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BCG's report: Creating people advantage 2011


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Rainer Strack, Jean-Michel Caye, Caroline Teichmann, Pieter Haen, Gerold Frick, Stephanie Bird
September 2011

The talent crisis is starting to hit European economies. A survey of more than 2,000 executives from 35 countries looks at the readiness of the HR function to meet the challenge, concluding that companies should base their people strategies on a rigorous analysis of personnel data and embrace both globalization and online social media.

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  • In common way, organizations missuses and fullmouth about the word Talent. Talent is only found between an elite, the best in class or ...could perhaps be found even at organization's bottom?. Too complicated if the top management 'just knows' who is the better according its own criteria: the closest!!. If you ignore it, doesn't exist!!. A lot of money and implication is lost every day in organizations 'cause the management only pay attention whom prefers but not the best (mainly to avoid problems with an unknown level of intelligence that they prefer keep slept?).
    It's a real big problem. Who's guilty?
    Are you sure you want to  Yes  No
    Your message goes here
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  • 1. Creating People Advantage 2011Time to Act: HR Certainties in Uncertain Times
  • 2. The Boston Consulting Group (BCG) is a glo- The European Association for People Mana-bal management consulting firm and the gement (EAPM) was founded in 1962 by theworld’s leading advisor on business strategy. national associations and professional insti-We partner with clients in all sectors and re- tutions of personnel management in France,gions to identify their highest-value opportu- Germany, Sweden, Switzerland, and the Uni-nities, address their most critical challenges, ted Kingdom. Today, the nonprofit umbrellaand transform their businesses. Our customi- association, with 31 national member asso-zed approach combines deep insight into the ciations throughout Europe, represents pro-dynamics of companies and markets with fessionals specializing in people manage-close collaboration at all levels of the client ment. EAPM operates independently oforganization. This ensures that our clients employers, trade unions, governments, andachieve sustainable competitive advantage, political bodies. Its objectives are to promotebuild more capable organizations, and secu- and develop knowledge and experience inre lasting results. Founded in 1963, BCG is a the HR field, specifically knowledge of peo-private company with 74 offices in 42 coun- ple issues and people activities, and to de-tries. For more information, please visit monstrate the importance of these topics both the public and private sectors. For more information, please visit
  • 3. Creating People Advantage 2011Time to Act: HR Certainties in Uncertain Times Rainer Strack Pieter Haen Jean-Michel Caye Gerold Frick Caroline Teichmann Stephanie Bird September 2011
  • 4. © The Boston Consulting Group, Inc., and the European Associa-tion for People Management, 2011. All rights reserved.For information or permission to reprint, please contact BCG at:E-mail: bcg-info@bcg.comFax: +1 617 850 3901, attention BCG/PermissionsMail: BCG/Permissions The Boston Consulting Group, Inc. One Beacon Street Boston, MA 02108 USA
  • 5. ContentsExecutive Summary 4European Trends in Managing People 7The Most Critical HR Topics 8Trends Shaping the Senior Management Agenda 9Make Talent, Not War: Building a Strong Talent and Leadership Advantage 12The Dangers of Relying on Serendipity 12A Talent Strategy Provides Option Value 13Managing Three Tiers of Talent in an Economic Crisis 17A Technology Platform for All Ages: Why Social Media Are a Game Changer for HR 19Opportunities and Risks Presented by Social Media 19Using the Web for Talent Relationship Management 21Guidelines for the Virtual World 23HR Without Frontiers: Pathways for HR to Add Value on a Global Scale 26Value First, Cost Savings Second 26How Centralized and Standardized Is HR? 27Beyond Structures, Creating a Global Mindset 32Appendix I: Methodology 34Appendix II: Executive Interviewees 35Appendix III: Supporting Organizations 38Note to the Reader 39Creating People Advantage 2011 3
  • 6. Executive SummaryI n a globalizing economy marked by uncertainties, ◊ The report presents our findings and analysis of 22 HR one thing is certain: talent and effective leaders topics covered by the survey. We also feature short grow scarcer every day. People stand at the heart of case studies on individual company initiatives or rel- business strategy and execution, and there are many evant research, and we have produced a BCG Focus, proven solutions and tools to develop human capi- Hard-Wiring Diversity into Your Business, inserted at thetal. Human resources executives thus have an extraordinary back of this report, on how companies can foster diver-opportunity to distinguish themselves as business partners sity in their workforce for business reasons—not onlyat the decision-making table. legal or social reasons—such as serving specific cus- tomer segments better, improving innovation, or mak-Many HR executives aim to make the HR function more stra- ing the organization more agile.tegic, beyond providing services and support. But becoming atrusted voice in the C-suite will require HR executives to step This year, four HR topics stand out as the most criti-up their game on several fronts. It will hinge on defining co- cal for our respondents—exhibiting high future im-herent people strategies in line with business objectives, sub- portance yet relatively low current capabilities.jecting consistent personnel data to rigorous analysis, embrac-ing the HR challenges of globalization, and having the ◊ Managing talent is the top priority in Europe overallself-confidence to counsel other executives on people impera- and in most individual countries. Recruiting, develop-tives. That’s a tall order for HR departments carrying a lega- ing, and retaining talent have ranked high on the agen-cy of being underresourced and defaulting to a less analytical, da over the past five years.soft-skill approach. HR’s willingness to change itself in theseways is a prerequisite for creating people advantage. ◊ Improving leadership development remains a high prior- ity for HR. This topic shows stronger capabilities, most-Good things won’t come to HR executives who wait. It’s time ly in large act. ◊ Transforming HR into a strategic partner has risen in im-This European survey is the third conducted by BCG portance. However, there is a significant gap betweenand the European Association for People Manage- the capability ratings of HR respondents and the lowerment; the first was completed in 2007. BCG has also ratings of business managers.partnered with the World Federation of People Man-agement Associations on two global surveys. ◊ Strategic workforce planning—the ability to quantify and simulate future capacity and skill demands—has◊ The online survey generated 2,039 responses from become a high priority. Few companies have a coher- executives in 35 European countries and a broad range ent approach to it, leading to low capability ratings. of industries and government bodies. We also inter- viewed 58 executives, including board and executive ◊ In addition, although enhancing employee engagement committee members of multinational companies. has dropped out of the red zone, perhaps because4 The Boston Consulting Group • European Association for People Management
