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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”
<Insert Picture Here>
“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