Let me begin by thanking some key people who envisioned this session today…. I’ll like to thank Mr Lal for some of his very ASTUTE STATEMENTS. Mr. Parag Diwan & Mr MK Suri - ISP and our corporate sponsor's IOC, HPCL & GAIL. There support in making this event a reality is highly appreciated by all of us here. What I would like to do over the next 30 mins. is to develop the theme further………...and focus on the following agenda What we know of the future What we should do about it How we can get there
Let me ask all of you a QUESTION………. Do people feature as part of your company’s PROFIT & LOSS Statements as INCOME OR EXPENSE? In your Balance Sheets…….LIABILITIES Technically then….the chairs that you are sitting on are ASSETS !! … and are more valuable than your PEOPLE. Are people on your balance sheet/ on your P&L account? How do we assess the value of people? The right people are your assets. What is it that right people have which can be considered as an asset … skills, knowledge and capability, all of which contribute to organizational value creation The leaders will be those who develop talent on a continuous basis, unlocking existing value and developing competencies to exploit opportunities These will be the GREAT companies; in the oil and gas industry there may not be any others So what is it that you need to do to develop this asset? Have you considered the cost of doing nothing... a
Only TINKERING will not help. INCREMENTAL CHANGES will not do. Hiding behind constraints is not ACCEPTABLE… THERE IS NO ROOM FOR EXCUSES. And given that this change is en-evitable…….What is the link to transformation.
Given that all this is inevitable, what is the link to transformation Transformation begins with a focus on people, and with a focus on talent strategy Talent strategy should be related to business, should be do-able and executable On the one hand, we have business imperatives; on the other, people capabilities A Balance of these two is what drives organisational performance What does this talent strategy look like? While industrial requirements will vary broadly, talent strategy for the industry will revolve around this framework You all have marketing strategy, financial restructuring options, unique business segmentation, but to bring this to life requires a unique talent strategy. All of these elements of transformation must be incorporated in this talent strategy… and it must be done well In the following slides we will discuss the implications of each of these and quickly touch on the ‘what’ and ‘how’ of creating these elements.
How do you resolve the issues that occupy the mind of the CEO and all business leaders Do I have the right people? How far can structures and systems drive performance/ how do I ensure that the right people are positioned correctly How do I motivate and reward my workforce How do I arm the right people with the right competencies? Do I have leaders in place? how do I deal with the talent shortage? how do I harness intellectual capital? How do I create a performance culture? and many more… but you have heard all these questions already.
While your business strategy is unique, as an illustration, I have mapped the actual growth framework of one of the oil and gas companies to demonstrate what will be the talent and workforce implications of structure capability & discipline Performance & reward
How do we create critical alignment and agility in the organisation structure How should we be structured to best support the on-going consolidation in the industry? How do ensure better co-ordination between our retailing chain, our refineries and our exploration and production units? What structure would enable quicker decision making required in the face of competition? How should we be structured to show a unified face to the customer? How can we make people more accountable at all levels? Ventures in your industry even the smallest are long-term, capital intensive and global in scope and technology, spanning geographies Breaking the organisation into manageable units and looking at profitability as the key driver is the trend From this point of view, different stages of growth require different structures. Alternative structures to manage different business drivers need to be contin uously evolved (Many companies must live with state/ promoter ownership imposed constraint) Integration, flexibility and responsiveness can be created by ensuring that key attributes and systems (represented above) are aligned to the stage of growth. For example an O&G major which wants to enter into a new business opportunity (for example, enter the auto-LPG business) needs to have a structure, which is quite different from the structure of a ongoing oil concern Different parts of an organisation need to be structured differently Structure should not become a roadblock
