A11 Creating People Advantage

Session A11Session A11

Creating people advantageHighlights from the global survey conducted by the Boston Consulting Group (BCG) for the WFPMA

Jean‐Michel CayePartner and Managing Director – Paris, France

Paul OrlanderPartner and Managing Director – Toronto, Canadag g ,

The sessions in the Insérer logoPersonal equity track

are presented by

Creating People Advantage How Companies Can Adapt their HR Practices for Volatile Times

Montreal, 27th of September 2010

1CPA 2010_Montreal-final_ 27-9-10 JMCPA.ppt

The Creating People Advantage series goes into fourth round

The CPA series has drawn strong participation in the past ...

The CPA series has drawn strong participation in the past ...

... and received extensive international media coverage

... and received extensive international media coverage

LaRepública

FinancialTimes

Times

Handelsblatt

Australian Fin. Review

The EconomicTimes

FrankfurterAllgemeine

Zeitung

TV: CNBC

Le Figaro

Il Sole 24 Ore

BusinessWeek

The HeraldBusiness

CPA Europe 2007

1,355 participants

CPA World 2008

4,741 participants

CPA Europe 2009

3,348 participants

Source: Selection of media responses 2007-2009

CPA World 2010

5,561 participants

BloombergBusinessweek

Le Figaro InterviewLe Figaro

CPA 2010 publication: Montreal, Sept. 27, 2010


Portugal 100

More than 100 nationalities participated in global HR study

Note: Not all countries shownSources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis

Norway 24Sweden 121

Zimbabwe 5

Ecuador 31Colombia 50

United Kingdom 131

Switzerland 67

Philippines 85

China 73

Slovenia

48

= 0

50–99100 or more

Fewer than 10

20–4910–19

Canada 438United States 293

Brazil 201

South Africa 97

Spain 50France 270

India 50

Australia 220

New Zealand 68

Singapore 3

Germany 173

Japan 18

Mexico 19Guatemala 16

Uruguay 27

Senegal 20

Denmark 42

Czech Republic 28

Estonia 1Austria 21

Russia 166

Taiwan 101Thailand 33

Sri Lanka 16

Argentina 25

Dominican Republic 24

Chile

7

Venezuela 38

Botswana 29

Finland 177

Hungary 36Netherlands 89

Belgium 26

Panama 24

Bolivia

4

Latvia 38

Poland 8

Slovakia 10

Malaysia 15

Costa Rica 42

Benin 4Algeria 1

Uganda 44Nigeria 8

Namibia 6

Malawi 2Tanzania 33

Swaziland 1

Italy

57Bulgaria 109

Turkey

53

Cyprus 20

Greece

89

Malta 74

Peru

26

Romania 52

Saudi Arabia 75

Serbia 22

South Korea 42

United arab. Emirates 10

Ireland 30

Macedonia 30

Paraguay

18

Kenya 11

Morocco 8

Nicaragua 8 Trinidad and Tobago 5

Tunisia 4

Côte d'Ivoire 3

Indonesia

3

Ukraine 3

Andorra 2

Moldova 2

Montenegro 2

Qatar 2Saint Kitts and Nevis 2

Afghanistan 1Albania 1

Brunei 1

Chad 1

Cape Verde 2

Angola 1


Interviews with executives have been conducted around the world

Source: Interviews; BCG/WFPMA analysis

Tota

l

Sou

th A

frica

Aus

tralia

New

Zea

land

Philip

pine

s

Col

ombi

a

Bra

zil

Arge

ntin

a &

Chi

le

USA

Can

ada

UK

Net

herla

nds

Turk

ey

Switz

erla

nd

UAE

Spa

in

Finl

and

Nor

way

Italy

Hun

gary

Ger

man

y

Fran

ce

Chi

na

15361233478

137411

5133455568

1212

24

Interviews in AfricaEurope

88 6

Latin

America

11

Asia / Pacific

28

Kore

a

Sing

apor

e

Indi

a

Rus

sia

Mid.East

5

North

America

15


Germany

USA

BASF Dr. H. Schwager CHRO

AmEx Kevin Cox EVP

HR

Australia Lynelle

BriggsAPSC Head of APSC

(Australian Gov.)

Europe

North America/ Latin America

Asia/Pacific/Australia/Africa

153 interviews have been conducted

BMW

Daimler

Sandy Price

Lazlo Bock

Joann

Eisenhart

Harald Krüger CHRO

Wilfried Porth CHRO

Head HR

VP of People OperationsSVP

WW HR

Finland Nokia Hallstein Moerk CHRO

South Africa Gold Fields Italia Boninelli SVP HR

Google

Pfizer

Sprint

China Jianjun

BaiMa Steel Group Head

of HR

France Schneider Electric Karen Ferguson EVP

HR

UK Lloyds BankingGroup Angie Risley Group HR Director

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http://de.wikipedia.org/w/index.php?title=Datei:BMW.svg&filetimestamp=20071020161529

