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YOUR EMPATHY PROPHET T - ISSUE 3/ FEBRUARY 2009 Many of the organisations I have been talking to over the last few months will be focusing on OPEX ( Operational Expenditure) efficiencies, rather than CAPEX ( Capital Expenditure) programmes during Q1/ 2 of 2009. People, Process & Technology programmes will be reviewed for opportunities to impact OPEX for cost efficiencies and to drive revenue improvement. In this article I want to focus on the issues and concerns these discussions raise about the ' People' part of the OPEX equation and discuss the impact of Empathy on HR. My team are currently working with leading suppliers of technology like Cisco, Verint, SAP and others to look at the process & technology impacts of change on OPEX and these subjects will be discussed in due course. The link between the ERIC measures and bottom- line results has been well documented and still represents the only measure of its type in the world to show an academically proven correlation with profit. However, whilst this is still a highly influential and relevant finding, major concerns exist about the current economic conditions and the appetite for significant CAPEX Programmes during the next 6 months +. Whilst Harding & Yorke initiatives rarely require any significant CAPEX, they can also be proven to generate positive impact on OPEX and revenues. Therefore it makes sense to look in more detail at those areas of expenditure where an empathetic culture or interaction will have a positive effect in terms of efficiency or will allow a reduction in expenditure in line with many organisations' current needs. The tools we use to measure Empathy are easy to deploy and provide the only academically proven way to measure the Customer Experience and its financial impacts. The HR ( people) element of OPEX is a key lever that can be used during the current economic conditions to deliver change. Currently, with unemployment rising and major brands disappearing 14ACADEMIA USING ERIC TO INFLUENCE HR ELEMENTS OF OPEX Many organisations will be focusing on Operational Expenditure efficiencies, rather than Capital Expenditure during 2009. This is the first section of a longer article written by Jamie Lywood, focussing on the people element of the OPEX equation and discussing the impact of Empathy on HR. Please see the enclosed white paper for the full analysis and explanation of these four categories. JAMIE LYWOOD, CHAIRMAN OF HARDING & YORKE Throughout his career Jamie Lywood has displayed one very obvious and distinctive desire - that is to search out alternative solutions to age old problems. In 1994 he joined Harding & Yorke - then a fledgling company thinking that many current measures adopted by businesses were at best irrelevant and at worst irresponsible. Over the next decade, as Managing Director of the business, he has launched new initiatives for Harding & Yorke including consultancy and benchmarking services - all dealing with the measurement and development of Empathy in the corporate environment. In 2008 Jamie was appointed Chairman and CEO of the business.

© 2009 HARDING & YORKE from the scene, there are both opportunities and threats presented by the change in conditions. Some of the key expected changes are: At Harding & Yorke during the past six years, Nickie Hawton and her Solutions team ( The Empathy Academy) have had the opportunity to work with companies and organisations from virtually every sector and in many overseas locations including Europe, Australasia and North America. It is from these experiences and the results of numerous change programmes we have witnessed, analysed, designed and implemented that we draw these conclusions on the relationship between EMPATHY and the HR elements of OPEX. HR and its role in OPEX can mean different things to different types of organisations because accounting principles and business mechanics vary in different sectors and countries. Therefore we have generalised our observations into four main categories: . Recruitment . Training . The Interaction . Culture RECRUITMENT Recruitment costs are a necessary evil. The need to control these costs is paramount but if your " cost of recruitment" calculation only covers pre-induction activity, this should be reviewed. Attraction We have all heard numerous times the call to recruit people with the right attitude and then train them in the necessary skills so let's examine this element of " Attraction". What is it about an organisation that attracts the top people? Of course, money plays a key role, but increasingly people are looking for demonstrable evidence of caring and empathetic initiatives in potential employers. Golden Rule - Understand how attractive your organisation is to recruits and external recruiters and track this. This is another outcome- based measure ( like Customer Empathy) that provides vital data about how you are doing in the real world. Golden Rule - Know who you want to attract and why. If there are companies who develop traits in staff that you can build on, this can help reduce recruitment costs. The reverse may also be true. There may be people coming from very different corporate environments who may not adapt well to your business culture. When the recruitment drive begins, there is an immediate transfer of skills from the more traditional incumbent to the dynamic and well- reputed organisation. Golden Rule - Know what the " right attitude" for your business is. Being focused on recruiting people with the right attitude and who already have an industry understanding is something HR should be able to articulate and measure, thus cutting down on initial induction costs, and on attrition during the induction process. 15 Opportunities Larger pool of resources allowing for the selection of more candidates with a best fit to requirements Wage cost and incentives are flat and this is expected to continue for the next year Competition for the best fit resources will lessen Staff churn patterns will change and should reduce Staff motivation to stay in employment may deliver improved focus on roles threats Increased job applicant numbers will add to front-end selection cost and make selection process more stressful for hr team Motivation of new hires may pose challenges based on how long they have been in the market and if recently redundant. Motivation & monitoring techniques will need to take into account how roles may change because of lack of consumer confidence or increased exposure to vulnerable or distressed customers Lack of other job opportunities may negatively impact behaviours of managers and staff Poor market conditions may present agents with fewer opportunities to convert sales or meet incentive targets, impacting on incentives and wages. In addition this may lead to reduced self-confidence. continued on page 16