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THETALENTPOWEREDORGANISATION
Truegeniusresidesinthecapacityforevaluationofuncertain,hazardous,andconflicting
information WinstonChurchill
Chapter6 EmbeddingandSustainingTalentPower
Intheprecedingchaptersweexplainedhoworganizationsthatbuilddistinctive
capabilitiesindefiningtalentneeds,discoveringsourcesoftalent,developingtalent
potential,anddeployingtalentintherightplaceattherighttimewilloutperform
competitors. Whenthesecapabilitiesarealignedwitheachotherandwithbusiness
strategyandwheninvestmentsineachareaaremeasuredandtracked,talentcan
multiplyandpoweryourorganizationtohighperformance.
Inthefirsthalfofthischapter,weexplaintheimportanceofunderstandingand
measuringhowtalentcontributestoyourorganizationsperformance. Experience
remindsusthatwhatgetsmeasuredgetsmanaged. Talentpoweredorganizations
measureinvestmentsintalentprocessesandcapabilitiestoensurethattheyare
defining,discovering,developinganddeployingtalentinwaysthatcreatevaluefor
themselves.. Wepresentarobustmeasurementframeworkthatcanfocusyour
organizationsenergiesandinvestmentsasyoubuildyourtalentpower.
Ofcourse,embeddingandsustainingtalentmultiplicationcapabilitiesisnotsimplyamatterofmeasurement.. Itrequiresrobustandintegratedprocessesthatsupportall
aspectsoftalentmanagementthroughouttheemployeelifecycle,anditrequires
completealignmentofmindsetsandeffortswithintheorganization.Talent
multiplicationhappensinthecourseofthedailybusinessoftheorganizationas
employeesengageintheirworkactivities,createandinnovatetogether,andinteract
withcustomersandclients. Forthisreason,everyoneinyourorganizationmustbe
involvedinmultiplyingtalentfromtopleaderstoHRtolinemanagerstoemployees.
Thereforethesecondpartofthischapterfocusesontheneedto:
maintainvisibleleadershipthatkeepsyourorganizationpermanentlyfocused
ontalentasitstoppriority
clearlyencourageandrewardlinemanagersfortheirperformanceinnurturing
talent,and
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ensurethatHRdepartmentsandtrainingorganizationsaremodernizedand
retainthecapabilitiestoactastheexpertadvisors,supporters,adjudicatorsand
enablersofdiscovering,developing,anddeployingtalentintheorganization.
Measuringtalentscontributiontoperformancethecurrentposition
Theneedforrobustmeasuresoftalentorhumancapitalisessentialtoallthe
stakeholdersofanenterprise. Topmanagementandleadershipmustunderstand
whereandhowinvestmentsarenecessaryinimprovingtheperformanceofthe
workforcetodrivegreaterbusinessvalue,anditisequallyessentialforeveryline
managertounderstandhowthecompetenciesoftheirteamslineupandhowwellthey
areperformingagainstspecificorganizationalobjectives. HRleadersneedadeep
understandingofgapsandneedsintalentacrosstheorganization,andwhereandhow
investmentsneedtobemade,andtheymustbeabletopresentthebusinesscasesforinvestmentsthattalkaboutvalueoutcomes,notjustpossiblecostsavingsinprocess
improvements. Outsideinvestorsorstakeholdersalsoneedmorevisibility. Aswe
exploredinearlierchapters,giventhecontributionofhumanandintellectualcapitalto
futurebusinessvalue,outsidestakeholdersneedsomebetterframeworksfor
assessment.
Measurementtodatehasgenerallyfocusedoncostsofhumanresourceadministration
activitiesorsomemeasuresofprocessefficiency. Thesearetheeasiestaspectsoftalent
managementto
measure,
and
are
well
supported
through
benchmarks
such
as
from
the
SaratogaInstitute.Costmetricsforpeoplerelatedprocessesareimportanttotrack,
especiallywheretheoperatingmodelforHRrequirescrosschargingofHRservicesto
businessunits,suchasthroughasharedservicesmodel,whichwewillreviewlaterin
thischapter.However,sincesomanyHRfunctionsstillworkwithfragmentedsystems,
processes,andcapabilities,itcanbechallengingsimplytogetreliablecostdata.
Intheend,costdataofthistypepointonlytoefficiencyofprocesses,andnotto
effectivenessorvalue. Sincecostsofhumanresourceadministrationactivitiesare
actuallyasmallcomponentofoverallorganizationalcosts(typicallyintherangeof13
percentofSG&Acosts)thenevenifadministrationactivitiesareveryefficient,theoverallsavingstotheorganizationissmall. Andifyouhaveefficientfirstquartilecost
benchmarkedrecruitmentprocesses,forexample,butthoseprocessesarenotgiving
youtherightpeople,thenthatefficiencyisvalueless.
Differentsurveysacrossmanyorganizationscontinuetoshowthatdespitethewide
recognitiontodayoftheimportanceofbusinessoutcomemeasuresrelatedtoworkforce
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investments,thereisasignificantlackofactualmeasurementoragreedframeworks.
Forexample,researchbytheCharteredManagementInstituteintheUKfoundthat
therewasawidedivergenceonwhatseniorexecutivesanddirectorsofUKcompanies
thoughtwasimportanttomeasure,andwhatwasactuallybeingmeasured:for
example,60percentofrespondentsthoughtsuccessionplanningimportant,butfewer
than10percentthoughttheywereeffectivelymeasuringit.Therewasasimilar
dichotomyon managerseffectivenessmappedagainstdepartmentalperformance(over
60percentthoughtthisimportanttomeasure,fewerthan10percentthoughtthey
wereachievingthis.1
OurownresearchinthisareasuggeststhatmeasurementofeffectivenessofHRand
trainingsupportorimpactofinvestmentsinpeopleonbusinessperformanceis
generallyunsatisfactory,althoughitisnowreceivingmuchmoreattention.Amongkey
findingofourHighPerformanceWorkforceStudy,previouslycited:
nearly40percentofrespondentssaidtheyhadnoformalmeasurestogauge
theimpactoftheirHR/trainingeffortsontheperformanceoftheirtopthree
workforces 39percentsaidtheyhavesuchmeasuresbutonlyforsomeHR
andtraininginitiatives
customersatisfaction&retention,employeeattraction&retention,and
employeeproductivityarethemostcommonoutcomebasedmetrics
59percentofrespondentssaidtheyusemargin/profitability
50percentuserevenues/sales.
Thestudyalsoseparatedoutwhatwetermedhumanperformanceleaders.Only9
percentofthesurveyedpopulationratedtheperformanceoftheirtopthreeworkforces
atthehighestlevel,ratingthem5outof5,andtheyratedtheperformanceoftheirHR
andtrainingfunctionshighly.Toillustratetheseleadersaccomplishmentsmorefully,
wecomparedtheirresponsesandexperienceswiththoseofrespondentsfrom
laggardcompanies,whichaccountfor54percentofouroverallsurveysample. We
definedlaggardsasthosecompaniesinwhichnoneofthethreetopworkforcesis
performingatthehighestlevel(ie,receivedaperformanceratingof5). Incomparing
thetwogroupsonthesubjectofmeasurement,35percentoftheleadershadformal
measuresofgaugingtheimpactofallHR/trainingsupportactivitiesversus19percentofthelaggards,and65percentoftheleadersusedmarginorprofitabilityasameasure
togaugethesuccessoftheHRfunctionssuccessversus56percentofthelaggards.
1See:Measuresofworkforcecapabilityforfutureperformance,CharteredManagementInstitute
supportedbyOracleandOxfordBrookesUniversity.
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Toplevelperformancemeasures
Atthehighestlevel,measuresoforganizationalperformanceforallbarpublicsector
organizationswillalwaysincludeprofitability. Giventherealitytodayofthehigh
proportionofvalueandmarketcapitalizationtiedupinintangibles,thenassociating
talentwithprofitabilitywouldseemtobeasensibletoplevelbusinessperformance
measure. Thesimplestmeasurewouldbeprofitperemployee. Totalprofitisinthe
endtheresultofthetotalnumberofemployeesandhowmuchprofitisattributableto
eachemployee,soitwouldbevaluablemakethesemeasuresvisibletocontributeto
greaterunderstandingoforganizationperformance.Althoughtheymaybedifficultto
compareacrossindustries,especiallyforthosethataremoreorlesscapitallyintensive,
suchmeasureswouldilluminatethekeypartofintangiblevaluewhichissuchalarge
constituentoftotalvalue,andhowitischanging. Alongsideothertraditionalmeasures
suchasreturnoninvestedcapital,itwouldprovidemoretotalinsightonperformance.
Organizationscanimproveprofitabilityandperformancebyinvestingmorecapital,or
increasingorreducingtheirinvestmentinandcostoflaborieinitssimplestformby
addingorsheddingstaff. Clearly,ifprofitabilityperemployeeisrisingthenthatwould
showgooduseoftalentineithercircumstance.
Accountingmeasureswillgivevisibilitytocapitalinvested,butascostoflabornow
accountsforsuchalargepartofthecostbase(forservicebasedcompaniesthesecosts
willbe
the
largest
single
cost
category
and
typically
will
be
of
the
order
of
60
per
cent
or
moreofthetotalcostbase),thenweshouldalsohavevisibilitytocostoflabor how
manyemployeesandhowmuchistheaveragecostperemployee. Otherbasic
measuresofthehealthofhumancapitalwithinabusinesswouldincludeattritionor
staffturnoverrates,absenteeismrates,engagementlevelsorfeedbackfromemployee
satisfactionsurveys,averagelengthofemployeeservice,andtotaltrainingdaysper
employeeandlevelsoftraininginvestmentasaproportionofemployeecosts.
Noneofthesetoplevelmeasuresaredifficulttoobtainforanyorganization,although
theyarerarelyreported. Wewouldadvocatethemasbasicmeasuresthatall
organizationsshouldtrackandifdoneconsistentlywouldprovidegreaterinsightonwhatisreallydrivingperformancetodayandexpectationsinthefuture,forall
stakeholders.
InthesamestudybytheUKCharteredManagementInstitutequotedearlier,their
surveysofwidesamplesoftopexecutivescameupwith5keyhumancapitalmeasures
seentobemostsignificantinimpactingfuturefinancialperformance. Thesewere
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consistentforbothUKbasedandinternationalcompanyexecutives. Themeasures
were:
leadership
staffmotivation
traininganddevelopment
performanceimprovement
payandrewardstructures.
Thesemeasuresarebroadlysimilartothebasicmeasuresofhumancapitaldescribed
above,withtheexceptionofleadership. Thereisnodoubtthatthisisacriticalmeasure
ofthehealthandfuturevalueofanorganization,butischallengingtomeasure
objectively. Thestudyproposedvariousmeasuresfocusingonaspectssuchastopteam
reputation,assessmentofpercentageofmanagerswithnecessaryleadershipcapability,
andpercentageofmanagersreadytoassumeagreaterrole.
Thereisnodoubtthatmoreandmoreorganizationsaretryingtomeasurekeyaspects
oftalentandlinkthesetoperformanceoutcomes,usingtheseaspartoftheirinternal
measurementorbalancedscorecards.
