Bridging the Gap Between Finance and Talent Management
1. TheWhitePaper*
ISSUE 6 JUNE 2008
Engaging the Global Workforce:
Bridging the Gap between Finance and Talent Management
2. TheWhitePaper*
Table of Contents
Introduction .................................................................................................... 3
Key Finding No. 1: .......................................................................................... 4
Human Resources must take a more strategic role in the business.
Key Finding No. 2: .......................................................................................... 5
Employee recognition improves employee engagement, which increases retention and
productivity, thereby positively affecting company performance.
Key Finding No. 3: .......................................................................................... 7
Business leaders believe creating a universal recognition platform for global companies is difficult.
Key Finding No. 4: .......................................................................................... 8
CFOs are not aware of how much they are currently spending on recognition programs.
Key Finding No. 5: .......................................................................................... 9
The CTO and the CFO must work together to chart the course for the future.
Summary ........................................................................................................ 10
Methodology ................................................................................................... 11
Demographics................................................................................................. 11
About Globoforce ............................................................................................ 12
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3. TheWhitePaper*
Introduction
The link between workforce retention and company performance has become
more quantifiable, and a new wave of HR executives is moving to the vanguard of
corporate governance—the Chief Talent Officer (CTO).
In the 21st Century, the question is no longer
whether global changes in workforce dynamics im-
Key findings of this study include:
pact company performance, but how to be in front
1. Human Resources must take a more strategic role in the
of these changes. One such change is the onset of
business.
baby-boomer retirement combined with decades of
economic expansion and a tight labor market to cre-
2. Employee recognition drives engagement and therefore impacts
ate a critical shortage of seasoned managers.
recognition, retention and productivity on the bottom line.
To lessen the impact of these changes, many com-
3. Creating a universal recognition platform for global companies
panies have increased investment in succession
is difficult.
planning, employee retention and employee en-
4. CFOs are not aware of how much they are currently spending
gagement. Such initiatives help to bridge the gap
on recognition programs.
between finance and talent management as the two
departments collaborate to create business cases for
5. The CTO and the CFO must work together to chart the
new processes, programs and technologies to track
course for the future.
their financial outcomes as it relates to their biggest
investment in human capital.
This report assesses the attitudes of business lead-
ers towards the relationships between the CTO and
the CFO, and their mutual role in engaging the glob-
al workforce to adapt to the new global workforce
trends.
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4. TheWhitePaper*
Key Finding No. 1
Human Resources must take a more strategic role in the business.
Human Resources has come a long way from its days as the Personnel Department.
The idea of HR’s role as merely a transactional or recordkeeping function is as outdated
as the typewriter.
substantiate ROI. Survey respondents overwhelm-
Today, employees are the largest investment for an or-
ingly agreed with this—91 percent said it is more
ganization and, like any other investment, their value
important than ever for HR to be accountable for
needs to be understood, their performance measured
what it spends. Almost as many respondents—88
and their skills amplified. As one survey respondent
percent—said HR must embrace a more metric-
explained, “HR holds the keys to the engine—the
based standard for measurement.
employees. Nothing is more important than what hap-
pens on the front line. HR hires, trains and retains
But how is HR doing in taking a strategic view?
these folks, and it is vital that HR play a role in the
The survey results indicate actions are not neces-
strategic planning.” With this in mind, it comes as
sarily following intent. Although 87 percent of re-
no surprise that 87 percent of respondents said HR
spondents believe HR should play a more strategic
should play a more strategic role than in the past.
role than in the past, only 63 percent of respon-
dents believe HR has the right amount of input in
As technology enables organizations to harness
the strategic direction of the organization. Further-
more data about employees, HR is not only expected
more, fully one-third of respondents still believe
to take a strategic position in the organization, but
HR has too little say in overall business strategy.
also to quantify its work with appropriate metrics to
Human Resources Must Take a More Strategic Role in the Business
HR has the right amount of input in the
63%
company’s strategic direction
HR has too little say in strategy 33%
HR should play a more strategic role
87%
than in the past
HR must be accountable
91%
for what it spends
HR must embrace a more metric-based
88%
standard for measurement
20 40 60 80 100
0
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5. TheWhitePaper*
Key Finding No. 2
Employee recognition improves employee engagement, which increases retention and
productivity, thereby positively affecting company performance.
