Providing Business Value: Managing People to Support a High ...
-
Upload
alistercrowe -
Category
Documents
-
view
889 -
download
8
description
Transcript of Providing Business Value: Managing People to Support a High ...
Providing Business Value: Managing People to Support a High-Performing Organization
29 July 2003
Rick Poppell, Vice PresidentLily Mok, Senior Compensation AnalystDiane Berry, Managing Vice President
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 2
consulting
Agenda
Current state
The changing role of IT
An HCM model for improving business value of IT
Best HCM practices to support a high-performing organization.
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 3
consulting
Current State of the IT Employment Environment
Employee Initiated IT Turnover Rates Dropped
Average of 2 to 4 percent.
IT Unemployment Rates Up High rates of workforce reduction Spots of geographic severity
– Silicon Valley
– NY Metro and Northeast
Increased Degree of IT Outsourcing 89% of companies surveyed do it to some
degree
Aging Workforce Concern for loss of critical business knowledge Especially an issue in Public Sector
Emerging Risk of Employee Backlash Need for work/life balance Conscious choices of employer allegiance
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 4
consulting
Current State of the IT Employment Environment
Difficult-to-Hire Positions DBA Internet/Web Architect Network Architect and Engineer Security Analyst Project Manager ERP Configurer
Current Hot Skills Oracle PeopleSoft Java MS SQL Server UNIX XML
Average Base Salary Increase 3.5% for 2002 and 2003 A precipitous drop in 2001
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 5
consulting
Increased BVIT
Business Partner—Seeks to understand business need; provides alternative solutions
Transactional—Delivers on customer defined requirements; order taker
Consultative—Understand both business and technology; provides proactive solutions
Strategic Leadership—Setting the strategic direction of the Enterprise
Climbing the IT Value Chain
Where are you today?
Where do you need to be?
Increased Competencies and Integration of the Primary HCM Processes
The Changing Role of IT
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 6
consulting
The “value” perception of IT increases as you internalize work processes and increase the
capability of the organization
Areas of Focus
Efficiency Measures
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 7
consulting
Aligning key Human Capital Management elements is the key to success
Business Value of IT—HCM Model
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 8
consulting
Understanding the business strategy and role of IT in supporting the strategy Developing an IT strategy that aligns and supports overarching business
objectives Supporting greater IT credibility
Purpose
HCM Model—Supporting Elements
A common business and IT strategy is key to success
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 9
consulting
Purpose Purpose Purpose Purpose Understand degree
of business alignment
Identify required IT functions
Build a process-aligned organization structure
Getting the right people in the right roles
Maximize utilization of people
Effective use of contractors and outsourcers
Reinforce behaviors
Manage and measure performance
Sustain professional development
Reward and Recognize
HCM Model—Purpose
Define job families Define clear roles,
skills and competencies
Define career and progression paths
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 10
consulting
Defines HCM strategy that when implemented will support the overarching IT strategy Defines how HCM resources will be sourced and utilized within IT Provides a governance process to ensure strategy elements are being adhered to and
objectives are realized
Purpose
HCM Model—Purpose
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 11
consulting
HCM Model—Supporting Elements
Creating competitive advantage through optimization of technology and HCM
Driving for defined business results that support the overarching needs of the enterprise
Realizing competitive advantage through IT
Purpose
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 12
consulting
Organization Structure
Purpose Understand degree of business alignment Identify required IT functions Build a process-aligned organization structure
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 13
consulting
Influences to Organization Design
The Business Structure—IT should align to optimize relationships related to the overall business structure—centralized vs. decentralized
The Role of IT—Transactional organizations will take on a different structure than a more consultative IT organization
Efficiency vs. Effectiveness—Centralized vs. decentralized models will impact how efficient and/or effective the organization operates
Outsourcing—The degree to which a company outsources all or part of its IT function will impact how the organization is structured and the types of roles required
Roles and Process Design—How an organization is structured will impact how work flows through the organization influencing process and role definitions
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 14
consulting
Customers
Customers
Customers
Delivery Support
Project Prioritization
Selection
Matrixed Resource Mgt.
