Focus On Manufacturing

Focus on
Manufacturing

Human-Capital Strategies
in a Slow Recovery
THE FINANCE PERSPECTIVE ON
WORKFORCE MANAGEMENT

A report prepared by CFO Research
in collaboration with Paychex

in a Slow Recovery
THE FINANCE PERSPECTIVE ON
WORKFORCE MANAGEMENT

Focus on
Manufacturing

A report prepared by CFO Research
in collaboration with Paychex

Human-Capital Strategies in a Slow Recovery: Focus on Manufacturing is published by CFO Publishing LLC, 51 Sleeper
Street, Boston, MA 02210. Please direct inquiries to Matt Surka at (617) 790 3211 or mattsurka@cfo.com.

CFO Research and Paychex developed hypotheses for this research jointly. Paychex funded the research and publica-
tion of our findings.

At CFO Research, Celina Rogers and Matt Surka directed the research, and Matt Surka wrote the report.

August 2012

Copyright © 2012 CFO Publishing LLC, which is solely responsible for its content. All rights reserved.
No part of this report may be reproduced, stored in a retrieval system, or transmitted in any form, by any means,
without written permission.

in a Slow Recovery

Contents

About this report 1

Rising stakes for workforce management 2

After cost control, building a better workforce 5

The need for a better-equipped HR department 9

A commitment to making better use of HR technology 10

in a Slow Recovery

About this report
In July 2012, CFO Research conducted a survey
among senior finance executives at midsize
U.S. companies to examine their views on the
challenges of maximizing workforce produc-
tivity—both now and in the future. We sought
to gauge how companies are planning to
improve their ability to manage their work-
force, as well as find out more about how their
human-capital strategies will take shape over
the next two years.

From the full set of 164 respondents, we
received 45 qualified responses from execu-
tives working at manufacturing companies, as
follows:

Annual revenue
Less than $100 million 58%
$100 million–$500 million 33%
$500 million–$1 billion 7%
$1 billion–$2 billion 2%

Number of employees
50–250 employees 51%
250–500 employees 29%
500–1,000 employees 20%

Titles
Chief financial officer 51%
Controller 27%
Director of finance 9%
VP of finance 7%
EVP or SVP of finance 4%
Other 2%

Note: Percentages may not total 100%, due to
rounding.

© C FO P U B LISHING 2012 1

in a Slow Recovery

The problem of Rising stakes workforce management, working to fine-tune

finding skilled for workforce the increasingly critical balance between help-
ing employees do more and carefully managing
employees management a small, precious pool of resources.
is making it
increasingly after an economic near-collapse, a tepid For manufacturing companies, striking this
recovery, and persistent uncertainty through- balance may be made especially difficult by
important—and
out the world, no one could blame a CFO for challenges in recruiting and retaining skilled
increasingly feeling like nothing ever gets less difficult but employees. Research conducted by the Society
difficult—to more important. For companies in this economic for Human Resource Management in August
manage the size of environment, the most important tasks seem 2012 indicates, for example, that manufactur-
compensation and only to become more difficult. This is certainly ers are being pressured to increase the size of
true for workforce management—the processes, compensation packages to recruit qualified
benefits packages
practices, and technologies that companies use workers. New-hire compensation rose 1.9%
effectively, train to build their teams of employees into power- between July 2011 and July 2012, in contrast with
new hires, and houses of productivity. Our survey of 164 senior a 6.1% drop in new-hire compensation in service
retain employees. finance executives at midsize U.S. companies industries over the same time period. Manufac-
suggests that the stakes for developing and turing companies are struggling to find quali-
executing effective human-capital strategy are fied machinists, engineers, and other technical
rising—and quickly. The finance executives workers—and the effects of that struggle can
responding to our survey point out that com- send tremors through many other aspects of
panies will need to continue to do more with managing a workforce. In our survey, finance
less over the next two years. As the difficulty executives working in the manufacturing sector
of maximizing employee productivity rises tend to describe recruiting challenges as the epi-
along with its importance, finance teams may center of a number of labor challenges. Respon-
be called upon to become especially involved in dents suggest that the problem of finding skilled
employees is making it increasingly important—
and increasingly difficult—to manage the size of
compensation and benefits packages effectively,
Figure 1. Companies’ Labor Plans Over the Next Two Years
train new hires, and retain employees. These
Survey results suggest that most manufacturers plan to increase the pace issues are compounded by broad trends within
of hiring without increasing the share of resources allocated to labor. the manufacturing sector—most notably the
push for faster, larger-scale hiring.
Decrease Stay the Same Increase
Manufacturing companies’ workforces are
growing, and the need to extract greater value
from that investment in human capital is
growing with them. Most manufacturers are
Hiring 13% 24% 62% planning to increase the pace of hiring over
the next two years—even as the average labor
budget (measured as a percentage of operating
Labor Budget 20% 51% 29% budget) remains somewhat steady, according to
our research. A solid majority of senior finance

