Smartsizing
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Transcript of Smartsizing
Empowering Organizations to Empowering Organizations to
Achieve Extraordinary ResultsAchieve Extraordinary Results
SmartSizing The Employment Law
Conference
September 21, 2009
• What is the business scenario?
• How can HR contribute to the bottom-line?
Outline
• SmartSizing process
• Tangible next steps
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
� Reduce all the discretionary expenses� Contractors/consultants/temps
� Training
� T & E
� Advertising
� Search fees
� Capital spending
� Overtime
Typical actions in a downturn
� Temporary actions hoping for market recovery• Bonuses
• Promotions
• Hiring freeze
• Merits
• Furloughs
• Pay cuts
• 401(k) match
• Headcount reductions
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
WHAT’S NEXT?
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
Deep Cuts for Today’s EPS
$
P
R
O
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
F
I
T
S
Today Future
� The “tipping point” where actions taken preserve the
company’s future potential
� Strategy and core competencies are preserved in your
market space
� Key customer service levels are maintained
SmartSizing
� Key customer service levels are maintained
� Bold actions are taken instead of a series of minor actions
over time
� Senior leaders are committed to the actions
� Employees fully understand and embrace the direction
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
� Assess the business situation
� Ensure strategic alignment and executive commitment
� Challenge historic business mechanisms
SmartSizing process
� Build business strategy consensus
� Develop go-forward plans/Implement/Monitor
� Risk management
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High Value Short Sale Foreclosure
What is your business scenario?
High Value Short Sale Foreclosure
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Growth Decline
� Key business metrics and cost drivers
� Current organization structure
� Employee concerns
Assess the business situation
� Business opportunities and risks
� Sacred cows
� Senior leadership competency
� Resources required
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� Updated strategy and financial goals
� Senior leadership commitment levels
� Organization effectiveness criteria
Ensure Strategic Alignment
� Must do’s at all costs
� Data requirements
� Project organization and staffing
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� New and different processes and approaches
� What can you outsource, divest, consolidate, improve
efficiencies, find alternative distribution channels, reduce
layers, reduce costs, etc. while preserving the future
potential?
Challenge historic business mechanisms
potential?
� Review the organization structures
� Bring in external benchmarks for key functions, processes
and the business
� Survey your customers – Value, Need, Satisfaction?
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
Organization structure for targeted discussions
VP
Director Research
Director Production
Director Quality
Director Purchasing
Administrative Assistant
There’s always
a story!
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Director Research
Director Production
Supervisors
Leads
Director Quality
Managers
Managers
Director Purchasing
Managers
Supervisors
HR Functional Benchmarking
HR Functional Ratios 2005 2006 2007
HR FTE ratio 89 89 94
Recruiting/staffing FTE ratio 463 441 543
Business Partner FTE ratio 941 974 1,016
HR leadership & strategy FTE 1,092 1,180 1,282
Source: PwC Saratoga US Human Capital Effectiveness Report
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
HR leadership & strategy FTE
ratio
1,092 1,180 1,282
Compensation FTE ratio 1,157 1,254 1,635
Benefits FTE ratio 879 771 746
HR spend per employee $1,400 $1,611 $1,610
Revenue per employee $284k $330k $355k
Metric Current
Industry
(2000 companies)
Net New Business 23.4% 36.5%
Forecast Acc. - Wins 60% 57%
Quota per Rep $1.6m $0.92m
Start-up Ramp 4 mos 6 mos
Attrition - Sales Force 12.6% 29.7%
Sales Rep to Manager 4.4 5.3
Reps > 100% Quota 40.5% 62%
Average Deal Size 16k Bottom 42.1%
Sales Channel
Direct 87% 70%
Sales Functional Benchmarking
Copyright 2009 Revenue Governance
Direct 87% 70%
Indirect 13% 19%
Telesales 0% 11%
SG&A 27.3% 33.2%
Sales to SE Ratio 2.2 n/a
Average Sales Cycle 4 mos Top 10%
Variable Compensation 53% 42%
Targeted Comp to Plan 178K Top 40%
Lead Generation Unknown 52% marketing
Revenue/Quota Rep $1.1m $0.81m
Attainment 69.5% 88.2%
Source: CSO Insights 2009 Survey Results
� Base pay/merit
� Headcount
� Spans of control and
layers
� Vendors and contracts
� Human capital metrics
� Annual and Long-Term
incentives
� Benefits
� Promotions
� Learning
What’s in your line of sight for ROI?
