Click to edit Master title style Click to edit Master title style 5 Critical Challenges for HR 5 Critical Challenges for HR and the Organization and How and the Organization and How To Address Them SuccessfullyTo Address Them Successfully

Presented By:

Nigel Andrews & Paul Storfer

April 18th, 2005

AgendaAgenda

• Top 5 Critical HR and Organizational Challenges

• Impacts on and Challenges for HR and the Organzation

• Guidance for Response• Q&A

Top 5 ChallengesTop 5 Challenges1. Governance & Compliance

2. Focus on Values & Leadership Competencies

3. Aligning Executive Compensation With Shareholder Interests

4. Globalization & Consolidation

5. Outsourcing & Offshoring

Let’s take a closer look…

Governance & ComplianceGovernance & Compliance• Corporate scandals spawned new legislation

– Sarbanes Oxley Act of 2002– Gramm-Leach-Bliley Act– Multi-Industry Privacy legislation

• Increased shareholder and customer focus on ethics & corporate accountability

• Continued increase in litigation over:– Director liability– Class action suits– Sexual harassment– Discrimination

Challenge # 1

Challenges for HRChallenges for HRGovernance & ComplianceGovernance & Compliance

• Communicate and enforce corporate core values– Criteria for director selection– Establish process for communicating values and

ensuring accountability

• Evaluation of corporate governance process– Transparency for board to evaluate company

performance, compliance

Challenges for HRChallenges for HRGovernance & ComplianceGovernance & Compliance

• Need for defensible audit trail for hiring, promotion, compensation– Objective & competitively justifiable compensation

• Legal compliance in various geographies

How Do You Respond to the Challenge?How Do You Respond to the Challenge?

Translate corporate core values into competencies– Make values actionable– Set criteria for director selection– Allow and enforce accountability

• Cascading goals, compensation tied to competencies…

Articulate needs for roles that respond to the legal requirements

Provide transparency and audit ability

Provide a consistent, and enforceable, standard

ChallengesChallenges

• Governance & ComplianceToolsTools

• Competency Screen

•Assessment

Articulated Culture

Transparency

Consistent Standards

Audit Ability

Sample CompetenciesSample Competencies• Sarbanes – Oxley

– Integrity– Financial Acumen– Investigative Thinking

• Gramm – Leach - Bliley– Knowledge of Ethical and Privacy Issues– Attention to Detail– Knowledge of Data Security Administration

Focus on Values & LeadershipFocus on Values & Leadership• Company differentiation

– Employees represent the brand and key USP

• Competitive pressure/consolidation focusing companies on excellence– Superior customer service– “One-stop-shopping” product extensions– High performance, differentiating services

Challenge # 2

Focus on Values & LeadershipFocus on Values & Leadership• Leadership and Management

– Executives must show vision and ability to generate results

– Executives must adapt leadership style to embrace a more global perspective

– Build high performance teams

Challenge # 2

Challenges for HRChallenges for HRFocus on Values & LeadershipFocus on Values & Leadership• Identifying & articulating values• Defining training and development needed to

align employees with values• Building a high-performance team • Motivating employees

Challenges for HRChallenges for HRFocus on Values & LeadershipFocus on Values & Leadership• Implementing cascading goals• Defining/refining/communicating plans to

address the new challenges• Conducting ongoing performance management

to ensure standards• Maintaining a consistent corporate culture

How Do You Respond to the Challenge?How Do You Respond to the Challenge?

Define/refine competency profiles to reflect the new challenges, focusing on behaviors

Create and articulate measurable targets for superior performance process balancing competencies and objectives

Provide the diagnostic for less than desirable performance

Detail a development plan to improve performance

Difficulties to develop leadership vs. job skills

ChallengesChallenges

• Values, Leadership

& Management

ToolsTools

• Behavioral Competencies

• Objectives & Assessment

• Gap Analysis

Measurable Targets

Performance Diagnostics

Clearly articulated roles

Identified gaps for Development

© Scott Adams, Inc. / Dist. By UFS, Inc. Used by permission

KnowledgeKnowledge

SkillSkill

KnowledgeKnowledge

SkillSkill

Cognitive SkillsCognitive Skills

BehaviorsBehaviors

Traits/CharacteristicsTraits/Characteristics

AttitudesAttitudes

MotivesMotives

Cognitive SkillsCognitive Skills

BehaviorsBehaviors

Traits/CharacteristicsTraits/Characteristics

AttitudesAttitudes

MotivesMotives

The Iceberg Model of CompetenciesThe Iceberg Model of Competencies

• Necessary but not sufficient• Little correlation to superior

performance

• Harder to observe• Harder to develop• Better differentiators

of superior performance

•Easier to observe•Easier to train

Leadership Effectiveness, Development Leadership Effectiveness, Development and Competency Modelsand Competency Models

