TheWhitePaper*

Engaging the Global Workforce:Bridging the Gap between Finance and Talent Management

ISSUE 6 JUNE 2008

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Table of Contents

Introduction .................................................................................................... 3

Key Finding No. 1: .......................................................................................... 4Human Resources must take a more strategic role in the business.

Key Finding No. 2: .......................................................................................... 5Employee recognition improves employee engagement, which increases retention and

productivity, thereby positively affecting company performance.

Key Finding No. 3: .......................................................................................... 7Business leaders believe creating a universal recognition platform for global companies is difficult.

Key Finding No. 4: .......................................................................................... 8CFOs are not aware of how much they are currently spending on recognition programs.

Key Finding No. 5: .......................................................................................... 9The CTO and the CFO must work together to chart the course for the future.

Summary ........................................................................................................ 10

Methodology ................................................................................................... 11

Demographics ................................................................................................. 11

About Globoforce ............................................................................................ 12

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Introduction

The link between workforce retention and company performance has become

more quantifiable, and a new wave of HR executives is moving to the vanguard of

corporate governance—the Chief Talent Officer (CTO).

In the 21st Century, the question is no longer

whether global changes in workforce dynamics im-

pact company performance, but how to be in front

of these changes. One such change is the onset of

baby-boomer retirement combined with decades of

economic expansion and a tight labor market to cre-

ate a critical shortage of seasoned managers.

To lessen the impact of these changes, many com-

panies have increased investment in succession

planning, employee retention and employee en-

gagement. Such initiatives help to bridge the gap

between finance and talent management as the two

departments collaborate to create business cases for

new processes, programs and technologies to track

their financial outcomes as it relates to their biggest

investment in human capital.

This report assesses the attitudes of business lead-

ers towards the relationships between the CTO and

the CFO, and their mutual role in engaging the glob-

al workforce to adapt to the new global workforce

trends.

Key findings of this study include:

Human Resources must take a more strategic role in the

business.

Employee recognition drives engagement and therefore impacts

recognition, retention and productivity on the bottom line.

Creating a universal recognition platform for global companies

is difficult.

CFOs are not aware of how much they are currently spending

on recognition programs.

The CTO and the CFO must work together to chart the

course for the future.

1.

2.

3.

4.

5.

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Human Resources has come a long way from its days as the Personnel Department.

The idea of HR’s role as merely a transactional or recordkeeping function is as outdated

as the typewriter.

Key Finding No. 1Human Resources must take a more strategic role in the business.

Today, employees are the largest investment for an or-

ganization and, like any other investment, their value

needs to be understood, their performance measured

and their skills amplified. As one survey respondent

explained, “HR holds the keys to the engine—the

employees. Nothing is more important than what hap-

pens on the front line. HR hires, trains and retains

these folks, and it is vital that HR play a role in the

strategic planning.” With this in mind, it comes as

no surprise that 87 percent of respondents said HR

should play a more strategic role than in the past.

As technology enables organizations to harness

more data about employees, HR is not only expected

to take a strategic position in the organization, but

also to quantify its work with appropriate metrics to

substantiate ROI. Survey respondents overwhelm-

ingly agreed with this—91 percent said it is more

important than ever for HR to be accountable for

what it spends. Almost as many respondents—88

percent—said HR must embrace a more metric-

based standard for measurement.

But how is HR doing in taking a strategic view?

The survey results indicate actions are not neces-

sarily following intent. Although 87 percent of re-

spondents believe HR should play a more strategic

role than in the past, only 63 percent of respon-

dents believe HR has the right amount of input in

the strategic direction of the organization. Further-

more, fully one-third of respondents still believe

HR has too little say in overall business strategy.

Human Resources Must Take a More Strategic Role in the Business

HR has the right amount of input in the company’s strategic direction

HR has too little say in strategy

HR should play a more strategic role than in the past

HR must be accountable for what it spends

HR must embrace a more metric-based standard for measurement

0 20 40 60 80 100

63%

33%

87%

91%

88%

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Human Resources is frequently asked to provide a measurable benefit to the

organization for employee engagement. In fact, the term employee engagement

is so often discussed that it almost borders on cliché.