  • 7. many companies have introduced better programs edge sharing. They’re also concerned about the risks— and metrics on the issue, engagement remains a chal- particularly breaches of confidential data, lack of lenge in all HR domains. control over posted content, and headhunting of em- ployees.◊ Executives demonstrate a readiness to change regard- ing these topics. But their capabilities are lagging, ◊ As companies expand their social media activities, which suggests that they have not yet actively em- they should take care to integrate them at every step braced the challenges. of the recruiting process and to align them with the overall HR and business strategies, because any disso-In contrast to the business and financial uncertain- nance will be quickly spotted and criticized online.ties that companies now face, the major trends in HR They can mitigate risks by making clear who is respon-remain quite clear. Several megatrends shaping the sible for social media tasks, budgets, and progress, andsenior management agenda have a direct bearing on by setting down guidelines for communication.the HR function. To start, the growing scarcity of keyskills and people, and the complexity of businesses, Customer segments and supply chains are globaliz-raise the stakes for talent management and leader- ing, which requires HR to adapt its delivery modelship development. and manage the workforce in a global fashion.◊ By 2030, an additional 45 million employees will be ◊ Between 2003 and 2008, the 50 largest globally active needed in Western Europe in order to sustain econom- European companies created more than 500,000 jobs ic growth. In light of current population growth rates, abroad, while their workforce in domestic markets de- this number will be difficult to reach.1 At a time of clined by almost 300,000 employees. Thus, global growing talent gaps, when human capital is among the transparency, international frameworks and standards, most valuable assets for gaining competitive advan- and globally installed services are the hallmark of a tage, too few companies actively manage talent with a superior HR function today. sharp focus. Instead, most take big risks by relying on serendipity to address talent scarcity. ◊ Globalization raises the bar for becoming a true busi- ness partner, but HR now has the opportunity to help◊ By contrast, high-performing companies differ from plan and execute cross-border mergers, carve-outs, low performers in this regard: they fill far more senior and organic expansion abroad. To realize that part- manager positions internally than do low performers.2 nership globally, HR will have to standardize and pro- They are more likely to have a dedicated talent-man- fessionalize more of its activities, and HR staff will agement unit, and their top executives invest more also need to augment their international experience time in reviewing and sourcing talent. They under- and expertise. stand that a robust talent strategy gives them “option value”—the option to develop talent rather than buy Workforce diversity can yield strategic advantages it at ever-rising prices. when it’s hard-wired into the business.The rise of online social media changes how HR will ◊ An analysis of 40 randomly selected Euro Stoxx 50interact with prospects and employees of all genera- companies showed that 93 percent of board memberstions, not just younger ones. 1. Global Talent Risk—Seven Responses, World Economic Forum in◊ Social media have become a mass phenomenon, as 80 collaboration with BCG, 2011. percent of Internet users aged 16 to 24 are posting 2. Creating People Advantage 2010: How Companies Can Adapt Their messages to social networks, chat sites, and blogs.3 Us- HR Practices for Volatile Times, BCG report, September 2010. age is already substantial and rising rapidly among 3. Data in Internet Usage in 2010—Households and Individuals, Euro- stat (the statistical office of the European Union), December 14, older generations as well.4 HR executives view the 2010, available at under “Data.” main opportunities presented by social media technol- 4. Pew Research Center’s Internet & American Life Project surveys, ogies to be employer branding, recruiting, and knowl- September 2005 to May 2010.Creating People Advantage 2011 5
  • 8. are male, 49 percent are between 51 and 60 years old, insight and experience needed to meet the challenges and 86 percent are of European origin. Those same of globalization and varied customer segments. Com- companies generate an average 40 percent of their rev- panies must fish for talent in new waters and use di- enues outside Europe, and the share of female custom- versity strategically to deliver better products, enhance ers is steadily increasing. innovation, and make the organization more agile. The BCG Focus attached to this report offers advice on how◊ Organizations staffed exclusively with similar-looking best to achieve diversity for business. and similar-minded employees lack the broad range of6 The Boston Consulting Group • European Association for People Management
  • 9. European Trends in Managing PeopleT his report analyzes how HR challenges have Among the industries generating the most responses were been changing over time through survey re- business services, industrial goods, the public sector, tech- sponses and interviews on 22 topics. Our on- nology and communications, and health care. We also in- line survey generated 2,039 responses from terviewed 58 executives, including board and executive executives in 35 European countries. (See Ex- committee members of multinational companies.hibit 1.) The top 5 responding countries were Germany,Italy, Portugal, Russia, and Spain. Respondents came from To start, we asked executives to rate their organization’sa broad range of industries and government bodies. current capability in each topic and tell us whether they Exhibit 1. More Than 2,000 Executives from 35 European Countries Responded to the Survey Finland 97 Estonia 28 Lithuania 18 Sweden 72 Latvia 17 Norway 42 Russia 416 Denmark 19 Poland 5 Germany 122 Netherlands 90 Czech Republic 16 United Kingdom 34 Ireland 33 Slovakia 4 Ukraine 14 Luxembourg 1 Belgium 37 France 90 Spain 151 Portugal 99 Hungary 13 Romania 46 Bulgaria 44 Serbia 1 =0 Fewer than 10 Turkey 72 10–19 Switzerland 68 20–49 Greece 22 Cyprus 16 Italy 170 Republic of Macedonia 10 50–99 Austria 26 100 or more Croatia 1 Malta 58 Slovenia 40 Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis.Creating People Advantage 2011 7
  • 10. foresee the topic becoming more or less important in the Managing talent, which includes issues such as identifyingfuture. In general, the most pressing issues this year in- talent pools and effectively staffing leadership positions,volve more future-directed, strategic challenges, in con- continues to be the most critical topic for executives andtrast to our past surveys, in which the top issues con- has been in the red zone for several years, consistentlycerned present challenges. This year’s issues are among being viewed as having high future importance acrossthe red-zone topics shown in Exhibit 2. For example, many countries. (See Exhibit 3.)Transforming HR into a strategic partner entered the redzone in 2011. Improving leadership development follows managing talent. It ranks slightly higher than other red-zone topics in ca- pability, driven mostly by large companies.The Most Critical HR Topics Transforming HR into a strategic partner has risen in futureThe cluster of future-directed challenges in the red zone sug- importance. There is a significant gap between the capa-gests that executives are extending their field of view and bility ratings of HR respondents and the lower ratings ofdemonstrating a readiness to change regarding these topics. business managers.However, the corresponding capabilities rank low to mid-dling, suggesting that companies have not yet actively em- Strategic workforce planning was viewed by many respon-braced the challenges. Here’s what the red zone looks like: dents as fairly important for the future, but current capa- Exhibit 2. Respondents Perceived the Most Critical Topics to Be Future-Directed Strategic Challenges High Managing talent 2011 Improving leadership development Improving Transforming performance HR into a strategic management partner and rewards Enhancing employee On-boarding engagement and retention Strategic of new hires workforce Measuring planning Sample size: workforce 2,039 performance Future Becoming Medium Strong a learning importance organization need need to act to act Managing flexibility and labor costs Improving Managing employer change and Delivering on branding cultural Low Medium recruiting Mastering transformation need need to HR processes Managing work-life balance to act act Managing corporate Managing Restructuring social responsibility online Relevance today the organization Managing demographics social media Managing diversity and inclusion Providing shared services Low High Low and outsourcing HR Current capability Managing globalization High Low Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis.8 The Boston Consulting Group • European Association for People Management
