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HR Newsletter

News from Human capital advisory service

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If you have any questions regarding any of the articles in this publication, please contact one of the following HCAS experts:

Petr Kymlička
+420 246 042 480
Zeno Veselík
+420 246 042 486
Monika Benešová
+420 246 042 427

Dear Readers,

It looks like that year 2009 will not be an easy year for anyone. The financial crisis impacts the strategic decisions of each employer. In economic downturns companies face hard times and thus focus on lean operation to generate savings. And yet, they should be aware of the risk inherent in thoughtless and ill-conceived layoffs. To learn what can be done in times of financial crisis, HR managers can visit our Human Capital Services under Consulting at www.deloitte.cz or the Topic of the month section of this bulletin.

In addition to articles published in HR Forum and other periodicals reprinted in the Articles by our specialists section, in the Series section we bring you the last part of the HR Transformation series by Michiel van den Berg. The EU Funds section brings news about the possibilities to cover social responsibility programmes from the EU funds. In the Latest Trends in HR section we provide information on the latest global HR trends. We have run several workshops and participated in conferences that are described in the Events section.

We welcome your feedback, comments, and suggestions as well as any new topics you would like to find in this bulletin.

— Human Capital Advisory Services team

In this issue

Topic of the month

 

Articles by our specialists

 

EU Funds corner

 

Latest trends in HR

 

Events

Topic of the month

Take advantage of the current crisis

HR in economic cycles

The economy evolves in regular cycles which companies should consider in their long-term planning and adjust their activities accordingly. Times of prosperity and boom are followed by economic slowdown and recession. When enjoying prosperity it is good to get ready for future decline, stabilise revenues and keep cutting operational costs. When recession comes it is necessary to alleviate negative impacts by taking advantage of strategic opportunities, adjust the corporate business model to the new circumstances and particularly retain and motivate talented and key employees who, as a result, will mean a competitive edge and drive value when the boom comes again. When facing recession most companies focus only on short-term and medium-term activities neglecting long-term opportunities which would allow them to improve corporate performance more significantly. Although the period of recession and crisis is unpleasant, it is an opportunity to think about efficiency, cost reductions and elimination of activities adding insufficient value to the company.

HR in Economic Cycles

Articles by our specialists

Are benefits a necessary evil?

— Věra Čermáková

Almost all companies perceive employee benefits as an obvious part of the employee's total rewards. Companies offer benefits mainly because they are more tax efficient than cash rewards, attract new employees and, last but not least, help keep up with competitors and retain key employees. The skill of working with the benefit mix effectively, however, sometimes lags behind. Indeed, only a few companies see benefits not only as cost items but also as a form of investment.

Most companies that provide their employees with benefits focus primarily on "traditional" benefits which employees are used to and whose absence would pose significant problems for the company in recruiting new employees and retaining existing ones. Accordingly, omitting this group of benefits can be rather dangerous. It is hard to imagine, for example, that employees would not be annoyed if their employer made no contribution to their meals. Hence, the standard benefits such as meal vouchers or in-house catering services, contributions for sport activities or cultural events or contributions to pension or life insurance, etc. can be considered cost items.

Build HR that Means Business as Business is HR

— Michiel van den Berg

Why is it that so many international companies are struggling with getting HR into the business? Nowadays, everybody has heard of Dave Ulrich, many –if not all– HR Directors are speaking about HR business partners, Centres of Excellence, and still… still both business and HR are not on the same page. Only very few companies have maybe realised what professor Kjell Nordström simply calls, "HR is business and business is HR".

The global trend in HR is building an HR function around three core roles:

  1. HR as a business partner
  2. HR as an expertise centre on people management topics
  3. HR as a centre that processes all transactions and data to comply with internal and external legislation

HR aspects of call centres

— Ivana Gogelová and Monika Benešová

As call centres are becoming a part of many organisations and call centre staff now make up a large portion of their employees, the motivation of companies to move sales and sales support, complaints and product services into the company structure is clear: keep profitable customers, save costs, improve the quality of customer and employee services, and improve process efficiency. However, in spite of the many advantages resulting from these arrangements companies are also sure to face challenges at levels that do not relate solely to their employees.

Communication with customers and employees is increasingly driven by information and communication technologies, which place new demands on all "stakeholders" including employees, line managers and senior managers. Call centre staff must know the offered product or service, master work with IT, and also excel in communicating with customers.

2009 — The fight for talent

— Lucie Veselá

The newspaper headlines in the last months of 2008 and the beginning of 2009 surely frightened every employer and employee. While the situation in the Czech Republic did not seem very dramatic in the middle of last year, it presently appears that over 15,000 people lost their job by the end of 2008 or will soon lose it due to the economic and financial downturn. Yet, the situation should not only be perceived in negative terms; positive aspects must be sought as well. Some managers already try to see the benefits of the situation, i.e. the labour market will be leaner.