2 © C FO P U BL I S H I N G 2 0 1 2

in a Slow Recovery

executives at manufacturing companies (62%) ing the right people is a challenge, say finance A solid majority
say that their companies are planning to ramp executives. In open-response questions, several
of finance
up hiring over the next two years. (See Figure finance executives at midsize manufacturing
1.) Only a quarter of manufacturers (24%) will companies point to a “dearth of engineering
executives at
keep the pace of hiring steady, and very few talent and skilled field service personnel,” a manufacturing
(13%) plan to decrease hiring. At the same time, “demand for qualified employees [that] over- companies (62%)
more than two-thirds of manufacturing finance whelms talent availability,” and similar prob- say that their
executives (71%) say that their companies will lems. One manufacturing CFO says, simply, that
be working with either the same (51%) or lower the “skillset we need is hard to find in the midst
companies are
(20%) levels of resource allocation to labor over of so many unqualified applicants.” planning to ramp
the next two years, compared with today. (See up hiring over the
Figure 1 on page 2.) Hiring challenges seem to be tied especially next two years.
closely with company location among manu-
From these results, it’s clear that manufacturers facturers, as respondents observe in open-
will face a substantial internal labor challenge response questions. Salary expectations vary
over the next two years, as they strive to posi- by region, for example. One VP of finance at a
tion their employees in a way that maximizes midsize manufacturer, for example, says that
their contribution to the business. But the the company is “located in a small town with
mounting labor-strategy challenge doesn’t end a lower cost of living,” which allows it to stay
at a company’s four walls, survey results indi- competitive while keeping compensation pack-
cate: manufacturers will have to work harder ages smaller. Many other respondents—both
not only to manage their existing workforce, those in higher-salary regions and those in
but also to wrestle with their competitors for lower-salary regions—confirm this point. The
qualified employees. Sometimes, manufactur- advantages of being based in a lower-salary
ing companies will take on the two challenges region are not without drawbacks, however, as
together, optimizing their hiring and training companies in these areas often struggle to find
practices with their compensation packages to high-skill employees. “For skilled and admin-
account for both internal needs and the realities istrative positions, our facilities are located in
of the labor market. In less ideal cases, aggres- less populated areas that are a detriment to
sive recruiting practices may serve as a means recruiting,” says the CFO of a midsize manu-
of compensating for weaknesses in other areas facturer. Other respondents working in the
of workforce management. “We always need manufacturing sector describe similar regional
to hire experienced people [but] do not do a issues with recruiting, like one VP of finance
good job of bringing up new talent through the who notes, “Shop labor is not a problem; skilled
organization,” says a controller at a midsize labor is difficult due to [our] small-town loca-
manufacturing company. tion.” Companies based in or near cities tend
to face the opposite trade-off: greater access
Currently, most finance executives at manufac- to highly qualified employees at the cost of
turing companies (55%) say that they are facing greater competition for labor and higher salary
moderate competition for qualified employees, expectations. Although the specific barriers to
and an additional 18% say that competition for effective hiring and employee retention vary by
qualified employees is intense. (See Figure 2.) region, no region is without its challenges.
Despite persistently high unemployment, find-


in a Slow Recovery

Figure 2. Competition for Qualified Employees Over the Next Two Years

Competition in the labor market will become more intense over the next two years, say
finance executives at manufacturing companies.