Build, Buy,Outsource,Contractor
SLAsOutsourcing
BVIT Infinite Requests Limited Resources
IT Process Alignment
Work Process and BVIT
How you bring IT resources together will define the BVIT Resource Ownership Project Management Office Centralized vs. Decentralized
Portfolio Management
Project/ResourceManagement
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 15
consulting
CentralizedModel
FunctionalModel
DecentralizedModel
IT organizations are usually not always completely Centralized or Decentralized; however, some take on characteristics that drive them to operate to one of the
extremes. An appropriate balance should be sought between flexibility and control based on the business needs, IT strategy and IT culture.
Corporate/Divisional Model
Process OrientedModel
Organization DesignOptions and Impacts
Efficiency Effectiveness
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 16
consulting
1 2 3 4 5
Median Annual Sales (millions) $35 $250 $526 $1,850 $6,474Median # of Employees 600 750 2,300 4,600 8,542
Median # of IT Employees 8 31 64 233 693
Median Annual Sales (millions) $26 $235 $666 $2,450 $6,529Median # of Employees 133 650 230 6,071 1,100
Median # of IT Employees 6 30 63 233 522
Ap
plic
atio
ns
Dev
elo
pm
ent
Infr
astr
uct
ure
# of Management Levels
IT Management Structureand Span of Control
The typical management hierarchy for an IT function is between two and three management levels (including the top IT executive level–CIO)
The span of control is a function of management level, with the lowest-level managers having the widest span of control
Span of control varies only slightly across IT sub-functions
Source: Organizing For Results: IT Structures and Staffing Survey, January 2003, people3, Mercer Human Resource Consulting and the Information Technology Association of America
Applications Development 7 to 8 employees per supervisorInfrastructure 6 to 8 employees per supervisorOperations 5 to 9 employees per supervisorProgram Management 3 to 10 employees per supervisor
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 17
consulting
Ratio of Employees to IT Professional
11
19
33
36
0
5
10
15
20
25
30
35
40
Financial Services Professional Services Government,Education, Non-profit
Manufacturing
Industry
Nu
mb
er o
f E
mp
loye
es p
er IT
Pro
fess
ion
al
Ratio of Employees to IT Professional
18
25
40
0
5
10
15
20
25
30
35
40
45
< 500 500 - 10,000 > 10,000
Company Size (Number of Total Employees)
Nu
mb
er o
f E
mp
loye
es p
er IT
Pro
fess
ion
al
Ratio of Employees to IT Professional
11
19
33
36
0
5
10
15
20
25
30
35
40
Financial Services Professional Services Government,Education, Non-profit
Manufacturing
Industry
Nu
mb
er o
f E
mp
loye
es p
er IT
Pro
fess
ion
al
IT Staffing Ratios
The overall number of IT staff in a company is dependent both on company size and on industry As the total number of employees increases, there are more employees supported by
each IT professional
Financial Services companies typically have the highest levels of IT staff
Source: Organizing For Results: IT Structures and Staffing Survey, January 2003, people3, Mercer Human Resource Consulting and the Information Technology Association of America
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 18
consulting
Outsourcing
The survey indicates that 89 percent of companies outsource at least one IT function to some extent*
IT functions may choose to outsource for a number of reasons*: Focus on core competencies
Train existing staff for emerging needs
Improve time to market
Reduce costs—convert fixed costs to variable
However, potential risks associated with outsourcing should also be considered in deciding whether to outsource: Technical—Being forced to stay with a current architecture because the vendor does not
support the company’s new needs
Business—Losing the capacity to make quick IT decisions or being unable to terminate/convert the contract easily in the event of a merger or acquisition
Economic—Discovering unexpected costs during the contract
*Source: Organizing For Results: IT Structures and Staffing Survey, January 2003, people3, Mercer Human Resource Consulting and the Information Technology Association of America
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 19
consulting
Job Family and Role Design
Purpose Define job families Define clear roles, skills and competencies Define career and progression paths
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 20
consulting
Career Development Planning Succession Planning Resource Planning
Recruiting—Interviewing Project Staffing Requirements Management Coaching Training Plans
The Right People in the Right Roles Insource vs. Outsource Resource Availability Training to Address Skill and Competency Gaps
Career Paths
Skill and Competence Requirements
Employee Assessmentsand Development Plans
Job Families
Employee and Enterprise Data
Consistent Position Definitions To Support Resource Development and Utilization
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 21
consulting
Career Path Progression Within Job Families
Applications Development
Project Management
Leadership
JuniorDeveloper
DeveloperSenior
DeveloperDevelopmentConsultant
ProjectLeader
Manager
ProjectManager
SeniorManager
Senior ProjectManager
Director
ProgramManager
VicePresident
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 22
consulting
Skills and Competencies
Skills—What I do... Specific ability related to market based or internally developed products and services
– Relatively easy to identify and develop
– Relatively easy to develop through training
– Poor predictors of long-term performance
Competencies—How I do it... Competencies are characteristics of an individual that are observable, measurable, and predicative of performance within a given role or job.