IndividualIndividualCompetenceCompetence

IndividualIndividualCompetenceCompetence

JobJob CompetencyCompetencyRequirementsRequirements

JobJob CompetencyCompetencyRequirementsRequirements

ManagerialManagerialStyleStyle

ManagerialManagerialStyleStyle

OrganizationalOrganizationalCultureCulture

OrganizationalOrganizationalCultureCulture

Organizational Performance

Organizational PerformanceLeadershipLeadership

EffectivenessEffectivenessLeadershipLeadership

EffectivenessEffectiveness

Global Business CapabilitiesGlobal Business Capabilities

•Managing diverse cultures•Deal with ambiguity, uncertainty and paradox

SKILLS - ‘Management’ ATTRIBUTES – ‘Leadership’

ASSESSUnyielding integrity / ‘moral compass’‘Worldly’ awarenessThrive on change

Decision-making AccountabilityManaging performanceProject management

DECIDEJudgement and intuition Demanding excellencePerseverance and tenacityAdaptability and responsiveness

Ability to make the complex simplePresentation skillsListening and observationNetworking and collaboration

Passionate and persuasiveCuriosity and creativitySelf awareness Self confidence to involve others

COMMUNICATE

Teambuilding and teamworkTalent assessmentInterpersonal skills/giving feedback

ACTBoundless energy to motivate and energiseJudging performanceCapacity and desire to learn; coachable

Source: London Business School

Executive CompensationExecutive Compensation• Executive compensation out-of-line with

shareholder interests– Compensated for failure instead of motivated for success– Tied to stock performance – not organizational success– Serves self-interest of executives

• Reliance on “objective” compensation surveys– Results drive up compensation across the board

Challenge # 3

Challenges for HRChallenges for HRExecutive CompensationExecutive Compensation• Creating a culture of accountability

– Tying compensation to achievement of goals, not stock price

• Building justifiable compensation plans for management & directors

• Providing a defensible audit trail

Accountability and RewardsAccountability and Rewards

© Scott Adams, Inc. / Dist. By UFS, Inc. Used by permission

How Do You Respond to the Challenge?How Do You Respond to the Challenge?

Build justifiable compensation plans for management & directors and create a culture of accountability through competencies

Establish a pay for performance structure

Find “comparable” positions through competency comparison for base and incentive packages

Create performance-based metrics and targets for earning incentives.

ChallengesChallenges

• Aligning Compensation

ToolsTools

• Job Analysis

• Competency – based Job

Models

• Objectives & Assessment

True Comparables

Performance DiagnosticsMeasurable TargetsDefensible Metrics

Consistent Standards

Pay for Performance

Audit Ability

Globalization & ConsolidationGlobalization & Consolidation• Mergers & Acquisitions

– Domestic consolidation– Cross-border expansion– “One-stop-shopping” market

extensions• Geographical expansion

Challenge # 4

Challenges for HRChallenges for HRGlobalization & ConsolidationGlobalization & Consolidation

• Mergers & Acquisitions– Evaluating the combined organizational strengths prior to

M&A– Designing the optimal organizational structure– Deciding which positions/employees to keep– Retaining employees after M&A

• Defining the Desired Culture– Single corporate culture or portfolio of companies?– Which culture to retain in M&A? – Create new culture?– Building a high performance team

Challenges for HRChallenges for HRGlobalization & ConsolidationGlobalization & Consolidation

• Coalescing Around A Corporate Strategy– Identifying and cultivating the competencies to lead a

new, larger global organization– Maintaining consistent service & quality– Communicating a clear corporate strategy– Aligning goals with strategy

• Providing Tools to Support the New Organization– Support for multiple languages, geographies– Standardizing forms and processes

How Do You Respond to the Challenge?How Do You Respond to the Challenge?

Define the Desired Culture

Provide Tools to Support the Organizational Structure

Articulate the Required Success Capabilities

ChallengesChallenges

• Globalization &

Consolidation

ToolsTools

• Competency Library

• Objectives & Assessment

• Technology-Supported Processes

Articulated CulturePerformance Diagnostics

Measurable TargetsDefensible Metrics

Consistent StandardsClearly articulated roles

Remote Management CapabilityIdentified gaps for Development

Are We Ready?Are We Ready?

©2005 Universal Press Syndicate ©2005 Universal Press Syndicate

© ©2005 Universal Press Syndicate Used by permission

Corporate Cultural DifferencesCorporate Cultural DifferencesEgalitarian Decentral

HierarchicalCentral

PersonInformal

TaskFormal

Fulfillment-oriented culture

Project-orientedculture

Power-orientedculture Role-oriented

culture

INCUBATOR GUIDED MISSILE

FAMILY EIFFEL TOWER

•Sweden

•USA

•Canada•UK

•Denmark•Netherlands

•Germany

•France•Belgium

•Spain•Japan

•India

Source: Riding the Waves of Culture, Fons Trompenaars

Characteristics of 4 Corporate CulturesCharacteristics of 4 Corporate Cultures Family Eiffel