Forexample,anumberofyearsagoSears,RoebuckandCompanybuiltsome
sophisticatedstatisticalanalysestolinktalenttofinancialperformance. Sears,alarge
NorthAmericanretailer,mappedtherelationshipsbetweenhumancapitalpractices,
employeeattitudes,customerattitudesandbehaviors,andrevenue. Theysawexactly
howtheir
employees
attitudes
toward
the
job
and
the
company
drove
customer
service,whichinturninfluencedcustomerssatisfactionwiththeshoppingexperience
andthelikelihoodthatcustomerswouldrecommendSearstofriendsandfamilyasa
goodplacetoshop.2 Customerenthusiasmpromotedcustomeradvocacy,whichis
directlylinkedtorevenuegrowthandisakeydriverofprofitabilityatSears. Through
theirresearchandanalysistheyfoundthata5pointimprovementinemployee
attitudeswouldleadtoa1.3pointimprovementincustomersatisfactionthatproduced
ahalfpercentincreaseinrevenuegrowth.3 Investmentsinthespecifichumancapital
processesthatimprovedhowemployeesfeltabouttheirjobsandtheorganization
wouldincreasecustomerreferralsandenhancebusinessresults.
2 The Value of People: The challenges and opportunities of human capital measurement and reporting.The Conference Board, 2003 Research Quarterly, citing Becker, Huselid, & Ulrich. 2001. The HRScorecard: Linking People, Strategy, and Performance, p. 124. Boston: Harvard Business School Press.3 Huselid, M. A. 2005. The impact of human resource management practices on turnover, productivity,and corporate financial performance. Academy of Management Journal, 38: 635-672; The Value ofPeople: The challenges and opportunities of human capital measurement and reporting. TheConference Board, 2003 Research Quarterly.
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OtherorganizationssuchasRoyalBankofScotlandhavebuiltonthisideaalsofocusing
onestablishinglinkagebetweenimprovementinpeoplemeasures,suchasengagement
andemployeesatisfaction,andimprovementinsalesandcustomerservice. Theyare
oneoftheleadersinmeasurementofpeopleandrelationshiptobusinessperformance,
andasNeilRodentheGroupDirectorHR,saystheyaretryingtofurtherdevelopideas
thatcamefromorganizationssuchasSearsweretryingtotakethatonestepfurther
bysayingifyoucangetyourpeoplescoresupbyacertainfigure,thisiswhatitwilldo
toyourbusinessoutputmeasures.
SYSCOCorporation
SYSCOCorporation,isaUSbased$33billionFortune100globalfoodservicemarketer
anddistributor,with50,000employeesacross172operatingunits. Asexecutivevice
presidentandchiefadministrativeofficer,KenCarrig
makessureSYSCOshuman
capitalstrategysupportsthebusinessstrategy. MuchofthevalueSYSCOprovidesto
customersisafunctionofthestrongrelationshipsassociatesformwithcustomers.
SYSCOtrackskeyfinancial,operational,customer,andhumancapitalmetricsforallof
theirautonomousoperatingcompanies. Thethreecriticalhumancapitalmetricsare
workclimateandemployeesatisfaction,productivity(measuredasemployeesper
100,000casessold),andretention. Afterseveralyearsofmeasuringandanalyzingthese
keymetrics,SYSCOhasbeenabletolinkeffectivetalentmanagementpracticesto
businessresults.
4The
operating
companies
with
highly
satisfied
employees
had
higher
revenues,lowercosts,andsuperiorcustomerloyaltyandemployeeretention.5 Thisisa
causalrelationship,suchthatemployeesatisfactionleadstocustomersatisfactionwhich
driveslongtermprofitabilityandgrowth.6
SYSCOhasdemonstratedempiricallythateffectivetalentmanagementdrivesemployee
satisfactionandemployeeretention,sotheyroutinelymeasureandmanageseven
dimensionsoftheworkenvironmentthatarerelatedtoemployeesatisfaction:
leadershipsupport,frontlinesupervisor,rewards,qualityoflife,engagement,
4Cascio,WayneF.2005. Frombusinesspartnertodrivingbusinesssuccess:Thenextstepinthe
evolutionofHRmanagement.HumanResourceManagement,44(2):159163.5Cascio,WayneF. 2006. Theeconomicimpactofemployeebehaviorsonorganizationalperformance.InEdwardE.LawlerIIIandJamesOToole(Eds.),AmericaatWork: ChoicesandChallenges. New
York: PalgraveMacmillan.6Cascio,WayneF.2005. Frombusinesspartnertodrivingbusinesssuccess:Thenextstepinthe
evolutionofHRmanagement.HumanResourceManagement,44(2):159163.
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diversity,andcustomerfocus.7 Underperformingunitsareidentifiedandhelpedto
improve. Talentretentionimprovedfrom65percentto85percentin6years,and
savedthecompanynearly$50milliondollarsintheprocess.Measuringthereturnoninvestmentintalentdevelopment
Besidespayroll,thelargestinvestmentinpeopleisusuallyinlearningand
development. Measurementinthisarea,aswenotedinchapter4,isusuallylimitedto
inputmeasuresofthingsliketrainingattendanceandtrainingdaysprovided,orsoft
assessmentmeasuresofwhetherrecipientsoflearningenjoyedtheprogramorfeel
thatithassomehowhelpedthemintheirwork. Moreinsightfulmeasurementand
morevaluabletodecisionmakingwouldbemeasuresthatevaluatelearningasa
strategicinvestmentandlooktoestablishreturnoninvestment.
SinceAccentureinvestsheavilyinlearning,wesetaboutdevelopingarobustlearningROImodelbuiltonoutcomesforwhichgooddatacouldbefound.Theseelements
includerecruiting,retentionandperformance. Performancewasdefinedasper
personmarginandmeasuredasthepersonsbillratetimesthenumberofhoursbilled
minusthecostofthatemployeeoverthesametimeperiod. Perpersonmarginis
widelyacceptedinthefirm,andinsimilarservicescompaniesasameasureofpersonal
contributiontocompanyperformance. Asimpleconceptualmodelwasdevelopedas
showninFigure27.
7Cascio,WayneF. 2006. Theeconomicimpactofemployeebehaviorsonorganisationalperformance.InEdwardE.LawlerIIIandJamesOToole(Eds.),AmericaatWork: ChoicesandChallenges. New
York: PalgraveMacmillan.
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Figure27TheAccentureLearningROIModel
TrainingContribution
No training(Performance:Slope of lines =effect on speed tocompetency) Benefits of learning: The area under the
training line minus the area under the no-training line
Time with company(Retention: Length of lines = people stay with company longer)
TheYaxisofthemodel,contribution,canbedefinedintermsofwhateveractivityis
mostmeaningfultoacompanyandparticularworkforce. ForAccenture,the
contributionmeasurementistheperpersonmargin. TheXaxisrepresentsemployees
timewiththecompany. Thepresumptionhereisthatthelongertheemployeesare
withthecompany,themoretheycontribute. Basedonliteratureresearch,itisassumed
thatifthecompanyofferedtraining,thenpeoplewouldremainwiththecompany
longer,hencethelongerdottedlineversustheshortdashedlinewhichrepresentsno
training. Inaddition,thepeoplesspeedtocompetencyandcontributionwouldbe
fasterandhigherwhentheywereofferedtrainingasrepresentedbythehigherand
steeperslopeofthedottedlineversusthedashedline. Theoveralleffectoftrainingon
thebusinessshouldbetheareaunderthelineforthecompanythattrainsminusthe
areaofthatforthecompanythatdoesntprovidetraining.8
TheROIforAccenturewascalculatedasthenetbenefitoftrainingbasedonthe
assumptionsabovedividedbythenonpayrollcostsoftraining. Thefinalreturnon
investmentturnedouttobeanimpressive353percent.Thefirmcouldtakethis
numbertotheoutsideworldofinvestorsandsayconfidently: Investmentinhuman
8 This very robust model holds up to statistical analysis. The team used the total hours of trainingemployees had received as an independent variable. They controlled for factors that might confound therelationship, such as experience, inflation and business cycle. And they used per-person margin as theoutcome or dependent variable. This allowed them to calculate the effect of training on performancewhile controlling for factors that might cloud the picture
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capitalisimportant. Learninginvestmentsarenotjusttherightthingtodoforour
people. Theymakestrongfinancialsense.
Measuringprocesseffectivenesstheconceptofmaturity
Assessinghowwellanorganizationdevelopsandmanagesitshumancapitalassetsis
notaneasytask.Humancapitalprocessesareamongthesoftestprocessesinan
organization.Evenwhenahumancapitalprocessdoeshaveatangiblemetric
associatedwithitliketimetohireforrecruitingortrainingdollarsperemployee
forlearningthesemeasuresaddressonlytheefficiencyoftheprocess,ortheinput
costs.Theytelluslittleornothingatallabouttheeffectivenessoftheprocess how
welltheactivityiscarriedoutandhowreliablyitachievesitsintendedimpact.
Oneveryimportantcontributorofunderstandingaboutprocessesistheconceptof
maturity ameasureofrobustness,integrityandconsistencyinapplicationofthoseprocesses. Allorganizationswillsaythattheyhavethemajortalentmanagementand
developmentprocessesinplaceinsomeformperformancemanagement,succession
planning,rewardsandsoon. Therealquestionagainishoweffectivetheseare,and
whethertheyarewelldesigned,welldocumentedandunderstood(bothbythepeople
applyingthemaswellastherecipientsoremployees),consistentlyapplied,and
effectivelyintegratedwitheachother. Inotherwords,aretheprocesses
institutionalizedanddoestheorganizationhavethecommitmentandabilitytoperform
theprocessesconsistently? Ifitiscarryingoutperformancemanagement,arethe
meansby
which
people
are
being
assessed
visible,
fair
and
consistent;
do
the
results
clearlylinktorewards;canitalsolinkperformanceshortcomingstolearningand
developmentprograms? Integrationofthiskindisnecessaryforthemosteffectiveand
impactfulprocesses,anditneedstobeassessedconsistentlyagainstsomereliable
benchmarks.
Theconceptofprocessmaturityandmeasurementhasbeenwidelyappliedinthe
softwareindustryinparticular.ThepioneeringworkoftheSoftwareEngineering
InstituteatCarnegieMellonUniversityintheUSfromthelate1980screatedthe
CapabilityMaturityModel.Thishasbeenwidelyappliedandprovensoimportantin
helpingthesoftwareindustryarriveatstandardstodistinguishamongvendorsaccordingtothereliabilityandrepeatabilityofcoreprocessesassociatedwiththe
development,testingandreleaseofsoftware. ThedevelopersoftheCMMcarriedtheir
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workfurther,toincludewhattheyrefertoasthePeopleCapabilityMaturityModel(P
CMM)9 ,applyingthesamesortofthinkingtothematurityofpeopleprocesses.