– Harder to identify and develop in an individual
– Can be developed through a combination of approaches (e.g., training, coaching, feedback)
– Better predictors of long-term performance
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 23
consulting
Resource Management
Getting the right people in the right roles Maximize utilization of people Effective use of contractors and outsourcers
Purpose
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 24
consulting
What skills are possessed by individual employees?
What level of experience does each employee have for each skill?
When aggregated, can we get a consistent organization view?
What are our organizational skills strengths and weaknesses?
IndividualSkills
IndividualExperience
CollectiveReporting
OrganizationView
Current technology skills
Prior technology skills
Emerging technology skills
High-Level competencies
Years of experience by skill
Date skill last used
Level of proficiency by skill
Supervisor validation
Consistent skills categories and lists
Complete organization view
Strongest capability by skill
Weakest skill
Training direction
Opportunities for contractors or outsourcing
Understanding Current CapabilitySkills Inventory
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 25
consulting
Staffing Strategy and TimingQuestions to Answer
Strategy
3+ years
Planning
1-to-3 years
Execution
1-to-6 months
Deployment
1 month
ResourceAssembly
1 year
Where will our enterprise be?
Whatbusinesseswill we be in?
What kind of people will we need?
With whom will we partner?
What kind of investments must we make?
What will bethe role of the IS organization?
What skills, knowledge, proficiency, competencies will we need?
What should we focus on?
What delivery models shall we use?
Where are our gaps?
Which skills should we build? Buy?
Do we have prof’l devel-opment plans?
How many people shall we prepare?
With whom will we work?
For whatwork do we have the right skills?
Which gaps can we fill?
Which gaps can we not fill?
Who and what gets priority?
Who shall we assign to what role?
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 26
consulting
Resource Optimization
Reinforce behaviors Manage and measure performance Sustain professional development Reward and recognize
Purpose
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 27
consulting
Resource Optimization
Resource optimization is achieved by ensuring your key HR processes are developing and rewarding the right behaviors resulting in desired business results.
Key HR processes include: Performance Management
Career Development
Reward
– Cash
– Non-cash
Succession Planning
Selection
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 28
consulting
Performance Management
Performance Management processes will help managers: Establish individual and/or team
objectives aligned to business unit goals
Provide frequent communications on how employees are doing throughout the year (feedback and coaching)
Document results
Fairly evaluate performance
Provide appropriate rewards for individual and team contributions to the business.
Benefits Helps to achieve sustainable
improvements in individual and organization performance
Helps to increase employee motivation and commitment by linking business unit goal to individual objectives (line of sight) and rewards
Development focused
Strengthens relationships between individuals and their managers through continuous communication.
