Producing iron ore pellets for 35 years

Ukrainian HR Summit 201720 April 2017

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How should you position and structure HR in your organisation for success?

Greg NortjeGroup Head of HRFerrexpo plc

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Delegate survey

“In my organisation HR is seen as a strategic function that is critical to our overall business

success?”

Put your hand up if you agree with this statement

2

4

W H AT I S T Y P I C A L LY B R O K E N ?

Organisation: • Mis-aligned strategic objectives• Multiple accountabilities for HR• Lack of role clarity• Silo mentality leading to lack of sharing PDPs

Service: • Low customer ratings• No SLAs or agreed metrics

Quality: • Non-standard, variable quality processes

Cost: • Lack of technology enablers• Inefficient mix of resources• Flawed incentives

People: • Declining morale or “in a comfort zone” • Wrong skill mix

Trapped by inefficient execution of ‘personnel administration services role’ and not equipped to address new strategic demands

Best practice HR functional design consists of 5 functional job groups

5

W H AT AM O U N T O F C H A N G E I S P O S S I B L E ?

Best practice HR functional design consists of 5 functional job groups

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W H AT Y O U N E E D TO D O TO G E T H R I N Y O U R O R G A N I S ATI O N TO B E S E E N AS A S T R ATE G I C F U N C T I O N ?

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• Customer Interaction Service Performance Measurement

• Resolution by tiers of service

• Detailed case Information and reporting

• Detailed call information and reporting

• People metrics reporting

Measurement • Key Principles• Strategy• Tiers of Service• Customer interaction/

service delivery model

Strategy Values & Culture• Values• Behaviour• Engagement

• Structures• Teams• Jobs• Roles

Organisation• Leadership• Competencies• Talent management• Capability• Knowledge Management

Competency

Process• Contact Delivery Channels• Tiers of Service Resolution • Service Offerings• Contact Processes

• Workflow & Automation• Escalation processes• Contact SLAs and integration

• Locations• Equipment (telephones, headsets, flat

screens, scanners etc)• Other tools

Facilities & EquipmentTechnology & Systems• Telephony (Call Management)• Case Management Solution• Knowledge Management• Technical Infrastructure• Integration with ERP & other applications

(Portals , Reporting Sources etc)

1. STRATEGY

4. TECHNOLOGY/ EQUIPMENT

3. PROCESS

2. PEOPLEHR customer interaction is a capability that is enabled by the components represented below.

H R F U N C T I O N M O D E L

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W H AT I S T H E F O C U S O F Y O U R H R S T R ATE G Y ?

Employee Champion – Commitment & Morale

Change Management/Transformation Agent

Administrative Expert – Processes/Transactional

ExcellenceStrategic Partner

NowHR Roles

Future Strategic / long-term focus

Operational /

day-to-day focus

Building an efficient infrastructure and

provision of technical expertise

“Hard” / process focus

“Soft” / People Focus

Creating a renewed

organisation

Increasing employee

commitment and capability

Formulating & executing strategy

Dave Ulrich – HR Champions: The next agenda for adding value & delivering results - 1996

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H R S T R ATE G Y E X A M P L E

Sustained leadership

Build and sustain a high-performance culture

Effective labour at competitive costs

Winning human capital

performance

Fulfilling work environment

Create the tools that enable a culture that

measures and rewards

performance and drives superior

business results

Build strategies, processes, and

tools that transform

management and ensure the supply

of leaders

Create strategies and programs

that generate a fulfilling work environment

where people can perform to their full potential and are proud to work for your company

Create the strategies, tools, and services that

deliver a workforce with the right skills

and at the right price to execute your company’s

strategy

HR operating excellence

Develop one core set of polices and

execute them without

exception.

Align business priorities with HR

priorities and focus on

delivering results that matter to the

business

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Now HR Roles

Future Strategic/Long term focus

Operational/

day-to-day focus

“Hard”/Process Focus

“Soft”/People Focus

Creating a renewed

organisation

Formulating & executing strategy

Increasing employee

commitment and capability

Building an efficient infrastructure and

provision of HR technical expertise

Sustained leadership

Effective labour at competitive costs

Winning human capital performance

Fulfilling work environment

HR operating excellence

W H AT I S T H E F O C U S O F Y O U R H R S T R ATE G Y ?