PCMMisanapproachthatallowspeoplerelatedprocessestobeevaluatedagainsta5
pointmaturityscalethatrangesfrombasiclevel1tooptimizinglevel5,withmanaged,
definedandpredictableaslevels2through4. Eachmaturitylevelhasdefined
characteristicsforhowprocessesaredesignedandimplemented. ThePCMM
frameworkhasbeenmuchlesswidelyadoptedthanCMM,butinrecentyearsithas
hadsignificantapplication,especiallyintheaerospace,softwaredevelopmentandIT
servicesindustrieswhohadalreadyadoptedCMM. Ithasbeenusedandapplied
notablyinIndiawherethereissuchfastgrowthandfiercecompetitionfortalentinthe
ITServicesindustry. Mostofthemajorplayerstherehavegonethroughthe
certificationprocessandarerecognizedatlevel5. Tobelevel5youmusthavevery
mature,embeddedprocessesthatintegrateconsistently. Theprocessesassessed
throughthePCMMframeworkarecomprehensiveandinclude: staffing(includesrecruiting,selectionandplanning)
managingperformance
training
compensation
workenvironment
careerdevelopment
organizationalandindividualcompetence
mentoringandcoaching
teamand
culture
development.
PCMMpointstotheuseofcompetencyframeworksasacentralconstructinmature
andintegratedprocesses.. Evenatthelowerlevelsofmaturity,itisacommonthemeto
haveacompetencyframeworkwithabilitytoassesscompetencyandhaving
competencybasedpractices. PCMMalsohighlightstheimportanceofprocess
measurementasthemeanstoverifythatprocesseshavebeenperformedconsistently,
andreinforceaccountabilityfortheirexecution.
Level5certificationrequiresahighlevelofcapabilityinpeoplerelatedsupport
processes.ItsadoptionbyITservicescompaniesinIndiademonstratesthedegreeofsophisticationinpeoplemanagementtheyhavehadtodevelopinordertoattractand
retaintheirpeople. Assessedthisway,theseorganizationstodayhavesomeofthebest
talentmanagementcapabilitiesintheworld.
9 The Software Engineering Institute - The People Capability Maturity Model, by Bill Curtis, William E.Hefley, and Sally A. Miller (Addison-Welsey, 2002)
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However,whilstPCMMisapowerfulandthoroughapproachtomeasuringand
assessingtheunderlyingtalentdevelopmentandsupportprocesses,itdoesnot
measurethelinkagetobusinessperformanceandoutcomes.Itisassumedthathigh
levelsofmaturityinpeopleprocessesandpracticesimprovesoutcomes. However,Bill
Curtis,oneoftheoriginalauthorsofPCMM,hascarriedoutfurtherresearchover
severalyearsthroughlongitutidinalanalysesofdataatthesamecompanies.Hehas
beenabletoshowintheexamplesofsoftwaredevelopmentthathigherlevelsof
maturityofprocessesleadtosignificantreductionsindefectandreworkratesas
organizationsmaturefromthelowerlevelsuptolevel5,andsignificantimprovements
inprogrammingproductivity.Evidencefromourfirmalsoconfirmsthathighlevelsof
process maturitydoequatewithbetteremployeeretentionandengagement,andwe
areengagedonfurtherresearchinthisareaourselves.
Thekeylinkagethatweareseekingisbetweeninvestmentsinpeopleandpeopledevelopmentprocessesandbusinessoutcomesandperformance. Understandingthis
linkageiscrucialforimproveddecisionmakingandprioritizationsofhowtodrive
highperformanceinatalentpoweredorganization.
Measuringinvestmentsinhumancapitalfromprocessestoperformanceoutcomes
Itisessentialtoprovidegoodinformationtomanagersatalllevelsontheeffectiveness
ofthetalentmanagementorhumancapitalsupportprocessesandonhowinvestments
inpeople
are
resulting
in
useful
business
performance
outcomes.
It
is
afamiliar
concerntohearmanagerscomplainthattheyhaveallthesedatabutnoreal
intelligence. Youneedtomeasurewhatmattersbuttoknowwhatmattersyoumust
establishafirmconnectionbetweenbusinessororganizationalstrategyandhuman
capitalstrategyaswediscussedinchapter2. Otherwise,youwillmeasuretonoavail.
Inotherwords,youneedtohaveaclearsenseofhowtalentleadstovalue. Talent
poweredorganizationsunderstandhowtheirworkforcetalentandtheirhumancapital
capabilitiescontributetotheachievementofthefirmsstrategicobjectivesandcreate
valueforthefirm. Forthesehighperformers,itisimpossibletotalkabouthowthe
businessachievesitsobjectivesandcreatesvalueforstakeholderswithouttalkingabouttalentscontribution. AtSouthwestAirlines,theleadinglowcostairlineintheUnited
States,workforcecapabilitiesareessentialtoexecutingtheirlowcostoperationsand
highqualitycustomerservicestrategy. BusinessguruTomPetersoncedescribed
Southwestsformulaforsuccessinthisway: Cost,cost,cost,customers,customers,
customers,andpeople,people,people. Anythreeyearoldcanunderstandit. An
organizationsformulaforsuccessmustbepowerful,butitneednotbecomplicated.
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Anyapproachtomeasurementneedstolinktalenttovalue. Forexample,inFigure28
belowwedistinguishfourlevelsofmeasurementarrayedinacausalflow,verysimilar
tothestructurewedescribedinchapter2oflinkingbusinessstrategythroughtoHR
strategywhichcontrolsmanyoftheunderlyingprocessesoftalentmanagement. Atthe
topareanorganizationsstrategicobjectives.Thesecanbedepictedmanydifferent
ways:whatmattersisthattheyaremeasurable.
Directlybeneatharetheleversordriversofgreatestinfluenceinachievingthose
objectives;thesearecommonlyreferredtoasperformancedriversinthe
managementliterature. Theyarefewinnumberandvaryinimportancedependingon
themarketsinwhichagivenorganizationcompetes,egaccordingtoMichaelTreacy
andFredWiersema,authorsofthebusinessstandard,TheDisciplineofMarket
Leaders,mostbusinesseselecttocompeteonthebasisofproductleadership,
operationalexcellenceorcustomerintimacy. Eachbasisforcompetitionreliesonadifferentprioritizationofinnovation,productquality,productivity,andcustomer
satisfaction.
Beneaththeperformancedriversarethedistinctivecapabilities;thesearethehuman
andorganizationalcompetenciesthatmostdistinguishthecriticalelementsofsuccess
forthebusinessandforexamplemakeitpossibletobeinnovativeorproducehigh
levelsofqualityorratchetupproductivityorkeepcustomerssatisfied.
Finally,at
the
base
of
the
model
are
the
processes,
activities,
practices,
and
programmes
thatfuelthecreationofthosedistinctivecapabilities. Capabilitieslikecreativityand
engagementdonotcomeaboutoftheirownaccord;theyarethemselvestheproductof
enablingconditions,deliberatemanagerialeffort,androbustsupportingprocesses.
Successfulinnovationmaybeimpelledbyhigherlevelsofengagement,butasChapter
5hasjustshownengagementcannotbetakenforgrantedinthefirstplace.
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Figure28Strategicandunderlyingmeasurement
ProcessesProcesses
CapabilitiesCapabilities
Performance driversPerformance drivers
Strategic objectivesStrategic objectives
ProcessesProcesses
CapabilitiesCapabilities
Performance driversPerformance drivers
Strategic objectivesStrategic objectives
Framingtheissueinthiswayallowsyoutoworkyourwayfromtoptobottomorfrom
bottomtotop. Youcanstartwithstrategicobjectivesorfromanassessmentofthe
underlyingprocesses. Eitherway,thekeyistofocusonthepaththroughwhichvalue
iscreated,notmeasureelementsinisolation. Itisonlywiththisunderstandingofthe
linksbetweentalentmanagementandperformancethatorganizationscanmeasureand
investinprocessesandcapabilitiesthatwilldirectlyaffectwhetheritachievesits
strategicobjectives.
Aframeworkforprioritizingandmeasuringhumancapitalinvestments
Variousmodelshavetriedtomakethelinkagesfromunderlyingprocessestooutcomes,
oraswesawearlierinchapter5,linkagesbetweenparticularaspectsoftalentsuchas
engagementandoverallbusinessperformance. Mostofthesemodelsseektolinkfrom
basicHRtypemeasurestosomemeasuresofbusinessvalueoroutcomes,including
BassiandMcMurrersmodelofhumancapitaldynamics;BoudreauandRamstadsHC
BridgeFrameworkwhichlinksfromefficiencytoeffectivenessandimpact;Becker,
Huselid&UlrichsHRScorecard;Kaplan&Nortonsstrategymaps;andGallups7S
path
to
business
performance.
The
challenge
with
all
the
various
approaches
it
to
track
thecompletevaluechain,fromhumancapitalprocessestohumancapitalcapabilitiesto
keyperformancedriverstobusinessresults.
Overthelastfewyearsaframeworkhasbeendevelopedthatseekstotrackthefull
valuechaintoprovideabetterassessmentofhoweffectivelyanorganizationshuman
capitalprocessescreatevalue. Thisframework,calledtheHumanCapitalDevelopment
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Framework(HCDF)10drawsonbestpracticesinthefieldsofhumanresource
developmentandlearning,aswellasstateoftheartmeasurementtechniques.It
enablesanorganizationto:
determineitsstrengthsandweaknessesinthirteenkeyhumancapitalprocesses
prioritizeandtrackinvestments
targetthoseinterventionsmostlikelytohavethegreatestoverallimpactontheir
businessresults.
Theframeworkassesses,benchmarksanddeterminestherelationshipbetween
elementsinfourdistinctareas,shownastiersinFigure29:
Businessresults,orthefinancialmeasuresoforganizationalsuccess,suchas
capitalefficiency,revenuegrowth,returnoninvestedcapitalandtotalreturnto
shareholders.(Tier1) Keyperformancedrivers,ortheintermediateorganizationaloutcomes,suchas
customersatisfactionandinnovation,thataretypicallycapturedonabalanced
scorecard(Tier2)
Humancapitalcapabilities,orthemostimmediateandvisiblepeoplerelated
qualitiesthathumancapitalprocessesproducesuchasworkforceperformance,
employeeengagementorworkforceadaptability(Tier3)
Humancapitalprocesses,orthespecificpracticesandactivitiesorganizations
undertaketodeveloptheirhumancapitalassetssuchasperformanceappraisal,
workforceplanning
or
learning
management
(Tier
4)
10 Susan Cantrell, James M. Benton, Robert J. Thomas, Meredith Vey and Linda Kerzel. 2005. TheAccenture Human Capital Development Framework: Assessing, Measuring and Guiding Investments inHuman Capital to Achieve High Performance. Accenture Institute for High Performance Business WhitePaper.
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Figure29HumanCapitalDevelopmentFramework
Theseprocesseswerecarefullychosen,basedonpreviousresearchandourthinking
andexperiencesconcerningtheprogrammesandpracticesmostlikelytoaffect
workforceperformanceandbusinessresults.TheyincludenotonlycoreHRprocesses
suchasrecruiting,careerdevelopmentandcompetencymanagement,butbroader
humancapitalprocessesaswell,suchasworkplacedesign,learningandtraining,and
knowledgemanagement.TheFrameworkexplicitlyassessesthematurityofeach
processdrawingonsomeofthethinkingthatwasdevelopedthroughPCMMthe
extenttowhichitusesbestpractices;howwellitsupportsemployees;anditsreliability
andrepeatability.
