In short, CFOs seem conflicted about human capital, seeing in it plenty of potential but also uncertain returns. Most companies have automated many or all of the administrative functions associated with human resources, but when HR executives pitch workforce optimization as a logical next step, finance is not necessarily an ally. And in this era of the “free-agent nation,” in which employees are no more loyal to companies than companies are to employees, finance may have a point. In fact, while compensation was deemed the top driver of employee productivity, employees’ innate drive and capabilities ranked a close second, suggesting that many CFOs take a decidedly laissez-faire attitude toward the labor market.
There are exceptions. Mark A. Buthman, senior vice president and CFO at Kimberly-Clark Corp., is a self-confessed zealot when it comes to talent management, and has played a lead role in his company’s recent efforts to align its workforce with corporate strategy. “A partnership between finance and human resources makes complete sense,” he says. “This is an issue that’s right in the CFO’s wheelhouse, because people and information are the only two assets we own, and this combines them.”
Kimberly-Clark’s embrace of talent management, which is essentially synonymous with human-capital management and focuses on the assessment, development, and compensation of employees, may seem curious given its recently announced decision to cut 6,000 jobs between now and the end of 2008. But Buthman says that not only is there no contradiction, but in fact the workforce reduction and the new emphasis placed on leveraging talent go hand in hand. Advances in manufacturing technologies now allow factories to produce more goods with fewer employees. At the same time, a new focus on streamlined operations, high-growth markets, and R&D means that the employees who remain must be able to function at a higher level. That is, in order to get more from each employee, companies will have to invest in them accordingly.
Talent management at Kimberly-Clark combines process with automation. The company began by having a global team formalize various evaluation practices that the company had used inconsistently. The result is a program of quarterly performance discussions between an employee and his or her boss that, combined with a “multirater feedback” system (often called a 360-degree review) provide the foundation for the actual performance review. Buthman says some employees have monthly coaching sessions with their bosses, and he readily admits that some managers expressed concern that the new system would have them spending an inordinate amount of time on personnel issues.
That’s where technology comes in. As Kimberly-Clark’s global team developed the new process, it also shopped for software that could support it. A suite of HCM applications from SuccessFactors Inc. now helps speed the review process, in part by supplying a “robot” that provides thousands of sample phrases and assessments to help managers write reviews. Buthman says a review that once took him six or seven hours to prepare can now be done in a third of that time. And the software provides visibility into the overall program. “A year ago, if you had asked me what percentage of our employee base had been effectively reviewed,” Buthman says, “I would have had no way to tell you. Now I can see that 97 percent of our employees have gotten the appropriate reviews. And I also know who the 3 percent are who haven’t, and why that is.”