Are we developing the right talent pool and capabilities ? How do we create and manage a steady talent pipeline required for sustaining the different processes in the value chain? How can we retain best talent in the light of growing competition ? How can we motivate people to aggressively take on their responsibilities? Do we need to recruit specialists at middle/ senior levels? How can we integrate our social objectives with an effective recruitment policy? Attitudes created by bureaucracy inherent in the industry worldwide In the 80s, good business talent joined PSU’s (e.g. BHEL, Maruti, ICICI) because of the employer brand Bureaucracy required for command and control created behaviors which became institutionalised over time. Now we need to become results and consequence management focussed The nature of the industry (I.e. high capital investment, long lead times), necessitates strong systems and processes, but we really need to look at the inefficiencies these inherently created Example - Margaret Thatcher’s policemen posted at her staircase There are examples of high performance such as in the pharma, auto, retail as well as in oil and gas industries Pharma - women as medical representative, India 10 years ago Markets in the auto industry. You will find that talent is hired from other industries rather than from existing, for example say Maruti In Singapore - 10 top scientist recruited for the pharma industry will serve as role models for many others In India, 135 petrol world class pumps have been commissioned in 90 days
Skill Gaps The skills shortage in the industry has been much publicized, (60% of exploration and production workers will be retiring by 2010). however I am not referring only to this issue; Will we need to develop a more nimble less centrally driven approach to talent identification and development.. Several initiatives on talent management are already under way. In the existing system, we see a few people in key positions. But is this on an adhoc basis. Are we consistently driving talent development We have identified high-potentials for task forces & critical assignments. But what will it take to convert average to high-potential performers? Lack of opportunity is no longer an excuse. Managers of business must create opportunities not hide behind. There are examples of oil companies in India recruiting potential high performers and charting a different course for them The dynamics have changed, the opportunity to hire the right people is here and now (example - problem/opportunity anecdote)
are we really diffrentiating on performance How to create a culture of performance? How to measure the “right things”? How to align individual effort to business strategy? How to define and track different elements of performance? [goals, competencies etc.] How to recognize the “individual spark”, maintaining “team spirit”? How to discipline the system? All of you have performance management systems, many in an advanced state of decay. I do not intend to go into details of best-in-class performance systems here, but to highlight a few key points are we really differentiating based on performance? Mostly we pay lip service and use it as a tool for justification; but it is our most powerful tool to drive the organisations objectives. A robust performance management system, measuring the right things is a starting point to intstitutionalise change and competencies.
As I said earlier the outcomes are key. Going back to creating the right culture and attitude a transparent system enables the organisation to implement consequence management approaches in a fair a equitable, acceptable way
I have used this illustration to demonstrate the essential alignment and integration required if the performance management system is to deliver value and drive results. Across all this we must inculcate an attitude of discipline. This implies a consistently focussed approach, identifying and positioning the best talent in critical areas of action. It is the discipline required to convert an action plan to results and ensures the GOYA effect. (explanantion required)
Can rewards be used as a strategic lever? How to ensure “line of sight” to business success? How to integrate differentiated payment norms of merging entities? How to manage/ sustain a motivating and stimulating environment? How to reward innovation? Fin ally
Transformation is organic and cumulative, results are dramatic It is not a single defining action, killer innovation or a miracle movement The lack of implementation is the single obstacle to success in the industry. Thara are too many examples of lack of will. It is time to walk the talk, we all know what must be done, let us just take the plunge.
Driving Results with Breakthrough People Strategies June, 2003 Ravi Virmani, Managing Director, South Asia Hewitt Associates Presented at HR Round Table organized by ISPe & UPES, Dehradun
“ The old adage ‘People are your most important asset’ is wrong. People are not your most important asset, the right people are ” - Jim Collins in Good to Great
What we know of the future <ul><li>Privatization and Deregulation of sector </li></ul><ul><li>Intensity of Competition </li></ul><ul><li>Environmental & Social Regulations </li></ul><ul><li>New frontiers and New technologies </li></ul><ul><li>Looking beyond borders </li></ul><ul><li>Structural Changes </li></ul><ul><li>Natural gas as an alternative </li></ul><ul><li>The unknown unknowns </li></ul>Transform or Perish...
