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Managing Human ResourcesIn An Audit Firm

• By Amos Bagumire

Consulting GroupExperience in Practice

Session ObjectivesUnderstand the problem at hand with the way we manage our staffDefine human resource management and explain how HRM contributes to an Firm’s performanceDescribe the roles that HR plays in firms today and the categories of HR activitiesConclusion

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Background

Shifts That Are Re-shaping HR Roles Business & HR Challenges How About Our Clients Impact Of De-motivated StaffOur Investment How About Social Capital? Engaged, Enabled Employees Deliver

Bottom-Line Benefits

SHIFTS THAT ARE RE-SHAPING HR ROLES

FROMLocal markets, operations Manufacturing, clerical workHierarchyIntermediaries; face-to-face Obedience to formal authorityStability, efficiency, controlManagement prerogativeLoyal serviceWhite, male workforce

TOGlobal markets, operationsService, knowledge work

NetworksDirect access, virtual relationshipQuestioning of formal authorityChange, creativity, flexibility, order

Social licenceMarketable knowledge, skillsDiverse workforce

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BUSINESS & HR CHALLENGES

TOP 5 BUSINESS CHALLENGES

Developing new markets

Improving profitability

Market share growth

Becoming the recognized global market leader

Building shareholder value

TOP 3 HR CHALLENGES

Attracting and retaining talented people

Improving organisational capabilities

Developing leadership skills

How About Our Clients..

• Clients are becoming less tolerant of excessive turnover and are demanding the expertise that comes with experience.

• No longer satisfied with just an auditor's signature, today they expect to receive service from professionals who understand their business and who can help it grow and prosper.

• Firms need to transform themselves to meet increasing client expectations

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? %Of customers LEAVE because of poor employee attitude

Source: Parkington and Buxton, Study of the US

Banking Sector, Journal of Applied Psychology

? %Of customers are LOYAL because of a good employee attitude

Source: MCA Brand Ambassador Benchmark

? %Of customer brand perception is determined by experiences with PEOPLESource: Ken Irons, Market Leader

68%68% 41%41% 70%70%

Impact Of Demotivated Staff..

Our Investment…

• Firms are hiring more entry-level accountants and devoting more resources than in the past to their development.

• Because firms are investing more in each individual, the ability to retain staff is an increasingly important human resource issue.

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Our Investment…

• Given the competitive nature of public accounting, CPA firms can no longer afford to train staff accountants for two years and then see them leave.

• Those firms that are better able to retain their high performers will be the ones to succeed in an ever more competitive professional services market

How About Social Capital?• Social capital encompasses communities of

practice, knowledge exchanges, information flows, interest groups, social networks and other emergent connections between employees, suppliers, regulators, partners and customers.

• Social capital is what connects various forms of human capital. It is these patterns of connections that produce advantage for firm

• In the networked economy, the one with the best connections wins!

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People with better social capital:

Close deals faster Enhance the performance of their teams, Help their teams reach their goals more rapidlyPerform better as project managersHelp their teams generate more creative solutionsCoordinate projects more effectivelyLearn more about the firm’s environment and marketplace

Engaged, Enabled Employees Deliver Bottom-Line Benefits

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SECTION B-Human Resource Management

Human Resource Management Human Resource Management

Functions Staffing Human Resource Development Compensation Safety and Health New Role of HR Exemplary HR LeadersWhat Staff Desire Conclusion

Human Resource Management (HRM)

• The policies, practices, and systems that influence employees’:

• behavior• attitudes• performance

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Human Resource

Management

Safety and Health

Human Resource Management Functions

Stages in Human Resources functionalStages in Human Resources functionaldevelopmentdevelopment

COMPETITIVEADVANTAGE

(Consolidation)

Total line manager accountability Internal consulants Add value Integral to company success Long term vision and strategyBUSINESS

PARTNERS (Integrated)

Integral contribution to business plan Strong influence on other departments Member of top team Quality systems and processes Service management Intellectual capital/knowledge management Workforce empowerment and teams Return on investment Cost/benefit analysis Comprehensive database

PROACTIVE (Rapid growth) Customer/needs focused

Pro-active/improvement Management development Leadership training Succession planning Workforce planning Performance management Workforce productivity

INTERNALPOLICE

(Emerging) Policies and manuals Controls — headcount, hiring, restructuring, travel, relocation Reporting systems & budgets Basic measures — turnover, absenteeism Technical and skills training IR disputes, grievances OH&S procedures