1http://shrm.org/foundation/1006employeeengagementonlinereport.pdf 2http://www.valuentis.com/Publications/Journal/JoAHCM_VOL1NO1_2007_EmployeeEngagementarticle.pdf 3http://www.workforce.com/tools/whitepapers/TheNewROI_of_HR.pdf 4http://shrm.org/foundation/1006employeeengagementonlinereport.pdf

Key Finding No. 2Employee recognition improves employee engagement, which increases retention and productivity, thereby positively affecting company performance.

As the Society for Human Resource Management

(SHRM) Foundation Report “Employee Engagement

and Commitment” defined it, employee engagement

is a worker’s satisfaction with their work and pride in

their employer and “the extent to which people enjoy

and believe in their work and the perception that the

employer values what they bring to the table.”1

In 2007, the International School of Human Capital

Management Faculty of Employee Engagement de-

fined employee engagement as an output-based con-

cept that describes how aligned and committed em-

ployees are to the company, such that they are at their

most productive.2

Generally, definitions of employee engagement de-

scribe an employee attitude that results in a behavior

that positively benefits the company. Although some

may still wonder how something so intangible can be

measured, the proliferation of performance manage-

ment software and the increasing capability to mea-

sure employee attitudes through surveys are making

the naysayers fewer in number.

The financial benefits of engaged employees have

been conclusively established in many surveys.3 But

the data reports the same idea—engaged employees

are more likely to be high performing employees and

less likely to leave their current organization.4

With this in mind, it is not surprising employee engage-

ment, productivity and retention issues are clearly on

the minds of survey respondents. When asked which

HR metrics they consider most important in guiding

corporate strategy, the top replies were focused on en-

gagement, retention and productivity issues.

The most important HR metrics for respondents were

employee engagement at 71.4 percent, employee

productivity at 62.9 percent, and human capital ROI

at 57.1 percent. Interestingly, employee satisfaction

surveys, training ROI and turnover rate all returned

at 55.7 percent.

Most Important HR Metrics

Employee satisfaction surveys

Training ROI

Turnover rate

Human capital ROI

Employee productivity

Employee engagement

0 20 40 60 80 100

71%

63%

57%

56%

56%

56%

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Respondents also understand recognition plays a

vital role in attracting and retaining employees. A

clear majority—78.8 percent—said recognition was

an important attraction and retention tool.

When asked why, one survey respondent put it best:

“Our company understands the benefit of having a

performance-based recognition program and how it

helps drive employee engagement. Ultimately, it leads

to satisfied customers, and, if you have satisfied cus-

tomers, they are more likely to purchase again.”

When asked to put it all together, respondents were

near unanimous in their belief that employee recog-

nition improves engagement and productivity, which

affects the bottom line.

Attitudes About Recognition, Engagement, Productivity and Retention

Employee engagement increased employee retention and productivity

Employee retention and productivity have a positive impact on company performance

Employee recognition improved employee engagement

Recognition is an important attraction & retention tool

0 20 40 60 80 100

99%

97%

94%

79%

98.5 percent agreed employee engagement *

increased employee retention and productivity

97 percent agreed employee retention and *

productivity have a positive impact on company

performance

93.9 percent agreed employee recognition im- *

proved employee engagement.

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The majority, or 80% of, respondents believe address-

ing the needs of global employees is difficult. Almost

as many—76.6 percent—also find it difficult to recruit

and retain the right talent at the right location.

As difficult as recruiting and retention may be, sur-

vey respondents are also aware these things matter.

More than 55% of survey respondents cited recruit-

ing and retention of the right talent at the right loca-

tion as the one issue with the greatest effect on their

organization.

Key Finding No. 3Business leaders believe creating a universal recognition platform for global companies is difficult.

Motivating and engaging employees is challenging enough when they share

a common office, language and culture. As global business operations cross

international borders, those challenges increase dramatically.

As stated before, survey respondents understand

employee recognition is a key component in engage-

ment and retention, 58 percent of respondents said

creating a universal recognition platform for a global

organization was difficult.

Evidently, this challenge has also prevented many

organizations from implementing a truly global rec-

ognition solution. Even though 88 percent of respon-

dents said their organization has an employee rec-

ognition program in place, only 66 percent said they

have a universal recognition platform.