Business Results & Strategies Business Capabilities People Requirements Talent Strategies Employee Needs Staffing Rewarding Performing Organizing Learning Driving business results through people Business Interactions Management Practices Balanced Measurement
Bringing talent strategy to life Crude Procurement Refining Logistics Marketing <ul><li>Do I have the right people doing the right things </li></ul><ul><li>Am I creating the right environment for success </li></ul><ul><li>How do I know </li></ul>People Capability Performance Drive Structure Reward Customer
Strategy framework - an illustration Build emerging businesses Extend & defend core businesses Create viable options Profitable Growth Seed growth options & test business model Manage for profitability Replicate proven business model <ul><li>Key elements required to drive/ achieve growth and profitability for your business model </li></ul>Structure Capability Performance Reward
Seed growth Manage Replicate Organization structure <ul><li>Innovators </li></ul><ul><li>Entrepreneurs </li></ul><ul><li>Technical specialists </li></ul><ul><li>Developers of emerging businesses </li></ul><ul><li>Autonomy to run businesses </li></ul><ul><li>High level interface with the Strategic Group </li></ul><ul><li>Strategic core to drive synergies </li></ul><ul><li>Consolidation & Policy direction across different Oil Industry ventures </li></ul><ul><li>Highest level for Technical “Experts”also </li></ul>Profitable Growth <ul><li>Skill hierarchies </li></ul><ul><li>Career tracks </li></ul><ul><li>Continuous redefining of jobs </li></ul><ul><li>Provision for “high octane”special projects </li></ul><ul><li>Key Elements </li></ul><ul><li>Scalability </li></ul><ul><li>Agility </li></ul><ul><li>Focus </li></ul><ul><li>Innovation & Process Orientation </li></ul>
Capability building Seed growth Replicate Profitable Growth <ul><li>Key Elements </li></ul><ul><li>Effective leadership </li></ul><ul><li>Knowledge and capability development </li></ul><ul><li>Continuous skill enhancement </li></ul><ul><li>Defined “leadership culture” </li></ul><ul><li>Behavioral and technical competency framework </li></ul><ul><li>Linkage to hiring, training, performance management etc. </li></ul><ul><li>Recruitment based on competencies </li></ul><ul><li>Performance </li></ul><ul><li>based differentiators </li></ul><ul><li>Top-line focus and sharp decision making </li></ul><ul><li>Ability to strategize & run a business </li></ul><ul><li>Technical & creative skills </li></ul><ul><li>Deep functional/ industry expertise </li></ul><ul><li>Strong skill inventory and assessment/ upgradation mechanisms </li></ul><ul><li>“ No excuses” management style </li></ul>Manage
Leadership - the fulcrum of capability building Organisation Team Individual Self Awareness & Effectiveness Leadership Systems Development Exercises Complacence is a function of past success and lack of future visibility. Indian oil and gas companies will need inspired leadership in the next 3-5 years if they are to escape the complacence trap. Strategic paranoia will be the most critical lever available to the value chain integrator.
Leadership - the fulcrum of capability building <ul><li>Multi-Source Feedback </li></ul><ul><li>Individual development action plans </li></ul><ul><li>Coaching & Feedback </li></ul><ul><li>Development Curriculum - Workshops, Simulations, Team Exercises </li></ul><ul><li>Performance Management </li></ul><ul><li>High potential Management - Succession Planning </li></ul>Self-Awareness & Effectiveness Leadership competencies Identifying individual Strengths & development needs How one is perceived by others Team Development Exercises Team effectiveness Integrated dynamics Addressing collective development needs Supporting Leadership Systems Integrated approach to manage the Leadership Life Cycle Organisational dynamics Systemic model
Build your talent pipeline external sourcing strategies groom from within strategies Get the “ Right People ” on the bus Senior Leadership Emerging Leaders - Talent Pool Board and CEO Future Leaders - Young Talent
