Managing Human Resources In An Audit Firm. Session Objectives
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1 Managing Human Resources In An Audit Firm By Amos Bagumire Consulting Group Experience in Practice Session Objectives Understand the problem at hand with the way we manage our staff Define human resource management and explain how HRM contributes to an Firm s performance Describe the roles that HR plays in firms today and the categories of HR activities Conclusion 1
2 Background Shifts That Are Re-shaping HR Roles Business & HR Challenges How About Our Clients Impact Of De-motivated Staff Our Investment How About Social Capital? Engaged, Enabled Employees Deliver Bottom-Line Benefits SHIFTS THAT ARE RE-SHAPING HR ROLES FROM Local markets, operations Manufacturing, clerical work Hierarchy Intermediaries; face-toface Obedience to formal authority Stability, efficiency, control Management prerogative Loyal service White, male workforce TO Global markets, operations Service, knowledge work Networks Direct access, virtual relationship Questioning of formal authority Change, creativity, flexibility, order Social licence Marketable knowledge, skills Diverse workforce 2
3 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 3
4 Impact Of Demotivated Staff.. 68%? % 41%? % 70%? % Of customers LEAVE because of poor employee attitude Of customers are LOYAL because of a good employee attitude Of customer brand perception is determined by experiences with PEOPLE Source: Ken Irons, Market Leader Source: Parkington and Buxton, Study of the US Banking Sector, Journal of Applied Psychology Source: MCA Brand Ambassador Benchmark 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. 4
5 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! 5
6 People with better social capital: Close deals faster Enhance the performance of their teams, Help their teams reach their goals more rapidly Perform better as project managers Help their teams generate more creative solutions Coordinate projects more effectively Learn more about the firm s environment and marketplace Engaged, Enabled Employees Deliver Bottom-Line Benefits 6
7 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 Leaders What Staff Desire Conclusion Human Resource Management (HRM) The policies, practices, and systems that influence employees : behavior attitudes performance 7
8 Human Resource Management Functions Human Resource Manageme 1 nt Safety and Health 1-15 Stages in Human Resources functional development BUSINESS PARTNERS (Integrated) COMPETITIVE ADVANTAGE (Consolidation) Total line manager accountability Internal consulants Add value Integral to company success Long term vision and strategy Integral contribution to business plan Strong influence on other departments Member of top team Quality systems and processes Service management Intellectual capital/knowledge management PROACTIVE (Rapid growth) Customer/needs focused Pro-active/improvement Workforce empowerment and teams Management Return development on investment INTERNAL Leadership Cost/benefit training analysis POLICE Policies and Succession manuals Comprehensive planning database (Emerging) Controls Workforce headcount, planning hiring, restructuring, Performance travel, relocation management Reporting Workforce systems productivity & budgets Basic measures turnover, absenteeism Cafeteria Technical and skills training Car park IR disputes, grievances Security OH&S procedures Recruitment KIND HEARTS (Lending Support) BASIC NEEDS Induction Payroll Admin/Records Leave Gymnasium Social club Christmas party 8
9 Staffing Job Analysis Human Resource Planning Recruitment Selection 1-17 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
10 Job Analysis-Have You Developed Competencies Competencies Any skill, knowledge, or other attribute that is observable / measurable and identifies successful (excellent) performance. generic knowledge motive, trait, social role or a skill personal characteristics set of skills, related knowledge and attributes Results Orientation Focusing efforts on achieving excellent work outcomes in line with the strategic direction and vision for the organization 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 19 Why competencies? Rationale Standardization of skill levels for hiring Method to evaluate, reward, and promote workers Road map for training existing workforce Guidelines for academia Improved ability to define the field Utility for future certification processes Competencies translate the strategic vision and goals for the organization into behaviours or actions employees must display for the organization to be successful. 10
11 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 1-21 Staffing (Cont.) Selection - Process of choosing from a group of applicants the individual best suited for a particular position and the organization
12 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 of the people involved. Only by attracting the best people will you accomplish great deeds." Colin Powell Getting The Best 1. Hire people more talented than yourself 2. Talented people attract talented people 3. Look for the best in each person 4. Set standards for selection 5. Spend time evaluating and acculturating prospective team members 12
13 6. Do not prolong consideration of people who will not receive a position 7. Ceaselessly search for new talent 8. Ruthlessly replace individuals who do not meet the standards of the firm 9. Work with the tools at hand Getting The Best The Criteria.. Hire and promote: first, on the basis of integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience. 13
14 Do You Know That.. 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. 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
15 Human Resource Development Training Development Career Planning Career Development Organizational Development Performance Management Performance Appraisal 1-29 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
16 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 1-31 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
17 Compensation Compensation - All rewards that individuals receive as a result of their employment 1-33 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
18 Safety and Health Employees who work in safe environment and enjoy good health are more likely to be productive and yield longterm benefits to organization 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
19 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 employees CHANGE 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 problemsolving communication and influence skills. In short, the HR manager must know how to manage change. 19
20 Changing 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 20
21 Ricardo Semler CEO of SEMCO 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. 21
22 Steve Jobs Former CEO of APPLE 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. Skills of HRM Professionals 22
23 Desired Changes By Staff Changes most desired by staff Rating By Staff Engagements properly staffed 4.38 Realistic time budgets and deadlines 4.35 Enhanced professional training 4,23 Greater variety of assignments 4.22 Greater use of microcomputer 4.13 "Big picture" explained to staff 4.06 Mentoring system 4.06 Timely, constructive performance evaluations 4.00 Increased communication with partners 3.99 Alternative work arrangements 3.94 Staff select client portfolio 3.94 Return home each weekend 3.93 Upward performance evaluations 3.91 Changes moderately desired by staff Increased personal recognition % -l5% salary increase 177 More contact with superiors 3.73 More even workload throughout year 3.65 Eliminate lock-step pay and promotion 3.62 Schedule set far in advance 3.60 Increased reward for communication skills 3.49 Increased reward for accounting knowledge 3.36 CPA exam study time 3.35 De-emphasize class structure 3.32 Strictly cap hours 3.30 De-emphasize profits and "low-balling" 3.24 Hire paraprofessionals 3.22 Survey By Roger H. Hermanson, Joseph V. Carcello, Dana R. Hermanson, Bernard J. Milano, Gerald A. Polansky and Doyle Z. Williams In Conclusion.. Speak their language Win their confidence through walking the talk Say what you mean And mean what you say Make unbiased Concessions Catch Them Doing the Right Thing and Appreciate Them Develop well defined targets to be achieved through the team and individual 23
24 At end Of The Day, People Want Sense of Belonging Sense of Security Sense of Self-Fulfilment Sense of Service Spirit of Harmony Spirit of Striving for Progress Spirit of Courtesy Spirit of Gratitude The Ball is in Your Hand Thank You 24
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