Smart Human Capital Strategies for Uncertain Times

R. Sathiyanarayanan

Principal Consultant

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Agenda

1. How change is driving the need for an agile workforce

2. Making a talent strategy work – A business advantage and imperative

3. Smart Strategies in Uncertain times

4. Align HR and talent management – The Role of Technology

Concerns about a Global Recession …

Managing in Uncertain TimesEffective HR cost-cutting will be imperative

“Many companies expect to increase employee

communication & make a range of cost cutting changes

in the next 12 months. Most notably, one quarter plan

layoffs, hiring freezes, & increased employee

contributions to healthcare premiums.”

Watson Wyatt Survey, “Effect of the Economic Crisis on HR Programs. 10/08

Drivers of Change in the Workforce

Disengaged Employees Leadership Development

Shrinking Workforce

1.1%

1.7%

1.2%

0.4%

0.2%0.3%

0.2% 0.2%

1.6%

2.6%

0.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1950s 1960s 1970s 1980s 1990s 2000s 2010s 2020s 2030s 2040s 2050s

Labour Force Growth (Population = 16-65)

Multiple Generations

“…visionary HR first must clarify what an organization’s work force needs to become, and then must build a blueprint of the necessary capabilities and actions. These steps depend on an employer’s ability to find new information showing how HR initiatives do or do not fuel the organization’s objectives. ”

Today’s Crisis Impacts Future Survival

Will you have the right workforce to drive tomorrow’s transformation?

Haig Nalbantian and Colleen O’Neill of Mercer Human Resource Consulting —“Looking for Answers in All the Wrong Places” for WorldatWork

Morale Matters

Employee Performance & Engagement Can Make or Break

the Bottom-Line

Fact: Employee engagement has

declined 18% since the financial

crisis began, translating into a

staggering 3%-4% drop in

productivity.

Fact: One in four high potential

employees plan on quitting their

job in 2009.

Sources: Corporate Executive Board, December 2008

Increased Executive Focus on Talent

Three-quarters of CEOs say that lack of key skills is one of the biggest threats to their business

(rising to 86% for APAC)

PricewaterhouseCoopers 11th Annual Global CEO Survey

Talent Management Evolution

Old Way New Way

Talent Mindset HR responsible for People

Management

All managers – starting with

CEO are accountable for

building Talent Pool

Employee Value

Proposition

We provide good pay &

benefits

We shape our company,

even our strategy to appeal

to talented people

Recruiting Recruiting is like purchasing

- Seller’s market

Recruiting is now marketing

Growing

Leaders

Development through

Training

Fuel development through

stretch jobs, coaching, and

mentoring

Differentiation We treat everyone the

same

We affirm all our people and

invest in A, B, C players

60%

40%

20%

Harvard Business Review, July-August 2008

Percentage gap between top and bottom quartiles

Another critical goal during a downturn is getting more "bang for the buck" from employees … by increasing a company's operating scale, making processes more efficient to reduce rework, and stepping up efforts to automate manual procedures. IT is essential to all of these efforts.. McKinsey, “Managing IT in a Downturn,” 2008

1965 2005

Ma

rgin

Ga

p

1995

IT Drives Higher Performance, Profitability

Making a Talent Strategy Work

More than a Simple HR Strategy

HR & Talent Management

Time

Core HR

Benefits

Self

Service

Position

Management

Payroll

Business

Strategy/

Metrics

Evolution from HR… to Talent Management… to

Integrated Talent Management

Integrated talent management aligns business strategy

and metrics with talent and HCM management

Time

Core HR

Benefits

Self

Service

Position

Management

Payroll

Business

Strategy/

Metrics

Human Capital

Management

• Core HR

• Payroll

• Benefits

• Time

• Position Mgt

• Self Service

Business Strategy

• Grow Business

• Improve Profitability

• Market Responsiveness

Talent Management

• Recruiting

• Performance mgt

• Succession planning

• Workforce planning

• Learning mgt

• Compensation planning

Metrics

Metric Examples:

• Improve workforce

productivity

• Retain high performers

• Develop employees

• Improve leadership

• Etc.