http://www.daimler.com/dccom/home/de

http://www.nokia.de/

http://www2.sprint.com/mr/cmastaticfiles/non-landing/images/KeyEx/Price.jpg

http://www.goldfields.co.za/index.php

http://www.google.de/imgres?imgurl=http://www.apsc.gov.au/capam/briggslge.jpg&imgrefurl=http://www.apsc.gov.au/capam/briggs.html&usg=__NGuwXuUY9c0VJgb_JpdSGEHCsqs=&h=200&w=200&sz=9&hl=de&start=12&um=1&itbs=1&tbnid=nJx0UETf5cVI1M:&tbnh=104&tbnw=104&prev=/images%3Fq%3DAPS%2BC%2BLynelle%2BBriggs%26um%3D1%26hl%3Dde%26sa%3DN%26rls%3Dcom.microsoft:de-de%26tbs%3Disch:1

http://www.apsc.gov.au/index.html

http://www.google.de/imgres?imgurl=http://www.google.com/press/images/laszlo_bock.jpg&imgrefurl=http://www.google.at/press/images.html&usg=__LAtlDRlGCG8pmPEwZqICb8gANiI=&h=461&w=306&sz=48&hl=de&start=4&um=1&itbs=1&tbnid=8xtfP_BIznGTHM:&tbnh=128&tbnw=85&prev=/images%3Fq%3DLazlo%2BBock%2BGoogle%26um%3D1%26hl%3Dde%26rls%3Dcom.microsoft:de-de%26tbs%3Disch:1

http://www.google.de/imgres?imgurl=http://thm-a01.yimg.com/nimage/f0086a8e36e1c7dc&imgrefurl=http://www.123people.com/s/karen%2Bferguson&usg=__jm7DZZW8JDN6sfsy4oeHYmRq1Tw=&h=160&w=139&sz=5&hl=de&start=5&um=1&itbs=1&tbnid=BbqPntx8zOObuM:&tbnh=98&tbnw=85&prev=/images%3Fq%3DKaren%2BFerguson%2Bschneider%2Belctric%26um%3D1%26hl%3Dde%26rls%3Dcom.microsoft:de-de%26tbs%3Disch:1

http://www.lloydsbankinggroup.com/home.asp


Some Results


Google leads in ranking for best HR practices

Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA

analysis

23% of all respondents rated Google as the company with the best HR practice23% of all respondents rated Google as the company with the best HR practice

1

2

3

4


Insights on "Engaging Employees"

Laszlo BockGlobal Vice President of

People Operations at Google

Laszlo BockGlobal Vice President of

People Operations at Google

Hallstein MoerckExecutive Advisor & Former Executive

VP of HR at Nokia

Hallstein MoerckExecutive Advisor & Former Executive

VP of HR at Nokia


The 21 HR topics fall into five categories

Source: BCG analysis

Managing corporate social responsibility

Managing talent

Becoming a learning organization

Transforming HR into a strategic partner

Enhancing employee engagement

Measuring labor costImproving performance management and rewards

Measuring workforce performance

Improving leadership development

Managing work-life balance

Managing change and cultural transformation

Managing demographics

Strategically planning the workforce

Improving employer branding

Managing globalization

Delivering on recruiting

Managing diversity and inclusion

Restructuring the organization

Managing flexibility

Providing shared services and outsourcing HRMastering HR processes

Source

Perform

Develop

Affiliate

Achieve HR excellence



analysis

Talent, leadership development, engagement and workforce planning are the most critical HR topics

Low

High

Future

importance

2010

Sample size:5,561

Relevance today

HighLow

Mediumneedto act

Strong need to

act

Low need to act

Current capabilityHigh Low

Leadership development

Managingtalent

Strategic workforce planning

Employee engagement

HRprocesses

Labor costs


Recruiting

Flexibility

Performance management and rewards

Demo-

graphics

Change &Culturaltrans-formation

Globali-zation

Workforce performance

measurements

Shared services & outsourcing HR

Employer branding

Diversity &inclusion

Corporate

socialresponsibility

Work-life

balance

Learning

organization

HR as strategic partner


Note: N of each country is above 50Source: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis

Managing talent and improving leadership development ranked high in most countries

1 2 43 51 2 43 5

Northern America Northern America

Latin Am. Latin Am.

Mid.East AfricaMid.East AfricaEuropeEurope AsiaAsia PacificPacific

53333344

3444555435333

1121122212112

221321112114 21

Philip

-

pi

nes

New

Ze

alan

d

Aus

tralia

Chi

na

Sou

th

Afri

ca

Saud

i A

rabi

a

UK

Rus

sia

Net

her-

la

nds

Italy

Ger

-

m

any

Fran

ce

Bra

zil

Uni

ted

Sta

tes

Can

ada Men-

tions

in Top

5

14

13

13

8

Country

Subject

552

1 35

3

3

Performance and rewards

Employer branding

554 4 4Learning organization

4325 4Change and cultural transformation

234 24 5HR as a strategic partner

35455 5Workforce perform. measurement

Employee engagement

Workforce planning


Managing talent

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http://en.wikipedia.org/wiki/File:Flag_of_New_Zealand.svg

http://en.wikipedia.org/wiki/File:Flag_of_the_Philippines.svg


Performance management and rewards, and employee engagement, have jumped in current importance ranking

18192021

1234567891011121314151617

2010 ranking

Improving leadership developmentManaging talentEnhancing employee engagementMeasuring workforce performanceImproving performance management and rewardsManaging labor costsDelivering on recruitingTransforming HR into a strategic partnerStrategic workforce planningMastering HR processesBecoming a learning organizationManaging change and cultural transformationManaging flexibilityImproving employer brandingRestructuring the organizationManaging work-life balanceManaging corporate social responsibilityManaging diversity and inclusionManaging demographicsManaging globalizationProviding shared services and outsourcing HR


analysis

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2008 ranking

Managing talent



Managing work-life balance




Improving performance management and rewards




Managing demographics

Mastering HR processes




Providing shared services and outsourcing HR

Current importance


Of the Five Most Frequent Projects, Four Are Poorly Managed Lack of Focus of HR function?