KIND HEARTS (Lending Support)

Cafeteria Car park Security Gymnasium Social club Christmas party

BASIC NEEDS Recruitment

Induction Payroll Admin/Records Leave

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1-17

Staffing

• Job Analysis• Human Resource Planning• Recruitment• Selection

1-18

Staffing (Cont.)• Staffing - Process through which

organization ensures it always has proper number of employees with appropriate skills in right jobs at right time to achieve organizational objectives

• Job analysis - Systematic process of determining skills, duties, and knowledge required for performing jobs in organization

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CompetenciesAny skill, knowledge, or other attribute that is observable / measurable and identifies successful (excellent) performance.generic knowledge motive, trait, social role or a skillpersonal characteristicsset of skills, related knowledge and attributes

Job• superior performance

in a given job, role or a situation

• individual’s ability to perform.

• linked to superior performance on the job.

• contribute to effective managerial performance

• successfully perform a task or an activity within a specific function or job

Job AnalysisJob Analysis--Have You Developed Have You Developed CompetenciesCompetencies

Focusing efforts on achieving excellent work outcomes in line with the strategic direction and vision for the organization

Results Orientation

Why competencies?Rationale

Standardization of skill levels for hiringMethod to evaluate, reward, and promote workersRoad map for training existing workforceGuidelines for academiaImproved ability to define the fieldUtility for future certification processes

Competencies translate Competencies translate the strategic vision and the strategic vision and goals for the organization goals for the organization into into behavioursbehaviours or actions or actions employees must display employees must display for the organization to be for the organization to be successful.successful.

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1-21

Staffing (Cont.)

• Human resource planning - Systematic process of matching internal and external supply of people with job openings anticipated in the organization over specified period of time

• Recruitment - Process of attracting individuals on a timely basis, in sufficient numbers, and with appropriate qualifications, to apply for jobs with an organization

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Staffing (Cont.)

• Selection - Process of choosing from a group of applicants the individual best suited for a particular position and the organization

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Attracting Best People

Organization doesn't really accomplish anything. Plans don't accomplish anything, either. Theories of management don't much matter. Endeavors succeed or fail because ofthe people involved. Only by attracting the best people willyou accomplish great deeds." Colin Powell

1. Hire people more talented than yourself2. Talented people attract talented people3. Look for the best in each person4. Set standards for selection5. Spend time evaluating and acculturating

prospective team members

Getting The Best

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6. Do not prolong consideration of people who will not receive a position

7. Ceaselessly search for new talent8. Ruthlessly replace individuals who do

not meet the standards of the firm9. Work with the tools at hand

Getting The Best

Hire and promote: first, on the basis of integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience.

The Criteria ..

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Without integrity, motivation is dangerous.

Without motivation, capacity is impotent. Without capacity, understanding is

limited. Without understanding, knowledge is

meaningless. Without knowledge, experience is blind.

Do You Know That..

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Measuring Quality of Hire in Today’s Environment • As of today, traditional recruitment

methods result in successful new hires only about 25 percent of the time. Most businesses can’t stay in business if they are experiencing hiring mistakes 75% of the time. HRM Survey

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1-29

Human Resource Development

• Training• Development

• Career Planning• Career Development

• Organizational Development• Performance Management

• Performance Appraisal

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Human Resource Development (Cont.)• Training - Designed to provide learners with

knowledge and skills needed for their present jobs

• Development - Involves learning that goes beyond today's job; more long-term focus

• Career planning - Ongoing process whereby individual sets career goals and identifies means to achieve them

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1-31

Human Resource Development (Cont.)• Career development - Formal approach

used by organization to ensure that people with proper qualifications and experiences are available when needed

• Organization development - Planned and systematic attempts to change the organization, typically to a more behavioral environment

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Human Resource Development (Cont.)

• Performance management - Goal-oriented process directed toward ensuring organizational processes are in place to maximize productivity of employees, teams, and ultimately, the organization

• Performance appraisal - Formal system of review and evaluation of individual or team task performance

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Compensation Compensation -All rewards that individuals receive as a result of their employment

1-34

Compensation• Direct Financial Compensation - Pay that

person receives in form of wages, salaries, bonuses, and commissions

• Indirect Financial Compensation (Benefits) -All financial rewards not included in direct compensation such as paid vacations, sick leave, holidays, and medical insurance

• Nonfinancial Compensation - Satisfaction that person receives from job itself or from psychological and/or physical environment in which person works

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1-35

Safety and Health

Employees who work in safe environment and enjoy good health are more likely to be productive and yield long-term benefits to organization.