Tower Guided Missile

Incubator

Relationships between employees

The whole Specific role Shared objective

Spontaneous

Attitude towards authority

Parental Superior role Contributor Entrepreneurial

Ways of thinking and learning

Holistic Logical Professional Process oriented

Attitudes towards people

Family Human resource

Expert Co-creator

Ways of motivating and rewarding

Respect Promotion Pay for performance

Creation

Management style Mgmt by subjective

Mgmt by job description

Mgmt by objective

Mgmt by enthusiasm

Ways of Changing “Father” changes course

Change rules and procedures

Shift aim as target changes

Improvise

Four Organizational ModelsFour Organizational Models

Management Mentality:regards overseas operations as a portfolio of independent businesses

Personal Control:informal HQ-subsidiary relationships overlaid with simple financial controls

Decentralized Federation:-many key assets, responsibilities, and decisions decentralized

Multinational:

Management Mentality:regards overseas operations as appendages to a central domestic corporation

Administrative Control:formal management planning and control systems allow tighter HQ-subsidiary linkage

Coordinated Federations:-many key assets, responsibilities, and

decisions still decentralized, but controlled from headquarters

International:

Management Mentality:regards overseas operations as delivery pipelines to a unified global market

Operational Control:tight central control over decisions, resources, and information

Centralized Hub:-most strategic assets, resources, responsibilities, and decisions centralized

Global:

Distributed Control:Large flows of components, products, resources, people, and information among independent units

Distributed Control:Large flows of components, products, resources, people, and information among independent units

Management Mentality:Complex process of coordination and cooperation in an environment of shared decision making

Management Mentality:Complex process of coordination and cooperation in an environment of shared decision making

Distributed Network:Distributed, specialized resources and capabilities

Distributed Network:Distributed, specialized resources and capabilities

Transnational:

Source: Bartlett & Ghoshal, 1989

Each of the Models has Different Implications Each of the Models has Different Implications for Competency Systems and their Managementfor Competency Systems and their Management• Transnational organizations have a great need for a

common language– Competency systems provide a culturally-neutral language to

describe requirements– Competency systems are also used to manage local

requirements

Global Business CapabilitiesGlobal Business CapabilitiesKNOWLEDGE / CONTENT

• Global Marketing and Brand Management

• Global Strategy

• Global Macro Economics• Global Finance• Global Supply Chain

Management

• Human Resource Management

• Organisation Structure and Dynamics

• Technology Management• Decision Sciences• Corporate Governance

• Sales and Account Management

• Micro Economics • Accounting

Source: London Business School

Outsourcing & OffshoringOutsourcing & Offshoring• Focus on core business leads companies to

outsource– Minimize costs and make them predictable– Leverage skills without hiring internally– Quickly scale operations– Additional market agility and responsiveness

Challenge # 5

Outsourcing & OffshoringOutsourcing & Offshoring• More and more companies are:

– Opening operations offshore (GE Capital, IBM…)• lower cost of quality labor, less regulation

– Contracting functionality for greater flexibility • (HR – ADP, Exult/Hewitt, Mellon; IT – Kanbay, WhitPro, InfoSys;

Customer Service)

– Partnering with offshore outsourcers

Challenge # 5

Challenges for HRChallenges for HROutsourcing and OffshoringOutsourcing and Offshoring

• Determine which processes/operations can be outsourced

• Hire & train new employees• Establish HR operations in new locations• Find ways to maintain quality & consistency in

service with outsourced or offshore operations– Negotiate service level agreements (SLAs)

How Do You Respond to the Challenge?How Do You Respond to the Challenge?

Select the appropriate organization through a detailed competency/culture match

Establish and maintain quality & consistency through clearly articulated standards (competencies)

Manage remote locations as if they were next door through competency management systems

ChallengesChallenges

• Outsourcing & Off-shoring

ToolsTools• Competency

and Job Model Library

• Objectives & Assessment

• Technology-Supported Processes

Articulated CulturePerformance Diagnostics

Measurable TargetsDefensible Metrics

Consistent StandardsClearly articulated roles

Remote Management Capability

Challenges Boil Down To…Challenges Boil Down To…• Establishing board-level accountability

• Building an optimal, high-performance organization

• Aligning and communicating goals, values and strategy to create a culture of accountability

• Integrating business units and departments within a consistent corporate culture

• Measuring and assessing performance

• Ensuring all HR processes are compliant

The Solution is CompetenciesCompetencies

ChallengesChallenges

• Governance & Compliance

• Values, Leadership

& Management

• Aligning Compensation

• Globalization &

Consolidation

• Outsourcing & Off-shoring

ToolsTools• Competency

and Job Model Library

• Objectives & Assessment

• Technology-Supported Processes

True ComparablesMeasurable TargetsArticulated Culture

Performance DiagnosticsTransparency

Defensible MetricsConsistent Standards

Clearly articulated rolesPay for Performance

Audit AbilityRemote Management CapabilityIdentified gaps for Development

Question & Answer SessionQuestion & Answer Session