Sources:

Proprietary Web survey with 5,561 responses; BCG/WFPMA

analysis.

Good practice•

Delivering on recruiting•

Mastering HR processes•


•


Number of projects undertaken

is above average

Number of projects undertaken

is below average

Below-average satisfaction

with projects

Above-average satisfaction

with projects

Difficult topics•


•

Strategic workforce planning•

Providing shared services and outsourcing HR

•


•

Managing demographics•


Under-leveraged•


•


•

Managing work-life balance•

Managing flexibility

Top five HR projects (number of projects)

Poorly managed•


•

Restructuring the organization•

Managing talent•


•


•

Managing labor costs•

Improving performance management and rewards


Top ten HR projects of high-performing companies

Top ten HR projects of high-performing companies

Low-performing companies rank five HR projects lower than high performers

Low-performing companies rank five HR projects lower than high performers


Managing talent





Managing labor costs

Performance management and rewards



1

2

3

4

5

6

7

8

9

10 -4

-4

0

0

1

-5

0

2

-1

-1

-5 -4 -3 -2 -1 0 1 2 3 4 5


analysis.

HR projects Number of ranks different from high performer

Three high-priority projects of high-performing companies are neglected by low performers


When adapting HR practices for volatile times five areas of HR should be in focus

Building Flexibility in the Workforce

A Strategic Workforce Plan to Build the

Capabilities You Need

Developing Capabilities for HR to Partner with

the Business Units

Creating a New Deal for Middle Managers

Do You Have the Right Future Leaders?

How Companies Can Adapt their HR Practices

for Volatile Times



analysis

Do you have the right future leaders?

Low

High

Future

importance

2010

Sample size:5,561

Relevance today

HighLow

Mediumneedto act

Strong need to

act

Low need to act



Managingtalent


Projections 2020 2030

Low Medium HighEmployability/immigration capabilityNo pressing talent shortageor skill gaps

High talent shortageor skill gaps

Very high talent shortage or skill gaps

Talent shortage or skill gaps

Manufa

cturing

Manufa

cturing

Constr

uction

Constr

uction TradeTrade

Hotels, restaur-

ants

Hotels, restaur-

ants

Trans-

port,

commu

nication

Trans-

port,

commu

nication OthersOthers

Public adminis

tration

Public adminis

tration

Edu-

cation

Edu-

cationUtilitiesUtilities

Health care

Health care

It & Bus.

service

It & Bus.

serviceFinan.serviceFinan.service

The region-industry matrix highlights likely skill shortages in 2020 and 2030

Pacific

Source: BCG analysis.Note: The country assessment scoring is derived from a combination of the employability score and the ease-of-immigration score. The country/ industry assessment scoring is based on the size of the current employment situation, the CAGR

difference between supply by country and demand by industry, and the CAGR

difference between labor supply and demand on the country level.

GER

TradeTrade OthersOthersUtilitiesUtilities

ITA

BRAMEXUSACAN

UK

ESP

FRA

AUSJPNKORCHNINDRUS

POL

SWE

TUR

Am

eric

aEu

rope

Asia

GER


Talent management: from serendipity to strategy

Ratios Leadeship Pipeline

~x 5

~x 3

~x 3

Function 1 Function 2 Function 3

Talent risks by functions% Talents / total staff

1 Division 2 Divisions 3 Divisions+

Proactive career management

Talent risks & strategies by geographies

€€

Leadership & Learning Center

Talent HR processes

BusinessStrategy Anticipate & Invest

Attract &identify

Assess&

select

Affiliate

Develop

1

2

3

4

5

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http://images.google.fr/imgres?imgurl=http://www.sanjosemagazine.com/main/wp-content/2007/11/best_places_to_work.jpg&imgrefurl=http://www.sanjosemagazine.com/main/%3Fp%3D376&usg=__grqpAQZUtkXAsZvMSd0dlV7JuWs=&h=350&w=630&sz=42&hl=fr&start=61&sig2=-UqQXQa1DMaFps46HS8IjA&um=1&tbnid=Xm6nLquupez2AM:&tbnh=76&tbnw=137&prev=/images%3Fq%3Dgreat%2Bplace%2Bto%2Bwork%26ndsp%3D20%26hl%3Dfr%26rlz%3D1T4GFRC_frFR202FR205%26sa%3DN%26start%3D60%26um%3D1&ei=haHDSr2ANs6e_gaIoa3NAg

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Talent issues to differentiate upon maturity of organization

