Are HR Professionals the Key to Unlocking Shareholder Wealth?

Several days ago, I wrote about the link between employee happiness and the bottom line. I was pleasantly surprised therefore to read about a new study conducted by Auburn University professor, Dave Ketchen. Acknowledging the importance of incentives, his research results also suggest that "performance improvements are stronger when companies take a systematic approach to human resources rather than implementing one or two practices". He adds that "Executives need to adopt a strategic view of the human resource function and create sets of practices that reinforce each other."

In a related article, published in the August 2006 issue of Workforce Management, Dr. Theresa M. Welbourne echoes a similar sentiment about the strategic importance of the HR function. Author of "Human Resource Management: At the Table, or Under It?", Welbourne describes several of her studies which suggest that HR professionals are not given their proper due. This is a pity since "HR can, through various initiatives that reach out to employees, obtain employee insights and ideas about the business. HR can be the table because HR will have information about the business that no one else in the organization has at present. Employees are the stealth ingredient to creating a realignment culture. If you ask employees for information, and you use their input to realign, they are now part of the change, which means they are much more willing to move forward with the leadership team."

So what does this all mean in pension land? Plan design analysis should take into account immediate cash flow and earnings impact as well as trickle down effects that relate to employee productivity and retention. The expected demise of defined benefit plans may not come to pass if companies decide that attracting and keeping employees requires traditional benefits. Given today's article by New York Times reporter Jeremy W. Peters, labor shortages (and related cost pressurs) could nip defined benefit plan terminations in the bud. (See "Labor Costs Shake a Pillar of Fed Policy", September 7, 2006, New York Times.)
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