Tier4measuresintheHCDFandthePCMMaresimilarinmanyrespectsandHCDF
usestheconstructofmaturityinassessingthehumancapitalprocesses,butwhatmakes
theHCDFdistinctiveisitsdirectlinkagetoorganizationalattributesandbusiness
outcomes.
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Matureprocessesarecapable,robust,worldclassintheiroperationandfinelytunedto
thebusinessmodeloftheorganizationthatemploysthem. Thisdistinctionis
important: matureprocessesprovidethegreatestbenefitwhentheyarealignedwith
thebusinessmodel. MaturityscoresinTier4resultfromthecombinationof
quantitativeandqualitativeinformationcollectedfromasurveysampleofhuman
resourceexecutivesandemployeeswhoanswerquestionsrelatedtothefollowingthree
dimensions:
1. Humancapitalbestpractices
Thedegreetowhichanorganizationincorporatesbestpracticesineachprocessarea
cantellusmuchabouttheeffectivenessoftheprocess.Bestpracticequestionsalso
servetoassessthecompletenessoftheunderlyingpracticesforeachprocessandthe
degreetowhichtechnologyandotherresourcesareusedtomaximumeffect.The
definitionofeachbestpracticerepresentsthecollectiveknowledgeandexpertiseofAccenturespecialistsandacademicresearchersastowhatconstituteshighlyeffective,
stateoftheartperformance.Samplebestpracticequestionsforthecareerdevelopment
processarelistedinTable5below.
Table5 SampleBestPracticeQuestionsfortheCareerDevelopmentProcess
Questions include the extent to which:
the organization provides employees with access to web-based tools (24 hours a day, 7 days a week)for:
o documenting career development plans and skill gapso identifying appropriate training
o recording and reviewing feedback
the organization provides employees and supervisors with access to web-based tools (24 hours a day, 7days a week) for viewing the career paths and associated job descriptions for all jobs in the organization
employees use feedback from others (i.e., multi-rater feedback) on their strengths and weaknesses asinput into their career development plans
employees have career development plans that describe such things as development activities (e.g., jobexperiences or training) and/or possible future roles
career counselors (i.e., supervisors or team leaders) review employees development plans, looking forsuch things as realistic career goals, development activities and timelines
employees meet with their career counselors to discuss their progress against their career developmentplans
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2. Executionandsupportoftheprocess
TheHumanCapitalDevelopmentFrameworkalsoadoptstheassessmentofmaturityof
processesasakeymeasureofeffectivenessandrobustnessofprocesses.Itincorporates
keyareasofassessment,includingtheextenttowhichanorganizationhas:
people(includinghumanresourcemanagers,supervisors,and/oremployees)
withtheskillsandabilitiesnecessarytosupportandusetheprocesses
clearlydefinedgoalsforeachprocessandmanagementsupportoftheirpursuit
clearandconsistentpoliciesforeachprocess
measurementandcontinualimprovementoftheprocesses.
3. Employeeuseoftheprocess
TheHCDFalsoseekstounderstandtheemployeeperspective.Dataobtainedfrom
employeesservetwopurposes:asacrosscheckforthereliabilityofthedataprovidedbyhumanresourceexecutives,andasanassessmentoftheeffectivenessoftheprocess
insupportingitsendusers.Samplequestionsaddressedtoemployeesforthecareer
developmentprocessinclude:
Towhatextentdoesyourorganizationscareerdevelopmentprocessprovide
youwiththetalentyouneedtomeetcurrentandfuturebusinessneeds?
Towhatextentdoyouhaveacareerdevelopmentplanthatprovidesyouwith
clearguidelinesforachievingyourcareergoals?
Thetooloffersorganizationsguidanceonwhichhumancapitalprocessestoinvestin
andenablesthemtobegintoevaluatethereturnontheirhumancapitalinvestments
ametricthatiscriticallyimportantyetlargelyunavailable.
Forexample,researchersusedtheHCDFtodeterminewhichhumancapitalcapabilities
andprocesseswouldneedtobeenhancedifanorganizationsoughttoimproveits
abilitytoinnovate(seeFigure30below) Fromdatacollectedinovertwodozen
applicationsoftheHCDF,researcherscouldshowthatthemostdirectpathto
improvedinnovationbeganwiththeeffectiveandmatureprocessesinrewardsand
compensation,employeerelations,workplacedesign,andknowledgemanagement.These,inturn,enhancedemployeeengagementandemployeeengagementturnsout
tohavethehighestcorrelationwiththeleveloforganizationalinnovation. TheHCDF
thereforesuggestedthatifanorganizationreallydependsoninnovation,itsbestbetsin
spendingmoneyonpeoplewouldbeonrewards,employeerelations,workplace
design,andknowledgemanagement.
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Figure30 Driversofengagementandinnovation
Employee Engagement
Key Performance Drivers
Human Capital Processes
Human Capital Capabilities
Tier 2
Tier 3
Tier 4
Key Performance Drivers
Human Capital Processes
Human Capital Capabilities
Tier 2
Tier 3
Tier 4
Number in bubble represents the correlation (r) with the element at the next tier
*r=.05 **r=.01
WorkplaceDesign
Rewards andRecognition
EmployeeRelations
KnowledgeManagement
WorkplaceDesign
Rewards andRecognition
EmployeeRelations
KnowledgeManagement
Employee Engagement
Innovation
.698**.698**
.63*.63* .72**.72** .61*.61*
.62*.62*
Employee Engagement
Key Performance Drivers
Human Capital Processes
Human Capital Capabilities
Tier 2
Tier 3
Tier 4
Key Performance Drivers
Human Capital Processes
Human Capital Capabilities
Tier 2
Tier 3
Tier 4
Number in bubble represents the correlation (r) with the element at the next tier
*r=.05 **r=.01
WorkplaceDesign
Rewards andRecognition
EmployeeRelations
KnowledgeManagement
WorkplaceDesign
Rewards andRecognition
EmployeeRelations
KnowledgeManagement
Employee Engagement
Innovation
.698**.698**
.63*.63* .72**.72** .61*.61*
.62*.62*
Thisframeworkhasimplementedwithorganizationsinavarietyofindustriesaround
theworld. Basedonagrowingdatabase,theframeworkhasestablishedempiricallinks
betweenspecifichumancapitalinvestmentsandbusinessresults. Itenables
organizationstodiagnosetheirstrengthsandweaknessesinkeyhumancapital
processes,benchmarktheirperformanceagainstothers,andtrackperformancechanges
overtime. Mostimportantly,theframeworkenablesexecutivestoassesstheircapacity
toachievesuperiorbusinessresultsthroughinvestmentsinhumancapital.
Casestudy:SAPAmericaandtheHCDF11
SAPAmerica,theNorthAmericasalesandservicesdivisionofenterprisesoftwaregiantSAP,embarkedonanewbusinessstrategyin2002inordertoturnaroundits
11 Susan Cantrell, James M. Benton, Terry Laudel, and Robert J. Thomas. 2006. Measuring the value ofhuman capital investments: the SAP case. Strategy & Leadership, 34(2): 43-52; Susan Cantrell, James M.Benton, Robert J. Thomas, Meredith Vey and Linda Kerzel. 2005. The Accenture Human CapitalDevelopment Framework: Assessing, Measuring and Guiding Investments in Human Capital to AchieveHigh Performance. Accenture Institute for High Performance Business White Paper.
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decliningrevenueandmarketshare. SAPAmericasfuturedependsonitsabilityto
deliverasteadystreamofinnovativesoftwareapplicationstoitscustomersandtotailor
themtotheirtargetedmarketsegments. Executivesthereforewantedtoensurethatthe
companyfocusedonthehumancapitalprocessesthatcouldhelpitinnovate. As
PresidentandCEOBillMcDermottputit,Thepeoplecomponentofexecutingour
strategywasbyfarthemostimportant. Ifwedidntgetthatpartright,wewouldnt
win. Andwewereinthisgametowin.
SAPwantedtosethumancapitalinvestmentprioritiesaccordingtotheirexpected
businessimpact. Inordertomakestrategicinvestments,SAPexecutivesneededtools
thatenabledthemtoevaluatetheimpactofabroadrangeofhumancapitalprocesses
andcapabilities. ThecompanyusedtheHCDFtogatherempirical,quantifiabledatato
informstrategicdecisionsonhumancapitalinvestments. Theframeworkresults
showedthatthecompanywouldbebestservedbyfocusinginvestmentsonalimited
setofhumancapitalprocesses: learningmanagement,humancapitalinfrastructure(egthefirmsHRprocesses)andsuccessionplanning. Thesethreeprocesseswere
identifiedasthosethatwouldhavethegreatestimpactonworkforceperformanceand
thusbusinessperformance.
SAPsubsequentlyinvestedin1)identifyingclearlearningandtrainingrequirements
foritsjobfamiliesandensuringthatmanagersworkmorewithemployeesascoaches
andmentorstodeveloplearningplans;2)improvingtheaccuracyanduserfriendliness
ofprocessesinvolvingpayroll,benefitsadministration,withanHRcallcentretoboost
employeesatisfaction
and
engagement;
and
3)
establishing
processes
to
give
managers
aclearerpictureofpeoplewhomightlaterqualifyforkeypositions,andtoensurethat
highpotentialindividualsreceiveddevelopmentplanstohelpthembuildtheirskills.
Oneyearintotheirturnaroundefforts,manyinitiativeswerepayingoffinimproved
processandcapabilityscores.
SAPssuccessrestedonthefactthattheHCDFprovidedalogicforhumancapital
investmentsandalanguageforcommunicatingthestrategicvalueofhumancapital
processes. AccordingtoSeniorVicePresidentofHumanResources,TerryLaudal,The
frameworkisimmenselyusefulbecauseitgivesussomethingtheHRcommunityis
generallylacking:acommonlanguageandvocabularyforwhatwedo. Itframeshumancapitalprocessesintermsofbusinessresults,providingaprofessionaltoolkit
forourHRteammemberstospeakwithbusinessexecutivesaboutthevalueofhuman
capitalinvestmentandthecontributiontothebottomline.
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Casestudy:SKMandhumancapital12
SinclairKnightMerz(SKM)isanAustraliancompanythatprovidesconsultingservices
insectors
including
the
environment,
infrastructure,
building
and
property,
and
power
andmining. Inthisindustry,companiescompetelargelyonthebasisoftheirpeople
specifically,theirknowledge,skillsandtheabilitytoprovideexcellentclientservice.
SKMwaslookingforwaystoincreaseitsabilitytomanageandgrowitsworkforce
capabilities. ThecompanyusedtheHumanCapitalDevelopmentFrameworkto
identifywaysofenhancingitshumancapitalcapabilities.
SKMshumancapitalprocesseswereamongthestrongesteveranalyzedusingthe
framework.However,theanalysisdidmorethanjustconfirmexistingstrengths.Italso
identifiedanumberofareaswherefurtherimprovementscouldgainthemvital
competitiveadvantagesinworkforceperformance.Forexample,althoughtheHRfunctionhadmanybestpracticesinplace,executivesweresurprisedtolearnhowfew
employeesinnonmanagerialrolesknewaboutthem.ThisfindingpromptedHRto
increaseitscommunicationtostaff.