  • 11. Exhibit 3. Managing Talent Ranked Highest in Importance in Most Countries Matrix Analysis* Country Bul- Ger- Neth- Switz- garia Finland France many Italy er- Norway Portu- Roma- Russia Spain Sweden erland Turkey Mentions gal nia Topic lands in top 5† Managing talent 2 1 1 1 3 1 1 1 1 3 2 1 1 1 14 Improving leadership development 1 2 2 2 4 3 2 2 1 4 2 2 12 Transforming HR into a strategic partner 3 1 5 2 2 3 4 5 3 3 10 On-boarding and retention of new hires 4 4 4 4 3 5 2 7 Enhancing employee engagement 5 2 5 3 4 Improving performance management and rewards 4 5 4 1 4 Strategic workforce 5 3 5 3 planning Managing change and 2 4 5 3 cultural transformation Measuring workforce 3 4 2 performance Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis. Note: This exhibit shows countries with more than 35 respondents. *Ranking based on future importance. † Of the 35 countries that had respondents, the number of countries that cited the topic in the top 5 for future importance.bilities were rated low. In our experience, many execu- Trends Shaping the Senior Managementtives have not yet adopted the tools and mindset required Agendato plan the workforce over the long term. Instead, theyreact to short-term trends and adjust their workforce ca- Turning to the yellow zone, several HR topics clusteringpacities on an ad hoc basis. The HR function, however, low on both dimensions relate to megatrends that are highshould be equipped with sophisticated models to predict or rising on many companies’ agendas. Despite the impor-supply-and-demand dynamics that are closely aligned tance of these areas, the relevant capabilities were amongwith an evolving company strategy. those rated lowest by respondents, so companies face a tough task in addressing the issues. (See Exhibit 4.)Our survey data indicate that high-performing compa-nies (defined on the basis of a combination of revenue Demographics. It is a statistical certainty that the cominggrowth and profitability over a three-year period) con- waves of baby-boomer retirements will create huge talentduct a larger number of strategic-workforce-planning gaps in most industrialized countries.5 By 2020, the medi-projects than do their low-performing counterparts. As an age will exceed 47 in Germany and Italy.6 “More thanRoberto di Bernardini, HR head of emerging markets/ one thousand colleagues will be retiring in our group overEMEA for Janssen, explained, “Strategic workforce the next five years. Replacing their experience is a crucialplanning allows us to understand the talent challengesin the context of tremendous change in pharma mar- 5. Stimulating Economies Through Fostering Talent Mobility, Worldkets. It has also helped us make some counterintuitive Economic Forum in collaboration with BCG, 2010.moves.” 6. Various national statistical institutes; BCG analysis.C P A  
  • 12. Exhibit 4. Capabilities Are Lowest in Areas Shaping the Senior Management Agenda Topics of greatest current Topics of greatest future Topics with the lowest importance importance current capabilities 1 1 1 Improving leadership development Managing talent Managing online social media 2 2 2 Delivering on recruiting Improving leadership development Managing globalization 3 3 3 Transforming HR into a strategic Managing talent Managing demographics partner 4 4 4 Providing shared services and Managing flexibility and labor costs Enhancing employee engagement outsourcing HR 5 5 5 On-boarding and retention of new hires Strategic workforce planning Managing diversity and inclusion Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis.challenge,” said László Szőcs, director of HR for Hungary’s growth in many countries over the past two years, havelargest oil and gas company, MOL Group. “The key is to led to an increasing number of cross-border activities. Butidentify a reserve of passionate natives and help them to international growth seems to have outpaced HR’s par-survive in the new world. They need to enable the integra- ticipation. Although core business and HR operationstion of the new generation’s competencies,” explained have become synchronized in some companies, the ma-Monica Possa, director of HR and organization for RCS jority of companies have neither built an internationalMedia Group. Even nations with large cohorts of young operating model for HR nor prepared their professionalspeople are not immune to workforce risk. Rapidly devel- to think and act on a global scale.oping economies show very high workforce demand yetare wrestling with the issue of low employability of many Diversity. Competitive markets today are characterized bycitizens, and that affects European companies doing busi- globalization, talent scarcity, and increasingly distinct cus-ness in those markets. Companies will have to address tomer segments. Companies staffed exclusively with simi-such demographic problems through better strategic lar-looking and similar-minded employees lack the broadworkforce planning and better recruiting. range of insight and experience needed to meet those chal- lenges. They must fish for talent in new waters and use di-Social Media. The growing talent gap in developed coun- versity strategically to deliver better products, enhance in-tries means that power is shifting to employees and re- novation, and make the organization more agile.7cruits. At the same time, several generations of peoplehave grown accustomed to more technology-intensive Work-Life Balance. This topic currently receives little at-ways of interacting with colleagues and potential employ- tention from companies. However, as the balance of pow-ers. Talent management is thus becoming democratized er shifts from employers to skilled employees, the demandand decentralized. Companies that don’t master online for a work life that meshes well with one’s private life—asocial-media technologies soon will struggle to keep pace preference strongly expressed by the millennial genera-in the talent race. tion—will become more important. “Younger people, inGlobalization. Globalization of customer segments and 7. For more information, see Hard-Wiring Diversity into Your Business,supply chains, together with the return of economic BCG Focus, June 2011, attached to this report.10 The Boston Consulting Group • European Association for People Management