Man

age

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Y O U R H R S T R ATE G Y S H O U L D B E S I M P L E AN D E A S Y TO U N D E R S TAN D B Y E V E RYO N E

“A Great place to work”

1. We will be an employer where colleagues love to work

2. We will continue to invest in the training and development of our colleagues

3. We will have an inclusive workforce that offers employment opportunities to all members of the community

HR Strategy

Commitments

KPIs & Measures

1. We will understand our colleagues better than anyone else and engage colleagues in the long term success of our business

2. We will exceed the National Living Wage and address the gender pay gap

3. We will invest in industry leading training and development for all colleagues

1. Measures

2. Measures

3. Measures

4. Etc.

5. Etc.

6. Etc.

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When developing your strategy what are the 4 major trends should you have on

your radar?

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Economic Activity Shift

- Balance of economic activity is shifting East and South…………. at high speed!

Year 2000 ~ 95% of large company HQs in Europe & USA

Year 2025 > based in China than Europe & USA combined

Emerging markets ~ 10 years will account for 70% of global economic growth

Since 1985 ~ 65m people have urbanised

Between 2016 & 2025 ½ of global economic growth will come from 440 cities in emerging markets:

‒ Hsinchu in northern Taiwan - 4th largest advanced electronic & high-tech hub

‒ Brazil’s Santa Catarina state - regional hub for electronics & vehicle manufacturing & home to a number of Billion $ companies already

D I S R U P T I V E F O R C E S S H A P I N G T H E W O R L D O F W O R K ( 1 )

Source: No ordinary disruption, R Dobbs et.al., McKinsey & Co, 2015

Best practice HR functional design consists of 5 functional job groups

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E C O N O M I C AC T I V I T Y I S S H I F T I N G !

SHANGHAI CIRCA. 1995

Best practice HR functional design consists of 5 functional job groups

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SHANGHAI CIRCA. 2015

I F Y O U R P E O P L E P L A N D O E S N O T AD D R E S S I T Y O U W I L L B E L E F T B E H I N D !

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Technology:

- Computing power – a faster, more transparent world of work - flexible work patterns, fewer support staff

- Processing of information - outsourcing, enterprise wide systems

- Industry 4.0, Big Data, virtual reality and artificial intelligence

- To reach 50m users:

Telephone ~ 50 years

Radio ~ 10 years

iPod ~ 5 years

Skype ~ 2 years

“Angry Birds” ~ 35 days

D I S R U P T I V E F O R C E S S H A P I N G T H E W O R L D O F W O R K ( 2 )

Best practice HR functional design consists of 5 functional job groups

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D I S R U P T I V E F O R C E S S H A P I N G T H E W O R L D O F W O R K ( 3 )

Demographics

- Ageing populations, falling fertility rates, generational divides, migration

- 30 years ago 2.1 children = replacement rate; 2013 ~ 60% of world population in countries with a lower fertility rate

- Changing social attitudes/ single parent families/ norms/ rise of extremism - irreversible trends changing how societies operate

Ukraine predicated shortfall in labour in the next 10 years

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U K R A I N E H A S O N E O F T H E H I G H E S T M O R B I D I T Y R ATE S I N T H E W O R L D – L I M I T S L A B O U R M A R K E T G R O W T H

Source: http://countrymeters.info/ru/Ukraine and https://uk.wikipedia.org/wiki/

In 2015 Ukraine was second out of 225 countries in terms of morbidity, second only to the Kingdom of Lesotho, a small Southern African state.

Average life expectancy for men is ~ 62.8 years, women ~ 74.8 years.