People are the key to survival in hard times!

When unemployment grows searching for new employees is less difficult. Qualified people start appearing on the labour market in greater numbers. While it was sometimes a Herculean task to find suitable employees in some industries or branches in the past, a wide range of candidates are available today. Companies should, however, seek and demand employees who meet their new needs. What should they be like? Top managers currently look for employees who will help them deal with the major economic, financial, organisational and other challenges they are facing today and anticipate in the future.

HR marketing through a marketing manager´s eyes

— Jiří Pavlík 

HR and marketing are incompatible concepts. While marketing is allegedly about advertising, pressure on customers, and the ability to sell and maximise market share, revenues and profit, HR marketing is different. Or is it?

An HR specialist is a person who, in addition to a range of other activities, fulfils the requests of colleagues — managers — to find and acquire employees who are well-qualified and skilled to perform specific work in a specific position. To find eligible candidates the HR specialist establishes a strategy: first he/she checks CVs on hand to determine whether an eligible candidate is available among them; he/she uses research and social and demographic statistics to verify whether there is any chance to find the needed candidates in the given region; he/she prepares a job description and targets, alone or in cooperation with employment agencies, the labour market in which prospective candidates can be found; he/she fights for talented candidates with competitors; and gives special attention to and engages future talent as early as when they study at secondary schools and universities. Once the candidate is won, the HR specialist develops motivational and other programmes aimed at retaining talent in the long-term.

HR in a “shrinking” world

— Michiel van den Berg 

Think about it for a moment. How much communication media we have available at our hands at work? What types of work can actually be designed in such a way that the work can be carried out around the globe around the clock.

We can connect with colleagues, clients, friends any time (do we all the times respect private life hours?) and from any place in the world. Imagine you have a question and want to contact a colleague on the same floor. You have a variety of options. You can make a 50 meters walk, dial a phone number, write an SMS or email, make contact through the virtual workplace; and this list of possibilities is actually even longer.

We can take a look at the key responsibilities of employees nowadays: knowledge sharing. Knowledge sharing on a local and global level is one of the factors of business success. The technical knowledge an employee acquires, the employee can share through

  • using a global knowledge management platform, electronic data rooms (so-called eRooms), local office servers, intranet, knowledge databases
  • organizing conference telephone and video calls
  • creating RSS news feeds
  • publishing blogs, podcats, webcasts
  • using same-time communication, e.g. Skype
  • sending emails

Though, of course, the old-fashioned way of sharing knowledge the employee can also opt for is by providing trainings, workshops and conferences, publishing articles and visiting the coffee or relax corner.

SERIES

HR transformation – Continuously improve and communicate results

— Michiel van den Berg 

This is the final part of a series of 5 articles on HR Transformation.

The previous 4 newsletters primarily dealt with strategic business priorities, HR strategy, human capital services and programs. This newsletter will deal with perhaps the critical component in delivering people solutions: people. Although people management skills of managers are also important we will focus in this newsletter edition on the HR staff — HR's capabilities. We will also address the HR operations and the communication component in delivering valuable HR services.

HR’s capabilities

The evolving role of the HR function has lead to changing and more often increasing demands on the competency level (capabilities) of the HR staff. For example, a local operating manufacturing company buys another company. HR is confronted with managing the merger and integration process from a people perspective. Top management will increase demands on change management capabilities, conflict resolution capabilities, and advisory skills.

Another example, HR leadership decides to change its HR back-office operations — from several locations throughout the country to one Shared Services Centre on one physical location. The new HR management team of such a centralised back office sees itself confronted with increased demands in capabilities such as: large scale project management, ability to partner with internal stakeholders and 3rd party organisations, and increased demands on deepening the functional expertise.

In the previous newsletters we described how HR can pro-actively act on upcoming strategic changes. HR leadership should thus not stop here but also identify the knowledge and skills its HR staff will need in the next years. Such an assessment allows HR leadership to train and recruit required knowledge and skills. It also enables them to review the composition of teams and job positions, which may lead to the conclusion that changes are needed. For example, when HR wants to become a more strategic partner it needs to know what kind of skills and knowledge are required as well as reviewing the responsibility areas of the client-facing HR jobs. Maybe a stricter split is necessary in jobs that currently deal with both strategic people management issues and HR operations. Operational HR work can blur the time and devotion needed to be a strategic advisor or to discuss with executive leadership on strategic people management issues.

