WorkUSA 2002 - University of South Florida

Transcription

Human Capital
Management
Human Resources: Return on
Investment
WWW.WATSONWYATT.COM
University of South Florida
January 17, 2003
Jackie Greaner
"Copyright (c) 2003 by Watson Wyatt W orldwide. All rights reserved. This presentation is protected by US and international copyright laws."
Our Game Plan
l HR’s
Challenge
l HR
Practices that drive productivity and
growth
Ø
Watson Wyatt’s Human Capital Index™
Ø
WorkUSA 2002
l Ideas
2
for driving productivity and profitability
In the next decade tremendous
pressure on HR to...
GDP
Growth
Rate
3.2%
~
=
Labor
Growth
Rate
.8%
Out-attract,
out-retain
the competition
3
+
Productivity
Growth
Rate
2.4%
Boost productivity
from existing
workers
What HR practices are most
effective in driving productivity
and profitability?
4
Watson Wyatt’s Latest Human
Capital Research
5
=
Human Capital Index
– Demonstrated the link between superior HR practices
and shareholder value
– Survey of HR executives in 750 large, publicly traded
companies in North America and Europe
=
WorkUSA® 2002
– One of the largest statistically representative surveys on
the attitudes of U.S. workers
– Sample balanced against the Census demographics
(gender, age, race, and region).
– 12,757 participated.
– Seventh WorkUSA® study since 1987
Key Findings: HCI
FINDING:
Superior HC
practices are
a leading indicator
of financial
performance
IMPLICATION:
HC practices implemented
now will help companies
recover more quickly from
economic downturn
6
FINDING:
Companies with
best HC practices
provide 3 times the
shareholder return
as companies with
weak HC practices
IMPLICATION:
HC outlays can be justified
using quantitative data
FINDING:
Specific practices
drive shareholder
value, while others
actually diminish it
IMPLICATION:
Companies can allocate
resources to practices that
generate the most value
Higher HCI Companies
Create More Value
5-Year Total Return
to Shareholders
5-Year TRS
(1996-2001)
5-Year TRS
(1994-1999)
HCI Scores
7
What Drives What?
Superior HR
Practices
Shareholder
Value Creation
OR
Superior HR
Practices
8
Shareholder
Value Creation
Superior Human Capital practices are a
leading indicator of Financial Performance
Superior HR
Practices
9
Shareholder
Value Creation
Key Links Between Human
Capital and Shareholder Value
Total Rewards & Accountability
Collegial, Flexible Workplace
Recruiting & Retention Excellence
Communications
Integrity
Focused HR Service
Technologies
Significant Improvement
47% Increase in Market Value
(shareholder value creation)
Expected change in market value associated with a
significant (1 SD) improvement in HCI dimension
10
Dimension #1:
Total Rewards & Accountability
Benefits
Pay for performance
Recognizing variations in performance
16.5%
Expected change in market value
associated with a significant (1 SD)
improvement in HCI dimension
11
Dimension #2:
Collegial, Flexible Workplace
Company shows flexibility
in work arrangements
Company has high
employee satisfaction
Trust in senior leadership is
actively engendered
Managers demonstrate
company’s values
9.0%
Company culture encourages
teamwork/cooperation
Company avoids titles to
designate status/authority
Company avoids varying
perquisites by position
Company avoids varying
office space by position
12
Dimension #3:
Recruiting & Retention Excellence
Company has low voluntary turnover
of managers/professionals
Company has low voluntary turnover of
employees in general
Company emphasizes job security
Formal recruiting strategy exists
for critical-skill employees
Recruiting efforts aligned with
business plan
7.9%
Employees have input on hiring decision
Company has established reputation as
a desirable place to work
Systematic new hire orientation exists
Hourly/clerical new hires are well equipped
to perform duties
13
Professional new hires are well equipped
to perform duties
Dimension #4:
Communications Integrity
Employees have easy access to
basic technologies for
communication
Employees at all levels give ideas and
suggestions to senior management
Company shares business plans and
goals with employees
High percentage of workforce participates
in employee opinion surveys
7.1%
Company shares financial information
with employees
Company takes action on employee
survey feedback
Expected change in market value associated with
a significant (1 SD) improvement in HCI dimension
14
Dimension #5:
Focused HR Service Technologies
Improving service to employees/managers is a key
goal in implementing HR service technology
Reducing cost is is a key goal in
implementing HR service technology
Increasing transaction accuracy/
integrity is a key goal in implementing
HR service technology
Expected change in market value associated with
a significant (1 SD) improvement in HCI dimension
15
6.5%
If human capital practices have
such a dramatic impact on
shareholder value, what’s most
important to employees and also
drives financial performance?
16
Watson Wyatt’s Latest Human
Capital Research
17
=
Human Capital Index
– Demonstrated the link between superior HR practices
and shareholder value