Human Resources is frequently asked to provide a measurable benefit to the
organization for employee engagement. In fact, the term employee engagement
is so often discussed that it almost borders on cliché.
As the Society for Human Resource Management With this in mind, it is not surprising employee engage-
(SHRM) Foundation Report “Employee Engagement ment, productivity and retention issues are clearly on
and Commitment” defined it, employee engagement the minds of survey respondents. When asked which
is a worker’s satisfaction with their work and pride in HR metrics they consider most important in guiding
their employer and “the extent to which people enjoy corporate strategy, the top replies were focused on en-
and believe in their work and the perception that the gagement, retention and productivity issues.
table.”1
employer values what they bring to the
The most important HR metrics for respondents were
employee engagement at 71.4 percent, employee
In 2007, the International School of Human Capital
productivity at 62.9 percent, and human capital ROI
Management Faculty of Employee Engagement de-
at 57.1 percent. Interestingly, employee satisfaction
fined employee engagement as an output-based con-
surveys, training ROI and turnover rate all returned
cept that describes how aligned and committed em-
at 55.7 percent.
ployees are to the company, such that they are at their
most productive.2
Most Important HR Metrics
Generally, definitions of employee engagement de-
scribe an employee attitude that results in a behavior
that positively benefits the company. Although some
Employee engagement 71%
may still wonder how something so intangible can be
measured, the proliferation of performance manage-
Employee productivity 63%
ment software and the increasing capability to mea-
sure employee attitudes through surveys are making Human capital ROI 57%
the naysayers fewer in number.
Turnover rate 56%
The financial benefits of engaged employees have
been conclusively established in many surveys.3 But Training ROI 56%
the data reports the same idea—engaged employees
Employee satisfaction surveys
are more likely to be high performing employees and 56%
less likely to leave their current organization.4
0 20 40 60 80 100
1http://shrm.org/foundation/1006employeeengagementonlinereport.pdf
2http://www.valuentis.com/Publications/Journal/JoAHCM_VOL1NO1_2007_EmployeeEngagementarticle.pdf
3http://www.workforce.com/tools/whitepapers/TheNewROI_of_HR.pdf
4http://shrm.org/foundation/1006employeeengagementonlinereport.pdf
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6. TheWhitePaper*
* 98.5 percent agreed employee engagement
Respondents also understand recognition plays a
vital role in attracting and retaining employees. A increased employee retention and productivity
clear majority—78.8 percent—said recognition was
* 97 percent agreed employee retention and
an important attraction and retention tool.
productivity have a positive impact on company
When asked why, one survey respondent put it best: performance
“Our company understands the benefit of having a
* 93.9 percent agreed employee recognition im-
performance-based recognition program and how it
proved employee engagement.
helps drive employee engagement. Ultimately, it leads
to satisfied customers, and, if you have satisfied cus-
tomers, they are more likely to purchase again.”
When asked to put it all together, respondents were
near unanimous in their belief that employee recog-
nition improves engagement and productivity, which
affects the bottom line.
Attitudes About Recognition, Engagement, Productivity and Retention
Employee engagement increased
99%
employee retention and productivity
Employee retention and productivity have a
97%
positive impact on company performance
Employee recognition improved
94%
employee engagement
Recognition is an important
79%
attraction & retention tool
0 20 40 60 80 100
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7. TheWhitePaper*
Key Finding No. 3
Business leaders believe creating a universal recognition platform for global
companies is difficult.
Motivating and engaging employees is challenging enough when they share
a common office, language and culture. As global business operations cross
international borders, those challenges increase dramatically.
The majority, or 80% of, respondents believe address- As stated before, survey respondents understand
ing the needs of global employees is difficult. Almost employee recognition is a key component in engage-
as many—76.6 percent—also find it difficult to recruit ment and retention, 58 percent of respondents said
and retain the right talent at the right location. creating a universal recognition platform for a global
organization was difficult.
