clients have put in place, health promotion programmes to encourage employees to stay fit and healthy. As part of these programmes, seminars are run on the key areas of nutrition, stress management, and exercise. Other features include discounted gym memberships, free or subsidised health checks, flu jabs, and eye checks, and programmes to prepare for fun runs.
At the end of the day you can have best practice policies but if you don't treat people well, you won't get the value you're seeking for your business.
While our prescription for best practice HR sounds simple in theory, its considerably more difficult to achieve. There is a huge amount of detail in legislation and HR policies that you need to consider and the pitfalls are varied and many. You will find, however, that your efforts to attain best practice will be well worth your time and will create value-adding benefits for your organisation.
For more information on how PricewaterhouseCoopers advisors can help you get your people management policies and practices into shape please contact one of our
People Practice Team
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