How to Build a More Sustainable Relationship Between Companies and Employees

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1 Q&A By Elana Varon NO. 32 How to Build a More Sustainable Relationship Between Companies and Employees SAP Center for Business Insight Brief Q&A Case Study Inquiry E-Book 1

2 To build a higher-performing, more-sustainable workforce, companies need to deepen their relationships with current employees. Just as lifetime employment is a thing of the past, so is employee loyalty. For those employees in high demand, technology smooths the path to changing jobs or becoming independent contractors. Meanwhile, companies often have to spend large sums of money to replace these lost employees if they can find people at all. We gathered a panel of experts to discuss how companies can stop leaving their workforces to chance and take a more sustainable approach. Karie Willyerd is vice president for learning and social adoption with SAP Success Factors. Josh Bersin is principal and co-founder of Bersin by Deloitte, a research and analyst firm focused on HR, leadership, and talent. Alexander Spermann is director of talent management, flexworker, and public affairs with Randstad Germany. 2 Q&A: How to Build a More Sustainable Relationship Between Companies and Employees 2013 SAP AG or an SAP affiliate company. All rights reserved. NO. 32

3 Why don t the old models for human resource management work anymore? What does business strategy have to do with this? Karie Willyerd: We re experiencing a huge demographic shift, especially in Western countries, with baby boomers retiring or moving into parttime work and the larger, less-experienced millennial generation taking their place. Meanwhile, technology that allows us to be mobile and to collaborate globally is advancing rapidly. And business needs are evolving so quickly that people you hire today, even if they re outsourcers or contractors, may not have the skills you will need a year or two from now. The promise of a paycheck isn t enough to maintain a highly trained, loyal, and competitive workforce. Alexander Spermann: Most people would like to work for a company for a long time. In Germany, the average tenure is 11 years. But firms can t provide job security anymore. So people pursue a different type of security. They look to get experience that will make them employable in the labor market over the long term. Josh Bersin: While demographics is clearly an issue, today s working environment is also vastly different from the world when many HR practices were designed. Organizations are much flatter, we operate in highly connected teams, and we work online and through more social technologies than ever before. Many people now have multiple managers who are working just as hard as they are, so we have to create HR practices that aren t top-down, manager-led. For example, we need peerto-peer performance appraisals and career paths that recognize that moving up in the organization may be less important than just moving to an interesting new job that broadens the employee s skills. Bersin: It s fundamental. There are no business strategies that don t have people-related issues surrounding them. How people are hired, trained, motivated, reorganized, and led is critical to every business decision. And every time a business has a failure, there is a people story behind it. CEOs and other senior executives understand that workforce capabilities are their biggest challenge, and they expect HR to know how to address these problems. Willyerd: But companies don t always connect the dots. Business leaders still tend to think that everyone they hire has to be an expert. However, if they re expanding into a new market, they may be better off staffing up with people who are simply capable enough to get the business off the ground and developing them as it progresses. On the other hand, in the service economy, the knowledge-based economy, there s constantly some new way to do a job remotely that used to require an onsite presence. For example, hospitals don t need to have the person reading an MRI to be in the same building as the scanner anymore. Where there is competition for talent, the best workers can choose companies that offer the best development opportunities, locations, and technologies. If companies want to attract those people, they have to align human resource management with their business strategy. Bersin: Over the years we ve seen that companies with a culture of continuous employee development are enduring companies. They survive recessions better [and] have higher-performing employees and lower turnover, because their people know that the organization will support them as they learn and adapt. Moving up in the organization may be less important than just moving to an interesting new job. Josh Bersin, principal, Bersin by Deloitte NO SAP AG or an SAP affiliate company. All rights reserved. Q&A: How to Build a More Sustainable Relationship Between Companies and Employees 3