Developing a Global Recognition System Is Difficult

My organization has an employee recognition platform

My organization has a universal recognition platform

Addressing the needs of global employees is difficult

Recruiting and retaining the right talent at the right location is difficult

Recruiting and retaining the right talent at the right location has the greatest effect on the organization

Creating a universal recognition platform for a global organization is difficult

0 20 40 60 10080

88%

66%

80%

77%

55%

58%

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In fact, many respondents did not believe their orga-

nization was taking the necessary steps to measure

and quantify engagement and other HR functions.

Only 52 percent said their organization had a metric

or plan for measuring the effect of employee engage-

ment on company performance.

One respondent articulated why HR must do a better

job to justify its investments and suggested a best

practice: “HR plays a key role in establishing the

business case and instigating the research for new

processes or systems. This will lead to a larger scale

feasibility study where Finance resources are used to

consider ROI and other key financial requirements.

Key Finding No. 4CFOs are not aware of how much they are currently spending on recognition programs.

Even though nearly everyone agrees HR and Finance need to be on the same

page, only 58 percent of respondents say this is the case in their organization.

When asked if their CFO was aware of how much their organization spends on

recognition programs, the response was the same with 58 percent agreeing with

the statement.

CFO is involved in reviewing and approving all HR metrics

0 20 40 60 80 100

22%

HR, Finance Not on the Same Page

Metric/plan in place to measure effect of employee engagement on company performance

CFO aware of recognition program spend

HR & Finance are on the same page

Finance makes final decision to create business and ROI cases for HR process/technology investments

HR makes final decision to create business & ROI cases for process/technology investments

58%

58%

52%

36%

46%

The final proposal will be reviewed by a global steer-

ing group for presentation to the CFO.”

Even though best practice suggests Finance is the

business unit that should require ROI, few survey re-

spondents indicated Finance was taking a leading role.

Only 36 percent of those surveyed said Finance made

the final decision to create business and ROI cases to

justify an investment in new processes, programs or

technologies for the HR department, as opposed to 46

percent who reported HR made the final decision. Also,

only 22 percent said their CFO was involved in review-

ing and approving all HR metrics in their company.

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Survey respondents overwhelmingly understand this,

and 95 percent believe the CTO and the CFO should

work together to chart a course for the future. As one re-

spondent explained, “Alignment by these two key sup-

port executives is critical for charting the right course

and staying on course. Human capital is also the larg-

est cost in the organization and the largest competitive

advantage and tool to win in the marketplace.”

Key Finding No. 5The CTO and the CFO must work together to chart the course for the future.

Because Human Resources is expected to measure the performance of the human

capital investment, it comes as no surprise that the work of the Chief Talent Officer

would draw the attention of the Chief Financial Officer.

HR and Finance Should Work Together. But Do They?

The CTO and CFO actually do work together to drive employee recognition

CTO and CFO should work together to chart a course for the future

0 20 40 60 80 100

95%

58%

However, there is a disconnect. In spite of the near-

unanimous agreement that the CTO and the CFO

need to work as a team, only 58 percent of sur-

vey respondents said this was currently the case in

their organization.

In an environment where nearly everyone agrees

that HR and Finance need to collaborate, yet only

slightly more than half say this is happening, room

for improvement clearly exists.

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Summary

Business leaders understand HR has the power to

transform an organization by taking a strategic view and

using technology to implement a measurable employee

engagement solution that generates real results. They

also understand employee recognition can improve

employee engagement and—by extension—their bot-

tom line, shareholder value, customer retention and

the ability to retain and recruit new employees.

Even though business leaders recognize the value

and competitive advantage engaged employees of-

fer, they also realize implementing a universal rec-

ognition platform for global companies presents a

serious challenge. How do you develop a recognition

system to motivate employees that crosses borders,

languages and cultures?

As the leading provider of on-demand strategic

reward and recognition solutions for global com-

panies, Globoforce suggests these best practices

developed in partnership with the world’s largest

and most diverse companies:

Establish a Clear, Global Strategy for Recognition: *

Strategic recognition delivers a clear financial and

cultural return. Fragmented, disparate programs

and systems undermine those benefits. Global

companies need global strategies that treat all em-

ployees consistently in a transparent, auditable and

measurable way across the program.

Secure Executive Sponsorship with Defined *

Goals: Like all other global strategic initiatives,

recognition must also be managed using a pro-

cess such as Six Sigma’s DMAIC guidelines or

other operational excellence program. Organiza-

tions must hold managers accountable for suc-

cess by setting measurable goals for frequency

of recognition, program adoption, budget, speed

and employee satisfaction scores.