Less Intense No Change More Intense

9% 16% 75%

Seventy-five For most manufacturers, attracting the right two years; only 26% will hire primarily low-
people is already tough—and it will only skill workers. Two major trends underpin these
percent of
become tougher in the years ahead, say senior results: first, persistent interest in automating or
senior finance finance executives. Survey results suggest outsourcing low-skill, manual tasks, and second,
executives say that the battle in the labor market is poised to the need to direct labor resources to the techni-
that competition become increasingly fierce over the next two cal workers, knowledge workers, and managers
years: 75% of senior finance executives say that who they deem likely to produce the greatest
for qualified
competition for qualified employees is likely gains in overall workforce productivity.
employees is to become more intense, and only 9% see it
likely to become becoming at all easier. (See Figure 2.) In open- Survey respondents also observe that finding
more intense response questions, manufacturing respondents employees to fill specialized roles often proves
over the next reference the two dimensions of this rising com- to be more of a challenge than filling roles that
petition for labor—greater demand and shrink- require fewer qualifications. “To date, we have
two years.
ing supply—and offer explanations for both. not had an issue hiring the production staff,”
says one controller at a midsize manufacturing
Greater demand for labor. One CFO at a company. “Our issues arise when it comes to
midsize manufacturer predicts that competi- hiring a more skilled worker/manager.” Such
tion for employees will become more intense observations may become more common over
over the next two years, because “the economy the next few years. One controller at a midsize
is improving and there will be more hiring.” manufacturer notes, “Finding qualified manu-
Other respondents express similar views, and in facturing engineers is becoming increasingly
many cases they indicate that greater demand difficult.”
for highly skilled workers, in particular, will
pose the greatest challenge. According to survey Shrinking pool of qualified applicants. Some
data, a plurality of manufacturers (47%) will respondents express concerns that the number
primarily hire high-skill workers over the next of qualified potential employees in their subset

4 © C FO P U BL I S H I N G 2 0 1 2

in a Slow Recovery

of the labor market may be on the decline. Opin-
ions on the causes of the shrinking labor supply After cost control, Most
manufacturers
vary, with respondents offering explanations building a better (53%) will
related to their specific niche in the manufactur-
ing sector, the region in which their company is
workforce primarily focus
based, and the aging workforce. Although some
how will manufacturing companies
on maximizing
causes of the skilled-labor shortage in manu-
approach the labor challenges that lie ahead? the output of
facturing may be more immediate and more
localized than others (one CFO at a manufactur-
Although our research confirms that manu- their workforce:
facturers plan to catch these challenges in a improving their
ing company, for example, points to an ongoing
classic pincer—working to reduce labor costs
“workforce exodus” from the state in which the
on one side and maximize workforce output
ability to recruit,
company is based), finance executives have their retain, train,
on the other—deeper analysis of the data sug-
eye on longer-term trends as well. “Retiring
gests a more nuanced story. Finance executives and develop
workers put pressure on need for new hires,”
suggest that workforce management starts employees.
notes a CFO at another midsize manufacturer.
with developing robust systems and processes
for managing labor costs. The next step—the
In order to stay competitive, manufacturing
step that most manufacturing companies will
companies may need to push back against both
focus on over the next few years, according
short- and long-term trends. Doing more to
to finance executives—involves working to
find and develop the right people isn’t a task
improve employee performance, training, and
that manufacturers can afford to bow out of. A
development.
solid majority of manufacturing respondents
(78%) agree that “Over the next two years, our
In our survey, we presented senior finance
ability to attract, develop, and retain quali-
executives with two broad strategies for
fied employees will be an important source of
maximizing workforce productivity: maxi-
competitive advantage for my company.” More
mizing output and minimizing input. These
than one-third (36%) agree strongly that their
two strategies are, of course, anything but
companies will seek to derive a great deal of
mutually exclusive; they represent two sides
competitive advantage from their human-cap-
of a single mission, and neither one could be
ital strategy, and an additional 42% agree to at
effective without the other. With this in mind,
least some extent.
however, we set out to determine which of the
two strategies companies are most likely to
focus on over the next two years. According to
➽ the bottom line Finding the right our research, most manufacturing companies
people—and keeping them—will become (53%) will focus primarily on maximizing the
substantially more difficult over the next output of their workforce: improving their
two years, survey results suggest. At the ability to recruit, retain, train, and develop
same time, the share of resources that employees. (See Figure 3 on page 6.) A smaller
manufacturing companies allocate to labor proportion (31%) will focus primarily on
is likely to remain steady. This adds up to an minimizing the cost of their workforce, which
all-too-familiar imperative: continue to do includes improving their ability to manage
more with less. employee time and attendance, benefits costs,
expenses, and labor-related taxes.