  • 13. particular, look for more in a job than just salary and po- organizational development and planning for Poste Ital-sition these days in choosing an employer,” said Christian iane. “HR needs to adopt the culture and skill set of theG. Machate, head of HR for private banking and Switzer- business functions to overcome that perception.”land at Credit Suisse. “They consider work-life balance,the company’s culture, and engagement with society. It’s Excellence in HR thus encompasses both solid execution ofabout a partnership, and that’s what Credit Suisse focuses basic HR activities for the present and active preparation foron. I strongly believe that’s why people approach us.” future challenges. In particular, we would highlight four trends and the areas for development that they entail:By addressing these topics, HR can substantially improveorganizational performance and increase its value added. ◊ Demographic changes and the attendant talent scarcity,HR executives at large companies seem to recognize this: with implications for talent and leadership developmentrespondents from companies with more than 5,000 em-ployees perceive a significantly higher future importance ◊ Technological shifts that increase the importance offor managing diversity and inclusion, managing demograph- mastering social media for use in recruiting, engage-ics, and strategic workforce planning. In addition, they re- ment, and communicationsport higher capabilities in managing globalization andmanaging diversity and inclusion. ◊ Globalization and the new role for HR, including de- velopment of a global delivery modelBut HR will first have to overcome its perceived role asstrictly a service provider, which contributes to the ongo- ◊ The growing diversity of customer segments, which,ing gap in perspective between HR and non-HR execu- combined with scarcity of talent, demands greater di-tives about HR’s capabilities and performance, both in versity in the workforcebasic service areas and in the strategic dimension. (SeeExhibit 5.) “The businesses often tend to see HR merely The remainder of this report discusses how HR can dealas a body provider,” said Pierangelo Scappini, director for with these challenges and turn them into opportunities. Exhibit 5. Five HR Capabilities Are Assessed Very Differently by HR and Non-HR Executives Assessment of HR capabilities by HR and non-HR executives Transforming HR into a strategic partner Mastering HR processes Delivering on recruiting Restructuring the organization Improving leadership development Current capability assessed by HR respondents Low High Low High Low High Current capability assessed by respondents outside HR 2011 2010 2009 Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis. Note: These five topics had the greatest difference between the two groups in 2011.Creating People Advantage 2011 11
  • 14. Make Talent, Not War Building a Strong Talent and Leadership AdvantageT he growing shortage of talent will become their employer value propositions to chance—neither acute in most industries, as well as in na- customizing their brands to match talent segments’ tions that lack favorable demographics or needs nor regularly measuring the attractiveness of strong educational systems. Many compa- their brands. nies frame their response to that shortagein the context of a “war for talent.” We view this ap- And as for 360-degree performance assessments and oth-proach as undermining good talent strategy, because it er sophisticated approaches, they are common practicesets up a corrosive dynamic: focus on cloning the usual among 57 percent of responding companies but are usedsuspects (such as young, male, home-country MBAs), bid with very few employee groups.up the price for their services, promise them anything toget them, and then watch them job-hop to follow themoney and opportunities after their compensation has The Dangers of Relying on Serendipityoutpaced their capabilities. These survey responses show that in a time of growingThere are alternate avenues to building a strong bench of talent gaps, most companies are not actively managingcurrent and future talent, powered by a well-crafted ap- talent with a clear focus. Several factors account for theproach that relies on the development of “homegrown” haphazard approach.talent. In reality, however, few companies report havingany talent strategy in place. It’s not an exaggeration to First, for all the rhetoric about how “people are our great-say that they’re relying on serendipity to meet their cur- est asset,” senior executives devote very little time to tal-rent and future talent needs, incurring unnecessary busi- ent issues. On average, our respondents said, their CEOness risk. and other senior executives spend less than 9 days a year on activities related to talent management—far fewerThis is the fourth year in a row that managing talent falls than the 20-plus days spent at best-practice the red zone in our survey. Yet roughly 60 percent of It’s easier for senior leaders to ignore the issue if the tal-respondents said they lack a real strategy to source talent ent shortage has not yet hit the company hard. Some HRor to address their succession challenges. Indeed, more departments, meanwhile, may be stretched thin and sothan one-third ranked their company as having no strat- busy fighting fires that they don’t have time to step backegy at all, and only 2 percent cited a strong, comprehen- and present a cogent argument to senior management insive strategy. favor of a more comprehensive talent strategy.Digging deeper, only 30 to 40 percent of respondents Another complicating factor is the relatively narrowhave structured “on-boarding” activities to welcome scope of talent management at many companies. For ex-specific talent segments into the company once hired, ample, HR focuses more on high-potential employeesand very few companies manage international talent (69 percent) than on senior leaders (54 percent) or theirpools. About 60 percent of respondents said they leave successors (52 percent), or on the most promising junior12 The Boston Consulting Group • European Association for People Management
  • 15. employees (35 percent), whom we call “emerging poten- A Talent Strategy Provides Option Valuetials.” Each of those groups requires HR’s attention in or-der for the company to build a talent pipeline. These problems can and should be overcome. We would argue that a comprehensive talent strategy offers “optionMore than half of respondents lack a dedicated talent- value”: it gives companies the option to develop theirmanagement unit and end up managing talent in piece- own talent in an environment of increasing scarcity. Themeal fashion through different pockets of the organiza- sooner a company starts, the less expensive and disrup-tion. It would be far more effective to take an end-to-end tive that option will be. (See the sidebars “GarantiBank:view that has the latitude and resources to see the big pic- Moving from Basics to Best Practice” and “Sociététure and try alternative approaches. Générale: Talent Management Overhaul.”)Related to the piecemeal approach is a tendency to con- Consider several data points from the survey that supportsider talent only in the short term. When asked whether the “build versus buy” case. High-performing companiestalent plans are embedded in and aligned with the com- (again, as defined by revenue growth and profitabilitypany’s business-planning cycle, only 1 percent of respon- over the past three years) fill 60 percent of their seniordents said they were aligned. Yet adequate planning for manager positions internally, compared with a mere 13talent sourcing and development in new markets or new percent for low-performing companies.8 Some 53 percentregions takes time. Absent a real talent strategy, manycompanies will face a rude awakening when shortages or 8. Creating People Advantage 2010: How Companies Can Adapt Theirother talent problems surface. HR Practices for Volatile Times, BCG report, September 2010. GarantiBank Moving from Basics to Best Practice Over the past ten years, GarantiBank of Turkey has expe- ance, while management talent gets assignments for rienced sharp growth rates, with the number of branches various projects that will stretch their skills.” Mean- and employees almost tripling. From 2001 through 2006, while, talent strategy focuses mainly on increasing the the bank’s executives devoted time and resources to spatial and functional mobility of staff, as well as on se- building a solid talent-management and leadership- nior executive succession