4 What do companies, and their human resource departments, have to do differently in order to fit the way they manage talent into the business strategy? Bersin: The most profound change is for companies to expand their definition of who the workforce is. We talk about the open talent economy. Contingent workers are 30% to 40% of the workforce, and they re not in the HR system, usually. For example, you have companies with integrated supply chains where suppliers are involved in the design, manufacturing, and delivery of products. You want to analyze their performance the way you analyze your own employees performance. Spermann: We see that as well. Typically, agency workers like ours are bought by the purchasing department, like screws. But if HR has a strong role in contingent workforce planning, then they think about how to treat them like regular staff and, depending on the workers performance and demand for their skills, the company considers them for permanent positions. You have to organize that in a systemic way so that workers can make transitions quickly, and be trained and become productive. Do companies have the data they need to understand the types of employees they need to hire? Willyerd: Companies have a lot of data, but they haven t necessarily learned to dig deeply into it. Even basic yet important insights, such as whether you re about to lose a whole job class to retirement, can get lost if you re looking only at the average age of the workforce across the company. Willyerd: Building relationships with talent placement companies will become more important. In many companies, work is becoming project based. Some companies have pools of, for example, software developers, who move from assignment to assignment but are permanent employees. However, I can see a lot of that flexible work being managed through agencies. Bersin: I think we re in the beginning of a new dawn of data in HR. The most analytically mature companies will be able to use data to build models for making decisions about hiring or compensation or restructuring the organization. But few companies are ready for that stage. Most are still stuck in reporting madness, consolidating their HR data from different systems into a trusted source that business people can access. Contingent workers are 30%-40% of the workforce TYPICALLY, AGENCY WORKERS ARE BOUGHT BY THE PURCHASING DEPARTMENT, LIKE SCREWS. NO SAP AG or an SAP affiliate company. All rights reserved. Q&A: How to Build a More Sustainable Relationship Between Companies and Employees 4

5 NEARLY HALF OF RECRUITERS DON T USE SOCIAL MEDIA TO FIND WORKERS, EVEN THOUGH 80% OF THE WORKERS ARE USING FACEBOOK AND TWITTER TO FIND JOBS. Karie Willyerd, VP, SAP Success Factors In many companies, HR is still viewed as having an administrative and compliance role, not a strategic one. What else is standing in their way? Bersin: We don t see nearly enough innovation in HR. Chief human resource officers (CHROs) need to be bold and make their programs relevant to today s organizations and business problems. A CHRO of a very large company recently told me that their company wasn t doing enough employee development, so they mandated that everyone take 40 hours of training or be demoted. While that s a step in the right direction, the fact that I signed up for training isn t meaningful unless a manager has told me what training to take and why. Let s think about the problem differently. Maybe instead we should mandate managers meet with their teams every week to reflect on their progress together. Willyerd: On a practical level, companies are going to struggle with managing talent until they embrace new approaches for recruiting and developing people. Social tools are critical. Here s one example: Nearly half of recruiters don t use social media to find workers, even though 80 percent of the workers are using Facebook and Twitter to find jobs. They re building relationships with people that they want to work with and at some point they can ask if they can send a résumé in. On the learning and development side, social media, collaboration technologies, and mobile devices make it more cost effective to deliver training and development. So HR has ways to address this influx of demand from workers. But the role is shifting from the traditional one of creating training courses to curating resources from experts, both inside and outside the company, and making them accessible to everyone. Curating requires research and content management skills, not instructional design skills. Smart companies are going to use data and technology to help them develop and maintain relationships with workers before, during, and after their employment, just like they re using it to deepen their relationship with customers. The workforce is going to expect it. Elana Varon is a freelance writer and editor specializing in technology, leadership, and business innovation. There s More. TO LEARN MORE ABOUT HOW TO BUILD A MORE SUSTAINABLE HUMAN RESOURCE MANAGEMENT STRATEGY, READ THE IN-DEPTH REPORT A NEW VISION FOR HR: THE WORKFORCE ECOSYSTEM. The SAP Center for Business Insight is a program that supports the discovery and development of new research-based thinking to address the challenges of business and technology executives. 5 Q&A: How to Build a More Sustainable Relationship Between Companies and Employees 2013 SAP AG or an SAP affiliate company. All rights reserved. NO. 32

6 2013 SAP AG or an SAP affiliate company. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG and its affiliated companies ( SAP Group ) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see for additional trademark information and notices. SAP Center for Business Insight Brief Q&A Case Study Inquiry E-Book 6

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