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

2

4

6

8

10

12

14

16

1815.4 15.3 15.7 16 16 16.6 16.2 16.4 16.3

15.3 15.2 14.5 14.5 14.6 14.7

Коэффициент смертности в Украине/ Morbidity in Ukraine

Средний мировой коэффициент смертности/ Average world morbidity rate, 8,6

Болезни систем кровообращения/ Circulatory diseases; 67.3

Новообразования/Neoplasms; 13.3

Внешние причины/ External reasons; 6.3Болезни органов пищеварения/ Digestive system; 4

Болезни органов дыхания/ Respiratory diseases; 2.3Инфекции и паразиты/ Infections & culprits; 1.7Другие причины/ Other reasons; 5

7.06%

33.86%

5.08%6.68%

36.94%

10.38%

Население Украины на конец 2015г.Population of Ukraine end of 2015

0 - 14 (М/М)

15 - 64 (М/М)

65 + (М/М)

0 - 14 (Ж/F)

15 - 64 (Ж/F)

65 + (Ж/F)

Demographics:

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D I S R U P T I V E F O R C E S S H A P I N G T H E W O R L D O F W O R K ( 4 )

Globalisation

- Asia becoming world’s largest trading region

- South-South trade doubled in last 10 years

- Trade between China and Africa:

• YR2000 ~ US$9bn

• Year 2013 ~ US$211bn

- Global capital flows (trade) expanded 25 times between 1980 and 2007

- Increase in cross-border digital “flows”

- International migration/ living outside country of birth:

• Year 1960 ~ 75m people

• Year 2013 ~ 232m people

Source: UN Department of Economic & Social Affairs/ No ordinary disruption, R Dobbs et.al., McKinsey & Cos, 2015

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G L O B A L I Z ATI O N I S I M PAC T I N G S K I L L S I N U K R A I N E ( 4 )

По данным сайта Мигрант.ру http://migrant.ru/v-medvedchuk-vyrazil-svoe-mnenie-otnositelno-ugroz-trudovoj-migracii-v-ukraine/и Pantopticon http://panoptikon.org/articles/73767-vsplesk-migracii-iz-ukrainy-kuda-i-zachem-edut-ukraincy.html

Ministry of Social Policy confirms that today between 3 and 5 million Ukrainians work abroad

The total number of labour migrants from Ukraine is estimated at 4.5 million people

According to the Institute of Ethnology national Academy of Sciences, labour migration is as follows

Russia

More than 2 mln (officially – 169K)

Italy

500K (officially – 195412)

Poland

More than 450K (officially – 20K)

Czechia

150K (officially – 51K)

Portugal

75K (officially – 44600)

Spain

250K (officially – 52760)

Greece

75K (officially – 20K)

Great Britain

About 70K

Netherlands

40K

USA

About 500KOther

About 100K

Where do the Ukrainians go?

The most popular countries are Germany and Poland, the main reasons are work and family reasons

Moved to PPR starting from 2015

Germany

Poland

Slovakia

Ukraine

According to the migration service of Ukraine

The main reasons of migration

According to Euro statistics in 2014

Work

Study

Family reasons

Other reasons

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What other trends should you be concerned about in Ukraine?

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E M P L O Y E E PAY I N U K R A I N E I S 2 1 % O F T H E E U AVE R A G E B U T M I N I M U M WAG E I S H I G H E S T R E L ATI V E TO P E E R S

Labour & wages

- Minimum wage is ahead of productivity vs. European peers

- Minimum wage

- Increased growth (ST), inflation (LT) & Zero hour contracts

- Rising number of part-time or self-employed workers; currently 1/3 of workforce:

- Lower taxes & regulation

- Avoidance of minimum wage & benefits thresholds

- Greater use of contractors

- Globalisation & employment flexibility

- Pension reform?

Source: World Development Bank/ IMF data

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C U LTU R E C O U L D B E A P O T E N T I A L H U R D L E TO C H A N G E

ACTIONSEMOTIONS

BELIEFS

• How we feel about ourselves• How we feel about our jobs• How we feel about management• How we feel about our organisations• How we feel about our world

• What we do or don’t do• What we say or don’t say• The way in which we behave

• The meaning and judgements we attribute to ourselves, others and the environment around us

• What we think about ourselves, others and the environment

• Our perceptions and interpretations of reality

EXPERIENCES 1

The events and situations that we experience

The way in which we are managed

The environment in which we are required to perform

3 4

2

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Power Distance Individualism Motivation Uncertainty Avoidance Long term outlook0

10

20

30

40

50

60

70

80

90

100

Australia Ukraine Russia

Status is important; in a hierarchy everyone has

a place; Centralised control; subordinates expect to be told what

to do

Think for yourself; personal

fulfilment. Look after yourself and direct family only

Let’s analyse this in detail before we try; we like to control the future; not keen on

new ideas and change

Perseverance, pragmatism; education.