–

Low turn-over and low growth–

Status-quo and silo oriented executives–

Overload of low performers–

Important HR systems legacy–

Complex decision making on talents–

More attractive for farmers than developers–

…+

Highly educated talents+

Internal sourcing more important than external

+

Important HR systems legacy+

Profitability and excellence oriented KPIs+

…

Mature Organizations

–

Often talent massive education required in RDEs

–

Unstability of talents and management–

Often non adapted managers–

Little culture of meritocracy in RDEs–

Lack of cohesion–

External sourcing is crucial–

Little equipement in HR systems–

…+

High turn-over and growth+

Rapid decision making on talents though some opacity

+

Growth oriented KPIs+

Attractive for developers+

…

Rapidly

Developing

Organizations


Top performing companies are able to fill top executive positions internally – Low performers struggle

Sources: Proprietary Web survey with 5,561 responses; 1,089 responses in this section; BCG/WFPMA

analysis

60%

47%

60%

13%

51%

63%

0

20

40

60

80Internal fill rate (%)

Top managersSenior middle managersFrontline managers

Low performerHigh performer


In North America women make up 1/3 of talent pools - in Europe less than 1/4 of employees in talent pools are women

Source: Proprietary Web survey with 5,561 responses; BCG/WFPMA

analysis

15%

24%

24%

24%

27%

32%

33%

96%

85%

76%

76%

76%

73%

68%

67%

Makeup of talent pool

80604020 1000

Women Men

Middle East 4%

Established Asia

Africa

Latin America

Europe

Emerging Asia

Pacific

North America 38%

31%

42%

44%

50%

49%

61%

90%

Companies with ≤10% women in talent pool


The best leaders will demonstrate differentiated leadership Need to navigate an uncertain, ambiguous world with a shortage of key talent

Source: Interviews, survey responses and BCG analysis

N

E

S

Timeless

Leadership differentiators

WDrive toachieve

JudgmentCourage

Integrity

Intelligence

mpathizeAchieve through network influence and authority

in & winDeliver sustainable success

to company and stakeholders

elf-correctUnlearn outmoded

success models

avigateEmbrace global uncertainty

and chart a clear course

Vision

Compelling aspiration

IQ and people smarts

Right trade-offsOwnership and risk

Resilience

Ethics


Development conversations and plans are relatively popular but not considered effective

Training actions performed (% of respondents)Training actions performed (% of respondents)Effectiveness of each training

action Effectiveness of each training

action

Low HighSources: Proprietary Web survey with 5,561 responses; 1,089 responses in this section; BCG/WFPMA

analysis.

8%

21%

22%

30%

30%

33%

40%

44%

47%

48%

International assignments

External assignments (such as joint ventures and NGOs

Tailored career tracks along functions, regions, position

Cross-functional assignments

Mentoring

Internal executive-development program

Individual coaching

On-the-job projects

Regular development conversations and plans

Technical and functional training


Top 10 stand-out preparation practices for Leadership development

1. Mandate experiences via development formulas, e.g. 2x2x2+5

2. Immerse leaders completely in unfamiliar markets (e.g., live in rural India, favelas, Iraq)

3. Temporarily assign leaders to external groups, e.g. industry policy groups, payers

4. Embed social causes into the business to generate leader loyalty

5. Provide opportunities for very high-potential leaders to "skip a chair"

6. Create critical assignments bank to develop next generation leaders and enable late career leaders to migrate to new role while still making value-adding contribution

7. Map external top talent in key markets to determine the market's best

8. Provide limited-authority experiences, e.g. peer-group leadership, JV leadership

9. Conduct "after-action reviews" every Friday or after every assignment

10. Conduct quarterly talent reviews with templates reporting action plan follow-up, senior team health, succession confidence, high-potentials pipeline, and diversity

Example practices

Expand horizons

Create fast tracks

Accelerate skills

development







the Business Units




for Volatile Times



analysis

Creating a new deal for middle managers

Low

High

Future

importance

2010

Sample size:5,561

Relevance today

HighLow

Mediumneedto act

Strong need to

act

Low need to act



Employee engagement


White paper on engagement was released in July 2010 Title: "Creating a New Deal for Middle Managers –

Empowering a Neglected but Critical Group"

......


Note: Scale of engagement indicators: 1 = strongly disagree, 2 =

disagree, 3 = neither disagree nor agree; 4 = agree; 5 = strongly agreeSources: Engaging

for

Results

database; BCG/WFPMA

analysis

Engagement of middle managers is still suffering after crisis

1 2 3 4 5

People managercapabilities 3.7

Recognition 3.5

Performancemanagement 3.3 -8%

-5%

-5%

Difference in engagement before and after the financial crisis

Engagement level of top management

is slightly down

Indi

cato

r of e

ngag

emen

t

Engagement 2009 <-7% <0%Change 2007-2009: >0%

Engagement score

Top managersTop managers

1 2 3 4 5

3.5

3.2

3.1 -14%

-14%

-10%

Middle managers are increasingly

disengaged

Engagement score

Middle managersMiddle managers

1 2 3 4 5

3.4

3.1

3.1 +7%

-6%

+3%

Engagement of team members has

not suffered

Engagement score

Team membersTeam members


The importance of middle managers

Middle managers...

manage day to day business and are key to

execution

are unengaged after the crisis

The Middle Matters

should function like a v-belt between top mgmt and

employees

have often been

neglected, in favor of top

managers and high potentials

make up the vast majority of managers

should translate vision and strategy to

employees

have a direct impact on employee

engagement

need support to develop leadership

skills


Middle managers need new roles, responsibilities, and levers

Source: BCG/WFPMA

analysis1. Span of control of 7 used in this example

High

pot

entia

ls

Topmgmt

Front-line management

~ 50-200 top managers

~ 7,000 middle managers

~ 43,000non-managers

Illustrative company with a workforce of 50,0001

Do we have too many management layers?