– Survey of HR executives in 750 large, publicly traded
companies in North America and Europe
=
WorkUSA® 2002
– One of the largest statistically representative surveys
on the attitudes of U.S. workers
– Sample balanced against the Census demographics
(gender, age, race, and region).
– 12,757 participated.
– Seventh WorkUSA® study since 1987
What We’ve Learned
Employee commitment may pay
off even more for companies in
bad times than in good…
18
Commitment
Employee commitment remains unchanged….
2002
57%
2000
55%
Favorable
19
31%
29%
Mixed
12%
16%
Unfavorable
Commitment
…but its impact on shareholder value
has grown
24%
2002
8%
108%
2000
66%
Low Commitment
High Commitment
3-Year Total Return to Shareholders (TRS)
20
Line of Sight
Companies ability to help employees make connections
between their jobs and business goals is decreasing.
70%
60%
50%
65%
52%
40%
2000
38%
30%
2002
31%
20%
10%
4%
0%
Favorable
21
Neutral
10%
Unfavorable
Line of Sight and TRS
Companies who do this well have 4 x TRS …
Good
21%
Poor
5%
0%
22
5%
10%
15%
20%
25%
TRS
There is room for
improvement when it comes
to communication…
23
Communication
Companies must keep employees better
informed…
Communication Effectiveness
Favorable
31%
24
Mixed 40%
Unfavorable
29%
Communication
…to improve shareholder value
High
23%
Commun ication
Companies
Low
Commun ication
7%
Companies
0%
5%
10%
15%
20%
25
25%
Companies cannot
afford to ignore their TRUST
problems…
26
Breach of Trust
Trust in senior leadership is low….
Employee Trust Levels
Favorable
39%
27
Mixed 32%
Unfavorable
29%
Breach of Trust
And employee trust levels are falling….
Confidence dropped between 2000 and 2002
2002
2000
45%
29%
50%
29%
Favorable
28
Mixed
26%
21%
Unfavorable
Breach of Trust
…threatening corporate competitiveness
20%
High Trust
Low Trust
0%
7%
5%
10%
15%
29
20%
Perspectives on Change
Management
Companies who manage change well enjoy
higher TRS...
Managed Change Well
(Top 25%)
29%
Managed Change Poorly
(Bottom 25%)
-10
-5%
-5
0
5
10
15
20
30
25
30
Perspectives on Change
Management
…but, employees say too few companies
get it right
Employee ratings of their company’s
change management performance
Favorable
43%
31
Mixed 36%
Unfavorable
21%
Change Effectiveness
Don’t blame the type of change…
even “negative” changes can be handled well
Employee perceptions of change effectiveness by type of change
100
86
80
85
60
91
94
90
91
58
48
40
40
35
29
30
Average % Responding
ge
er
So
ld
M
cq
ui
A
Be
en
Si
g.
Bu
sin
es
s
d
d
re
o.
aC
d
re
ui
cq
A
G
ro
w
n/
Ex
pa
nd
ed
re
tu
uc
str
Re
D
ow
ns
iz
ed
0
d
20
32
85
% Responding Change Handled Well
31
Rewards for Managing
Change Well
Those who implement change well have more
motivated and more prepared employees…
Willing to do as much as
possible to help company
100
100
80
80
60
40
97%
60
60%
0
83%
61%
40
20
20
33
Prepared for rapidly changing
business environment
1% 14%
Favorable
Unfavorable
0
12%
Favorable
Change Well (Top 25%)
Change Poorly (Bottom 25%)
2%
Unfavorable
Companies with effective HR
functions are rated more
highly by employees in a
number of areas…
34
HR Matters
Effective HR makes a difference…
Trust
8%
Line of Sight
Communication
53%
4%
77%
23%
66%
12%
Ineffective HR
35
70%
24%
Commitment
Change Management
62%
Effective HR
HR Matters
…but only half of companies get it right
Employee Perceptions of HR Effectiveness
Favorable
48%
36
Mixed 33%
Unfavorable
19%
Missing The Mark
Companies are failing to maximize HR’s
potential contribution to shareholder value…
Effect on
Shareholder
Value*
% of Employees
Who Say Their
Firms Do This
Well
Company does a good job of hiring and
promoting the best people
Increase
24%
Company terminates poor performers
whose performance does not improve
Increase
26%
Employees at all levels provide ideas and
suggestions
Increase
34%
Employees have trust in senior
leadership
Increase
38%
Constructive changes occur as a result of
employee feedback
Increase
12%
Top performers are paid better than
average performers
Increase
35%
Practice
*Research from Watson Wyatt’s Human Capital Index® Study
37
What it all means –
Effective HR -- makes a difference!
38
Ideas for driving productivity
and profitability
þ Foster 2 way - open communication between
management and employees
þ Provide credible and effective communications
about changes and manage change well
þ Solicit, listen to and act on employee ideas
þ Create a total reward orientation
þ Hold employees accountable for their performance
and reward/ pay for good performance
þ Communicate the value of benefits to employees
39
Ideas for driving productivity
and profitability
þ Establish clear lines of sight: help employees make
connections between their jobs and business goals
þ Foster trust in senior management
þ Establish a collegial flexible workplace by making work
arrangements flexible and minimizing level differences
þ Recruit and retain the best talent: selection processes and on boarding are key
And remember . . .
Human capital can be a true competitive advantage
and drive financial performance!!
40

WorkUSA 2002 - University of South Florida

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