People, Performance, Profit

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People, Performance, Profit

• Row Henson
• HCM Fellow
• Oracle

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People...PerformanceProfit

• People as Capital From HR to HCM
• Aligning the Workforce for Increased Performance
• Talent Management Implication
• What does the CEO expect from HR?
• HR Transformation
• Human Capital Impact On Your Bottom Line

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From HR to HCM in 20 Years
In 1982, intangible assets comprised 38 of a
companys market value. By 2002, that number
soared to 85!
Source Brookings Institute, 2005
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What we mean by Intangibles?
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Talent Drives the Knowledge Organization
The ability to make good decisions regarding
people represents one of the last reliable
sources of competitive advantage.   -- Peter
Drucker
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People as Human Capital
Asset
People as Means
People as Capital
Loss
Profit
People as Problems
People as Costs
Liability
Source Chapman Condy Company
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People...PerformanceProfit

• People as Capital From HR to HCM
• Aligning the Workforce for Increased Performance
• Talent Management Implication
• What does the CEO expect from HR?
• HR Transformation
• Human Capital Impact On Your Bottom Line

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Strategy Execution gets a failing grade
Less than 10 of strategies effectively
formulated are effectively executed
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• So how do we align our talent with our strategy?

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Talent not Engaged with Objectives

• Employees dont understand their impact
• Employees not fully engaged with enterprise
  objectives
• Managers dont have line of sight into talent

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Performance Not Being Managed

• MBO process is unsuccessful
• Feedback is poorly articulated and delivered
• Employees not developed for success
• Fragmented process

Outcome Employee not leveraged or developed
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Not Creating a Performance Driven Culture

• Not truly paying for performance
• Top performers are not rewarded or enticed to
  remain
• Cant identify tomorrows leaders

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Global Engagement Gap

• 21 Engaged
• 41 Enrolled
• 30 Disenchanted
• 8 Disengaged

Source Towers Perrin global Workforce Study
2007-2008
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How Towers Perrin defines employee engagement
Nine Core Engagement Factors

• Emotional Engagement
• I would recommend my company to a friend as a
  good place to work
• My company inspires me to do my best work
• I am proud to tell others I work for my company
• My job provides me with a sense of personal
  accomplishment
• I really care about the future of my company

• Rational Engagement
• I understand how my unit contributes to the
  success of my company
• I understand how my role is related to my
  companys overall goals, objectives, and
  direction
• I am willing to put in a great deal of effort
  beyond what is normally expected to help my
  company succeed
• I am personally motivated to help my company be
  successful

Rational
Engagement
Emotional
Engagement
Source 2005 Global Workforce Study. Towers Perrin
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Performance Management Drives Business Success
Employee understands how to make a difference
Employee understands company goals
91
84
38 more engaged
68 more engaged
46
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Understand
Do not understand
Understand
Do not understand
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Meeting The Challenge

• Drive Business Results
• Clearly define and link individual performance to
  enterprise objectives
• Process for Sustained Change
• Iterative and collaborative communication
• Transfer Ownership to Users
• Planning/linking objectives, defining
  responsibilities, training plans, and career
  planning
• Increase Employee Success
• Improve quality timeliness of feedback
• Enable performance driven development
• Support End-to-End Business Processes
• Link the right rewards directly to performance
• Link feedback to development plans

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People...PerformanceProfit

• People as Capital From HR to HCM
• Aligning the Workforce for Increased Performance
• Talent Management Implication
• What does the CEO expect from HR?
• HR Transformation
• Human Capital Impact On Your Bottom Line

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Talent Management Solution Landscape
Core HR
Compensation
Learning Management
Workforce Performance Management
Succession Planning
Assessment
Competency Management
Recruiting and Staffing
Source IDC 2007
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Gartners Talent Management
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Talent Life Cycle
Talent Planning
Recruiting (internal employees and
contractors/consultants)
Teams Projects
Plan
Jobs Positions
Compensation
Evaluate
Measure and Report
Analyze
Performance Management

Competency Management
Lead
Develop
Learning Development
Advance
Career Planning
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Translating business strategy into workforce
infrastructure

• Experience working in China confirms that many HR
  functions still have much work to do to build
  basic programs to drive business success.
  Further, the programs that are in place often are
  not integrated resulting in misalignment and
  misdirection (i.e. pay and performance,
  competencies and assessment, job descriptions and
  recruitment, assessment results and individual
  development plans, etc.)
• Mercer March 5, 2007 report.