planning. development framework in order to sustain long-term growth. ◊ Developing Talent and Leadership. With 95 percent of Ga- ranti’s management positions filled internally, young, With that foundation firmly in place, Garanti is refining its talented employees have excellent opportunities to de- approach to strive for best-practice levels in several areas velop into managers at the bank. Although there are of talent management: many young employees at the management level, high performance and at least seven years of experience in ◊ Recruiting. Garanti rose to the top of Turkey’s most- the banking sector are required for advancing into se- desired-employer list in 2008, in part because of its in- nior positions. Junior talent-development programs, for novative “talent camp” designed to tighten relation- both headquarters and the regions, play a big role in ships with key universities. At the camp, potential preparing these employees to be managers. Using a recruits work on cases that they present to a senior model dubbed Yıldız (“star”), Garanti senior managers management jury. The camp and its accompanying gather once a year to discuss the top talent company- website and Facebook page have helped to build the wide at all levels—their strengths, skills, and potential employer brand and to expand the recruiting pipeline for career growth and greater responsibilities. at leading schools. Talent challenges never stand still, and Garanti constantly ◊ Planning and Segmentation. “Currently the cohort of high- adjusts to new situations. For instance, as its hierarchies potential talent covers about 6 percent of the work- became flatter, vertical staff movement diminished. In re- force,” explained Osman Tüzün, HR coordinator for Ga- sponse, Garanti is working to enrich and expand certain ranti. “Different groups get different support from HR. positions, and to promote cross-functional transfers that For instance, one focus for junior talent is career guid- will yield new career opportunities.Creating People Advantage 2011 13
  • 16. Société Générale Talent Management Overhaul Don’t let the perfect become the enemy of the good. That to each executive,” said Veronique Poulard, global head of concept guided French bank Société Générale in 2009 as leadership and talent management. it articulated a growth plan that included an overhaul of how it managed talent and leadership. The bank launched Société Générale believed it was necessary to adjust its its ambitious effort on many fronts simultaneously, over employer value proposition to meet increasingly demand- the course of one year. ing expectations from the staff. What the bank settled on was a simple promise, “Career, care, agility”—care for em- Talent targets were derived from the bank’s strategic plan ployees, help to boost their careers, and encouragement and adopted by the divisions. The talent life-cycle pro- of agile teamwork at all levels. This was expressed through cess—performance reviews, succession plans, and mobil- a series of concrete actions, such as an overhaul of mobil- ity management—was revised to get closer to industry ity and diversity policies, tailored local actions to improve best practices, with a much higher level of consistency work-life balance, and tools to measure both employee and adoption. Talent governance, moreover, was standard- engagement and the company’s attractiveness to job can- ized internationally to break through divisional silos and didates. encourage international mobility. Because the HR staff was being stretched by its more de- On the leadership front, a group leadership model has manding roles, the bank also began to upgrade skills been incorporated into most HR processes and systems. among HR business partners and to improve delivery Performance evaluations and bonuses now hinge not just through HR systems and shared-service centers. on individual results but also on behaviors that contribute to those results, which affect how people collaborate. Although this effort is not complete, the bank has already seen remarkable improvements. Talent pools have in- Development programs for executives were augmented creased sharply, and engagement levels have risen as and folded into a corporate university. Each group, from well, especially for the employee groups that received the emerging talent to potential senior executives, received greatest investments. As Anne Marion-Bouchacourt, head customized individual and team coaching and modules to of group human resources, said, “You shouldn’t wait to expand their ways of thinking about business issues. have it all perfect before implementing. If anything, I “Some modules are mandatory, while others are adapted would go even further and faster.”of high performers have a strategy to address talent sourc- identifying the gaps in talent quantity and quality. Verying and succession problems, versus 27 percent of low few companies have a systematic strategy in place to meetperformers. High performers are also more likely to have their sourcing and succession challenges; only 8 percent ofa dedicated talent-management unit, do 360-degree re- respondents said their company was at or near a best-prac-views, and cover emerging potentials in their talent pro- tice level. (See Exhibit 8.) “Investments in people shouldgrams. (See Exhibit 6.) be considered just like investments in assets, and their re- turns should be tracked as such,” said Shafie Shamsuddin,How can companies move from serendipity to effective executive director of global talent management and organ-talent management and leadership development? We isation development for Carrefour.recommend a holistic approach that is grounded in busi-ness strategy, treats human capital with the same rigor as Thus, one could tally the total expenditure to hire, train,a capital asset investment, and looks for opportunities and develop an engineer, and also estimate the individu-throughout the employee’s life cycle. It consists of six di- al’s value through performance scores, record of meetingmensions. (See Exhibit 7.) targets, and upward feedback. (See Exhibit 9.)Talent Strategy and Returns Tracking. This involves, Leadership Model. Hierarchical, command-and-controlfirst of all, defining a talent strategy that fits with the busi- approaches do still address the basic needs of many orga-ness strategy and external market conditions. It asks where nizations, but they should be complemented by new be-the company is now and where it wants to be in the future, haviors that promote the fluid and collaborative nature14 The Boston Consulting Group • European Association for People Management
  • 17. Exhibit 6. What High-Performing Companies Do Differently Regarding Talent Percentage of high versus low performers3 Define a comprehensive strategy High 53 Strategy 1 Low for talent sourcing and succession. 27 High 55 Install a dedicated talent- Organization 2 Low 35 management unit. Make sure emerging talent is covered High 54 Scope by the talent-development program.2 33 Low Install a 360-degree High 71 feedback process.2 Low 57 Performance management Provide employees and leaders with High 41 performance feedback more than 1 Low 27 once a year. Sources: Proprietary Web survey with 2,039 responses; 270 respondents in this section; BCG/EAPM analysis. 1 Percentage of respondents who chose 4 or 5 on a 5-point scale. 2 Percentage of respondents who said that they do this. 3 Performance based on revenue growth and profitability over the past three years. Exhibit 7. A Framework for Building Talent Improve governance around talent, 6 the employer brand, and other constituents of a company culture Talent magnet that will attract top talent culture Create a culture of high performance and collaboration, and adapt to Promote diversity among employees, employees’ changing expectations 5 and adopt on-boarding best practices, in order to become more efficient at Talent engagement sourcing talent and affiliation Accelerate learning and expose 3 4 employees to new situations in order to build capabilities Talent sourcing Talent development internally and reduce and diversity acceleration dependence on recruiting 2 Leadership model Develop middle managers and senior leaders around the world who can Define and monitor a talent strategy address twenty-first-century requirements 1 that reflects market conditions and business needs, and generates Talent strategy appropriate economic returns and returns tracking Source: BCG analysis.Creating People Advantage 2011 15