HR operations

Did we reach the finish line already? In today's practice many people are part of project teams and initiatives. HR staff feels the pressure to continuously improve their services, processes, policies, procedures, service level agreements, performance objectives and indicators, (integrated) technologies, and the list does not stop here. As business strategy evolves and changes overtime, HR operations also need to evolve and improve overtime. There are a couple of key practices that can help achieve results in the HR operations area:

  • Establish an "operational excellence" team to drive continuous improvement
  • Define standard operating procedures to provide consistency across the HR function
  • Manage processes from end-to-end, rather than in piecemeal fashion
  • Rationalise (fragmented) HR applications, prioritise information needs and then take full advantage of applications functionality
  • Develop training programs that emphasize continuous learning
  • Establish rigorous governance processes to improve financial discipline, accountability and compliance
  • Measure HR's performance against service level agreements and industry benchmark
And… communicate, communicate, communicate

It often happens that when there is no communication but only action there is no real success. Sometimes we see HR functions rebranding (part of) the HR front office to HR Business Partners, which should add more value to the organisation and be strategic, without actually developing the enhanced capabilities, infrastructure, or services. Guess what, indeed, leadership and managers keep being dissatisfied or worse get even more concerned about the real capabilities of the HR function. Maybe they are indeed nothing more than an administrative function.

On the other hand, when there is action but no communication failure looms. There are HR functions that present proudly, but out-of-the-blue to the senior management team, the new performance management and bonus system. The senior management team is then typically not in the mood to take action and start the implementation. In general, keeping the company in the dark until everything is complete is a recipe for failure.

On the other hand, when there is action but no communication failure looms. There are HR functions that present proudly, but out-of-the-blue to the senior management team, the new performance management and bonus system. The senior management team is then typically not in the mood to take action and start the implementation. In general, keeping the company in the dark until everything is complete is a recipe for failure.

EU funds corner

Corporate Social Responsibility supported by EU structural funds?

— Luděk Hanáček, Barbora Parráková

While Corporate Social Responsibility (CSR) is not fully and clearly implied when speaking about grant programmes funded from structural funds, CSR projects do in fact receive interesting grants and it is worth noting that the CSR-related activities can be supported from grants.

The link between CSR activities and support from EU structural funds is a social pillar based on the modernisation of the European social model, the aim of which is to invest in people, reduce their exclusion from society, improve the level of education and hereby assure one's safety and well-being. To promote these activities, projects supporting these aims are funded from the European Social Fund — ESF.

If we assume that companies not only operate exclusively in economic terms but that they also impact their environment (community, social situation of employees, etc.), we can find inspiration in operational programmes (grant programmes funded from EU funds). Future applicants must realise that each call for submission of project intents addresses various target groups and provides various definitions on who can submit the project intent (e.g. companies, non-profit organisations, schools and other educational institutions, etc.). Given the development level of the Prague region, it is always necessary to submit projects for target groups in the territory of Prague and projects for target groups in other regions of the Czech Republic separately. While the target groups in the territory of Prague are supported in the "Praha Adaptabilita" Operational Programme (the provider of the grant is the Capital City of Prague), target groups outside of Prague are supported in the "Lidské zdroje a zaměstnanost" operational programme (provider of the grant is the Ministry of Labour and Social Affairs). The "Vzdělávání pro konkurenceschopnost" operational programme (the provider of the grant is the Ministry of Education) is intended for elementary and higher education. When expressing project intents, it is necessary to use conditions of calls for submitting project intents and adjust said project intents to reflect these conditions. The calls are announced by the grant providers several times a year. The programmes referred to above have been approved until 2013.

The grant projects referred to above can support projects focused on employee education and development (e.g. in educational courses or through setting up an educational system including advisory and the provision of grants). Target groups include both employers and employees, and projects may be submitted by both business entities and non-governmental non-profit organisations, professional and business associations and schools.

Other interesting CSR projects include projects focused on supporting both equal opportunities on the job market and the work-life balance. These projects can involve activities such as training and re-training courses for unemployed persons who may be relatives or spouses of employees. Other projects may include those focused on introducing and testing the flexible forms of work such as working from home. Pro-family policies may be further developed through educating parents on maternity/parental leave, focusing on the return to work or keeping contact with the job. This type of project can involve supporting related measures which lead to the support of equal opportunities for women and men such as contributions for transport or child care. The support and development of child care services is an activity supported separately, one in which an employer can provide funding for maternity and family centres, babysitting agencies, child corners and nursery schools. Projects focused on supporting the integration of excluded groups, the educational activities of pupils and students (e.g. career advisory, student internships at employers, involvement of experienced professionals and foreign professionals in the creation of educational programs, etc.) are also of interest. Appropriately focused courses and trainings for employees or other target groups can also play a preventive role in areas of life style, the environment, social area and safety and protection against various risks.

