Recruiting, Retention, and Returns

Everyone believes good HR policies affect the bottom line. Southwest Airlines, GTE, and A.C. Nielsen can quantify it.

Such insights attest to the benefits of measuring human capital. And they demand the attention of finance. Robert Kaplan, professor of accounting and leadership development at the Harvard Business School and co-author of The Balanced Scorecard, points out that interest in capturing human capital metrics “depends on how broadly the CFO interprets his or her mission. Some interpret it narrowly and say, ‘We’re in charge of only the things that have a dollar sign in front of them.’ There are other CFOs who say, ‘We’re the best people in measurement, and our role in the organization is to make sure we can measure things.’ If CFOs define their roles more generally as one of measurement, they can play a key role here.”

Money Can’t (Always) Buy You Love

Retaining employees isn’t only about dollars and cents.

Retaining valuable employees is one of the main objectives of human capital measurement. But figuring out what makes employees stay — especially at technology firms — is complicated.

More than anything else, the highest-in-demand employees want to be where the action is. “People want to feel that they’re working for a winning organization,” says Thomas Flannery, director of the human capital service practice at Arthur Andersen LLP. “They want to feel they have the resources to do their job. When those things don’t exist, companies are forced to [pay] more.”

Creating that winning feeling at any firm — and especially at a dot-com company — is a constant struggle, even in today’s booming economy. Employees are driven by an “emotional commitment: Do I feel valued, challenged, and capable of making a difference?” says Kirk Froggatt, vice president of human resources at Yahoo Inc. “And is the day-to-day experience energizing? Because if it isn’t, I don’t have to stay here, or anywhere, for that matter.”

When people do leave, says Chris Carlton, vice president of human resources at Network Appliance Inc., a Sunnyvale, California, network data storage maker, it’s often because “we haven’t paid attention to them. They didn’t feel valued from an ongoing stock perspective or from a work-environment perspective.” A critical question for all senior managers, she says, is, “How do you make sure people are part of the community? It’s the community that’s going to keep them here.”

Art Technology Group (ATG) is answering that question by paying attention to its culture, says Ann Brady, CFO of the Internet software and services provider, based in Cambridge, Massachusetts. “For the most part, decisions are made in a democratic setting,” she notes. But ATG takes culture management one giant step further: Its vice president of organizational development, Brenda Sullivan, has been dubbed “the keeper of cool.” “A large part of her job is to maintain the ATG cool,” says Brady. “She surveys employees to keep on top of problems, identify conflicts, and resolve them.”

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