TheframeworkresultshavealsopromptedSKMtoreviewitsmethodsofrecruitingtop
talentandputinplaceaninternalcapabilityinkeygeographies. Thisinitiativehas
beenimmediatelyeffective;ithasreducedtimetorecruitkeystaff,increasedthefirms
abilitytohandlelargerecruitingassignments,andsignificantlyincreasedthe
satisfactionof
managers
with
the
HR
recruiting
service.
ThetransformationandreorganizationofHR
TheHCDFandalltheothermeasurementtechniquescommonlyusedshowclearlythat
underpinningthevaluedriversofhumancapitalarethehumancapitalortalent
managementprocesses. Itisimpossibletodriveuptheperformanceofpeople
consistentlyifthebasicsupportprocessesareinconsistent,poorlyapplied,orpoorly
structuredandenabled.
MostoftheseprocessesaretheresponsibilityoftheHRfunction.However,aswe
indicatedinchapter2,HRistoooftenpoorlypositionedandlackinginsomeofthe
12 Susan Cantrell, James M. Benton, Robert J. Thomas, Meredith Vey and Linda Kerzel. 2005. TheAccenture Human Capital Development Framework: Assessing, Measuring and Guiding Investments inHuman Capital to Achieve High Performance. Accenture Institute for High Performance Business WhitePaper.
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capabilitiesthatareneededtooptimizetheseprocesses,andisthereforeunableto
understandandachievefocusedimprovementsleadingtorealtalentmultiplication.
TheHRfunctionhasbeenreceivingalotmoreattentionandinvestmentinthelastfew
yearsthanitprobablyeverdidinthepast. ItisHRsmomentinthespotlight.Leading
organizationseverywherelookingathowtosignificantlyimprovethecapabilitiesandvalueaddofthefunctionforallthereasonswehaveexploredthroughoutthisbook,
andmanyarewelldownthispath.
ManyglobalorganizationsareintheprocessofscalinguptheirHRcapabilitiesand
seekingtomanagetheirpeopleconsistentlyacrossallpartsoftheirorganization. Itis
partoftheessenceofatrulyglobalbusiness,orindeedanybusinessthatrunsacross
differentlocationsandorganizationalentities,tomanageanddevelopitspeople
throughconsistentandprovenpracticesandprocesses. Visibilitytothetotalworkforce,
mobilityofpeoplearoundorganizations,andthefocusondistinctivecompetenciesand
criticalworkforces,allrequirethis.
Wealsodescribedinchapter2theevolutionaryjourneyofHRandtheorganizationsit
supports,andcomparedthistothejourneyfrequentlyundertakenbythequalityandIT
functions. Thejourneybeginswithimprovingthecapabilitiesandfocusofattention
fromadministrationandcontrol,ultimatelytovalueaddingandenablingoftalent
multiplication.
However,HRhasoftenfoundithardtoshiftitsfocusofattentionandcapabilityfrom
administration.HR
still
tends
to
concentrate
on
transactional
and
administrative
activitiespayrollandpersonneladministrationandrecordkeeping. AsJacFitzEnzof
theSaratogaInstitute,theHRbenchmarkingorganization,saidin2000 Only10per
centofcurrentHRcontributionsaddvalue.Theother90percentistransactional
nonsense.
Workingwith awiderangeofHRorganizations,ourownresearchhasshownthat
evenwhereHRhasorganizeditselftosplitouttherolesofmorespecialistHR
personneltofocusonmorestrategicactivities,itstillspendsmostofitstime
administrativeortransactionaltypesofactivity.ThisisshowninFigure31below,
basedonawiderangeofactivityanalysisdatafrommanydifferentorganizations.
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Figure31HRactivityanalysis
0
10
20
30
40
50
60
70
80
Administrative Generalist Specialist
Administrative Execution Strategic
Type of Role: Work Type
% ofTime Spent
0
10
20
30
40
50
60
70
80
Administrative Generalist Specialist
Administrative Execution Strategic
Type of Role: Work Type
% ofTime Spent
Althoughitmaybetransactional,ofcourse,thisworkhastogetdone. Theissueishow
tobestdothisworktoensurethatitisdoneasefficientlyaspossibleandinafocused
partoftheorganization.
ThekeypillarsofefficientandeffectiveHRcapability
MosttransformationsandreorganizationsofHRhaveincludedanumberofcommon
elements. Aswehaveseen,aprimarygoalistofocustransactionalactivitiesandto
improvethevalueaddofHR. Welookatfourbasicbuildingblocksorpillars:
harmonizedprocessesandpolicies consolidationofprocessesandpolicies
toconsistentformatsandapproachesleadingtomoreconsistentmanagement
ofpeople
integratedHRsystemsandinformationconsolidateddatabaseof
informationprovidingonetruthforHRinformation,andintegratedsystems
tosupportintegratedprocesses.
sharedservicesconsolidationofadministrativeandtransactionalactivities
intoacommonorsharedservicestructurethatsupportstherestofHRacross
thebusiness,supportedbyanintegratedservicemanagementmeasurement
framework
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focusedandimprovedcapabilitiesandgovernancetheactivitiesofHR
havetobebrokenoutandorganizedtospecificareasofcapabilitytoensure
focus,beginningwiththesharedservicepiece. GovernanceofHRisalso
vitalinensuringadequateoversightandappropriatemanagementofallparts
ofHRacrosstheorganization.
Theseareasaretoalargeextentinterdependentitishardtohavegoodshared
servicesforexample,unlesstheprocessesandpoliciesareharmonized,andlikewiseit
ishardtoreorganizeHRtoprovidemorefocuswithoutthesetwoaspectscoordinating.
EachareaisworthsomefurtherexplorationgiventheimportanceoftheHRfunctionto
enablingaproperlytalentpoweredorganization.
Harmonization
of
processes
and
policies
HRrelatedprocessesandpolicies,inallbutthemostcentrallymanagedorganizations,
haveevolvedasthebusinessitselfhasevolved. Whenneworganizationalentitiescame
intobeing,orpartsoforganizationsweredevolvedoracquired,thepeople
managementprocessestendedtocomeorgowiththem.Theythereforegrewupin
manydifferentways,withdifferentstandardsandpoliciesthatreflectedmanagements
viewsatthetime. Organisationsoftenhavemanydifferentpayschemes,performance
managementprocesses,recruitmentprocessesandchannels,rewardprograms,and
others. Thismakesitdifficulttocompare,measure,andprovideconsistencyofbest
practiceto
managing
the
talent
across
the
organization.
Gettingmorealignmentonprocessesandpoliciesisessentialforconsistencyand
efficiency,buttheevolutionoftheseprocessesoftenmakesitdifficulttoachieve
agreementonthis.HRisoneofthefewfunctionsonwhicheverylinemanagerand
businessleaderislikelytohaveanopinion. Manyleadersacrossthedifferentpartsof
organizationsrelishtheelementsofempowermenttheyhave,andtheirabilityto
managetheirpartofthebusinessastheyseefit,andthisisusuallytrueintheirthinking
aboutpeople. Thecommonrefrainofyoudontunderstandweredifferenthas
beenheardthousandsoftimesasorganizationsseektogetmoreconsistency,yetinthe
areaofHRorpeopleprocesses,goodprocessesarenotonlyconsistent,buttheyareabletoflexwheretheyneedtosupportwhattrulyneedstobedifferentorlocalized. Bring
togetherthecommonelements,executetheminacommonway,andallowforvariation
whereitisreallyneeded.
Sothemanagementofsalespeople,theirrewardandcompensationprogramsetc,will
bedifferentfromthatrequiredforthepeopleoperatingmachineryonthefactoryfloor,
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buttheadministrationoftheseactivitiescanbedonetogether,allowingthebestpeople
tosupportbothofthesegroupsofemployeesinaconsistentway.
However,tomakethishappenrequirescompromiseandunderstandingofthe
organizationsambitionsforthecommongood. Objectivessuchastheabilitytotakea
consistentviewofpeopleacrossthebusiness,consistentassessmentofskillsandcompetencies,andconsistentmeasurementanddata,aremucheasiertoachieveif
processesandpoliciesarestandardized.
BestpracticeprocesseshavebeenwelldocumentedPCMM,forexampleprovidesa
viewofhowpracticesandprocessesshouldalignandbeimplemented,andotherbest
practiceprocessmodelsdescribeefficientworkflowsandprocessstepsforeachofthe
coreHRfunctions. Weusetheseextensivelytoprovideabaselineagainstwhichto
compareexistingpracticesandthisisusuallyabetterstartpointthanarguingover
whichparticularversionofthevariousexistingprocessesacrosstheorganizationisa
best.
Bestpracticeprocessreengineeringisnowalsowellunderstoodandshouldbeapplied
thingssuchashavingprocessowners(whichwewillcomebacktoinconsideringHR
organization),processmeasures,processdocumentationandtraining,andgood
structureandworkflow. Measurementofprocessesshouldincludetheconceptsof
maturitywediscussed howconsistentlytheyarebeingexecuted,howwellintegrated
theyareaswellaswhethertheyaremeetingefficiencyandcosttargets.
SinceHRprocessesofteninvolvedifferentpeopleatdifferenttimes,workflowand
understandingprocessintegrationisessential. Wehavenotedbeforethatintegratingthekeytalentprocessesisanessentialpartoftalentmultiplication. Employeesneedto
seeandunderstandhowtheprocessofobjectivesettinglinkstoperformance
managementandhowthatconnectstorewards,andwhereandhowtheythenneedto
focusonlearninganddevelopmenttoimprovetheirperformance. Theyalsoneedto
understandhowtheircareersaredevelopingandhowperformanceassessment,skills
andcompetencyneeds,andopportunitiestolearnthenewskillstheyrequirefornew
rolescanbestbeachieved. Skillsandcompetencyframeworksthatunderpinthis
integrationareessentialinprovidingacommonlanguageandcontext.
Thesearecrucialconnections,buttheyhappenalltoorarelytoday.Inmanyofthe
organizationswehavestudiedconcernordissatisfactionwiththeirpeoplearisesmost
significantlywhenthevisibilityacrosstheseprocessesisnotclear.Aswenotedin
earlierchapters,clearperformancefeedbackandrecognitionofdevelopmentalneeds,
togetherwiththesupportthattheorganizationcanprovide,arebecomingevermore
importanttothenewgenerationsofworkers.
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IntegratedandcommonHRsystems
HRhasrarelyreceivedgoodinvestmentinsystemsanditoftenmissedoutonthewave
ofenterprisemanagementsystemsthatfirstsweptthroughorganizationsinthe1990s.
HRitselfwasusuallyunabletoarticulatetheneed,andsincethefunctionsitsoutside
themainstreamprocessesofabusinessfromdevelopingcustomerstomanaging
suppliers,ithasgenerallyacquiredalegacyofpoorlyintegratedandfragmented
systems.
Thisisreflectedinthemultiplicityofspreadsheetsandlocaldatabasesthathavegrown
upinsupportoflocalmanagementneedortoplugthegapsofthepoorinformation
and
functional
support
provided
by
the
various
HR
systems.
