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The function of the human resource (HR) department has evolved in recent years. No longer simply the custodian of employee information, today it is a core department responsible for everything from standard, essential procedures such as payroll, to complex, key strategic elements such as senior management development. HR is integral to a company’s human capital strategy, particularly around ways in which organisations recruit, train, compensate, manage and retain their workforces. These have become pressing issues in recent years, particular as competition for talent has intensified.

UNITED STATES

Cleary Gottlieb

“In recent years, we have seen a significant increase in the attention that companies are paying to human capital issues – that is, issues relating to how companies recruit, train, compensate, manage and retain their workforces – and to ensuring the overall health and stability of their workforces. This attention reflects the mission-critical importance of attracting and retaining talent in an increasingly competitive marketplace. It is also a product of the intensifying focus of regulators and shareholders on human capital management, and the pressure these constituencies have placed on boards of directors and management to effectively oversee these issues and to consider them as vital to long term value and growth.”

UNITED KINGDOM

Personio

“There has definitely been a change in recent years, with employees enjoying a much higher status in companies today. Not least because of the war for talent, the majority of companies have realised that they must put more focus on their employees in order to attract and retain them. Satisfied employees perform better and resign less often. And retention is a cost issue; employees leaving an organisation represent a very high cost factor for companies – up to 150 percent of the employee’s annual salary when he or she leaves the company. Now, having realised the value of human capital, it is only logical for businesses to see the value and importance of human resources (HR) teams.”

BELGIUM

PwC Belgium

“Historically, the human resources (HR) department has focused mainly on administrative processes, such as payroll, vacation planning, compliance with social legislation and health and safety requirements, and so on. In recent years, however, HR has evolved from an administrative support function to a full-fledged business function. HR was sometimes a part of the finance function or the legal function and was not always part of the organisation’s leadership team. Increasingly, HR got a seat at the table as a strategic business partner for the organisation.”

HONG KONG

Lewis Silkin

“Human capital is becoming an increasingly crucial asset to corporations. In an era where change is the only constant, what is considered ‘new’ today may be outdated in a few months. Therefore, physical capital, such as new equipment, may only be able to create competitive advantage for businesses temporarily. However, human capital can create long-lasting competitive advantage because people are flexible – they can adapt to changes and constantly find new opportunities within them. In addition, human capital has a unique nature compared to other types of capital.”

CONTRIBUTORS

Cleary Gottlieb

Lewis Silkin

Personio

PwC Belgium