in a Slow Recovery

Controlling costs Although manufacturing companies are, of important—but finance executives working in
course, interested in both increasing labor manufacturing also recognize its limits.
is step one;
output and decreasing labor input, our data
everything else suggests that improvement efforts will center The rationale behind this arrangement of labor
is step two. on the output side of the equation. Asked about priorities varies by company and industry,
their companies’ plans for each component of but the explanations offered by senior finance
these strategies for workforce management, executives in open-response questions tend to
finance executives working in the manufactur- support the idea that building robust processes
ing sector confirm that their companies will for managing employee time and attendance
take on the task of maximizing workforce pro- forms the foundation to support other aspects
ductivity from multiple directions. In particular, of workforce management. Simply put, con-
manufacturing respondents say their companies trolling costs is step one; everything else is
will seek to boost output by improving both step two. Many manufacturing respondents
their ability to manage employee performance indicate that their companies have already
and to train and develop employees (87% of implemented new systems and practices for
manufacturing respondents, respectively). At managing employee time and attendance—in
the same time, more than half of manufactur- some cases very recently. “We have just imple-
ing respondents (56%) say their companies mented a paperless time-off reporting system,”
will move to control labor costs by improv- says the CFO of a midsize manufacturer. Other
ing their time and attendance management. respondents offer similar responses, saying
(See Figure 4 on page 7.) Taken together, these that they “have already taken steps to do this”
results confirm that labor cost-control remains and “already use new software to manage

Figure 3. Which strategy for maximizing workforce productivity will your company
focus on over the next two years?

Minimizing Workforce Cost… …Or Maximizing Workforce Output?
Improving ability to manage employee time Improving ability to recruit, retain, train,
and attendance, benefits costs, expenses, and/or develop employees
and/or labor-related taxes

2% 2%
13% 13%

31% 53% 31% 53%
Note: 13% of manu-
facturing respondents
chose, “Neither of these
statements describes
our approach,” and 2%
answered, “Not sure.”

6 © C FO P U BL I S H I N G 2 0 1 2

in a Slow Recovery

Figure 4. Over the next two years, will your company work to improve its ability to _________________?
Although manufacturers will work to improve multiple aspects of workforce management, survey results suggest that
they will prioritize maximizing employee output by managing performance and promoting training and development.

Manage Employee Train and Develop Manage Employee
Performance Employees Time and Attendance
YES