Without
proper
systems
support,notonlyaretheprocessesdescribedearlierpoorlysupportedandinefficient,
butthedataorinformationneededtounderstandtalentandvaluearemissing.
Withoutdata,HRcredibilitywithbusinessleadershipiscompromisedandweakened.
Today,themajorenterprisesystemorERPvendorsdominatedbySAP,
Oracle/PeoplesofthavebroadbasedandflexibleHRsystemsplatformsthathavebeen
implementedineverytypeofbusiness. Theyincorporatemanyofthebestpractice
processesinHR,andprovideofftheshelfintegrationacrosstheseprocesses,andinto
othersystemssuchasfinance.
ThesalesofthesesystemsareacceleratingasorganizationsconsolidatetheirHR
processesandlookformoreintegratedHRsystemsplatforms. Thereismuchinterest
andinvestmentintheHRsystemsmarketplace,andtherearealsomanynichesolution
providers,providingricherfunctionalityinparticularthehighervalueHRprocesses
suchasrecruitmentandresourcing,performancemanagementandlearning.
Consolidationishappeningandwillcontinueasthismarketmatures.IDC,Gartnerand
otheranalystsallseegrowthinthesemarketsof810percentormoreperyearforsome
timetocome,andinsomeregionsoftheworldthegrowthrateissignificantlyhigheras
organizationsseektocatchup.
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Figure32depictionofintegratedHRsystems
Oracle Web Employees
Work-forceAdm.
IR Comp.
HRMS Intelligence
RewardRe-
sourc.
HRMS
Learning Mgmt Case MgmtKnowledge
Base
ExternalInterfac
es
For example: Payslips Applicant Packs Offer Letters Total Reward
Statement
Accessedvia
SelfServiceandProfessionalGU
I
Management and Operational Reporting (Sample)
ServicePerformance
Headcount/FTE Salary Spread
PerformanceSpread
Training Enrolments Training
Effectiveness Training Delivery
Number of Applicants
Electronic DataRecord Mgmt
PrintingService
HR and Service Centre Systems
Number ofLeavers
Types of Absence Time at level
Time to Recruit
EAI & Workflow
Applicants
Vendors
External
Contact Centre
HR Advisors
TransactionSupport
HR ServiceDelivery
Employees
Managers
Clients
Case WorkersPayroll
ExternalLettersandForm
s
For example: Time &
Attendance Finance
Active Directory
Banks
Oracle Web Employees
Work-forceAdm.
IR Comp.
HRMS Intelligence
RewardRe-
sourc.
HRMS
Learning Mgmt Case MgmtKnowledge
Base
ExternalInterfac
es
For example: Payslips Applicant Packs Offer Letters Total Reward
Statement
Accessedvia
SelfServiceandProfessionalGU
I
Management and Operational Reporting (Sample)
ServicePerformance
Headcount/FTE Salary Spread
PerformanceSpread
Training Enrolments Training
Effectiveness Training Delivery
Number of Applicants
Electronic DataRecord Mgmt
PrintingService
HR and Service Centre Systems
Number ofLeavers
Types of Absence Time at level
Time to Recruit
EAI & Workflow
Applicants
Vendors
External
Contact Centre
HR Advisors
TransactionSupport
HR ServiceDelivery
Employees
Managers
Clients
Case WorkersPayroll
ExternalLettersandForm
s
For example: Time &
Attendance Finance
Active Directory
Banks
OneareaofmodernHRsystemsisprovidingbetterenablementoftalentprocessesand
integrationacross
organizations.
It
is
generally
titled
eHR
amoniker
for
eenabled
HR. SincemanyHRprocessesdirectlyengagepeopleandmanagers,itmakesmuch
sensetoprovidemoreabilityforthemeithertoperformdirectlypartsofthose
processesortoaccessdirectlyandmoreeasilyinformationthatisrelevanttothose
processes. Socalledselfservicehasemergedinmanyorganizationsasaresponse,
butalsoasameanstodrivegreaterefficiencies. Forexample,ratherthanemployees
havingtosendanoteormakeacalltosomeoneinHRtoupdatepersonaldetailssuch
asaddresschangesorbankaccountdetails,theycandoitthemselvesdirectlyintothe
system. Thisassuresthemthatthedetailshaveactuallybeenrecordedandallowsthem
tocheckcurrentinformation,butalsoremovesasimpleadministrativetaskfromHR.
SelfserviceandeenabledHRprocessesneedtobewelldesignedtoensureeaseofuse
fortherangeoflikelyusers,andtheirimplementationanduptakeneedtobeproperly
communicated. Theymustalsobesupportedbywelldesignedandconsistent
processes,andtheirassimilationintotheorganizationcarefullymanaged.Users,
whetherlinemanagers,employeesoroutsiders,havetoseeandunderstandthevalue
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ofsuchprocessestoovercomethenaturalresistancetousingthemandthebeliefthat
theyareameanstoreducecostforHRbutaddtaskstoeveryoneelse.
HRsharedservices
Theidea
of
shared
services
for
support
functions
is
far
from
new,
and
many
organizationshavesharedservicesinsomeform,typicallyaspartoffinance,
procurement,andITfunctions,aswellasHR. Whenexecutedwell,sharedservices
provideconsistentsupportandcapabilityinadministrativeandtransactionalprocesses
inacostefficientwaytotherestoftheorganization.
Theconceptisessentiallytobringtogetherasfaraspossiblecommonactivitiesintoone
placetoexecutethemconsistentlyandefficiently. Theactivitieswhichcanmostbenefit
fromthisarethemoreadministrativeandtransactionaltasksfrompayrollrelated
processes,topersonneldatamanagementandtheadministrationofhighervalue
functionssuchaslearningandresourcing. Moreover,muchHRinformationandquerysupportcanbeprovidedfromasharedservicecentresuchasinformationonHR
policiesandprocedures,andstandardHRreporting.
ConnectiontotherestoftheHRfunctionandthemanagersandemployeesisthen
providedthroughacontactcentre,orthroughselfservicetechnologies. SincetheHR
processeswillneedtoworkacrossthesharedservicecentreandtherestofthe
organization,thereneedstobeworkflowtypetechnologythatfacilitatesthepassingof
casework,forexamplefromthelineHRorganizationtothesharedservicecentre.
Wellrun
shared
service
centers
filter
the
work
coming
in
to
the
centre
to
ensure
that
it
isprocessedefficientlyandeffectively. ThemoreexperiencedHRpersonnelinthe
centrewillbeassignedthemorecomplexcasework,whereasbasicqueriesor
administrativeactivitiescanbedonebylesstrainedorlessskilledstaff. Effectiveuseof
selfservicecanalsofilteroutmanyminoractivitiesfromthecentre.
Organisationswithmultiplelocationsandacrossmultiplegeographiesinevitablyhave
toconsiderhowmanysharedservicecenterstheyshouldhaveandwheretolocate
them. Inthelastfewyearstherehasbeenacleartendencytoconsolidateintoasmall
numberofcentersessentiallydeterminedbyconsiderationssuchaslanguagesupport
andtimezones. AsmoreandmorebignameorganizationslikeP&G,BT,Unilever,IBM haveforgedapathinmovingthesecenterstolowcostlocationsacrosstheworld
suchasIndia,confidenceandcapabilitieshaveincreasedtoallowradicalrestructuring
ofHRsupportinthisway. Costhaspromptedfurtherconsolidationandlocationof
centerstolowcostcountries:thecostsavingscanbeveryconsiderable,atleast20to30
percentoncurrentoperationsformostbusinesses.
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However,theseprogramsofchangearenotforthefaintheartedandrequiresignificant
effortandinvestmenttomakethemhappensuccessfully.Givenalsothedifficultiesin
settingupnewcentersinthelowcostlocationsoftheworld,andtheissuesof
availabilityofsuitablyqualifiedresourcestostaffthesecenterswith,therehasalsobeen
asignificantgrowthinoutsourcingthesecenterstoothers.
Aswenotedinchapter1,thefavoritelocationsforthesetypesofbusinessprocessesare
rapidlybecomingcrowded.Staffcostsrise,issuesofstaffrecruitmentandretention
grow,andwithoutthescaletobeabletorespondtothesepressuresandmovework
aroundoropencentersinothercities,thesecanmakelifedifficult. Outsourcingservice
providersarelocatingcapabilityforHRacrossmanycentersaroundtheworldtoday;
theyareconstantlylookingatlocationsandflexingthesupportinfrastructuretobeable
tomoveworkaround.
Figure33belowshowssomeexamplesofprocessesandhowtheymightsplitbetween
differentpartsoftheorganization.
Figure33Sharedserviceprocessexamples
Functional Responsibility / Governance
Line Manager/Employee
Call Center Back Office HR Business Partner(primarily subgroup specific)
Service Delivery Center (Group-wide)
Center of Expertise
Efficient execution ofadministrative activities
Processing of complexHR transactions
Management ofindividual employee
cases
Process routine HRtransaction
Resolve 80% of callsat first point of contact
Employee / Managerself-service
HR Policies
HR Reports
E-Learning
Development ofconceptual frameworkfor HR BusinessPartners, ServiceCenter and Self-Services (programs,policies and
processes)
Translate Businessneeds to HR programrequirements
Ensureimplementation of HRprograms in Business
Examples: Examples: Examples: Examples:Examples:
Apply for a jobRecruitment candidatesifting and screening
Development andcommunication ofrecruitment policy
Conduct recruitinginterview with linemanager
Register for trainingProvide guidance onpolicy and procedure
Schedule trainingrequests
Development andcommunication ofrecruitment policy
Define priorities forthe business areain conjunction withline managers
View Pay informationAnswer generic payenquiries
Check Pensionscalculations
Definition of endyear reports
Approval for bonuspayment
Manage personaldata
Sick and absenceadministration
Changeorganizational Datain ERP
Need of systemmodification/customizing
Need fornew/modified report
StaffingData ManagementPayrollWorkforce Development
Functional Responsibility / Governance
Line Manager/Employee
Call Center Back Office HR Business Partner(primarily subgroup specific)
Service Delivery Center (Group-wide)
Center of Expertise
Efficient execution ofadministrative activities
Processing of complexHR transactions
Management ofindividual employee
cases
Process routine HRtransaction
Resolve 80% of callsat first point of contact
Employee / Managerself-service
HR Policies
HR Reports
E-Learning
Development ofconceptual frameworkfor HR BusinessPartners, ServiceCenter and Self-Services (programs,policies and
processes)
Translate Businessneeds to HR programrequirements
Ensureimplementation of HRprograms in Business
Examples: Examples: Examples: Examples:Examples:
Apply for a jobRecruitment candidatesifting and screening
Development andcommunication ofrecruitment policy
Conduct recruitinginterview with linemanager
Register for trainingProvide guidance onpolicy and procedure
Schedule trainingrequests
Development andcommunication ofrecruitment policy
Define priorities forthe business areain conjunction withline managers
View Pay informationAnswer generic payenquiries
Check Pensionscalculations
Definition of endyear reports
Approval for bonuspayment
Manage personaldata
Sick and absenceadministration
Changeorganizational Datain ERP
Need of systemmodification/customizing
Need fornew/modified report
StaffingData ManagementPayrollWorkforce Development
Withtheadditionalcomplexitiesofsplittasksandprocesses,andtheneedtoensure
thatthesharedservicecentreisoperatingeffectivelyandefficiently,itisessentialto
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havegoodmeasurementandmanagement. Acomprehensiveservicemanagement
frameworkthatcoversalloftheHRprocessesshouldprovide:
planningandprioritisation identificationandprioritisationofservice
requirementsaccordingtobusinessobjectives
servicereporting enablesthedeliveryofanagreed,defined,measurableand
continuouslyimprovingservice
visibility measurementofserviceperformanceagainstagreeduponkey
performanceindicatorsandservicelevelagreements,andregularreportingand
reviewofmeasurements
improvements identificationofareasforimprovementbasedonfeedbackand
measuredperformancetrends
flexibilityto
change
controlledandformal,butnotbureaucraticchange
mechanism.