<ul><li>Differentiated performance parameters/ time horizons </li></ul><ul><li>Feedback and Coaching mechanisms </li></ul><ul><li>Review completion to have the intensity & focus of a budget process </li></ul><ul><li>Key Elements </li></ul><ul><li>Alignment to business strategy </li></ul><ul><li>Right measurement </li></ul><ul><li>Process orientation and transparency </li></ul><ul><li>Culture of discipline </li></ul>Performance management Seed growth Manage Replicate <ul><li>Entrepreneurial drive, top-line focus,sharp decision making & self motivation </li></ul><ul><li>Strategize, plan & run a business aggressively & profitably </li></ul><ul><li>Organisation building capability </li></ul><ul><li>Consolidate/leverage technical & creative skills </li></ul><ul><li>Strong leadership </li></ul><ul><li>Recognition of innovation </li></ul><ul><li>Long term time horizon </li></ul><ul><li>Top-line and aggressive targets </li></ul><ul><li>Strong linkages to training and development </li></ul><ul><li>Medium term time horizon </li></ul><ul><li>“ Clear penalties” for under-performance </li></ul><ul><li>KRAs and targets based on bottomline growth </li></ul><ul><li>Ongoing review and feedback </li></ul>Profitability & Growth
Common Purpose focusing everyone on the organization’s goals Where are we headed? Clear Expectations for individual and group contribution What’s my role? Commitment based on meaningful work and rewards What’s in it for me? Capability built through feedback and learning What will it take? Performance Planning Performance Reviews Rewards and Career Development Ongoing Feedback Focus on the Key Outcomes more than the Process Steps Develop performance systems
Ensure alignment…. Performance Scorecard <ul><li>Map objectives to the balanced scorecard framework </li></ul><ul><li>Establish metrics, baseline, and set targets </li></ul>Value Driver Mapping <ul><li>Identify value levers </li></ul><ul><li>List metrics in view of short- and long-term business strategy, anchored to value creation requirements </li></ul>Strategy Tree <ul><li>Articulate how the business will create value, from high- level strategies to specific initiatives that will support the business objectives </li></ul>
<ul><li>Articulated “compensation strategy” </li></ul><ul><li>Pay for person & performance </li></ul><ul><li>Differentiated pay mix/ranges and career paths </li></ul><ul><li>Standardized pay delivery </li></ul><ul><li>Key Elements </li></ul><ul><li>Rewards for continuous skill upgradation </li></ul><ul><li>Flexibility and responsiveness </li></ul><ul><li>Equity, fairness and transparency </li></ul>Rewarding Seed growth Manage Replicate <ul><li>Immediate financial rewards for “ideas” </li></ul><ul><li>Open ended and broad pay ranges </li></ul><ul><li>Cash bonuses and equity participation </li></ul><ul><li>Skill acquisition adequately rewarded </li></ul><ul><li>Career paths dependent on growth </li></ul><ul><li>Special incentives for “exceptional” performance </li></ul><ul><li>Sharp incentives for meeting targets </li></ul><ul><li>Clear penalties for under-performance </li></ul><ul><li>Clearly defined and closed pay ranges </li></ul>Profitability & Growth
Putting the building blocks in place Equity Participation Skill based Pay Rewarding Creativity and Innovation Recognition Incentives/ Benefits Differentiated Career Paths Make work a “rewarding” experience <ul><li>Define a common language of success </li></ul><ul><li>Share more to receive more </li></ul><ul><li>Communicate possible rewards effectively </li></ul><ul><li>Build flexibility in pay </li></ul><ul><li>Recognize dedication and drive </li></ul><ul><li>“ Package” career management effectively </li></ul>
<ul><ul><li>In summary… </li></ul></ul><ul><li>Your agenda needs to be… </li></ul><ul><li>Build agility and alignment in your structure </li></ul><ul><li>Develop leaders and manage a steady pipeline of talent </li></ul><ul><li>Drive performance down the organization </li></ul><ul><li>Create a common language of success </li></ul><ul><li>Create a culture of discipline </li></ul>
Begin with …. “ The absence of execution is the biggest obstacle to success” — Larry Bossidy, Execution Execution —Turning Ideas Into Action <ul><li>Focus </li></ul><ul><li>Target the Vital Few Initiatives </li></ul><ul><li>Demonstrate Impatient Perseverance </li></ul><ul><li>Communicate Purpose and Progress </li></ul><ul><li>Practicality </li></ul><ul><li>Ensure Lean Design </li></ul><ul><li>Build Real World Tools </li></ul><ul><li>Enable With Technology </li></ul><ul><li>Accountability </li></ul><ul><li>Monomaniac on a Mission </li></ul><ul><li>Enlist Active Sponsorship </li></ul><ul><li>Measure What Matters </li></ul>