Do middle managers have the right levers to manage and engage?

Do middle managers have the required leadership skills?

Is middle managementactively involved in company affairs?

elayer

and create larger, exciting roles for middle managersD

mpower

managers to act

ccelerate

leadership skills

everage

the power of middle managers

E

A

L

Middlemanagement

Non-managers


1. Span of control less than sixSources: BCG/WFPMA

analysis

New DEAL interventions

Delayer and create larger, exciting roles

•

Significantly reduce micro-teams1

and increase average span of control•

Design new role mandates defining accountabilities, decision rights, key performance indicators, and desired leadership behavior for each middle manager

•

Redesign their vertical and horizontal career paths and performance management and incentive systems

D

Empower managers

to act

•

Give the middle managers the levers and the authority to manage•

Make middle managers accountable for their team organization •

Provide them with rigorous objective setting and evaluation systems for their teams •

Give middle managers leeway to reward and recognize their teams •

Grant them the responsibility and the means to develop employees

E

Accelerate leadership

skills

•

Train middle managers on managerial skills—especially goals setting, performance evaluation, and employee coaching and development

•

Develop leadership behaviors in middle managers consistent with company strategy through 360°

feedback, development workshops, performance management, and coaching

•

Establish modules along the hierarchy ("first leadership experience", "dealing with Generation Y", etc.)

A

Leverage the power of middle

managers

•

Involve middle managers in strategy development, continuous improvement processes, and innovation•

Establish "middle-out" programs and platforms to engage employees with corporate vision, strategy, values and actions

•

Establish recognition programs to celebrate success in the middle

L


Due diligence can help pinpoint

~ 50-200 top managers

~ 7,000 middle managers

~ 43,000non-managers

Illustrative company with a workforce of 50,0001

Topmgmt

Front-line management

Middlemanagement

Non-managers

High

pot

entia

ls

0

100

200

300

4321 ...111098765 1 2 3 4 5

Non-managersMiddle managersTop managers

Spans and layers analysis

Assess structural symptoms for sources of disengagement and inefficiency

•

Narrow spans of control (below 6)•

Too many layers

Average span of control: 5.3

Span of control

Micro teams

Elements of engagement

Engagement survey (EFR)

Assess engagement levels of employees for:•

Low overall engagement scores•

Dissatisfaction in specific domains•

Differences among management cohorts

Sources: Engaging for Results database, data from 2009; BCG/WFPMA

analysis

ObjectivesAspirations

AccountabilityCollaboration

Performance managementRecognition

People manager capabilitiesInteractions

Overall engagement

Engagement score

Illustrative example of spans of control of executives







the Business Units




for Volatile Times



analysis

A strategic workforce plan to build the capabilities you need

Low

High

Future

importance

2010

Sample size:5,561

Relevance today

HighLow

Mediumneedto act

Strong need to

act

Low need to act


Strategic workforce planning

Workforce performance

measurements


The time horizon is often shorter for workforce planning than for corporate strategy

Note: Values below 1% not shown.Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA

analysis.

Percentage of respondents

Companies that use the same time horizon for workforce planning and strategic planning

Company’s timehorizon forworkforce planning

6 or more

years

5 years

3 years

2 years

1 year

Company’s time horizon for strategic planning

4 years

5%

1%

4%9%

6 or more

years

5 years4 years3 years2 years1 year

3%

2%

2%

2% 7%

3%

10%

5%5%

17%

2%

1%

2%

14%


Derive actions from a

supply-and-demand

model: 6%3

Have a supply-and-

demand model:

9%2

Basic workforce models are prevalent, but more sophisticated simulations are rarely used

Have a supply model:15%1

Consider age of current workforce 62%

Consider current job groups 72%

Consider current job groups

Simulate different scenariosDerive workforce demand for the

entire company along job Simulate productivity increases

Simulate technology changes

70%

53%

47%

45%

39%

47%Simulate new hires

42%

%

77%

57%

36%

Simulate retirement

Staff reductions

Derive workforce supply for theentire company along job

Apprenticeship actions with quantified goals

Recruiting actions with quantified goals

36%

Simulate different scenarios

53%

Simulate attrition

47%

Qualification actions with quantified goals

33%

1. Subgroup is asked to further specify workforce supply model. 2Subgroup is asked to further specify demand model. 3Subgroup is

asked to further specify actions derived.Sources: Proprietary Web survey with 5,561 responses; 883 responses in this section; BCG/WFPMA

analysis.