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Workforce architecture provides tangible benefits
to organizations, managers and employees
Managers can
Organizations can
Employees can

• Give more specific guidance to employees
  regarding their roles, accountabilities and
  performance expectations
• Speak to employees in a consistent language about
  performance and how they can contribute to
  organizational success
• Obtain better information about talent resources
  within the organization
• Make objective decisions about how to best deploy
  talent to meet business needs and goals

• Gain better line of sight and understand how
  their role supports the business
• Know what they need to do or do differently
  to contribute day to day
• Understand what skills and competencies they will
  need to do their role well
• Know how their performance will be measured and
  rewarded
• Understand what they need to do to advance
• Gain ready access to more robust up-to-date
  information that empowers them to better manage
  their careers

• Translate business goals into explicit talent
  requirements
• Segment the workforce so that accountabilities,
  performance standards and competencies can be
  assigned to right roles
• Cascade goals and objectives from the top to the
  bottom of organization
• Create an infrastructure and reporting system for
  analyzing, managing and deploying talent
• Cut across traditional HR silos to take an
  integrated approach to talent management

Mercer Translating business strategy into
workforce infrastructure Mar. 5, 2007
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People...PerformanceProfit

• People as Capital From HR to HCM
• Aligning the Workforce for Increased Performance
• Talent Management Implication
• What does the CEO expect from HR?
• HR Transformation
• Human Capital Impact On Your Bottom Line

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CEO Priorities HRs Mandate
2003
2008
Top Management succession Customer
retention Developing retaining potential
leaders Engaging employees in the companys
visions, values, goals Improving product
innovations Reducing costs Talent identification
and growth
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28
45
33
24
31
31
18
25
28
18
43
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What CEOs are asking from HR

• What workforce segments create most value?
• How will business be impacted by impending
  retirement and are we prepared?
• Where is talent demand outpacing supply?
• What skills will we need in next 5 years that we
  dont have today?
• Turnover? How much is it costing in customers?
  In productivity? In innovation? In quality?
• Do we have a workforce plan to communicate
  financial consequences of talent decisions on our
  business?

Source Deloitte Study Its 2008 Do You Know
Where Your Talent Is?
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People...PerformanceProfit

• People as Capital From HR to HCM
• Aligning the Workforce for Increased Performance
• Talent Management Implication
• What does the CEO expect from HR?
• HR Transformation
• Human Capital Impact On Your Bottom Line

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Strategic Transformation of HR to HCM
Strategic Decision Support
Decision Support
ValueAddedServices
Control
CostStructure
Control
Reporting
Reporting
OutsourcetoService Provider
Self Service
Administration and Transaction Processing
Source IDC 2002
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Mercer 2007 Transformation Report
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(No Transcript)
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Mercer 2007 Global HR Transformation Study Asian
findings

• Half of HR functions around the world are
  undergoing a transformation, driven by changing
  business and organizational needs
• In Asia, the number of HR roles with direct
  reports to CEO has doubled since 2003
• Building talent as opposed to buying talent is on
  the up trend for HR professionals in Asia
• HR leaders expect talent management to remain a
  top priority in two to three years.

HR transformation is the process of recreating
or reinventing the HR function with the specific
intent of enhancing HRs contribution to the
business.
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Current state of HR transformation across Asia
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Top Human Capital Challenges
Challenges
Responses In
Global
Asia
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Top Human Capital Challenges
Responses In
Challenges
Global
Asia
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Barriers to Successful HR Transformation

• HR is too busy or lacks decision making power
• Weak HR Information/Technology
• Skills and capabilities of HR staff
• Negative business perception of HR
• Insufficient capability of line managers
• Weak HR and business leadership

Source Keeping the promise of HR
transformation in Asia - Mercer
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Transforming HR

• One size does not fit all
• Innovate or be outsourced
• Business partner/business alignment
• Owner of corporate culture/ employee brand
• Competency/talent identification development
• Process flexibility and adaptability
• Better analytical skills

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People...PerformanceProfit

• People as Capital From HR to HCM
• Aligning the Workforce for Increased Performance
• Talent Management Implication
• What does the CEO expect from HR?
• HR Transformation
• Human Capital Impact On Your Bottom Line

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Why Measure?

