Here’s a question for you: When you’re creating a strategic compensation plan to attract and retain critical skills, how closely do you work with the CFO?
If you answered, “Not at all,” fasten your seatbelts because closer collaboration between HR and finance is going to be 'the next big thing' in innovative, high performing organizations.
If you haven’t had a chance to read Jaque Vilet’s most recent post Are Employees “Costs” or “Assets”? I highly recommend it. Jaque succinctly outlines the trade-off between cost and value as well as the inflection point where human assets begin to appreciate.
Another key takeaway is that few HR organisations are able to track total employee costs such as turnover, lost productivity, recruiting, interviewing, hiring, training, customer dissatisfaction, reduced or lost business, administrative costs, lost expertise, etc.
Some of these are opportunity costs and therefore difficult to quantify but the closer you can get, the easier it is to connect the dots between business strategy, talent investment and business performance.
An excellent example of HR and finance working together to drive better business results can be found in a recent Fortune magazine article ‘Questions for Starbuck’s Chief Bean Counter’, which is an interview with CFO Troy Alstead. He talks about creating strategic advantage with people.
Here’s the recap: Starbucks has grown from about 100 stores to 20,000 stores since Alstead joined in 1992. In a time of economic uncertainty and belt-tightening, 70 million people go to Starbuck’s each week.
In fact, Starbuck’s has had a fabulous year at a time when other retailers are negatively impacted by reduced consumption and fragile brand loyalty.
How do they do it… and keep doing it? Essentially, by not missing a single opportunity to connect with consumers and deliver what they want.
People strategy plays a huge role in this: “Our baristas…provide experiences. The products we offer are the platform, but the real magic and the reason we have the brand strength we have… is because of the fantastic experiences provided in the stores.”
Starbucks hasn’t just excelled in customer service, however - that would be too easy!
- They’ve also made strategic investments in mobile applications to help drive customer loyalty with online rewards programs.
- They use customer data to tailor their offerings to different market segments and consumer profiles.
- They use social media to engage with rather than sell to customers.
- They’ve built significant capabilities to execute a diversified growth strategy, while keeping the store experience at the core of everything they do.
- They’ve made several strategic acquisitions such as Teavana to expand their offering to a larger consumer population.
Doing all of this successfully requires a clear business strategy, high employee engagement, a robust framework for evaluating strategic investments as well as world class capabilities across financial planning and analysis, eCommerce, customer service, social media, and brand diversification... just to name a few.
This kind of result is only possible when HR and finance team up on strategic planning and execution.
So get a jump on the competition and go grab some lunch with the CFO!
Laura Schroeder is EMEA product marketing director at Workday, headquartered in Pleasanton, CA. She has nearly fifteen years of experience envisioning, designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University. Her articles and interviews on HCM topics have been published in the US, Europe and Asia. She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing (well, kicking things) and spending time with friends and family. If you want to read more from Laura, check out her talent management blog Working Girl or follow her on Twitter @WorkGal.
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