HR’s burning issues

by 20 Mar 2007

Human Resources magazines study of the top ASX-listed companies in Australia has shed light on some of the hot issues for HR professionals. In the first of a three-part series, Craig Donaldson looks at some of the major HR challenges for corporate Australia and examines some of the solutions

Companies are well and truly ramping up their offerings in a bid to attract and retain talented employees. As the playing field of competition for talent becomes increasingly global, unfortunately many companies are playing catch-up when it comes to keeping their best people.

In Human Resources magazine’s annual study of Australia’s top ASX-listed companies, attraction (31 per cent) and retention (41 per cent) were cited as the top HR issues. This was followed closely by talent management (26 per cent), underscoring the fact that companies are taking a more focused approach to improving competitive advantage through their people.

Attraction and retention weren’t just issues for resources, engineering or accounting – companies across a growing number of sectors are placing more emphasis on the issues. However, a few forward-thinking companies are looking at deeper organisational issues that have a direct but sometimes immeasurable effect on attraction and retention as well.

Attraction factors

A number of Australia’s top ASX-listed companies are blessed with a strong brand, making the job of recruitment somewhat easier. Craig Thomson, Coca-Cola Amatil’s head of HR services, Australia, believes his company is fairly fortunate in that regard, but it still has its reasonable share of HR challenges that other companies experience. “It is a fairly tight labour market, and we do have to work double time to make sure that we get good talent into the business,” he says.

“An area that we’ve really started to have some success in is through an internal referral program. So where employees know other people in the market, we see this as an avenue, an opportunity and a way of getting in touch with a broader base of people. That’s been a successful strategy for us. But it’s always a challenge to get really good, top flight people into your business,” he says.

Closely linked to the attraction and retention is a growing awareness of employment branding (27 per cent) as well as developing and delivering on the employee value proposition (7 per cent) when it comes to top attraction and retention strategies.

Bob Barbour, people and culture director for Lion Nathan, says employment branding is a bit part of its attraction and retention strategy. The company re-launched its employment brand after working with a research company, advertising agencies and surveying more than 300 employees. “So we’ve got consistent advertisements in the marketplace which are heavily focused on what we’d like to be seen for at the end of the day, which is great people, great brands,” Barbour says.

Lion Nathan has also had an employee value proposition in place for four years, and Barbour says there are a number of levels to successfully delivering on such a proposition. “It’s based on what we believe people really want from an employer, and that is to be the best you can be, which is all about personal growth and development. People want to make a difference, so our proposition is aimed at people who want to feel like the job they’re doing really makes a difference, so they feel connected to the business. We know this drives engagement, and they have a great time doing it,” he says.

National Australia Bank’s regional general manager of people & organisational development, Chris Blake, believes most big organisations tend to spend more time on the marketing of the employee value proposition rather than becoming the proposition. As such, the bank is taking a step back from marketing the proposition until it’s actually able to fulfil it, he says. “There’s a lot we’ve done, but there’s a lot more we’ve got to do around learning, leadership development, how we manage and create relationships for people within the business and how we create a positive environment to allow all that to happen,” Blake says.

“But all those things have to be sustainable, and in order to do that you have to change the organisation itself first.”

A culture of engagement

Culture change featured as an HR issue of increasing importance (24 per cent) in the survey, as did leadership development (17 per cent) and engagement (14 per cent). In the past, culture was seen as a warm and fuzzy ‘nice to have’, but there has been a change in corporate Australia’s tune when it comes to culture.

More companies are coming to appreciate the often immeasurable but distinct impact culture has on a whole gamut of HR and organisational issues. Blake says organisational culture is the one thing that stands head and shoulders above other issues at the bank. “This is something we’ve been working on for a few years –the whole issue of the organisation’s culture and how that contributes to the performance of the organisation over time,” he says.

The bank has already built a strong compliance culture and has taken the steps necessary to prevent a repeat of past events, Blake says. “The next step of that is shifting to a higher performing organisation, which is focused directly on how we build a bigger, intangible asset value for the organisation through its people, and that that will get reflected in the way the market talks about the organisation. Some people mistakenly refer to culture as the soft stuff. It’s actually very direct and focused on producing not just a great experience for our people, but a great return for our shareholders.”

Barbour says Lion Nathan has continued its focus on building a highly constructive culture for a number of years. It measures its culture every couple of years through Human Synergistics’ organisational culture inventory tool, with the most recent check in October last year. “The hard data we get is the basis for us to develop insights, which we then translate into action plans as to how we’re going to continue to improve our achievement culture,” he says.

Engagement is also a key factor in not only retaining staff but improving their performance output, according to Blake. There are two elements to engagement for the employee, he says. “Number one is, do they understand what the organisation’s purpose is? And number two is do they understand their role and purpose within that?”