87% 87% 56%

employee time and attendance.” Among the pared with other industries represented in our “It is vital that
companies that are not planning to further research. One EVP of finance at a manufacturing
our employees
improve their ability to manage time and company notes, “Our industry is extremely price
attendance, many may have spent the last sensitive and cost savings are expected from our contribute to
several years focusing intently on the cost customers.” their maximum
dimension of workforce productivity. “We cur- capability. This is
rently have systems and procedures in place Once a sufficiently cost-minded foundation
a primary focus
for managing this area,” says one controller at is in place, manufacturers may find that they
a midsize manufacturer. “Small tweaks may have more resources to spare on maximiz-
for management.”
be made to address issues but [this is] not a ing the output of their workforce. In open- —CONTROLLER, MIDSIZE
MANUFACTURER
primary area of focus.” response questions, finance executives work-
ing in the manufacturing sector confirm the
Nonetheless, some companies are still catch- increasing importance of managing employee
ing up on time-and-attendance management. performance. Some respondents explain that
“We feel we have the staffing numbers not the striving to improve employee performance
staffing productivity,” says a director of finance represents a valuable means of staving off
at a midsize manufacturing company. One CFO external pressures. “It is vital that our employ-
at a midsize manufacturer describes similar ees contribute to their maximum capability,”
challenges and ties them to cultural changes says a controller at a midsize manufacturing
within the labor supply: “Younger workers have company, adding that managing employee
a need/desire for more flexible work hours and performance “is a primary focus for manage-
our industry needs more time and attendance ment.” Another midsize manufacturer relies
[oversight].” Manufacturing respondents seem on boosting employee performance in order
especially conscious of the importance of to compensate for necessary increases in
managing employee time and attendance, com- compensation. “Manufacturing efficiency is a


in a Slow Recovery

Most senior major component of our costs,” says the com- to the company’s CFO. “For relatively minimal
pany’s CFO. “We have to manage efficiency investment, our staff learns new skills, keeps
finance
to at least offset wage and benefit increases, up on changing regulations, and is exposed to
executives (64%) as we do not have the ability to pass on price different ways of thinking about old problems.”
anticipate that increases to the customer.” Both companies and employees stand to ben-
their companies’ efit from a greater focus on employee develop-
Respondents to our survey also emphasize ment. The task falls to finance executives and
HR function will
the need to improve practices for employee their peers in other functions and business
play a greater role training and development, taking a variety of units to ensure that employees’ desire to learn
in maximizing approaches to the issue. “New employees are and grow is matched with an opportunity to
workforce a high risk to quality, safety, and productivity,” do so.
says one controller at a midsize manufactur-
productivity over
ing company. “As such, they are a focus of our ➽the bottom line Manufacturing CFOs are
the next two efforts.” One CFO takes a different (but com- looking forward to maintaining labor cost sav-
years. patible) perspective, focusing on the benefits ings real-ized in the course of the downturn. But
of well-designed training programs: “Employ- they recognize that, after several years of intense
ees who can do more work faster with better focus on cost management, their companies will
quality—and don’t cost more in salary. The need to invest in training and development and
company gains, and the employee [gains] too employee-performance management in order to
with new and current skills.” Another manu- continue to boost productivity.
facturing CFO suggests that the rising impor-
tance of focusing on employee development
may have roots in the mind-set of employees—
those both current and prospective. “Employ-
ees nowadays attain much job satisfaction
from career development, so it is critical that
they see themselves given the opportunity to
grow on the job,” this CFO argues. The CFO
adds, however, that redoubling efforts to train
and develop employees, far from being merely
a means of satisfying employee expectations,
has long-term advantages for a company: “It
is beneficial to have a group of well-trained
‘veterans’ to effectively guide the ‘rookies’ and
newcomers so as to achieve seamless assimila-
tion/transition.”

If the desire for learning and growing is truly
on the rise among employees, the interests
of employees and employers may be aligning
more than ever before. At a midsize manu-
facturer, “Training existing staff adds to our
culture of employee empowerment,” according