Companies do not always need to be the grant applicant and there is sometimes a need for projects to be implemented by non-profit entities. Support of non-profit entities by companies in preparing the grant applications that will be subsequently realised by these non-profit entities is also one way to increase the number of interesting projects focused also on the employees of private businesses.

The range of CSR activities discussed in this article and financed primarily from the European Social Fund is not comprehensive but sufficient for providing both a brief illustration and also inspiration. Having an advanced social society is in the interest of both EU institutions and businesses, and provides ample opportunities for all. Not only do several individual businesses that engage in these activities already exist locally, but the global environment for developing CSR activities is already in place.

Latest trends in HR

HR process outsourcing: Adopt standard transactional processes and technologies

Today's efficiency-driven, cost-cutting business climate, coupled with the mandate for human resource (HR) professionals to become strategic people managers, has compelled many firms to consider comprehensive human resource outsourcing (HRO). Discretely outsourcing processes such as benefits and payroll is nothing new. Comprehensive HRO is different — it is defined as outsourcing multiple processes and technologies to a single vendor. As HR professionals look to remove administrative tasks to focus on the strategic ones, it is important to understand the real reasons to outsource, including the historical challenges with comprehensive HRO, the different models offered by HRO providers, and how to successfully implement the change. (Forrester Research, October 29, 2008)

Not all talent management solutions are created equal

Talent management solutions are a key area of investment for organizations which are looking for increasing workforce productivity and side stepping the talent war. Global organizations are investing and finding value in HR technology systems that seek to maximize employee performance. By integrating the needs of executives, management and employees into one system, unified Talent Management solutions are making it possible for organizations to leverage critical information across multiple applications such as Performance Management, Learning Management, Compensation Management, Career Development, and Succession Planning. Talent Management solutions ensure that by providing information to all employees and their managers continually (not just at performance review time), employers and employees are truly working together to build stronger organizations. (Workforce Management, October 6, 2008)

One in four companies planning layoffs, but most taking measured approach to economic crisis

According to a Watson Wyatt survey, with the impact of the global economic crisis taking hold, a quarter of U.S. employers are expected to make layoffs in the next 12 months. However, most companies are focusing on increased employee communication and smaller cost-saving measures. According to the survey of 248 companies conducted in mid-October 2008, more than one-third are planning to increase their communication around pay (37 percent) and benefits (35 percent). And roughly one of four is planning layoffs (26 percent), hiring freezes (25 percent) or raising employee contributions to health care plans (25 percent). While some companies also plan other changes, including travel restrictions, restructuring and reductions in training, relatively few expect to freeze salaries, freeze or close their pension plan. (Watson Wyatt, October 23, 2008)

Expatriate employee numbers double as companies see increased value in expatriate assignments

According to a survey conducted by Mercer, the number of employees on international assignments has doubled over the last three years as part of the continuing trends towards globalization. According to the report, 47 percent of companies surveyed said they had increased the deployment of traditional expatriates (employees on 1–5 year assignments) and 38 percent reported an increase in "global nomads" (employees that continuously move from country to country on multiple assignments). The growth is primarily driven by the companies' desire to be globally competitive. To successfully launch new ventures abroad and gain advantage over competitors, companies generally bring in their own experts from other locations to lead projects on a short term basis, rather than rely on local talent. (Mercer, October 27, 2008)

Raises next year will be skimpiest since 9/11

A survey from Hewitt Associates has found that a large number of organizations will give smaller raises and bonuses in 2009, as a result of the economic slowdown. According to the survey, 42  percent of executives at more than 400 corporations plan to decrease pay raises by 1 percent next year. A separate survey conducted by Watson Wyatt Worldwide has found that about 30 percent of organizations have reduced their pay budgets, in order to control operating costs. This survey has also revealed that approximately 25 percent of the companies will retrench employees in the next year, and another 25 percent will institute a hiring freeze. (Workforce Management, October 24, 2008)

CEO pay at large caps way up despite drop in earnings

According to a study of CEO pay by the Corporate Library, the median pay package for chief executives has risen, in spite of the deteriorating economic conditions. The study revealed that the total compensation for chief executives at Top 500 companies rose by 22 percent in 2007, while operating earnings declined by 6 percent. It was also found that, during 2007, mid-cap companies increased their CEOs' pay by 15 percent, while small-cap companies increased this pay by 5.5 percent. (Workforce Management, October 21, 2008)

Events

HR Know How & HR Forum

Conference organized by IIR on December 2–3, 2008

On 2-3 December 2008, the annual HR Know How & Forum of HR Specialists Conference was held in the Clarion Congress Hotel in Prague. The conference was again organised by the Czech Society for Human Resources Development (Česká společnost pro rozvoj lidských zdrojů — ČSRLZ) and the Institute for International Research (IIR). As in prior years, the HREA — Human Resources Excellence Award® — was organised with the aim of awarding best projects and HR professionals.