1-36

Safety and Health• Safety - Involves protecting employees from

injuries caused by work-related accidents• Health - Refers to employees' freedom from

illness and their general physical and mental well being

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The New Role of HR Managers

STRATEGIC PARTNER• HR professionals play a strategic role when they have

the ability to translate business strategy into action. This facilitating role allows the HR manager to become part of the business team.

ADMINISTRATIVE EXPERT• To become administrative experts HR professionals

must be able to re-engineer HR activities through the use of technology, process engineering and total quality management.

The New Role of HR Managers

EMPLOYEE CHAMPION• The HR professional must be able to relate to and meet

the needs of employeesCHANGE AGENT• The HR manager needs to serve as a catalyst for change

within the organisation. This can be achieved by leading change in the HR function and by developing problem-solving communication and influence skills. In short, the HR manager must know how to manage change.

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Changing Roles of HR ManagementChanging Roles of HR Management

Note: Example percentages are based on various surveys.

“I wanted to create a company where people dare to try new things - where people feel assured in knowing that only the limits of their creativity and drive, their own standards of personal excellence, will be the ceiling on how far and how fast they move.”

- Jack Welch ,

Former Chairman and CEO, General Electric

He has been called the greatest CEO in the US. .

He give power to people

Exemplary HR Leaders

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Ricardo Semler, the CEO eliminated nine layers of management that were creating bureaucracy and unnecessary controls when he took over leadership. He removed organizational structures and instead empowered staff to make their own decisions related to work.Employees were selecting their own flexible working hours; they would choose and design their own work places, look for their own suitable working tools like IT and share all information without secrets.

Ricardo Semler CEO of SEMCO

Semler set his views in a Harvard Business Review article:“I believe in responsibility but not in pyramidal hierarchy. I think that strategic planning and vision are often barriers to success. I dispute the value of growth. I don’t think a company’s success can be measured in numbers since the numbers ignore what the end user usually really thinks of the product and what the people who produce it really think of the company.. I’m not sure I believe that control is either expedient or desirable “ I did try to reconstruct the company so that SEMCO could govern itself o the basis of three values; employee participation, profit sharing and open information systems.

Ricardo Semler CEO of SEMCO

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Innovation has nothing to do with how many R amp&; D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R & D. It's not about money. It's about the people you have, how you're led, and how much you get it.

Steve Jobs Former CEO of APPLE

Skills of HRM Professionals

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Changes most desired by staff Rating By Staff Engagements properly staffed 4.38Realistic time budgets and deadlines 4.35Enhanced professional training 4,23Greater variety of assignments 4.22Greater use of microcomputer 4.13"Big picture" explained to staff 4.06Mentoring system 4.06Timely, constructive performance evaluations 4.00Increased communication with partners 3.99Alternative work arrangements 3.94Staff select client portfolio 3.94Return home each weekend 3.93Upward performance evaluations 3.91Changes moderately desired by staffIncreased personal recognition 3.7910%-l5% salary increase 177More contact with superiors 3.73More even workload throughout year 3.65Eliminate lock-step pay and promotion 3.62Schedule set far in advance 3.60Increased reward for communication skills 3.49Increased reward for accounting knowledge 3.36CPA exam study time 3.35De-emphasize class structure 3.32Strictly cap hours 3.30De-emphasize profits and "low-balling" 3.24Hire paraprofessionals 3.22

Desired Changes By Staff

Survey By Roger H. Hermanson, Joseph V. Carcello, Dana R. Hermanson, Bernard J. Milano, Gerald A. Polansky and Doyle Z. Williams

Speak their languageWin their confidence through walking the talkSay what you mean And mean what you sayMake unbiased ConcessionsCatch Them Doing the Right Thing and Appreciate ThemDevelop well defined targets to be achieved through the team and individual

In Conclusion…..

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The Ball is in Your Hand

Sense of BelongingSense of SecuritySense of Self-FulfilmentSense of ServiceSpirit of HarmonySpirit of Striving for ProgressSpirit of CourtesySpirit of Gratitude

At end Of The Day, People Want…

Thank YouThank You