• STOP I think.I feel
• START I knowI can prove
• SHIFT From Tangible to Intangible Asset
  Accounting

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The Challenge of Measuring HR

• Percentage of HR executives who
• Believe ROI is their CEOs most important
  metric 53
• Say better aligning HR metrics to corp strat is
  top priority 60
• Believe HR metrics spend will grow over the next
  5 years 84
• Measure the impact of HR activities to a great
  extent 5
• Believe providing analytical tools is biggest
  challenge 71
• Reported having a fully automated HR metrics
  system 2
• Percentage whose system was not automated at
  all 57
• Cited lack of technology infrastructure as a
  major challenge creating HR metrics 50

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Metrics That MatterAnalytic Taxonomy
Predictive Modeling
Correlated Analytics
Contextual Embedded Analytics
Metrics Delivery (Dashboards)
Information Distribution
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TM Metrics that Matter Recruitment
Turnover forecasting
Workforce planning
Ratio of contacted to interviewed applicants
Recruiting Source Analysis
Percent of internal fills
Performance of hires
Cost of filling vacancy
Acceptance per offer ratio
Time to fill vacancy
Number of vacancies
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TM Metrics that Matter Learning
Impact of learning on business results
Learning forecasting
Trainee progress vs. dev plans
Learning Effectiveness Analysis
of ees w/ dev plans
Performance of trained vs. untrained
Efficiency of training enrollment
Cost per training hour
employees trained
Impact of learning on dept schedules/budget
Number of training days/programs per yr
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TM Metrics that Matter Performance
Impact of perf mgmt on business results
Perf Mgmt / Learning linkage
Effectiveness of perf mgmt
of ees unreviewed for gt 2 yrs.
Pay for Performance Alignment
Perceived credibility of perf mgmt
Perf. ratings distribution
Efficiency of perf mgmt process
employees reviewed
Number of reviews completed on-time
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(No Transcript)
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Evolution of Workforce Analytics
Strategic
Collaborative

• Alignment of HR initiatives with Enterprise goals
• Predictive Analytics
• Demand planning
• Workforce cost simulation

• Correlate people metrics with operational and
  financial metrics
• Drive workforce engagement with relevant,
  contextual performance metrics

Proactive
Reactive

• On-demand Dashboard
• Event-based problem identification resolution

• Historical Reporting on headcount and movement

Greater Workforce Insight
Today
Where Are We Headed
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Final Asian Research
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Talent Implications

• Within the next seven years, over 33 million
  individuals in Japan (26 of the population) are
  expected to be over 65 years old.
• India is expected to have a shortfall of 150,000
  IT engineers and 350,000 business process staff
  by 2010.
• One-child restrictions in China have created a
  labor shortfall that will impact cheap labor in
  the region for years to come.
• Current Bloomberg report states Globally,
  Singapore, Peru, India, Argentina, Australia,
  Japan and Hong Kong were top countries reporting
  strongest hiring prospects for the coming
  quarter.
• Mercer 2006 survey states attraction and
  retention has been consistently highlighted as
  one of top three challenges facing organizations
  in Greater China.
• Hudson survey for Q2 2007 shows employment
  expectations remain high for key business sectors
  in China, Hong Kong, Japan and Singapore
• Work related stress is rising, with almost half
  of respondents in China, Hong Kong and Singapore
  saying that their companys employees have
  experienced higher levels of stress over last
  year China the highest. Hudson survey

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Policies to relieve and prevent work-related
stress
Source The Hudson Report April-June 2007
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What makes a Best Employer in Asia?

• Effective and committed leadership. Best
  Employers display a more caring approach to
  people, and place great importance on ethics,
  integrity, and the creation of a working
  environment that nurtures learning. Leaders act
  as role models and are trustworthy.
• Powerful leadership and talent strategy that is a
  key part of the companys overall business
  strategy. Best Employers conduct robust
  performance and competency assessments leading to
  talent segmentation, and offer compelling
  development practices.
• A high-performance workforce built through
  ensuring accountability for achieving results,
  valuing key staff, managing opportunity so the
  strongest performers are in key jobs.
• Strategic HR functions that are structured in
  ways to deliver strong business results.
  Employees with Best Employers feel that HR is
  able to identify and implement HR strategies that
  are critical to meeting business needs.
• Address customer needs as a way of building a
  sustainable business. They understand the link
  between engagement and customer satisfaction and
  use customer retention as a measure to manage the
  business and shareholder return.

Hewitt Best Employers 2007
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Contact Information

• Row Henson
• row.henson_at_oracle.com
• 404/312-9221