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 29
consulting
Assessment Feedback IntegrityThe 360 Degree Process
Best Practices Goal Setting and Feedback
– Aligned with negotiated requirements or SLAs
– Aligned with organization objectives
– Multiple, objective, negotiated sources of feedback
– Typically facilitated by employee’s manager
– Typical Feedback Providers
» Manager
» Self
» Project Manager
» Key Customers
» Peers
Effectiveness of IT Staffing Strategies
Your Manager
Your Subordinates
Your Supplier
Your Customer
YOU
Inputs Outputs
Requirements and Feedback Requirements and Feedback
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 30
consulting
Employees rewarded for results achieved
(Compensation/Recognition)
Performance results summarydiscussion
Performance Ratings calibrated across the IT organization.
Manager writes initial Performance Results Summary
Mid-Year Performance Review
Establish IT Goals and individual/team objectives1
2
3
4
5
6
June - July
December
January
February
March
January - FebruaryC
oaching
Feed
back
Performance ManagementA Six-Step Process
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 31
consulting
DEVELOPMENT
PerformanceManagement
Specific time period forevaluation of performance(short-term)
Linked to compensation Development of critical
competencies for current roleand achievement of desired performance results for Performance year.
CareerDevelopment
Defined timeline (long-term) Linked to employee growth Competency gap analysis and
development to close gap for achievement of career goal.
Win-win occurs when development for business need (performance) supports development for employee desired career goal.
Performance Management and Career Development
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 32
consulting
Total Reward
Long-Term Incentives Stock option Restricted stock Deferred cash
Annual Variable Pay Premium pay Annual incentives Project milestone Project completion Cash recognition (spot award)
Base Pay
Benefits Pension 401(k) Healthcare Disability Vacation
Perquisites Company car Commute service On-site amenities Health club
Non-Cash Recognition Pat-on-the back Public recognition
of achievement Tech toys
Total
Rem
uneration
Job matches skills/ competencies
Performance feedback Job security Personal growth Career advancement
CultureWork
Environment
Affiliation Reward
Career Reward
Indirect Financial
Reward
Direct Financial
Reward
Developing a Total Reward Strategy for IT
Total Cash Compensation
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 33
consulting
Base Salary Targets Total Cash Compensation Targets
Compensation StrategyP
erce
nt a
ge
of
Res
po
nd
ents
Source: people3’s 2003 IT Market Compensation Study
Per
cen
t ag
e o
f R
esp
on
den
ts
Target Percentile Target Percentile(N=131)(N=135)
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 34
consulting
Compensation Strategy
Source: people3’s 2003 IT Market Compensation Study
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 35
consulting
Linking Pay To PerformancePaying For What People Do And How They Do It
Performance Linked to Rewards
The performance equations represent an overall practice of high-performing IT organizations. The three critical elements which contribute to superior performance in an IT role are identified and are linked into market-competitive reward and recognition.
Education
Training
Accountabilities
Goals
Assignments
Behaviors (Competencies)
Reward and Recognition
Knowledge and Skills
WhatNeeds to Be
Done
How Work is Done…
(Which Leads to Optimal Results)
Actual
Results
Accomplished
+ + =
Source: people3’s 2003 IT Market Compensation Study
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 36
consulting
Compensation Strategy
Results-oriented reward programs drive the right behaviors required for business success.
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 37
consulting
SummaryCharacteristics of a High-Performing IT Organization
Clear and articulated IT Strategy in support of a Business Strategy
Clear and articulated Mission, Vision and Values
Strong, ongoing communications (360 degree)
Formal and coordinated alignment with business units (often through an IT Business Office)
Program management office (PMO) and competency centers
Identified and formalized work processes
Formalized role definitions—people understand the requirements of their job and their part in the IT process Position descriptions (job characteristics, project complexity, education and experience)
Required business, behavioral and technical competencies
Formal career paths
© 2003 Gartner, Inc. and/or its affiliates. All Rights Reserved.
Page 38
consulting
Formalized career development process in place
Performance management system in place, supported by a measurement culture
Rewards (financial and non-financial) that align to individual goals and desired behaviors
Alignment is Key!
SummaryCharacteristics of a High-Performing IT Organization