Aligning People to Business Strategy

Growth Strategy – How will you build the right capabilities and leadership for growth?

Expanding Markets – How will you shift to a global focus?

Demographic Shifts – How will you address the loss of knowledge and skills with retiring employees?

Workforce Capacity – How will you forecast the right level of Workforce capacity?

Organization Design – How do

you design the organization to

support the strategy?

Talent Planning – How can you

ensure having the right people in

the right roles at the right time?

Talent Bench – How can you build

leadership pipeline at multiple

levels in the organization?

Talent Development – How can

you foster continuous

development?

What if Business has… HR Must Provide…

“Managing Talent” in Times of Uncertainty

Drop in employee morale

• Employee Engagement Tools• Compensation Review

• Performance Management

• Succession Planning

• Effective Communication

Organizational Restructuring

• Talent Redeployment• Organizational Modeling

• Internal Skill Analysis

• Employee Interests (Career

Plans)

• Able to Identify Key Talent• Top Performers

• Critical Skills (Competencies)

• Impending Departures

Reduction in Force

INTERNAL ONLY

Why Talent Matters: Value and Money

Value of Top Performers – Two, three times even 12 times the

performance of average employees (Ulrich and Smallwood)

Cost of Losing Talent – 1 ½ times burdened salary. Cisco estimates

losses of $250K for each talented engineer it loses. Bristol Meyers

Squibb loses $500K for each senior leader lost (HCI). Bill Gates says the

loss of one top engineer to a top competitor will cost Microsoft $1 billion

over the course of that engineer’s career

Cost of Poor Hire – $300K average impact in knowledge-economy firm

(Sullivan)

Impact of “bad fit” Executive Hires – 40% fail within the first 18

months (Charan)

Cost per Day – $7000 avg per day for operating without a key player

(Sullivan)

Why Talent Matters: Productivity

Engagement Levels – Only approximately 25% to 55% of employees are engaged (Watson Wyatt and CLC)

Breakeven Point – 6.2 months for a manager to become productive in a new job (Watkins).

Manager Ripple Impact – On average, a manager’s actions impact 12.4 people in a company (Watkins)

Deployment – Only about 20% of employees do what they do best at work (Buckingham)

Performance Expectations – Less than 50% of employees know what is expected of them at work (Stolovich)

Organizational Learning – Few organizations do a good job of sharing “what works”

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“By excelling in Talent Management,

the average Fortune 500 company

can generate a nearly 15%

improvement on earnings.”

Book of Numbers Research

The Hackett Group

Smart Strategies in Uncertain times

Smart Strategy: Increase Productivity and

Contain Costs

Actions You Can Take Immediately:

Automate Service Delivery

Identify & Segment Talent

Engage the Workforce

Develop Future Leaders

Solution

Automate Service DeliveryImprove Service Level Management and Shared Best Practices

Elaborate, out of date

HR practices slow

resolution time and

impact productivity

BenefitChallenge

Staff reductions leave fewer support staff to manage service delivery

HR Self Service and

HelpDesk for Human

Resources

• Employee and Manager Self –Service Capabilities

• Best of breed integrated HelpDesk application

• HR Service Delivery best practices are built-in

• Role based 24 X 7 access

to HR info empowers

employees to self-manage

own HR data

• Service level management

sets issue resolution

expectations &

commitments to employees,

• Knowledge library easy to

setup, access and update

and operational dashboards

increase insight

• Competency based call

routing increase

productivity, resolution time

and resource deployment

Must empower

workforce to

maintain accuracy of

personal data

HR knowledge

dispersed,

unquantified and

inaccessible

Disparate systems

and manual

processes are

driving up costs

Solution

Identify and Segment TalentImprove Morale and Lower Cost with Integrated Talent Management

If layoffs are coming,

do I know who to cut

and to keep? What

about morale?