8 © C FO P U BL I S H I N G 2 0 1 2

in a Slow Recovery

The need for a companies’ HR function as “very effective” at
supporting their efforts to maximize overall
Fifty-eight
percent of
better-equipped workforce productivity; a much greater pro-
manufacturers
HR department portion (36%) describe it as “not very effec-
tive.” The remaining respondents (48%) fall are likely to make
in the middle, describing their companies’ HR better use of HR
function as only “somewhat effective.”
As improving workforce management technology over
becomes increasingly critical, finance execu-
The problem, according to many finance
the next
tives working in the manufacturing sector
executives, is that manufacturers have thus two years,
recognize that their companies will need to
improve the effectiveness of HR if they want
far struggled to position their HR function to say finance
be able to contribute to high-value activities. executives.
to make much headway. Manufacturers will
For example, finance executives acknowledge
ask more of their HR functions in the years
that HR is often underresourced, which in
ahead, survey results indicate. Most manufac-
turn detracts from HR’s ability to develop and
turing respondents (58%) anticipate that their
execute human-capital strategy. “HR focuses
companies’ HR function will play a greater
more on policing the workforce and compli-
role in maximizing workforce productivity
ance with regulations rather than develop-
over the next two years.
ing the workforce,” notes one manufacturing
CFO. “Training is concentrated on compliance
At some manufacturing companies, say
rather than developing skill level or develop-
respondents in open-response questions, HR
ing management talent.” The controller at
is well positioned to support the workforce-
another manufacturing company expresses
management objectives of the entire company.
similar concerns about HR’s ability to develop
For example, HR at one midsize manufacturer
employees, linking this issue to the demands
excels at “employee relations and engagement,
of the industry: “They struggle to keep up with
benefits and compensation, [and developing]
our 24/7 manufacturing facilities. Training/
reasonable and fair policies,” according to the
meetings must be scheduled for each shift
company’s EVP of finance. This EVP adds that
or they are not effective.” Organizational
the company has “received awards for our
problems may compound this issue, hinder-
company/employee practices.” A handful of
ing HR’s access to strategic discussion. One
respondents express similar levels of satisfac-
manufacturing CFO notes that HR struggles to
tion with HR at their companies.
“coordinate with department heads to identify
employee-specific skill upgrades.”
But although a segment of manufacturing
companies have already pushed their HR func-
Interestingly, despite many finance execu-
tion up to where it needs to be, the majority
tives’ suggestion in open-ended responses
of manufacturers still have a long way to go.
that HR lacks the staff and resources to truly
Most senior finance executives in our survey
contribute value to the business, survey
indicate that their companies’ HR function
results indicate that HR efficiency is a concern
currently lacks the levels of effectiveness that
for a substantial number of senior finance
may prove increasingly necessary over the
executives. Only 11% of senior finance execu-
next two years. Few senior finance executives
tives at manufacturing companies describe
working in manufacturing (14%) describe their


in a Slow Recovery

A majority of the efficiency and cost-effectiveness of HR
administration at their company as “excellent”;
A commitment to
manufacturing
respondents
a much larger proportion—42%—say that the making better use
(58%) say that
efficiency of HR at their companies is in need
of improvement. Compared with respondents
of HR technology
their companies working in the other industries represented in
throughout our survey, finance
are likely to make our research, manufacturing respondents are
executives working in the manufacturing
far more likely to take the view that the cost-
better use of effectiveness of HR at their companies will
sector consistently indicate that the primary
barrier to a more-effective HR function—
technology for need to get better over the next two years.
and the issue their companies are most
HR over the next likely to address over the next two years—is
two years. But our survey also suggests that finance exec-
ineffective IT systems for HR. Manufacturing
utives at manufacturing companies are much
respondents indicate that their HR functions
less concerned with the absolute amount of
depend too heavily on manual processes,
resources consumed by the HR function, and
with two-thirds of finance executives (67%)
much more concerned that those resources are
agreeing that their companies’ HR function
deployed to higher-value work. Manufacturers
is currently burdened with too many manual
seeking to improve the overall effectiveness of
tasks. A majority (52%) also agree that
their HR function, then, are planning to take
supervisors at their companies are burdened
a close look at resource allocation within HR:
with too many manual HR processes.
how are HR executives and managers spend-
ing their time and attention? More important,
Survey results suggest that manufacturers
how can HR make better use of its existing
will focus on improving their HR functions
resources? The answer to this question, for
through better use of technology. Presented
most finance executives, lies in helping HR
with a list of steps that companies might take
make better use of technology.
in order to better position their HR function
to contribute to maximizing overall workforce
productivity, a majority of manufacturing
➽ the bottom line Manufacturing respondents (58%) say that their companies
companies will depend on HR to help
are most likely to make better use of tech-
increase productivity by developing their
nology for HR (e.g., web-based self-service,
workforces—but many CFOs say their HR
automated HR reporting) over the next two
teams are currently underresourced. CFOs
years. (See Figure 5 on page 11.) Improving HR
see a growing need to better equip their HR
processes follows somewhat distantly (38% of
departments to meet these requirements.
respondents). “The complexity of our payroll
requirements has created too many manual
processes,” says the CFO of a midsize manu-
facturing company. “This is an area we need to
spend time automating.”