Identify gaps/risk4

Define job roles

1

Job family group

Job family

Job function

Simulate workforce demand per job role

Simulate workforce supply per job role

2

3

Current workforce

Development scenarios

Assumptions--for example,•

Fluctuation•

Retirement•

Phased retirement

Workforce demand logic

Strategic scenarios

Assumptions—for example,•

Strategic planning•

Growth scenarios•

Technological changes

Future supply

Future demand

FY15FY14FY13FY12FY11FY10

FY11FY10 FY15FY14FY13FY12

Propose measures

5

•

Recruiting•

Training•

Transfers•

Insourcing/outsourcing•

Capacity reduction

>20

>15 to 20

>10 to 15

<-80 to -65

-80

Surplus or shortage of requirements in the respective year (%)

Strategic workforce planning at Lufthansa Technik

Gap analysis per qualification group 2008 2009 2010 2011 2012 2013 2014 2015

Specialist mechanical engineer -19% -27% -34% -39% -42% -46% -49% -64%

Specialist electrician 9% -25% -41% -35% -50% -55% -65% -71%

Supervisor mechanical engineer -15% -33% -40% -39% -33% -38% -61% -66%

Specialist electroplater -11% -38% -41% -38% -51% -58% -65% -67%

Specialist machinist 6% -10% -22% -33% -44% -44% -45% -46%

Instrumentation engineer ERI 21% 20% 17% 17% 15% 15% 7% -19%

Specialist for nondestructive testing -7% -36% -42% -48% -9% -57% -57% -58%

Specialist for blasting 23% 21% 21% 20% 14% 21% 11% -9%

Specialist painter/graphics -18% -38% -51% -64% -67% -58% -62% -62%

Supervisor electroplater -9% -21% -36% -36% -40% -47% -61% -61%

Instrumentation engineer electrician -12% -22% -24% -33% -37% -40% -51% -48%

Supervisor machinist -2% -13% -15% -21% -21% -24% -31% -38%

… 5% -1% -21% -38% -47% -53% -65% -67%

Source: BCG analysis.

>5 to10

<-5 to 5

<-20 to -5

<-35 to -20

<-50 to -35

<-65 to -50

Illustrative—fictive numbers


Companies rely more on basic input-related KPIs and often lack efficient follow-up processes

Inpu

t-rel

ated

KPI

sO

utpu

t-rel

ated

KPI

s

Input-related KPIs are usedmuch more widely thanoutput-related metrics

(% of respondents)

Input-related KPIs are usedmuch more widely thanoutput-related metrics

(% of respondents)

Target values, processes to improve results, and compensation linkage to

KPIs are rarely used (% of respondents)

Target values, processes to improve results, and compensation linkage to

KPIs are rarely used(% of respondents)

Use of metric Compensation linkProcess to improve resultsTarget value

0 10 20 30 40 50 60 70

% of new hires receivingtop performance ratings 12%

ROI of recruiting 13%

ROI of training 14%

Value added per person 27%

Training costs as% of total budget 41%

Training time per employee 46%

Cost of personnel 62%

Employee head count 68%

Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA

analysis.

0 10 20 30 40 50 60 70







the Business Units




for Volatile Times



analysis

Building flexibility in the workforce

Low

High

Future

importance

2010

Sample size:5,561

Relevance today

HighLow

Mediumneedto act

Strong need to

act

Low need to act


Managingflexibility


Labor cost reduction was often achieved by reducing head count

Note: Values below 1% not shown.Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA

analysis.

Head count reductionin 2009

1%

4%

2%

1%

3%

7%

4%

1%

6%

16%

4%

2%

2%

6%

6%

1%

2%

6%

7%

14%

>40%21%–

40%11%–20%5%–10%2%–4%<2%

>40%

21%–40%

11%–20%

5%–10%

2%–4%

<2%

Percentage ofrespondents

In 34% of companies,labor cost reduction was higher than head count

reduction

In 13% of companies,labor cost reduction was lower than head count

reduction

In 48% of companies,labor cost reduction equaled head count reduction

Labor cost reduction in 2009


Flexibility and cutback measures are used during difficult times

Comp.and

benefits

Worktime

Head-count

Workorgani-zation

Source: Proprietary web survey with 5,561 responses; 1,338 responses in this section; BCG/WFPMA