As difficult as recruiting and retention may be, sur-
vey respondents are also aware these things matter. Evidently, this challenge has also prevented many
More than 55% of survey respondents cited recruit- organizations from implementing a truly global rec-
ing and retention of the right talent at the right loca- ognition solution. Even though 88 percent of respon-
tion as the one issue with the greatest effect on their dents said their organization has an employee rec-
organization. ognition program in place, only 66 percent said they
have a universal recognition platform.
Developing a Global Recognition System Is Difficult
My organization has an
88%
employee recognition platform
My organization has a
66%
universal recognition platform
Addressing the needs of
80%
global employees is difficult
Recruiting and retaining the right
77%
talent at the right location is difficult
Recruiting and retaining the right talent at the right
55%
location has the greatest effect on the organization
Creating a universal recognition platform
58%
for a global organization is difficult
0 20 40 60 80 100
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8. TheWhitePaper*
Key Finding No. 4
CFOs are not aware of how much they are currently spending on recognition programs.
Even though nearly everyone agrees HR and Finance need to be on the same
page, only 58 percent of respondents say this is the case in their organization.
When asked if their CFO was aware of how much their organization spends on
recognition programs, the response was the same with 58 percent agreeing with
the statement.
In fact, many respondents did not believe their orga- The final proposal will be reviewed by a global steer-
nization was taking the necessary steps to measure ing group for presentation to the CFO.”
and quantify engagement and other HR functions.
Even though best practice suggests Finance is the
Only 52 percent said their organization had a metric
business unit that should require ROI, few survey re-
or plan for measuring the effect of employee engage-
spondents indicated Finance was taking a leading role.
ment on company performance.
Only 36 percent of those surveyed said Finance made
One respondent articulated why HR must do a better the final decision to create business and ROI cases to
job to justify its investments and suggested a best justify an investment in new processes, programs or
practice: “HR plays a key role in establishing the technologies for the HR department, as opposed to 46
business case and instigating the research for new percent who reported HR made the final decision. Also,
processes or systems. This will lead to a larger scale only 22 percent said their CFO was involved in review-
feasibility study where Finance resources are used to ing and approving all HR metrics in their company.
consider ROI and other key financial requirements.
HR, Finance Not on the Same Page
HR & Finance are on the same page 58%
CFO aware of recognition program spend 58%
Metric/plan in place to measure effect of employee
52%
engagement on company performance
Finance makes final decision to create business and
36%
ROI cases for HR process/technology investments
HR makes final decision to create business & ROI
46%
cases for process/technology investments
CFO is involved in reviewing and
22%
approving all HR metrics
0 20 40 60 80 100
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9. TheWhitePaper*
Key Finding No. 5
The CTO and the CFO must work together to chart the course for the future.
Because Human Resources is expected to measure the performance of the human
capital investment, it comes as no surprise that the work of the Chief Talent Officer
would draw the attention of the Chief Financial Officer.
Survey respondents overwhelmingly understand this, However, there is a disconnect. In spite of the near-
and 95 percent believe the CTO and the CFO should unanimous agreement that the CTO and the CFO
work together to chart a course for the future. As one re- need to work as a team, only 58 percent of sur-
spondent explained, “Alignment by these two key sup- vey respondents said this was currently the case in
port executives is critical for charting the right course their organization.
and staying on course. Human capital is also the larg-
In an environment where nearly everyone agrees
est cost in the organization and the largest competitive
that HR and Finance need to collaborate, yet only
advantage and tool to win in the marketplace.”
slightly more than half say this is happening, room
for improvement clearly exists.
HR and Finance Should Work Together. But Do They?