A controller at one midsize manufacturing
company suggests that making better use of
HR technology represents an effective way

10 © C FO PU BL I S H I N G 2 0 1 2

in a Slow Recovery

Figure 5. What steps is your company most likely to take to better position HR to
contribute to maximizing workforce productivity over the next two years?

Survey results indicate that most manufacturers will strive to
make better use of HR technology over the next two years.

(Respondents were asked to
select up to three responses)

11% 16% 29% 31% 38% 58%

Make better Reorganize the Enable supervisors Enhance HR Improve/ Making better
use of HR function to better perform staffing Streamline HR use of technology
outsourcing HR-related activites processes for HR
for HR

to meet the rising imperative to do more based HR software. Our research suggests that “HR will upgrade
with less. “HR will upgrade its systems and senior finance executives recognize the value
its systems and
processes to better meet our needs without in adopting this kind of software. Among
adding staff,” says the controller. This senior finance executives at manufacturing processes to
point likely resonates with finance and HR companies that have not yet adopted third- better meet our
executives alike, as our research indicates party, web-based software applications for needs without
that most manufacturers (64%) will allocate a variety of HR processes, most agree that
adding staff.”
the same amount of resources to their HR using such applications would improve overall
—CONTROLLER, MIDSIZE
departments as they have over the past five workforce productivity at their company. (See
MANUFACTURER
years. (A handful [11%] will go so far as to Table on page 12.) Manufacturing respondents
reduce the share of resources allocated to identify time and attendance management,
HR.) Finance executives believe that making training and employee development, and
better use of HR systems will help their access to forms and policies as activities that
companies respond to mounting pressures are particularly conducive to automation
even as HR and labor budgets hold steady. through web-based applications.

In the course of striving to make better use A plurality of manufacturing respondents
of technology for HR, many manufacturing (49%) favor the use of web-based HR self-
companies are turning to third-party, web- service for supervisors and/or employees at


in a Slow Recovery

Implementing their companies, compared with only 22% at a midsize manufacturer remarks, “After
of respondents who are resistant to the idea. dealing with the ‘change’ issue; [self-service
self-service
Although these findings lend further support technology] works well.”
technology to the idea that manufacturers will meet
constitutes a current and future labor challenges primarily Taken together, finance executives’ plans
careful balancing through the use of new technologies, they also for and concerns with web-based HR self-
suggest that manufacturing respondents are service suggest that implementing such
act.
approaching new HR systems with a close eye technology constitutes a careful balancing
on change management. As with any systems- act. Manufacturers can err in either
improvement project, implementation of new direction, over-automating a fundamentally
technology is only one part of the change; interpersonal department or resisting the
companies also need to train and encourage use of web-based HR self-service in areas
employees to use the systems effectively. where it may be the best option. The decision
Our research suggests that transitioning often comes down to company culture. At
employees to new systems may be of one midsize manufacturing company, for
particular concern within the manufacturing example, HR self-service might conflict with
sector, with many manufacturing respondents employee expectations, says the company’s
expressing reservations to the effect of, “our CFO: “Our company is still small enough for
supervisors need more training [before we us to provide these HR services in person and
can implement new systems].” One CFO provide the personal touch that matches the
culture created by the owners/founders of
this company.” By contrast, the controller at
another midsize manufacturing company says
Table. Would using third-party web-based software applications
for HR processes improve your company’s ability to maximize that employees may no longer be looking for
workforce productivity? face-to-face discussions with HR as often as
they once did. “These days almost everyone
Finance executives at manufacturing companies see value in using
has access to the Internet,” explains this
third-party, web-based software for a wide range of HR processes.
controller. “It is much more convenient to
log something on a website than schedule a
HR Process
YES NO meeting with an HR person.”