Impossible to understand

complexity of life

People treated as equals; we value your

ideas; hierarchy established for convenience;

People belong to ‘in groups’ that take care of them in

exchange for loyalty.

Let’s try this and work out the details

later; we are comfortable seeing

what the future brings

Desire to understand the truth. Respect for traditions, unlikely to save for future, focus

on quick results

Society is driven by competition, achievement

and success – a value system that starts in school and continues throughout organizational behaviour.

Society is about caring for others and quality of life. Quality of life is the

sign of success and standing out from the

crowd is not admirable.

H O F S T E D E C U LTU R A L D I F F E R E N C E S – AU S T R A L I A , U K R A I N E , R U S S I A

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How should you structure HR for it to become a more strategic function?

26Study conducted by Hay/McBer & Company, reported by Lyle M. Spencer, Jr., PhD.

40%

Today

Administration

Transactions/ Providing

information

Relationship Management/ Case

Work

Strategy

Handle employee transactions and enquiries

Develop & deliver programmes that enhance the organization's ability to attract, develop and

retain superior performers

Align HR activities and programmes with the strategic direction and business needs of

the organisation

30%

25%

5%

% of HR time Future

20%

20%

20%

Strategy

Administration

40%

Limited line management responsibility for HR Line accountability for people management is key

Devolve as much as possible to line managers & self-service channels

Transactions/ Providing

information

I F YO U WAN T Y O U R H R F U N C T I O N TO B E S T R ATE G I C & R E L E VAN T Y O U H AVE TO R E S T R U C T U R E T H E W O R K

Relationship Management/ Case

Work

Increase % of time spent on issues of strategic importance

27

Strategy

Admin

Reducing the resource demands and time required to develop, deliver and use key HR products, services and processes.

Developing, delivering and using HR solutions and services that have a productive impact on the workforce and the organisation.

Effectiveness

EfficiencySPECIALISTS• Expert knowledge based

solutions provider • Strategy, process and policy

designer / guardian• Maximise knowledge & cross-

assets sharing

HR OPERATIONS• Product and service delivery,

from transactional to professional services

• Covers Resourcing• Includes HRIS and reporting

BUSINESS PARTNERS

• Relationship Managers• Devise HR interventions aligned

with Business needs• Accountability for HR solutions• Assure the delivery of HR

solutions to the business• Embedding solutions in the

business

SPECIALISTS

BUSINESS SUPPORT

• Running HR as a commercial function

• PMO / project pool resource• Finance• Risk management• Analytics/ metrics• Vendor management and

procurement

VENDORS

I N C R E A S E E F F I C I E N C Y & E F F E C T I V E N E S S B Y I M P L E M E N T I N G D I F F E R E N T I ATE D R O L E S W I T H I N H R

Transactions/ Providing

information

Relationship Management/

Case Work

GENERALISTS

28

Learning, Talent, Resourcing & OD

SERVICE & ACCOUNT MANAGEMENT

GROUP HR LEADERSHIP

INTEGRATED HR INFORMATION SYSTEMS & COMMON PROCESSES

GeneralistsHead of HR Business Partners

SpecialistsLearning, Talent, Resourcing & OD Specialist Teams

VE

ND

OR

S

Performance and Reward Specialist Teams

CUSTOMER CONTACT / HELP DESK

Employee/Manager

Self-Service

Email

Call Centre

Mail/Fax

HR OPERATIONS TRANSACTION TEAMS

Res

ourc

ing

Pe

rfor

man

ce M

anag

em

ent

Re

war

d

Peo

ple

Adm

in

HRIS / HR REPORTING

VENDOR MANAGEMENT

Ind

ustr

ial &

Em

ploy

ee S

erv

ices

Lea

rnin

g, T

alen

t &

OD

Pay

roll

HR Operations/ Shared Service Centre

BUSINESS

HR CUSTOMERS

EMPLOYEES

Business Leaders

Line Managers

Potential Employees

Recruits

Current Employees

Former Employees

HR

HR Leadership

Business Partners

T H E R E D E S I G N H A S M U LTI P L E C O S T-E F F E C T I V E D E L I V E RY C H A N N E L S TO C U S TO M E R G R O U P S

You will increase efficiency and effectiveness of HR by implementing a standard model with clearly differentiated roles

BUSINESS SUPPORT

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A standard operations delivery model will utilise HR Operations’ low cost channels to resolve queries and perform basic transactions, with only highly complex cases and queries being handled by

Specialist Teams (LTROD and Performance and Reward).