The following prizes were given out during the conference:

First prize was awarded to the Training Centre of BOSCH DIESEL, s.r.o. from Jihlava; second prize was awarded to the HomeRun (Fit & Strong We Run Long) project of SAP Business Services Europe, s.r.o.; third prize was awarded to the PULZ project by Health Rescue Service of the Liberec Region; fourth prize was awarded to Impress with its production premises at Skřivany in Eastern Bohemia and its How To Bring Back the Reputation of Crafts or Bilaterally Advantageous Business project; and the Grand Jury prize was awarded to IBM together with the Masaryk University in Brno for their Lighthouse project.

The conference was opened by František Mika, the president of the Czech Society for Human Resources Development, who stated: “We don't need large sums of money, we need good ideas. If we have good ideas, we need not worry about the crisis.” The opening speech was followed by a discussion on the current economic development in the Czech Republic and its impact on HR. The topic was discussed by macroeconomists and other professionals from the Czech National Bank, Deloitte Advisory, UniCredit Bank Czech Republic, a.s., the Czech Economic Chamber and CERGE-EI. The discussion was moderated by Lenka Zlámalová, the chief analyst of Hospodářské noviny, Economia, a.s. “The future growth of the economy will be more demanding in terms of the quality of manpower,” said Pavel Sobíšek, the chief economist of UniCredit Bank. Štěpán Jurajda, the vice-chairman of the CERGE-EI Council continued: “The first people who will be impacted by the growth in unemployment will be those less qualified. The demand for the more educated and retrained will increase. The question is what will happen with less qualified foreign workers who will be the first to lose their jobs and will stay in the Czech Republic. In this situation, it will have to be the state that will play the major role.” Bronislav Pánek from Deloitte Advisory, s.r.o. spoke about the historical role of trade unions in the time of crises: “Trade unions in companies should not strive for an increase in wages, but for their short-term decrease in order to bridge over this period and prevent mass dismissals.”

The recipe for success in the form of comprehensive recruitment of team members and specific corporate culture was presented by Taťána le Moigne, Country Business Manager of Google Czech Republic, s.r.o. and Susan Pike, European Recruiter, Google Paris. In addition, the morning session included presentations of final projects nominated for the HREA — Human Resources Excellence Award®. The afternoon session of the conference was attended by Václav Klaus, head of the PORG grammar and elementary school, who spoke about the requirements for the qualification and personality of teachers.

On the second day of the conference, the participants were divided into six groups focused on various business spheres, specifically the manufacturing industry, as well as the automotive industry, finance — banks and insurance companies, pharmaceutical industry, state administration and budget organisations, HR costs reductions and last but not least part-time jobs.

The conference was concluded by a discussion with members of the Board of Directors of the Czech Society for Human Resources Development who focused on challenges in 2009.

Employable future II

Discussion Forum Organized by ČSRLZ in the Premises of VŠE

On 13 January, 2009 Deloitte HCAS team participated at the second series of a discussion forum Employable Future organized by the Czech Association for HR management at the University of Economics in Prague. During the second series of the event, groups of managers, university teachers and students set up a competency profile of an under-graduate. Deloitte HCAS team moderated the individual discussions on the remaining competency — project management. The Czech Association for HR management decided to continue with such events thanks to the active participation of all participants, their willingness to cooperate and successful stories of cooperation between universities and firms. The next Employable future will be held on 2 June and we hope to come up with concrete activities that enable university students to gain the required competencies.

Konference pro veřejnou správu (Conference for public sector)

Conference organized by ConPro

On 19 February 19, 2009 a Conference for public sector sponsored by Petr Nečas, Minister of work and social affairs, was held in Prague. Jiří Pavlík, Deloitte HCAS manager shared with the participants our experience and practical skills with a real implementation of an assessment, remuneration and development system at a public sector institution.

Meet our experts
2 June, 2009 — Employable Future III 
Discussion Forum organized by ČSLRZ. More information on www.lidske-zdroje.org.
14 September and 8 October, 2009 Discussion Multifórum on: "Have frozen wages? What next…?" 
Discussion multiforum organized by ČSLRZ, will be held at Deloitte premises.

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