  • 18. Exhibit 8. Best Practices Remain Rare in Talent Management Rudimentary approach Standard approach Best practice Definition of a strategy Talent for talent sourcing and succession 60 33 8 1 strategy and returns tracking Alignment of talent with business planning 53 30 18 Degree of CEO time commitment to talent management 50 36 15 2 Leadership model Degree of senior leader time commitment to talent management 41 42 18 Employer brand measurement system 60 31 8 Talent 3 sourcing and diversity Customization of employer brand to target audience 56 36 9 Talent Frequent competence reviews for 4 development employees and leaders 26 38 36 acceleration Variety of measures 5 Talent engagement for performance management 20 18 63 and affiliation 6 Talent magnet Systematic assessment and review culture of high-potential employees 28 27 45 0 20 40 60 80 100 Percentage of respondents Sources: Proprietary Web survey with 2,039 responses; 270 respondents in this section; BCG/EAPM analysis. Note: Respondents were asked to rate their organizations on a five-point scale. “Rudimentary approach” includes those who chose 1 or 2; “standard approach” includes those who chose 3; “best practice” includes those who chose 4 or 5. Because numbers were rounded, not all percentages total 100.of work today. More volatile business environments call ronment. Even in companies with more than 5,000 em-for adaptive leaders who embrace uncertainty and exper- ployees, almost half of respondents said that they lackimentation and can empathize with the perspectives of any staff dedicated to diversity—and only about one-other stakeholders. Effective talent management meas- quarter said that their company has internal diversity tar-ures leaders along those dimensions. Compensation and gets. Banco Santander strategically recruits individualsperformance reviews, for instance, could incorporate di- from markets of future growth and includes them in itsmensions of how well leaders engage employees, manage talent pool. “Our group has strategic agreements withteams, promote the employer’s brand, and build the tal- 1,200 universities around the world, including China. Weent pipeline, at both the global-leadership and middle- see this as a clear competitive advantage to have prefer-management levels. ential access to new talent,” explained José Luis Gómez Alciturri, executive vice chairman of Banco SantanderTalent Sourcing and Diversity. Competitive markets to- and director of the human resources are characterized by globalization, talent scarcity, andincreasingly distinct and demanding customer segments. Talent Development Acceleration. Many employees,Companies staffed exclusively with similar-looking and particularly younger ones, increasingly prefer a careersimilar-minded employees lack cognitive diversity—that trellis offering multiple options rather than a career lad-is, the broad range of insight and experience needed to der oriented only vertically. A trellis model gives employ-meet those challenges. By contrast, organizations that tap ees more options for the speed and direction of their ca-into the full spectrum of capabilities offered by a diverse reers. Allowing employees to adjust their job to theirworkforce are better equipped for today’s dynamic envi- personal life will enhance the company’s value proposi-16 The Boston Consulting Group • European Association for People Management
  • 19. Exhibit 9. Tracking Returns from Investments in Talent Investment Returns One-time and recurring Combination of financial and behavioral KPIs and metrics A • Employee engagement survey Where to invest Employee • Leadership evaluation data, including • Area of greatest gaps engage- Strategic 360-degree feedback and results • Fastest-growing region ment and • Most critical roles throughout productivity • Satisfaction factors on growth and employ- the organization ability from teams • Specific talent segment • High-profit business unit • Succession pipelines from middle managers to executives B Pipeline • Actual fit and future fit results from perfor- How to spend money performance mance reviews • Balance internal and external programs • Overall pipeline strength, depth, and • One-time costs such as concept design Tactical employee preparedness and IT development • Recurring costs such as HR support, IT administration, and training • Enhanced employee-development ratings • Accelerated financial performance Current value • Improvement in behaviors or capabilities C How to execute talent strategy • Increased retention rates • Number and nature of pilots • Training development module design • Improved external brand perceptions and Operational and rollout • Tool development, implementation, headhunter ratings and rollout Future value • Increased applicant quality and quantity • Ongoing change management • Overall competence enhancement • Building a talent magnet culture • Reputation for a development culture Source: BCG analysis.tion among high-potential employees. For those employ- tics can be quite varied, including one-week “engineeringees who want to accelerate their experience and compe- camps” at Royal Dutch Shell, three rotations over 15tencies, companies can immerse them in unfamiliar months at Nike Europe, or active mentorship for womenmarkets, temporarily assign them to external groups, or at Goldman Sachs. High-potential employees who seeprovide limited-authority experiences like joint-venture their company being flexible are more likely to go the ex-positions. tra mile both in their own jobs and in singing the com- pany’s praises to people outside the company.Talent Engagement and Affiliation. Executives andmanagers play a big role in establishing norms and expec-tations around what constitutes superior performance Managing Three Tiers of Talent in anand how employees should collaborate. Management in- Economic Crisiscentives should include metrics related to culture and en-gagement, holding managers accountable for developing For at least four years, executives have said that talenttheir teams and ensuring that employees feel engaged in management and leadership development are top con-their work. It’s not sufficient for a manager to meet her cerns, now and in the future. Yet they have a long way tonumbers and deliver on deadline if in the process she go in meeting those concerns with the right up her team so that they all quit or seek a transfer. The recent financial crisis and recession, which spurred high levels of unemployment, perhaps lulled executivesTalent Magnet Culture. Companies need to build strong into thinking that the shortage of talent was no longer aemployer brands to attract and retain top talent. The tac- pressing problem. That’s a false sense of security.Creating People Advantage 2011 17
  • 20. The top tier of talent—the “excellent” group—obviously training and development programs, not treating them asneeds to be nurtured. These people are always in high de- discretionary spending to be cut.mand, even during the worst period of an economic crisis. Whatever the coming years hold on the economic front,But companies should not neglect the “adequate” or key talent will become even scarcer and more important.“fragile” tiers, either, as growing scarcity raises their po- Companies should start preparing now in order to havetential value in the long run. Companies can improve the the option to build and keep the best team possible.mix of talent internally by raising the skill levels and en-gagement of both groups—for example, through invest-ments in corporate universities. Even during tough eco-nomic times, then, companies should be investing in18 The Boston Consulting Group • European Association for People Management
