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© 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

YOUR EMPATHY PROPHET T - ISSUE 3/ FEBRUARY 2009 16ACADEMIA Reputation Quite clearly having an enviable reputation can heap huge rewards in all aspects of business. But in challenging economic times reputation may be the deciding factor in business survival. Take the mortgage market as an extreme example of the impact of the current challenging economic conditions. By September 2008 mortgage sales had dropped by around 64% for the year and mortgage rejection rates had more than doubled in 3 months. Now predictions for 2009 are inconsistent and without a consensus in the market, the predictions look speculative at best. In shrinking markets where conditions require urgent change to business rules, consumers choose recognised brands and reputations. Because the stresses on front line staff translate into customers' perception of their treatment, having a good reputation means that customers and staff will trust a business to steer through difficult times when confidence is low. Golden Rule - Know what your reputation is and if it meets your business needs. Golden Rule - Never confuse Brand Values and reputation. Customers & Reputation The Harding & Yorke description of the Customer is: ' The customer is anyone you need to treat well in order to thrive'. It is the customer that is responsible for reputation. For internal customers, the ability to be empathetic ( looking after the needs of the individual) far outweighs your ability to pay high salaries - albeit this may serve as an initial attraction. This empathy is also a fundamental influencing factor in the development of your reputation with external customers. We already know that there is a direct correlation between Empathy ( as measured by ERIC) and profit ( as measured by Return on Capital Employed) and it is equally clear that there is a strong correlation between Empathy and Reputation. We know that a company that understands and responds to all its Stakeholders ( Customers, Shareholders, Suppliers, Community and Employees and their families) is able to charge more for its products and services as well as build up market share at the expense of its competitors ( a good example would be Innocent Smoothies in the UK). Add this to the improved returns on capital employed and suddenly understanding empathy becomes a priority. Retention The Harding & Yorke Empathy Scale is a 10- point combined numeric and verbal scale. It ranges from 1 ( you can't imagine how it could feel any worse) to 10 ( you can't imagine how it could feel any better). N. B. The Empathy Scale referred to here has been developed by H& Y and is the scale that has been academically calibrated. Typically, the customer experiences delivered by a single organisation's people will fall within a four point range on the Empathy scale, i. e. between 4 and 8, 3 and 7 etc. This is for a number of reasons including: . The organisation's culture & approach . The way you train your people . The processes you expect them to follow . Reward and recognition . The environment that they are in . The function and channel in which they work. However, as in all situations you will have people who are either particularly good (' Mavericks') and those that fall below organisational expectations (' Saboteurs'). The ideal situation is to lose those people or behaviours that do your business and its reputation harm, and retain and learn from those who are better than average. Unfortunately the natural organisational pattern ( if it left to its own devices), is exactly the opposite of this. USING ERIC TO INFLUENCE HR ELEMENTS OF OPEX - CONTINUED