� Learning
� HR administration
� HR service delivery
� Talent development
� Workforce planning
� Leadership development
� Succession planning
� Executive retreats
� Holiday functions
� Food subsidies
� Vacation carryover
� Executive compensation
practices
� Perquisites
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1 – Increase Medical Contributions-low
2 – Increase Medical Contributions-moderate
3 – Increase Medical Contributions -severe
4 – Medical Plan Design Changes - low
5– Migrate PPO Participants to HMO/POS - moderate
6 – Medical Plan Single Option High
Deductible - severe
7 – Medical Spousal Surcharge - low
8 – Medical Tobacco Surcharge -moderate
9 – Increase Waiting Period New Hires -severe
10 – Increase Dental Contributions - low
11 – Increase Dental Contributions -
MAXIMUM
ABC Company
Cost Savings
5
6
1
129
3
4
2
20
21
22
$148k
$169k
$51k
$385k
$30k
$81k
$41k$39k
$48k
$65k
$131k
2010 plan design options - Impact
11 – Increase Dental Contributions -moderate
12 – Increase Dental Contributions –severe
13 – Life – Reduce Executive Benefit to that of All Other - low
14 –Reduce amount of life insurance to flat $50k – moderate
15 – Reduce amount of life insurance to flat $25k - severe
16 – LTD Employee Contribution 25% - low
17 – LTD Employee Contribution 50% -moderate
18 – LTD Voluntary Plan – severe
19 - Vision Employee Contributions to 99% - low
20 – 401(k) – Reduce Match to 50%
21 - 401 (k) Eliminate Match
22 – Freeze salariesMI�IMUM �egative
Employee Relations Impact
MAXIMUM �egative
Employee Relations Impact
15
5
7
13
14
16
17
18
8
10
19
11
$7k
$14k
$30k
$13k
$7k
$16k
$1k
$26k
$3k $3k
$28k
MI�IMUM
ABC
Company
Cost Savings
$4k
Copyright © 2009 The McCart Group. All rights reserved. Use, duplication, or sale of this illustration or data contained herein, is prohibited.
� Senior team review and approvals
� Finalize plans and budgets
� Develop rollout strategy and tactics
Build Business Strategy Consensus
� Deploy effective change management
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� Develop master plan that is led and coordinated across
the functions and businesses
� Includes restructuring, strategic use of performance
coaching, and outplacement
Develop Go-Forward Plan/Implement/Monitor
� Create oversight group to monitor progress
� Resource the project management function
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� Most actions need to be scrutinized for unintended
consequences and risk mitigation
� This mindset helps you with downsizing, terms and
conditions, vendor management, severance agreements,
etc.
Risk Managment
etc.
� Use strategic outplacement services to help mitigate your
risks and coaching to increase productivity
� The last thing you need are large penalties, poor PR, and
employee ill-will in the community
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� New reality of planning and reaction to outplacement
� Helps mitigate your risks, productivity of remaining
employees, and outgoing employee goodwill
Risk Management – Strategic Outplacement
� Prevents costly litigation
� Identify key employee issues and proactively address
issues
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� Right people in right seats
� Align organization goals with individual skills and
expectations
� Increases productivity
Risk Management - Coaching
� Increases productivity
� Prevents costly turnover at the top (6x to 9x annual
compensation)
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� Conduct a customer satisfaction and value survey
� Develop ways to replace talent pools as demand increases
� Scrutinize the big cost drivers and figure out how to improve efficiencies
and drive costs out of the business – LEAN, Work-Out, etc.
� Help your customers deal with the problems – especially sales
Tangible steps to model the way
� Help your customers deal with the problems – especially sales
effectiveness
� Identify and deploy external benchmarks for the various functions – HR,
IT, Marketing, Sales, etc.
� Every vendor and vendor contract reviewed for services, pricing, SLA’s,
and bundling
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
� If you were given a clean slate
and could re-design HR:
� What would you want to do?
� What does the business need?
� What does the business value today?
Starting Over Scenarios
� What does the business value today?
� What can the business afford?
� What are your big gaps?
� How can you transform?
� Who will lead the transformation?
� How will your stakeholders participate and provide feedback?
� How will you sell this internally?
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
Contact Dave Brookmire with any comments:
404-593.5001
www.cpstrat.com
[email protected]@cpstrat.com
Whit Blakley
OI Partners/Career Management Resources
678-393-3330
www.cmresources.net
Copyright © 2009, Corporate Performance Strategies, All Rights Reserved