Align Recognition with Corporate Values for *

Global Understanding: Businesses can derive

additional strategic benefits from a recognition

program that rewards behaviors consistent with

company values. Not only is this virtually the only

way to bring values alive every day for a ll employ-

ees in a large company, it gives the organization a

measurable way to see if employees understand

the values and if the values are gaining traction

across a global organization.

Offer Everyone an Opportunity to Participate: *

Open the recognition program to all employees,

not just the elite few. This overcomes the skepti-

cal concerns of employees, such as those made

by one survey respondent: “Employee recogni-

tion programs have been tried in the past and

have become popularity contests. Many who

work very hard and keep their mouths shut

don’t ever get recognized, and those in the

limelight get recognized over and over again.”

By offering everyone an opportunity to participate

in the recognition program through peer-to-peer

options in addition to the more traditional manag-

er-to-subordinate model, companies can begin to

fine-tune their culture and social architecture to

align with the company’s values and mission.

Motivate and Acknowledge All Employees with *

the Power of Individual Choice: True choice ca-

ters to the demographics of a worldwide, multi-

generational workforce with millions of options

that are culturally appropriate, meaningful and

memorable to the individual recipient. Meaning-

ful reward options reinforce the power of the rec-

ognition moment with a lasting item that reminds

the recipient the company values him or her.

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The survey was sent via email to HR and Finance

professionals during the first quarter of 2008. Over

266 responses were received. Each respondent an-

swered the questionnaire via an online survey tool

and was assured of his or her confidentiality.

Their responses were used to drive the results and

Demographics

Methodology

conclusions of this report and will be used only in

this aggregate analysis.

The Key Findings herein are based at the 95 percent

confidence level with a +/- 10% margin of error.

The demographic composition of the respondent

pool provides a representative sample of global 2000

organizations. All of the respondents are from orga-

nizations with more than 10,000 employees engaged

in global operations.

The majority of respondents were between the ages

of 30-49; 43.8 percent were male and 56.3 percent

were female.

Respondents represented a variety of roles within

their organization.

The industries represented by respondents were

also varied.

Over 80 percent of respondents had responsibilities

within the broad category of human resources while

20 percent had responsibilities outside of HR.

57%

6%18%

19%

C-Level

VP

Director

Manager

Respondents Roles

80%

20%

HR

Outside HR

Job Responsibilities

High Tech

Mfg/Aerospace & Defense

Finance/Insurance

BioTech/Pharma/Healthcare

Bus. and Prof. Services

Transportation

Utilities/Oil & Gas

Retail/Wholesale Trade

Consumer Packaged Goods

Education

Hotels/Restaurants/Leisure

Other

Industry Participation

22.4%16.4%

10.6%

6.1%5.9%5.9%

3.6%3.6%3.5%2.4%

2.4%

17.2%

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Phone: +1 (888) 7-GFORCE (436723) Fax: +1 (508) 357 8964 Email: corporate@globoforce.com

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© 2008, Globoforce Limited. All rights reserved. No portion of this publication may be reproduced in any form without express written permission from Globoforce.

About Globoforce

Globoforce is the leading worldwide provider of on-demand strategic reward and recognition solutions for Global 2000 companies. Globo-

force’s flexible and efficient recognition tool can scale from one user to millions of users with ease, offering global companies a powerful and

secure solution to implement and manage their companywide or divisional employee recognition programs. Through a dynamic, easy-to-use,

on-demand technology platform, Globoforce transforms the way companies engage, motivate and empower their workforces across the world.

Co-headquartered in Southborough, Mass., and Dublin, Ireland, Globoforce was recently selected by the Great Place to Work® Institute as one

of the “50 Best Companies to Work For.” Globoforce won a 2007 Process Innovation Award for the creative deployment of Dow Chemical’s

global, on-demand employee recognition program. Globoforce also won Human Resource Executive magazine’s coveted “Top HR Product of

the Year” award in 2004 for its revolutionary on-demand software solution. Some of Globoforce’s world-class customers utilizing this enterprise-

class solution include Amgen, Avnet, Dow Chemical, Intuit, Procter & Gamble and Reuters. www.globoforce.com.