Withoutsuchaframework,itiseasytolosesightoftheobjectivesandinefficienciescan
easilybuildup. Inparticularmanyorganizationshavefoundthatworkintendedfor
transferfromthelineHRorganizationstothesharedservicecentredoesnotmove
completelyorstartstocreepback. Shadoworganizationsbuildupandduplicatework
andeffort,andkeycostsavingobjectivesarethenlost.
ThechangesinbehaviorsrequiredfrombothHRpeopleandfromtheemployeesand
linemanagementshouldnotbeunderestimated. FormanyHRpeople,administrativeandmeasurementworkistheircomfortzonewhileemployees,andlinemanagersin
particular,needtoletgooftheoldwaysofworkingwheretheywereaccustomedto
hightouchHRsupportortheabilitytowalkintotheHRdepartmenttogettheir
questionsanswered. Again,goodmeasurementraisesvisibilityofhowwellthenewly
definedprocessesandorganizationareworkingandwillshowifandwherethechange
isincomplete.
LeviStrauss&CocasestudyTheBusinessChallengeSanFranciscobasedLeviStrauss&Co.(LS&CO.)isamongtheworldslargestapparel
marketersandmostwidelyrecognizedbrands.In2003,LS&CO.sseniormanagementlaunched
acompanywideefforttoreducecostsandrefocusthebusinessonprofitablegrowth.This
requiredatransformationofHR,notonlytoreducecostsofthefunction,butalsotobetter
enablethestrategyandmanagementoftalentacrosstheorganization.
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TheHRtransformationprogramThecompanysetaboutamajorchangeprogramforHRfromearlyin2004,including
consolidationofHRsystems,andprocessesandtransactionalactivitiesintosharedservice
centers,tightlydefinedperformancemetricsandaservicemanagementframework.Muchofthe
administrativeoperationswereoutsourced,toallowthecompanytofocusitsattentionontransformingthehighervaluefunctionsandcapabilitiesofHRinternally.InApril2004,
AccentureassumedresponsibilityforallHRadministrativeoperationsforLS&CO.sactiveand
retiredemployeesinNorthAmerica,including:recruiting;trainingdesign,developmentand
administration;benefitsadministration;leaveofabsence;compensation;customerservice;HR
administration;expatriateandrelocation;performancemanagementadministration;andHR
systemsandapplications.
HighperformanceoutcomesLevisStrauss&Co.nowenjoysacosteffective,employeecentricapproachtothedeliveryofHRservices,completewithimprovedservicelevels,predictablefixedcosts,andtangiblesavings.
OverallHRcostsatLS&CO.havefallenby35percent,andtheHRorganizationoffersmore
andbettertools,processesandservices.
Standardized,practicebasedHRprocessesarenowinplaceacrossNorthAmericaprocesses
thatareenhancingemployeedataquality,reportingandanalysis.LS&CO.sHRorganization
alsoisbetterpositionedtosupportcompanyleadersintheirquestforprofitablegrowth;for
example, byhelpingexecutivesselecttherighttalent,emphasizetherightcapabilities,and
developcreativesolutionstomotivateandrewardpeople.Theneteffectisanewlevelofhigh
quality,costeffectiveHRservice,withflexible,scalableprocessesthathelpdelivermoresavingsandstrongerbusinesssupport.
ImprovingHRorganizationandcapabilities
Whenthemoreadministrativeandtransactionalactivitiesarelocatedinsharedservice
centers,therestoftheHRfunctionisabletofocusmoreonthehighvalueaddingand
businessfacingprocessesandfunctions.
ThebestpracticeHRorganizationisdisciplinedandorganizedaccordingtocapabilities.
Experienced,businessorientedHRprofessionalsworkcloselywiththebusiness
functionsandleaders,abletounderstandtheirneedsandtorelatethesedirectlyto
talentandpeoplerelatedneedsandcapabilities. Acommontermfortheserolesisthe
HRbusinesspartner.
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HighervalueandcomplexityspecialistHRcapabilitiesarebroughttogetherinto
centersofexpertise,toconsolidatethedeepexpertiseandprovideaconsistentsupport
totherestofHRandthebusiness. Thesewillincludeareassuchaslearning,resource
planning,compensationplanning,industrialrelationsandemploymentlaw,butalso
someoftheadditionalcapabilitiesthatHRismoreoftendevelopingsuchas
organizationdesign,changemanagement,andHRintelligenceandreporting.
Figure34belowshowsthebasicelementsofanHRorganizationthatisorganized
aroundcapabilitiestoprovidethemostefficientandeffectivesupporttothe
organizationandemployees.
Figure34HRorganization
HRBusinessPartners
HR Centreof
Expertise
HR SharedServiceCentre
Plan for HRsolutions byidentifying
business needs
Operate HRprocesses to
produce servicelevels
consistently &efficiently
Build HR processesthat leverageorganisational
capabilities
Deliver HRprocesses andsupport to meet
needs
Design HRsolutions by
applying best
practices tobusiness needs
One HR
Team
HRBusinessPartners
HR Centreof
Expertise
HR SharedServiceCentre
HRBusinessPartners
HR Centreof
Expertise
HR SharedServiceCentre
Plan for HRsolutions byidentifying
business needs
Operate HRprocesses to
produce servicelevels
consistently &efficiently
Build HR processesthat leverageorganisational
capabilities
Deliver HRprocesses andsupport to meet
needs
Design HRsolutions by
applying best
practices tobusiness needs
One HR
Team
Foralltheelementstocometogether,andforthismodeltowork,stronggovernance
andoversightofHRisrequiredacrosstheenterprise. ManyHRfunctionshave
developedwithadevolvedgovernance,wherethecorporateHRleadershiphasvarying
degreesofinfluencebutoftennotdirectcontrolofHRacrossallthebusinessdivisions
or
entities.
The
shared
service
centers
and
centers
of
expertise
should
all
report
centrallyandhaveservicelevelagreementsandkeyperformanceindicatorsthatallow
thebusinessentitiestomanageandmeasuretheservicestheyneed. Thebusiness
partnerrolesshouldhavejointaccountabilitytothebusinessentitiestheysupport,and
tocorporateHRtomaintainoversight. Finally,giventhewayinwhichHRprocesses
canbesplitacrosstheHRorganizationalcomponents,strongprocessgovernanceis
required. ProcessownersforthekeyHRprocessesneedtobeestablishedandhavea
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levelofimportance,andcredibility,equivalenttobusinessentityHRleadersandother
directreportstothecorporateheadofHR.
OrganizingHRinthiswaywillfocusontheneedsforupskillingornewcapabilities.
Thebusinesspartnerrolesforexample,reallyrequireverybusinessorientedand
capablepeoplewhoalsohaveexpertiseacrossthebroadrangeofHRfunctions,atleastatahighlevel,andfamiliaritywithpoliciesandprocesses. Inthepast,HRhasnot
alwaysbeenthefunctionthathasattractedthebestandbrightest. AttheUniversityof
MichigansRossSchoolofBusiness,whichhasoneofthebestfacultiesintheUSfor
organizationalissues,just1.2percentofthe2004graduatesjoinedanHR
organization.13
Forthemostpart,HRprofessionalsinthepasthavenotconsideredtraininginbusiness
orientedskillstobethatimportant,andHRfunctionshaveusuallynotdemandedit
either. TheUSbasedSocietyforHRManagement,orSHRM,carriedoutasurveyin
2005askingHRprofessionalsaboutwhattheyfeltwasimportantfromtherangeof
academiccoursesandsubjectsforasuccessfulcareerinHR. Nofewerthan83percent
saidthatclassesininterpersonalcommunicationsskillshad extremelyhighvalue.
Employmentlawandbusinessethicsfollowed,at71percentand66percent,
respectively.Changemanagementandstrategicmanagementweremuchlowerat35
percentand32percent,andfinallyfinancewasatonly2percent.
ForHRtochangeandbecomeafullyintegralbusinessfunction,itneedsmorebusiness
qualifiedandsavvypeople,alongsidedeepspecialistsincoreareasoftalent
management. ThedaysofHRbeingtheplaceforgeneralistsornonbusinessoriented
peoplearerapidlydisappearing.
BusinessacumenisthesinglebiggestfactorthatHRprofessionalsintheUSlack
today, saysAnthonyJ.Rucci,executivevicepresidentatCardinalHealthInc.,abig
healthcareprovider. RucciwastheHRexecutivewholedtheworkatSearswe
mentionedearlierseekingtoestablishthelinksbetweenemployeecommitment,
customerloyalty,andprofitability:beforeCardinalHealthhewasheadofHRand
strategyatBaxterInternational,anotherhealthcarecompany. Suchpeopleare
becomingmorecommonasleadersofHR. MuchashappenedinfunctionslikeITin
thepast,
business
experienced
leaders
are
increasingly
moving
in
to
senior
roles
in
HR,
sometimesaspartoftheirtourofdutyastheygainexperienceacrosstheorganization.
Thiscanonlybeagoodthing,andwillencouragethespreadofexperienceandideasof
talentmanagementbetweentheHRfunctionandtheotherbusinessfunctionsand
entities. Developingcommonunderstandingandaccountabilityforthedevelopmentof
13 See Keith Hammonds Fast Company, op cit
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talentisoneofthekeyaspectsofbeingatalentpoweredorganization,andachieving
talentmultiplication. Weshouldnextexaminewhatcollectiveresponsibilityfortalent
developmentandmultiplicationreallymeans.
UnilevercasestudyTheBusinessChallengeUnileverisoneofthelargestconsumergoodscompanyintheworldwithrevenuesofc.42
billion.OneineverytwohouseholdsintheworldhasaUnileverbrandintheirhome;everyday,
150millionpeoplein150countriesuseUnileversproducts.Unileversmissionistoadd
vitalitytolife.
In2005PatrickCescau,thenewUnileverCEO,institutedtheOneUnileverprogramme,
targetedwithdeliveringannualsavingsof700millionthroughtheimplementationofaunified
andstreamlinedoperatingmodelforthecompany.Aspartofthis,Unileverestablishedaglobal
HRtransformationprogramwiththeaimofcommercializingandstreamliningHR,providing
linemanagerswithnew/enhancedselfservetools,increasingaccesstoglobalworkforcedata,
leveragingbenefitsfromUnileversglobalscaleanddeliveringsavingsofatleast20percent.