analysis; Percentage of companies using measure during crisis

•

Performance management is tightened

50%•

Profit-related component of salary is increased

14%

•

Employees take time off for earlier overtime

31%•

Flexible work time is set up

25%•

Work week is shortened temporarily

16%

•

Job mobility is reinforced: employees are trained

43%

to perform different jobs within company

•

Fixed-term contracts are not extended

40%•

Hiring criteria are tightened

38%•

Number of hierarchies is reduced

34%•

Tasks are centralized in shared services centers

29%•

Work is outsourced

27%•

Sub-contracted activities are insourced

19%•

Work is offshored

9%

•

Company events are cut back

64%•

Training activities are cut back

47%•

Bonus payments are cut back or postponed

44%•

Fringe benefits are cut back or postponed

29%•

Overtime is no longer paid out

21%•

Base salary is reduced

19%•

Non-monetary component of salary is increase

9%•

Pension plans are reduced

9%

•

Employees are forced to take their vacations

35%•

Part-time work arrangements are increased

19%•

Unpaid leaves are increased

18%•

Employees are encouraged to go on sabbaticals

11%

•

Recruiting is cut back

63%•

Employees are laid off

48%•

Share of temporary employees is increased

24%•

Early retirement is increased

21%

Cutback measuresFlexibility measures % of companies that performed action

% of companies that performed action


Actions performed in 2009


Actions maintained in the future


Effectivenesscompared to average


Flexibility measures tend to be more effective

9%

Subcontracted activities are insourced 19%

Work is outsourced 27%

Tasks are centralized in shared-service centers 29%

The number of hierarchies is reduced 34%

Processes are streamlined 61%

Hiring criteria are tightened 38%

Fixed-term contracts are not extended 40%

Job mobility is reinforced 43%

Workweek

is

shortened

temporarily 16%

Flexible work time is set up: pay is reduced for reduced work hours 25%

Employees

take

time off to compensate

for

earlier

overtime 31%

Profit-related component of compensation is increased 14%

Performance management is tightened 50%

Work is offshored

62%

61%

75%

72%

30%

66%

19%

71%

53%

79%

79%

61%

46%

65%

-5%

1%

-4%

0%

1%

9%

9%

5%

9%

2%

10%

6%

-1%

4%

Lesseffective

Moreeffective

1. Compensation and benefits Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA

analysis.

C&

B1

Wor

k tim

eH

ead

coun

tW

ork

orga

niza

tion


Cutback measures tend to be less effective

47%

Company events are cut back 64%

Employees are laid off 48%

Recruiting is cut back 63%

Employees are encouraged to go on sabbaticals 11%

Unpaid leaves are increased 18%

Part-time work arrangements are increased 19%

Employees are forced to take their vacations 35%

Training is cut back

9%

Nonmonetary compensation is increased 9%

Base salaries are reduced 19%

Overtime is no longer paid out 21%

Fringe benefits are cut back or postponed 29%

Bonus payments are cut back or postponed 44%

Early retirement is increased 21%

Share of temporary employees is increased 24%

Pension plans are reduced

33%

47%

17%

30%

43%

29%

46%

48%

52%

85%

28%

50%

42%

23%

19%

30%

3%

0%

4%

4%

-15%

0%

3%

5%

-15%

-8%

-9%

-24%

-10%

-7%

-7%

-3%


analysis.

Com

pens

atio

n an

d be

nefit

sW

ork

time

Hea

d co

unt







Lesseffective

Moreeffective


High performing companies are more selective in their use of specific measures

Flex

ibili

ty m

easu

res

Cut

back

mea

sure

s

Processes are streamlinedJob mobility is reinforced: employees are trained to perform different jobsFixed-term contracts are not extendedThe number of hierarchies is reduced and the span of control is

increasedPerformance management is tightenedHiring criteria are tightenedFlexible work time is set up: pay is reduced for reduced working

hoursEmployees are compensated for earlier overtimeTasks are centralized in shared service centersWork is outsourcedSubcontracted activities are insourcedThe workweek is shortened temporarilyThe profit-related component of compensation is increasedWork is offshoredCompany events are cut backRecruiting is cut backEmployees are laid offTraining is cut backEmployees are forced to take their vacationsBonus payments are cut back or postponedFringe benefits are cut back or postponedPart-time work arrangements are increasedOvertime is no longer paid outThe share of temporary employees is increasedEarly retirement is increasedBase salaries are reducedUnpaid leaves are increasedPension plans are reducedEmployees are encouraged to go on sabbaticalsThe nonmonetary component of compensation is increased

more oftenless often

high low performer

Sources:

Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA

analysis. Seldom OftenUsage of measure


Flexibility measures tend to rank higher on perceived effectiveness and employee engagement


analysis.Note: Size represents the percentage of companies using the measure during the crisis

Below average Average engagement Above average

Ave

rage

ef

fect

iven

ess

Abov

e av

erag

eBe

low

ave

rage

7

21

Averageflexibilitymeasure

10 9 8

3

Averagecutback

measure

4 5

Average flexibilityAverage cutbackFlexibilityCutback

Examples of cutback measures

1 Employees are laid off

2 Early retirement is increased

3 Base salaries are reduced

4 Bonus payments are cut back or postponed

5 Company events are cut back

Examples of flexibility measures

6 Performance management is tightened

7 Job mobility is reinforced: employees are trained to perform different jobs within the company

8 Processes are streamlined

9 Hiring criteria are tightened

10 Flexible work time is set up

6

Measures:







the Business Units




for Volatile Times



analysis

Developing capabilities for HR to partner with the business units

Low

High

Future

importance

2010

Sample size:5,561

Relevance today

HighLow

Mediumneedto act

Strong need to

act

Low need to act


HR as strategic partner


Today, how much time does your HR function spend on what?