BenefitChallenge

Lack of succession for top positions could expose my organization

Integrated Talent

Management

• Align Workforce and Enterprise Goals

• Engage Employees to Deliver Results

• Analyze Talent and Optimize Performance

Are the right

rewards going to

the top performers?

Am I sure?

• Engage workforce with collaborative tools and fully understand key positions and top performers

• Integrated processes reduce hardware and software overhead and ensure single source of truth

• Integration of pay, performance, and sales systems ensures top performers are rewarded

• Succession planning at all levels conveys careers matter, which leads to a more productive workforce and higher sales growth

Solution

Engage the WorkforceImprove Productivity & Lower/Contain Costs with Workforce

Communications

Does the workforce

really understand

our policies and

goals?

How do I gauge

workforce product

or service

preparedness?

Do I really know if

morale is good or

bad?

I need to cut costs –

which programs are

successful and

which ones aren’t?

BenefitChallenge

Workforce

Communications

• Deliver messages to

targeted workforce groups

• Capture workforce

feedback and take action

• Gain program insight and

quantify success

• Reduce risk of non-

compliance

• Improve productivity through

increased employee

engagement

• Identify over/under

performing areas

• Identify workforce segments

requiring additional training /

development

• Reduce program costs by

understanding needs

• Ensure right decisions are

made in tough times

Workforce Productivity Impacts Business $$

Source: 2007, Gallop

Solution

Develop Future LeadersGrow Workforce Capabilities with Learning and Development

BenefitChallenge

LearningManagement Solutions

The best way to . . .

• Improve workforce skills

• Increase workforce knowledge

• Ensure workforce compliance

Poor visibility into

current and future

training needs

Increasing number

& complexity of

global HR

requirements

High cost of

compliance and

certification

Inconsistency in

business processes

create unnecessary

risk

• Quickly roll out training to a global employee base that ensures requirements are met

• Analytics provide corporate and local understanding of skill gaps and remedies

• Reduce costs and risk with improved regulatory compliance by automating certification notifications

• Ensure workforce is trained on the latest process changes and in alignment with corporate objectives and legal requirements

Action Benefit Area Percentage Improvement

Automate

service

delivery

• Workforce service delivery • 90% less HR printing and distribution

costs

• 50% less payroll processing fees

• 80% benefits enrollment fees

Identify and

Segment

Talent

• Competency and profile

management

• Performance Management

• 80% less HR administrative time to

support performance review/appraisal

• 33 times higher operating income

growth

Engage the

Workforce

• Workforce

Communications

• 5 times higher operating income

growth

• 46% fewer high performer separations

Develop Future

Leaders

• Learning management

system

• 44 times higher operating income

growth

• 41% productivity improvement in

workforce development staff

Sources of Benefit from Increasing Productivity and Containing Costs

Smart Strategy: Increase Productivity and

Contain Costs

Align HR with Talent Management

The Role of Technology

Transforming into an Agile Business

Before embarking on a talent management initiative,

executives should ask the following questions:

• “Do our talent management processes and HR

organization align to support business strategy?”,

• “Have we evaluated our company’s current IT platform

in the context of likely change?”,

• And, "Do we have a well integrated technology

foundation that can support change on an ongoing

basis?"

Empowers HR to provide flawless delivery of HR

programs and management support to the businesses.

Results in lower long-term total cost of ownership.

Reduces amount of time and labor costs in performing

administrative or transactional activities.

Provides reliable real-time data for measurement and

management of talent.

Results in stronger controls and reduced risks.

The Role of Technology

Putting it all together…

Business IntelligenceAt All Levels

Summary

• Current economic climate: a challenge & an opportunity

• Leaders will capitalize

• Clear winners and losers will emerge

• Target High-Impact Opportunities within Human Capital

Management

• Determine selective investments in technology

• Quick ROI focused on Cutting Costs and Increasing Productivity

• Leverage existing investment

• Which of these solutions do you already own

Thank You