  • 21. A Technology Platform for All Ages Why Social Media Are a Game Changer for HRM any HR executives believe that Face- traditional channels but mastering the new ones as book, video sharing, and mashups are well—the applications that facilitate user-generated con- phenomena limited strictly to Millenni- tent and social interactions, as distinct from websites als and their younger siblings. And they where users are passive viewers. As Rupert McNeil, HR doubt that online social media have se- director for Aviva UK, said, “This way of interacting willrious import for HR activities. Recent trends show that become pervasive with all generations of employees.they should reconsider both assumptions. Make sure you work out how to use it.”Internet penetration has reached more than 2 billion Like it or not, employers are being discussed in very pub-people and continues to increase worldwide. And while lic online forums. In German-speaking countries, for ex-social media use is highest among younger “digerati,” it’s ample, young employees and recent graduates use thealready substantial and rising rapidly among older gen- website Kununu to gain insights into companies througherations as well.9 Throughout 27 European Union coun- employees’ own evaluations and commentary on sub-tries during the first quarter of 2010, 80 percent of Inter- jects like work-life users aged 16 to 24 posted messages to socialnetworks, chat sites, and blogs; 42 percent of users aged25 to 54 did so, along with 18 percent of users in the 55- Opportunities and Risks Presented byto-74 age group.10 LinkedIn, the world’s largest profes- Social Mediasional network, reports that a plurality of its members, at36 percent of total membership, is in the 35-to-54 age Many executives do seem aware of the opportunities af-group.11 forded by social-networking sites. Almost nine out of ten respondents to our survey have an account in a socialSocial media site Facebook alone has more than 750 mil- network. And more than three-quarters of their compa-lion users, averaging more than a half-hour every day on nies are active in some form of social media. Half of thethe site. And the three largest professional networks claim respondents maintain corporate pages on Facebook, and145 million members—LinkedIn with 100 million, France- 41 percent on LinkedIn.based Viadeo with 35 million, and Germany-based Xingwith 10 million. And, of course, social media never stand 9. Pew Research Center’s Internet & American Life Project surveys,still: Google+ attracted more than 10 million new mem- September 2005 to May 2010.bers in just two weeks.12 10. Data in Internet Usage in 2010—Households and Individuals, Euro- stat (the statistical office of the European Union), December 14,Social media have become woven into the lives of many 2010, available at under “Data.”employees, no matter what their age. More and more 11. LinkedIn Demographics presentation, January 2011, at http:// blur the lines between work life and personal life, tics-2011.and between virtual and face-to-face communication. HR 12. Larry Page, CEO of Google, posted this number on his Google+executives need to adjust accordingly, maintaining the profile on July 14, 2011.Creating People Advantage 2011 19
  • 22. As for specific opportunities, almost three-quarters of re- main the cornerstone of a company’s Web presence. Fewspondents cited employer branding as the leading one. companies consider themselves highly effective in most(See Exhibit 10.) Next came attracting young profession- of the associated activities. For classic activities such asals (half of respondents), skilled workers (almost one- job search engines, 57 percent of respondents regardthird), and graduates (about one-quarter). Most respon- themselves as effective, and even fewer, 38 percent, rateddents did not think that other target groups, such as themselves effective in career networks. Although half ofexecutives and interns, could be reached effectively the companies use social media, only 19 percent ratedthrough the same channels. At the same time, executives themselves effective in these networks. More broadly, re-are concerned about a variety of risks that arise from so- spondents cited relatively low capabilities in social me-cial-networking sites. Breaches of confidential data are dia—certainly lower than the perceived future impor-the greatest risk, cited by 47 percent of respondents, fol- tance of the activities. (See Exhibit 11.)lowed by the scant influence companies have on postedcontent. Several concerns relate to the potential head- Like many initiatives, the success of social media pro-hunting of employees by competitors: 37 percent cited grams will depend in part on having sufficient budgetsthe threat of easier access to employee information, and and senior management commitment. Fully half of all32 percent said they worry about competitors actively social-media “champions” (companies that assess theirpoaching staff. social-media capabilities as being strong) dedicate re- sources to social media, compared with only 16 percentDespite those risks, companies have more to gain than of all social-media “novices” (companies that rank theirthey do to lose—if they use social media in thoughtful, capabilities as low). Similarly, 74 percent of championseffective ways. Current usage tends to favor more tradi- report strong senior-management commitment, com-tional applications such as corporate websites, which re- pared with 44 percent of novices. Exhibit 10. The Opportunities and Risks Presented by Online Social Networks Share of opportunities Share of risks assessed Opportunities assessed as top 3 (%) Risks as top 3 (%) 1 Employer branding 74 1 Confidential content 47 becoming public Attracting young 50 Little influence on 37 2 professionals 2 posted content 3 Knowledge sharing 34 3 Easier access to 37 employee information 4 Attracting skilled workers 31 4 Staff misbehavior 37 Competitors actively 5 Attracting graduates 26 5 approaching staff 32 6 Tracking public opinion 23 6 Ethical concerns 26 Problems implementing 7 Internal communication 22 7 Web 2.0 in recruiting 22 8 Employee engagement 21 8 Legal restrictions 21 9 Learning and development 19 9 Technical problems 18 Loss of intellectual 10 Attracting executives 14 10 property 12 11 Attracting apprentices 11 11 Increasing transparency 7 and interns 12 Alumni networking 9 12 Other 4 13 Other 1 0 20 40 60 80 0 20 40 60 80 Sources: Proprietary Web survey with 2,039 responses; 528 respondents in this section; BCG/EAPM analysis.20 The Boston Consulting Group • European Association for People Management