Central to the bank’s purpose is working out ways of helping customers achieve their aspirations, according to Blake, and this is central to the development and opportunities provided to employees. Many companies struggle with engagement, according to Barbour, despite it being a key but often immeasurable contributor to the bottom line. Lion Nathan conducted some pilot work into the links between engaged employees and customers, and found that highly engaged customers do more business with highly engaged salespeople.

“So that’s the top priority. The HR team have gone out and met panels of consumers and customers, and we’ve also had some interaction with shareholders to try and identify the right kind of behaviours for employees,” he says. As a result, HR has developed a values model based on 10 core behaviours, which is being hardwired into all HR processes such as recruitment, reward, performance and talent management. Lion Nathan has also taken a number of steps to provide managers with insights and tools to build the behaviours into their teams, Barbour adds.

Building leadership

Leadership development also featured prominently in the survey, with 17 per cent of companies citing it as one of their top three HR issues, while 16 per cent of companies said improving leadership capability was one of their attraction and retention strategies, and a further 26 per cent said career/leadership development was a key strategy for motivating people and improving their performance output.

Building a leadership pipeline is one of the top three HR issues for Coca-Cola Amatil, according to Thomson. “I guess it’s probably not too dissimilar to most organisations in that they are really trying to retain their talent and look for the right development opportunities for their talent. A lot of that is just based on having the right opportunity at the right time for the right people. If you’re too early, then they will end up failing in a role and if you’re too late, the chances are that they could exit your organisation,” he says.

Motivation and performance

Motivating people and improving their performance output is an issue of increasing importance for HR departments and their organisations. Twenty-nine per cent of companies cite recognition and reward as the number one focus for motivating their workforce, while career/leadership development (26 per cent) and learning and development (21 per cent) follow closely. Performance reviews (16 per cent) and performance management systems (12 per cent) also featured.

“Most people want to work for a good boss, they want good leadership, they want feedback on how they’re going and they want to have a sense of personal challenge and growth in their role,” says Thomson.

As with most companies, Coca-Cola Amatil has a performance plan system in place whereby every employee has an opportunity to sit down with their manager and discuss their performance every trimester, he says. In addition to this, the company conducts an organisation capability review process, which is a company wide review of results, behaviours and potential. Following this, all managers have one-on-one discussions with people about further opportunities and how their individual development plan fits into the broader organisational picture in terms of skills for their current role as well as career development for future roles.

Barbour says Lion Nathan has developed capability teams that focus on developing potential within different functions. “At the end of the day, we’re a fast moving consumer goods business, so having a highly skilled sales and marketing team which is operating in a way that’s consistent with best practice standards around the world is really important,” he says.

“So we have a sales capability team, a marketing capability team and an operations capability team, and their role is to build and deliver capability training programs. Those teams would often sit inside the sales and marketing functions, for example, but here they sit in the people and culture team, because we believe that’s where they can best leverage synergies around best practice learning techniques and really institutionalise the kind of hard technical skills needed. So there’s a big focus on investment in that area and we want that to be effectively delivered as a strong commitment to the business.”

Barbour says this is one example of how the HR profession can extend itself from focusing inside the business to the outside world. “At the end of the day, particularly for public companies, marketplace success is what we’re about. I think we can bring to bear our insights and tools we’ve gained over the years with our people, to work with consumers and customers. I think that’s a really exciting point for HR people to be thinking about,” he says.

Top three HR issues

Retention 41%

Attraction 31%

Talent management 26%

Recruitment 26%

Culture change 24%

Learning & development 22%

Leadership development 17%

Engagement 14%

Succession planning 12%

Performance management 12%

Remuneration/benefits 12%

Performance and reward/incentives 9%

Lifting staff/operating productivity 9%

Legislative changes/industrial relations 9%

Change management 7%

Growth management/operationalising HR initiatives 7%

M&A integration 7%

Work-life balance 3%

Top attraction and retention strategies

Remuneration 52%

Career opportunities 33%

Employer branding 27%

Positive culture 27%

Benefits 23%

Flexible working & work/life balance 21%

Improving leadership capability 16%

Learning & development 12%

International opportunities 7%

Develop/deliver on employee value proposition 7%

Referral scheme 5%

Top strategies for motivation and improving productivity

Recognition/reward 29%

Career/leadership development 26%

Learning & development 21%

Incentive based schemes 19%

Good culture 17%

Performance reviews 16%

Performance management systems 12%

Competitive remuneration & benefits 9%

Cascading goals to organisational priorities/individual performance 9%

Engagement 7%

Share scheme 3%

Health & wellbeing program 3%

Results based on responses from 60 companies from the S&P/ASX 200.

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