Time and attendance management 74% 26%

Training/Employee development 71% 29% ➽ the bottom line Manufacturing
CFOs sense that their HR departments
Access to forms and policies 68% 32%
are too heavily burdened with manual
Benefits, open enrollment, and administration 65% 35% processes—and they aim to resolve that
Applicant recruiting/tracking 65% 35% problem by helping HR to make better use
of technology over the next two years.
Performance tracking/review 62% 38%

Labor compliance 59% 41%

Paperless payroll 55% 45%

Ad-hoc, HR-related employee queries 53% 47%

12 © C FO PU BL I S H I N G 2 0 1 2

in a Slow Recovery

the task of building strong teams
of employees—and giving them what they
need to help them do more for the business—
isn’t getting any easier, our research suggests.
But finance and HR executives alike may
find that, at many manufacturing companies,
the internal mandate to improve workforce
management is rising along with the difficulty
and importance of doing the job as well as
possible. Finance executives are keeping a
sharp watch on labor challenges both current
and looming, and they recognize the press-
ing need to better support their companies’
efforts to maximize workforce productivity.
The workforce-management goals of finance,
HR, and the business units may be converg-
ing on one idea: the practices of the past will
not be enough to take on the challenges of the
imminent future. Finding the seed of oppor-
tunity in this notion may be the first step for
manufacturers committed to making the most
of one of their most important investments—
the investment in their people.


Linking Numbers and Narratives:
Correlating Quantitative Reports
in a Slow Recovery
with Qualitative Analysis

Sponsor’s perspective
Chapter hed
when we first discussed this study with Many senior finance executives report either
CFO Research, we had some idea of the having plans to implement these solutions in the
future conditions that senior finance execu- near future, or that they have already done so.
tives might be expecting. These conditions
included a slower than expected economic User adoption of web-based HR software was
recovery, increased competition, and rising identified as a concern among respondents. At
inflationary pressures. Paychex, we became aware of this issue early
in the game, when mid-market clients first
Where the research surprised us was in the approached us about offering web services.
number of points on which senior finance As a result, we’ve made our comprehensive
executives are largely in agreement: service packages as easy and intuitive to use
as possible. In fact, our latest web services are
n Labor performance as a key designed to be easily configured to meet future
competitive strategy needs that we either haven’t been asked for
n Plans to steadily ramp up hiring yet, or haven’t thought of ourselves.
n Emphasis on skills, recruiting, training,
development, and retention About Paychex, Inc.
n Leveraging workplace technology Paychex, Inc. is a leading provider of payroll,
(pages 9–11 in this report) human resource, and benefits outsourcing
solutions for small– to medium-sized busi-
Leveraging skilled labor appears to be the stra- nesses. Paychex One-Source Solutions offers
tegic imperative in a slow economy. Yet, the midsize organizations a complete range of
majority of respondents are not planning to scalable employer solutions that cover the
increase compensation or internal HR budgets entire employee lifecycle. Industry-leading,
over the next two years. web-based solutions include recruiting, hiring,
benefits, training and performance, time and
Clearly, managers of human resources will labor, payroll and tax administration, expense
need to find creative ways to do more with reporting, and employee/manager self-service.
less, and web technologies may be the silver Service delivery includes specialized onsite
bullet. The Paychex-CFO survey indicates the support, HR administrative outsourcing, con-
following approval rankings for web-based sulting, and employee leasing.
solutions that could help them achieve this:

Time and attendance management 71%
Paperless payroll 68%
To learn more about Paychex One-Source
Access to forms and policies 68% Solutions for midsize companies, visit us at
Training/Employee development 68%
Performance tracking/review 65% www.paychex.com

Benefits, open enrollment,
and administration 65%
Recruiting and applicant tracking 61%
Labor compliance 61%
Ad-hoc, HR-related employee queries 57%

© CFO P U B LISHING 2 0 1 2
14 © C FO PU BL I S H I N G 2 0 1 2
4

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