HR's Job: Make Companies More Money

Ensuring corporate prosperity, said James Freer, Vice Chairman of Human Resources for professional services firm Ernst & Young, in his keynote address at the AlleyCatNews HR Summit on January 11th, is the opportunity for human resources in the future. According to Freer, this new view of human resources in the corporate arena means:

1. HR is valued in the new economy;
2. HR affects the quality of life for many people;
3. Opportunities abound for innovation in HR;
4. HR strongly contribute to an organization?s success; and
5. There is upward career mobility for HR professionals.

Ernst & Young, according to Freer, is particularly motivated to cut costs. "Every time we lose ten professionals, it costs us about $1.2 million at Ernst & Young," said Freer. Accordingly, human resources must be leveraged to optimize the human capital aspect of their business, and to do so Ernst & Young has adopted a new firm-wide people management strategy called "People First."

Under Ernst & Young's prior people philosophy, retention was the primary goal. Measured by retention statistics, human resources did everything it could to get employees to stay that extra year. According to Freer, while the program proved effective in the short term, in the long term, productivity, long term satisfaction and profits did not improve.

"People First", however, shifts the focus to forging lifelong relationships with employees. Treating people as volunteers and focusing on each employee's individual needs ultimately leads to employee satisfaction and employee retention. This is accomplished not at the corporate executive level, but at the functional team level. For one employee, this may mean a flexible work arrangement so that he can coach his son's Little League baseball team every Wednesday evening. For another employee, this may mean providing more praise and control over her daily activities.

Employee satisfaction is key here. According to Freer, the "People First" philosophy asks managers to:

1. Recognize that employee satisfaction is a leadership issue;
2. Hire carefully, as people who subscribe to your vision will adapt to your culture;
3. Never withhold praise;
4. Reward good work over the short term, not just the long term;
5. Get all employees involved with employee satisfaction;
6. Emphasize local employee satisfaction efforts; and
7. Get real feedback from employees.

The way E&Y measures success has changed as well. Instead of black and white stock retention statistics, the focus turns to internal measures, supplemented by external surveys. One of the most important questions to evaluate supervisors: "How committed is this individual to fostering a positive work environment and help their people grow?"