How much time do you spent on what? Actual vs target numbers

How much time do you spent on what? Actual vs target numbers

Strategic future focus

People

Day-to-day business

Process

Functionalexpert

PlanungControlling

Besetzung/Recruiting

BeurteilungKarriere-

management

ZielvereinbVergütung

Administrativeexpert

Change agent &peoplepertner

Strat business

partner

Human capital manager

...%

...%...%

...%

...%

...% Allocation of the HR department's capacity


HR is enhancing its role as business partner, but integrating HR activities into line management is proving ineffective

24%

26%

30%

35%

41%

43%

73%

0 20 40 60 80

Outsourced HR activities

Integrated HR activities into line management

Bundled HR services in enterprise-wide shared-service centers

Introduced or enhanced the role of the HR business partner

Built HR centers of excellence

Bundled HR services in HR shared-

service centers

Introduced HR employee self service

Percentage of respondents that introduced a conceptPercentage of respondents that introduced a conceptEffectiveness of

each conceptEffectiveness of

each concept

Sources:

Proprietary Web survey with 5,561 response; 641 responses in this section; BCG/WFPMA

analysis.

Low High


Business planning and analytics rank as high priorities, but capabilities lag

Low High

Sources:

Proprietary Web survey with 5,561 response, 641 responses in this section; BCG/WFPMA

analysis.

HR professionals’ view

IT acumen

Conflict resolution

Policy implementation

HR expertise

Contracting

Marketing

Project management

Resource management

Business managers’ view

HR Business Partner Skills: Differences in Importance and Capabilities Ranked by GapHR Business Partner Skills: Differences in Importance and Capabilities Ranked by Gap

Low High

Business analytics

Business planning

Client relationship

management

IT acumen

Conflict resolution

Policy implementation

HR expertise

Contracting

Marketing

Project mgmt

Resource mgmt.

Business analytics

Business planning

Client relationship

management

CapabilityImportance

1

2

3

4

5

6

7

8

9

10

11

1

2

3

4

5

6

7

8

9

10

11


Only 40 percent of respondents offer training on business expertise to HR partners

15%

27%

29%

34%

37%

40%

41%

56%

57%

Offer rotational programs outside the HR function

Build financial acumen

Employ people from outside HR

Prioritize business knowledge and capabilities in hiring

Measure and provide incentives based on business performance

Offer training on business expertise

Develop change management capabilities

Offer training on leadership and managing people

Offer training on HR expertise

Activities performed (% of respondents)1Activities performed (% of respondents)1 Effectiveness of activitiesEffectiveness of activities

1. Includes only companies that have introduced the HR business-partner position. Sources: Proprietary Web survey with 5,561 response; 641 responses in this section; BCG/WFPMA

analysis.

Low High


8

Dealing with low performers is a development priority for both groups

Business Managers’ Skills: Differences in Importance and Capabilities Ranked by GapBusiness Managers’ Skills: Differences in Importance and Capabilities Ranked by Gap

CapabilityImportance

Sources: Proprietary Web survey with 5,561 response, 641 responses in this section; BCG/WFPMA

analysis.

Low High

Assess training needs

Recruiting

Make redundancydecisions

Make promotiondecisions

Manage staff costs

Deal with low performers

HR strategy development

Provide training

Low High

Assess training needs

Recruiting

Make redundancydecisions

Make promotiondecisions

Manage staff costs

Deal with low performers

HR strategy dev.

Provide training

1

2

3

4

5

6

7

81

2

3

4

5

6

7

HR professionals’ view Business managers’ view


Leadership training dominates business managers’ curricula

6%

7%

17%

18%

22%

23%

27%

27%

43%

0% 10% 20% 30% 40% 50%

Offer training on business expertise

Offer training on HR expertise

Offer training on leadership and managing people

Offer training on change management skills

Offer rotational programs that includea stay in the HR function

Employ former HR professionals as business managers

Offer training on HR information technology

Prioritize HR knowledge and expertise in hiring decisions

Measure and provide incentives based on people management performance

Activities performed (% of respondents)1Activities performed (% of respondents)1 Effectiveness of activitiesEffectiveness of activities

1. Includes only companies that actually performed the activity.Sources: Proprietary Web survey with 5,561 response; 641 responses in this section; BCG/WFPMA

analysis.

Low High


Discussion


CPA 2010 comprises of the report supplemented by a CD with interactive material and a White Paper

•

White Paper stand-alone and attached to the report:–

Focus on engaging and empowering middle managers–

White paper has been sent out to local offices as PDF–

PDF version available for download at www.bcg.com

or potentially via WFPMA

affiliates web sites

•

10,000 hard copies printed –

will be sent out to clients, interview partners, WFPMA conference participants and survey respondents

•

Report includes 21 HR topics, 4 deep dives and several case studies (~50p)•

Report can be ordered via www.bcg.com•

PDF version available for download on BCG Perspectives or potentially via WFPMA

affiliates web sites

•

CD with electronic material and extra analyses:–

33 countries: current capabilities and future importance of 21 HR topics–

15 industries: current capabilities and future importance of 21 HR topics–

additional case studies–

two video interviews–

report and white paper

http://www.bcg.com/

http://www.bcg.com/


The partners

Source: WFPMA

Homepage

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insights into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competit

ive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit www.bcg.com.

The World Federation of People Management Associations (WFPMA) is a global network of professionals in people management. It was founded in 1976 to aid the development and improve the effectiveness of professional people management all over the world. Its members are predominantly the continental federations which are made up of more than 70 national personnel associations representing over 400,000 people management professionals. For more information, please visit www.wfpma.com.

A11 Creating People Advantage

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