CTO and CFO should work together to
95%
chart a course for the future
The CTO and CFO actually do work together
58%
to drive employee recognition
0 20 40 60 80 100
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10. TheWhitePaper*
Summary
* Align Recognition with Corporate Values for
Business leaders understand HR has the power to
Global Understanding: Businesses can derive
transform an organization by taking a strategic view and
using technology to implement a measurable employee additional strategic benefits from a recognition
engagement solution that generates real results. They program that rewards behaviors consistent with
also understand employee recognition can improve company values. Not only is this virtually the only
employee engagement and—by extension—their bot- way to bring values alive every day for a ll employ-
tom line, shareholder value, customer retention and ees in a large company, it gives the organization a
the ability to retain and recruit new employees. measurable way to see if employees understand
the values and if the values are gaining traction
Even though business leaders recognize the value
across a global organization.
and competitive advantage engaged employees of-
* Offer Everyone an Opportunity to Participate:
fer, they also realize implementing a universal rec-
ognition platform for global companies presents a Open the recognition program to all employees,
serious challenge. How do you develop a recognition not just the elite few. This overcomes the skepti-
system to motivate employees that crosses borders, cal concerns of employees, such as those made
languages and cultures? by one survey respondent: “Employee recogni-
tion programs have been tried in the past and
As the leading provider of on-demand strategic
have become popularity contests. Many who
reward and recognition solutions for global com-
work very hard and keep their mouths shut
panies, Globoforce suggests these best practices
don’t ever get recognized, and those in the
developed in partnership with the world’s largest
limelight get recognized over and over again.”
and most diverse companies:
By offering everyone an opportunity to participate
* Establish a Clear, Global Strategy for Recognition:
in the recognition program through peer-to-peer
Strategic recognition delivers a clear financial and
options in addition to the more traditional manag-
cultural return. Fragmented, disparate programs
er-to-subordinate model, companies can begin to
and systems undermine those benefits. Global
fine-tune their culture and social architecture to
companies need global strategies that treat all em-
align with the company’s values and mission.
ployees consistently in a transparent, auditable and
measurable way across the program.
* Motivate and Acknowledge All Employees with
the Power of Individual Choice: True choice ca-
* Secure Executive Sponsorship with Defined
ters to the demographics of a worldwide, multi-
Goals: Like all other global strategic initiatives,
generational workforce with millions of options
recognition must also be managed using a pro-
that are culturally appropriate, meaningful and
cess such as Six Sigma’s DMAIC guidelines or
memorable to the individual recipient. Meaning-
other operational excellence program. Organiza-
ful reward options reinforce the power of the rec-
tions must hold managers accountable for suc-
ognition moment with a lasting item that reminds
cess by setting measurable goals for frequency
the recipient the company values him or her.
of recognition, program adoption, budget, speed
and employee satisfaction scores.
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11. TheWhitePaper*
Methodology
The survey was sent via email to HR and Finance conclusions of this report and will be used only in
professionals during the first quarter of 2008. Over this aggregate analysis.
266 responses were received. Each respondent an-
The Key Findings herein are based at the 95 percent
swered the questionnaire via an online survey tool
confidence level with a +/- 10% margin of error.
and was assured of his or her confidentiality.
Their responses were used to drive the results and
Demographics Respondents Roles
C-Level
6%
18%
VP
57%
The demographic composition of the respondent
19%
Director
pool provides a representative sample of global 2000
organizations. All of the respondents are from orga- Manager
nizations with more than 10,000 employees engaged
in global operations.
Industry Participation
The majority of respondents were between the ages
High Tech
of 30-49; 43.8 percent were male and 56.3 percent
Mfg/Aerospace & Defense
were female. Finance/Insurance
BioTech/Pharma/Healthcare
16.4%
Respondents represented a variety of roles within
22.4% Bus. and Prof. Services
10.6%
their organization.
Transportation
6.1%
17.2% 5.9%
The industries represented by respondents were Utilities/Oil & Gas
5.9%
Retail/Wholesale Trade
also varied.
Consumer Packaged Goods
2.4%
Over 80 percent of respondents had responsibilities 3.6% Education
2.4% 3.6%
3.5%
within the broad category of human resources while
Hotels/Restaurants/Leisure
20 percent had responsibilities outside of HR. Other
Job Responsibilities
20%
Outside HR
80%
HR
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