• Provide information on policies and procedures • Give contact information for suppliers & 3rd party

vendors• Support self-service issues• Create case record • Create service requests requiring special handling• Basic case resolution

• Accessed via intranet

• Use of ESS / MSS

• Assign transactional queries or actions by specialty area

• Queries or actions logged and managed through to resolution

• Assigned specialist will:– Administer– Investigate– Communicate– Close

• Develop and interpret policy• Decide on exception requests• Resolve referred questions

Self-Service Operations Teams

Administrative Support

Policy and StrategyTier 1

Specialist Teams

HR Operations

Walk-in Centre / Helpdesk

Tier 2 Tier 3Tier 0

Technology Filter

“High Touch” Filter

“Resolution” Filter

Planning & Policy Resolution

HR

Current Employees

Recruits / Former Employees

Business Leaders & Line Management

HR Customers 66%

Target Inquiry Resolution

28% 5% <1%

H R D E L I V E RY M O D E L – A I M I S TO F R E E U P S P E C I A L I S T S & B U S I N E S S PAR T N E R S F O R M O R E S T R ATE G I C W O R K

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DELIVERY

STRATEGY & DESIGN

People Strategy HR Technology Strategy HR Policy HR Governance Organisational Design Functional Strategies

Resourcing

Workforce / Manpower Planning

Process & Continuous

Improvement

International Mobility

Contractor and Contingency Management

Scheduling and Deployment

Onboarding

Recruitment Administration

Offer

Screening and Selection

Candidate Sourcing

Performance Mgmt

Performance Management

Strategy

Calibration

Year-End Review

Mid-Year Review

Manage Performance / Poor Performance

Set Objectives

Learning

Learning Strategy

Learning Evaluation

Career Development

Learning Administration

Learning Delivery

Learning Design Management

Knowledge Management

Talent

Talent Strategy

Leadership Development

Talent Relationship Management

Succession Planning

Capability Design

Organisation Development

Organisation Development

Strategy

Change Management

Employer Brand Management

Employee Survey

Payroll

Payroll Strategy

Payroll Administration

Payroll Distribution

Gross to Net

Build to Gross

People Admin

Leaver Management

Time and Attendance

Leave and Absence Management

HR Administration

Industrial & Employee

Industrial & Employee Service

Strategy

Labour Relations

Health and Safety

Employee Wellbeing

Employee Relations

Reward

Reward Strategy

Other Benefits

Share Schemes

Retirement and Pensions

Senior Team Compensation Management

Compensation Management

Capability Assessment

Other Financial Incentives

S T AN D A R D I Z E Y O U R H R P R O C E S S E S AC R O S S H R S U B -F U N C T I O N S T O S T AN D A R D I S E D E L I V E R Y

Best practice HR functional design consists of 5 functional job groups

31

Functional HR know-how

Business know-how Implementation know-how

People know-how

• Resourcing

• Performance Management

• Reward

• Talent Management

• People Development

• Organisation Design/ Planning

• HR Legislation

• HR Systems

• Strategic planning

• Business awareness

• Financial tools

• Merger, Acquisition, Integration & Divestment (MAID)

• Problem Solving

• Prioritisation & Planning

• Change leadership and management

• Project management

• Metrics

• Partnering

• Coaching

• Consulting

• Negotiating

D E V E L O P T H E C A PAB I L I T Y O F Y O U R H R T E A M

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AND F INALLY ………

• Strive for respect not approval

• Replace “no” with options (lots of them), whenever you can

• Focus on what you can change not what you can’t

• Forget corporate politics!

• Let people vent but don’t get pushed around

• Embrace HR’s larger purpose – to get better results through people

Good Luck!