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Companies may want to start cutting other expenses before handing out pink slips, as findings from an Accenturestudy indicate that investments in human capital offer a high return.

The study, conducted during late 2002 of 200 senior executives in the United States, Europe and Australia, revealed that nearly three-quarters of respondents felt that people-related issues are more important to a company’s success than they were a year ago, and 40 percent reported HR budget increases in 2002.

Training and creating an environment that fosters learning are equally important to employee retention and building morale. Peter Cheese, managing partner of Accenture’s Human Performance service line, comments: “Investments in human resources, training and development enhance employee satisfaction and improve workforce performance, but measuring the impact of those investments is key to ensuring companies’ ongoing success.”

When asked to choose their companies’ top strategic priorities, respondents chose workforce-related priorities as four of the top five. These were “attracting and retaining skilled staff” “changing organizational culture and employee attitudes” “changing leadership and management behaviors” and “improving workforce performance” — all chosen by more respondents than “industry consolidation,” “cost reduction” and “competitive pressures.” “Customer care and service” was the only non-workforce-related priority among the top five.

The study found that companies are becoming more dedicated to their workforce, specifically in the areas of training and development. More than two-thirds (67 percent) said that their companies offered some training and development services via the Web; 50 percent indicated that some “just-in-time” (no predetermined intervals) training was available to them, and 42 percent said their companies offer “extensive” opportunities for such training.

Investments in training and corporate processes may help boost the declining morale, but monetary compensation speaks loudly too. While a 2003 survey of IT managers conducted by Meta Group, Inc.found that 71 percent suffered from low morale, only 11 percent raised salaries in an effort to bolster job enthusiasm, but that may soon change, according to the results of another META Group staffing and compensation report.

Despite minimal IT spending, salaries for IT workers are expected to rise, the study finds, with 54 percent of respondents indicating that are still offering IT employees an annual year-end bonus, while a surprising 44 percent are using sign-on bonuses as a means to attract higher-level IT employees.

“There is little question that IT budgets will continue to decline slightly or remain flat this year,” says Maria Schafer, program director of META Group’s Human Capital Management Service. “What is most interesting is the fact that, despite this, we expect IT compensation to actually rise, in some cases at the expense of non-IT employees.”

In fact, the report found that the overwhelming majority of firms continue to pay IT employees higher salaries than their non-technical counterparts, with 75 percent of respondents indicating this, compared to 67 percent last year. This percentage is getting close to the historic high of 2000, in which 80 percent of respondents reported paying higher salaries to IT employees. This compensation imbalance can be partially attributed to the overall need to retain key IT staff.

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