TheHRTransformationProgramInMay2006Unileversignedasevenyearbusinessprocessoutsourcingagreementtohelpthem
transformtheirHRoperationsin100countries.Accentureastheoutsourcingpartnerwill
providerecruitment,payrolladministration,rewardadministration,performancemanagement,
workforcereportingandcoreHRadministration.Accenturewillalsoprovidevendorandcontentsourcinganddevelopment,programplanninganddelivery,learningsystemhosting,
andmanagementandadministrativeservices.
TheHRprocessesandsystemsarebeingredesignedtosupportmorecommonwaysofworking
andsharedserviceoperationsglobally. SupportacrossUnileversthreegeographicregionswill
beprovidedthrough6sharedservicecentres,withsomehightouchservicesremaininginthe
localbusinessentitiessuchassomeinstructorledtraining,recruitmentinterviewingetc.
UnileverisretainingkeyareasofcapabilityaroundhighvalueHRprocesses,andalloftheHR
businesspartnerswhoworkalongsidebusinessleadership.
Everyonesresponsible
Talentmultiplicationcapabilitiesmustbeembeddedintheactivitiesoftheorganization
andsustainedbyeveryone. DiscoveryoftalentcannotbelefttotheHRfunctionalone
linemanagersandemployeesmustseetheidentificationofnewtalentsourcesastheir
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responsibilitytoo. Formallearningactivitiesarenecessarybutnotsufficientfor
developingyourtalenteveryoneintheorganizationmustcontributetobuilding
capabilitiesofothersthrougheverydayactivitieslikeperformancefeedbackand
coaching,aswellasmentoringanddevelopmentalrelationships. Everymanagerand
supervisorhastheopportunitytodeploytalenttocreatevaluewhentheyassignpeople
jobsandtasks. Everyemployeecanpursuedevelopmentalexperiencesthatcontribute
tothebusinessbyproactivelytakingonnewresponsibilitiesorgettinginvolvedin
activitiesoutsideoftheirnormalroles.
Talentpoweriscreatedbyeveryoneinanorganization,butthevirtuouscycleoftalent
multiplicationissetinmotionbyleadership. Visibleleadershipontalentissuesis
absolutelynecessarytoensurethateveryoneintheorganizationunderstandsthattalent
ismissioncritical. Leadersmustalsocultivateatalentmindsetintheorganizationto
createthemomentumthatsustainstalentmultiplicationandpowersperformance.
Theimportanceofvisibleleadership
Leadersneedtotakeresponsibilityfortalentissuesbecauseaswehavestressed
constantly talentisstrategic. Leadershaveamultitudeofcompetingclaimsontheir
attentionandenergy,andforthatreasonalonetheyneedtoprioritizetalentissuesby
dedicatingsignificanttimetothem.Bygivingprioritytotalentissues,leaderscansignal
toeveryoneintheorganizationthattalentisstrategicallyimportanttothebusiness.
ThemostrecentAccentureHighPerformanceWorkforceStudyfromwhichwehave
previouslyquotedshowedthatcompanieswedefinedasleadershadamuchhigher
levelofinvolvementoftheirleadersdirectlyinpeopleandtalentissues,asFigure35
shows.
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Figure35 Leadersaremorelikelytohavetheheadsoftheirtopfunctionsdeeply
engagedintalentmanagementinitiatives
Aboveall,leadersnotspecialistfunctionslikeHRdecidewhatissuesarestrategic.
Theynotonlysetstrategyfortheirorganizationbutdecidethebuildingblocksand
determinantsof
strategy.
Leaders
alone
have
the
power
to
make
long
term
strategic
decisionstakepriorityovershortterminterests.Thisisparticularlyimportantinthe
fieldoftalent,sincetherewardsforinvestingintalentarelessapparenttomarketsthan
thoseofotherdecisions.Therearefiercepressuresoncompanyleaderstoproduce
goodlookingshorttermresults.BillZollars,CEOofYRCWorldwide,isoneleader
whohasresistedthesepressurestokeephiscompanyfirmlyfocusedonitstalent
strategy.TheonethingthatIprobablyunderestimatedwastheshorttermfocusthat
publiccompaniesnowhavetodealwithintermsofWallStreet.Iknewitwascrazy,
butIhadnoideahowcrazyitactuallyis.Itsreallygottentothepointwherelongterm
tomostanalystsisnextweek.14
Zollarsisoneofagrowingnumberoftopexecutiveswhohavetakenpersonal
responsibilityfortalentissueswithintheirorganization.Hewasoneof20CEOsor
COOsofmajorglobalcompaniesinterviewedinanEconomistIntelligenceUnitSurvey
TheCEOsroleintalentmanagement. Thesurveyfoundthat14ofthe20were
14 Source: EIU 2006 survey: The CEOs role in talent management
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devotingatleast20percentoftheirworkingtimeontalentmanagement:sevenofthese
weregivingitbetween30and50percent.However,theireffortswerenottypically
guidedbyaformaltalentstrategydirectlylinkedtotheircompanysmajorgoalsor
embeddedintheirbusinessplanningprocesses.The20leadersgenerallyengaged
insteadinselectedsupportingactivitieswheretheybelievedthattheycouldaddvalue.
Amajorfocusofleadershipistodirectthehumancapitalstrategyandcapabilities
requiredtoexecutetheorganizationstoplevelstrategicobjectives.However,before
eventhatessentialtask,leadersneedtocreateacommonbeliefsystemthroughouttheir
organization,inwhicheveryoneisfocusedongrowingandmultiplyingtalentand
assumesthesamecommitmenttoachievethis.Putsimply,leadersneedtocreatea
talentmindsetaswedescribedinchapter2.
Creatingatalentmindset
Whenanorganizationhasatalentmindset,theobjectiveofmultiplyingtalentunitesthe
individualandcollectiveeffortsofallitspeople,anddirectitspractices,cultureand
ambition.InJMKeynessmemorablephrase,itbecomespartoftheorganizations
animalspirits.
Thismindsetisbuiltontwosharedbeliefs.First,peoplerecognizethattalentisvitalto
theorganizationsimmediateandfutureneeds,andtheirown,andthattalentsetsthem
andtheirorganizationapartfromothers.Second,peoplerecognizethattheycan
contribute
personally
to
increasing
the
talent
available
to
their
organization.
Based
on
thesesharedbeliefs,organizationswithatalentmindsetshapeandachieveashared
vision,alignitwithcustomersandotherstakeholders,andconstantlyraisetheir
performanceandvalue. InthewordsofAnnetteLaw,manageroforganizational
developmentatUPSYourvisioniswhereyouwanttobeandtalentistheengineto
getyouthere.15
Tobuildthattalentmindsetleadersmustlookfirsttoestablishahighperformance
environment.Theysethighexpectationsandhighlighttheirachievement,both
individuallyandcollectively.Theymakedecisionsbasedoncriticalskills,attitudesand
valueswhichfostertalent.
Theythendeveloptherighttalentcapabilitiesbyidentifyingthesourcesoftalent
development,investinginthemandmanagingthem,andmonitoringandbuildingtheir
15 Lynne Morton. 2005. "Talent Management Value Imperatives: Strategies for Execution." TheConference Board Research Report R-1360-05-RR, pg 8.
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results.Theydiffuseroles,responsibilitiesandauthoritytostretchtheirpeople. They
constantlyseekandcreateopportunitiesforalltheirpeopletodowhattheyalreadydo
bestanddiscoverotherthingstheymightbeabletodo.
Allofthesetasksrequirevisibleandcommittedleadershipfromthetop,as
demonstratedbyKenChenaultofAmericanExpress. AnexcerptfromTheConference
BoardsprofileofAmericanExpressintheir2005reportontalentmanagement
strategiesappearsintheboxbelow.
AmericanExpressCompany: MindsetBeginsattheTop16
CEOKenChenaultsvisionisforthecompanytobetheworldsmostrespected
servicebrandwithcentralizedstrategydevelopmentandthecreationofarangeof
integratedinitiatives.Adecentralizedlineofbusinessstructurethenprovidesimplementationandfurtherinterrelationships.Thelinesofbusinessareglobal,soa
globaltalentmanagementframeworkisbeingdevelopedtosupportthem.
Inkeepingwiththiscustomerfocusedvision,AmericanExpresssubscribestothe
employeeserviceprofitchainphilosophy,whichlinksemployeesatisfactionto
customersatisfaction.Thisalignsthecompanysemploymentbrandtothebeliefthat
motivatedorengagedemployeescreatesatisfiedcustomers.Whenemployeescommit
totheemploymentbrand,theycontributetheirbesttalent,skills,andideasandplaya
criticalrole
in
the
organizations
success.
TheCEOdrivesthistalentmindset.Herecognizesthatpeoplearethecompanys
greateststrength. Hespends30to40percentofhistimeonleadershipissues,working
directlywithleaders.HisinvolvementincludesleadingatwiceyearlyCEOsummit,
wheretoptalentmeetwithhimfortwodaystoworkthroughasignificantbusiness
issue.Healsodinesquarterlywithtoptalentandannuallyhasseveralchairmanled
sessionsduringwhichtalentisdiscussed.Heispersonallyinformedabouthow
employeesfeelhelistensandisveryapproachable.Notonlydoesheplayavisible
andactiverolewithallemployees,buthealsohassimilarrequirementsofhisstaff.
Thereisclearlyatopdownemphasisontalent.
16 Lynne Morton. 2005. "Talent Management Value Imperatives: Strategies for Execution." TheConference Board Research Report R-1360-05-RR, pg 28.
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Givingpeoplemanagementbacktomanagers
Themostcriticaltaskistointegratehumancapitalmanagementpracticesintothevery
fabricofbusiness.Thewaytodothatistoensurethatlinemanagers,towhomthe
majorityofpeopleinanyorganizationactuallyreport,takeonproperaccountability
andresponsibilityfortalentmanagement.
Onsomelevel,thisisjustcommonsense. Alinemanagersrolehasalwaysbeentoco
ordinateanddirectpeopleandresourcesinpursuitofbusinessresults.Furthermore,as
wehavealreadyhighlighted,anemployeesimmediatemanagermattersmosttohisor
herperformanceandengagement.Andyetcommonsensemessagesoftengetlostinthe
clutteroflargeorganizations.DebraHunterJohnson,avicepresidentofhuman
resourcesatAmericanAirlines,toldushowgoodintentionseventuallydisconnected
toomuchofthedaytodayresponsibilityforpeoplemanagementfromlinemanagers:
Overtime,ashumancapitalmanagementbecameacentralizedspecializationunderthedomainofHR,westartedtakingawaysomeofmanagerspeoplemanagement
responsibilitiessotheycouldfocusonthebusiness.Althoughnumerousbenefitswere
achievedbythis,wehavegoneoverboard,anditistimewegivepeoplemanagement
backtomanagerswherethebiggestperformanceimprovementscanbemade.
Beyondthecommonsensepremise,however,laysthemajorquestion howdoesan
organizationaccomplishthischange? Theprincipalwaysbeingusedbycompaniesto
giveasignificantboosttoworkforceperformancethroughhandsontalentmanagement
include:shifting
active
people
management
responsibilities
back
to
line
managers;
creatingtheexp