  • 23. Exhibit 11. Companies Are Just Starting to See Potential for New Platforms Percentage of respondents Assessment of capabilities Percentage of respondents who say they are highly and future importance with an official presence effective in Web 2.0 for recruiting application Traditional Corporate website1 96 50 Job search engines2 66 57 Social media networks 50 19 New social-media platforms Career networks 41 38 - (Micro-)Blogging 28 13 Multimedia sharing 20 11 Current capabilities Future importance Low High Sources: Proprietary Web survey with 2,039 responses; 528 respondents in this section; Recruiting Trends 2011--Top 1,000 Companies, University of Bamberg/University of Frankfurt/; BCG/EAPM analysis. 1 Based on EuroStoxx 50 companies. They all have a dedicated career section on the corporate website, and 96 percent offer general career information and specific online-application options. 2 Based on the 1,000 largest German, the 500 largest Austrian, and the 500 largest Swiss companies.Success will also hinge on embedding these new commu- ate a vivid, multifaceted portrait of a company that reso-nication channels by specifying responsibilities and clear nates with a broad swath of potential employees. Shortguidelines. Too many companies execute social media ac- video clips by company representatives, for instance, cantivities informally, which tends to limit coordination, answer questions that have been raised on blogs, as wellalignment, and eventually their effectiveness. (See the as provide a more personal tone that creates an emotion-sidebar “How Can Companies Organize Their Online So- al bond.cial-Media Activities?”) To further improve companies’use of these tools, it is important to consider the Web’s The choice of tactics will depend on the company’s cur-potential for several of HR’s major endeavors. rent brand equity. Companies with a strong existing em- ployer brand, for instance, should make sure that social media highlight the particular equity elements of theUsing the Web for Talent Relationship brand. They can target their communications to particu-Management lar groups and try to move them from interest to actions like applying for a position. Companies with a weak em-Employer branding and recruiting activities can be re- ployer brand will need to raise awareness first, perhapsgarded as the central segments of a broader funnel that by establishing a presence on career sites and social net-starts with general awareness of a company’s character- works, becoming a topic of discussion among a broadistics and progresses to questions about recruiting and community of users.on-boarding new hires. (See Exhibit 12.) The Web is prov-ing quite useful in actively managing contacts who might Social media, especially career networks, can make it eas-be interested in joining the company at some point. ier to identify relevant candidate groups through filters that isolate specific functional expertise, qualifications, orStarting with employer branding, online channels have regions. By searching for specific variables linked to a cer-some unique characteristics that make it possible to cre- tain job profile, a company can efficiently screen out un-Creating People Advantage 2011 21
  • 24. How Can Companies Organize Their Online Social-Media Activities? Social media technologies are less than a decade old and The airline Lufthansa takes a mostly centralized ap- have caught fire only within the past four or five years, but proach: HR runs all recruiting-oriented social-media ac- we have already identified three broad stages of organiz- tivities, and the public Be-Lufthansa website is the exter- ing for these online activities. Typically a company starts nal interface for online recruiting. Be-Lufthansa has with an informal approach to social media, with no dedi- received 115,000 applications for 4,000 posted jobs and is cated responsibilities and no established policies. Sixty- a convenient channel for the airline to answer questions one percent of the companies we surveyed are conducting and guide applicants through the recruiting process. social media activities in this manner. Next is a more cen- tralized approach, in which a small unit or team conducts Lufthansa’s platforms also include Facebook, StudiVZ, or coordinates social media efforts. Forty-four percent of LinkedIn, and Xing; the company’s Facebook page, which social media “champions” in our survey (companies that is being used for HR purposes, recently had more than rank their capabilities as high in social media) give cer- 17,000 fans. The corporate intranet, meanwhile, supports tain employees responsibility for Web 2.0, in contrast to applications that extend the advantages of social media just 22 percent of “novices” (companies that rank their ca- internally. The general experience with social media to pabilities as low). This approach can be extended to a date has convinced Lufthansa executives that the bene- cross-functional model, which uses teams across business fits outweigh the risks and that the risks are manageable. units to support the central social-media unit. Here all “Executives have to discard the idea of perfect control employees are encouraged to take an active part, within over communication,” said Martin Schmitt, senior vice the bounds of clear policies. But many companies don’t president of corporate personnel policy. “Because if we yet have such policies. While 37 percent of the champions don’t act, we are going to lose even more control.” in our survey have social media policies in place, only 18 percent of novices do. Exhibit 12. The Web Should Be Integrated into Each Stage of the Recruiting Funnel Demand Employer Recruiting Candidate On-boarding Retention planning branding strategy recruiting • Engage target candidates with • Encourage online applications to increase campaigns on the company website, recruiting efficiency online job forums, and social networks • Support interview preparation with online • Leverage multimedia capabilities—for training tools example, video testimonials, interviews, • Target preferred candidates with the or company portraits company’s value proposition, communicated through social media channels How well are Are we How well are Do we receive Is our process Is our process able to Key we planning for enough questions we known in fast and effective and retain our future staff high-quality complete? needs? target groups? effective? staff? applications? • Use intranet and external social • Use appropriate channels to recruit, such networks to connect new employees as posting jobs on the corporate website • Share relevant knowledge through social or career forums media channels • Use employee contacts in social networks • Build an external talent pool Source: BCG analysis.22 The Boston Consulting Group • European Association for People Management
  • 25. suitable candidates. Qualified individuals who are not ac- velopment and ensures access to other executives.” Alca-tively looking for a job can be targeted as well—a practice tel-Lucent uses a proprietary internal social network toknown as passive recruiting. As career networks grow their promote knowledge sharing among its employees, withmembership, even lower-level positions can be filled more than two-thirds of employees being present on thethrough online channels. However, it’s important to learn platform. “This is truly an enabler for innovation,” saidwhich sites are used by each target group, because they Victor Agnellini, senior vice president of transformationvary by region and academic focus. (See the sidebar “Con- learning and accreditation for Alcatel-Lucent.necting Talent with Opportunity on a Massive Scale: AnInterview with LinkedIn’s CEO, Jeff Weiner.”) Guidelines for the Virtual WorldBecoming adept at this kind of recruiting “may requirebuilding an internal headhunting team that knows Web For companies considering where to begin with socialcommunities well,” noted Volker Stephan, head of hu- media, or how to expand their capabilities, our experi-man resources in Switzerland and Central Europe for ence suggests the following guidelines:ABB Switzerland. That can be a difficult task, he said,since “the bottleneck is experienced people.” A compa- ◊ Align the social media strategy with the overall businessny’s own employees should not be overlooked as a con- and HR strategies. An online video clip or any othervenient, knowledgeable channel to prospects. Employees tool should be consistent with the company’s goals forcan be a great source of referrals because they often know its employer brand and with the overall corporatepeople with a high likelihood of having the right qualifi- brand. Dissonance among the employer brand, the re-cations and a good fit with the company culture. Such alities of the workplace, and the overall corporate“peer to peer” recruiting can spur candidates to take ac- brand will quickly be spotted and criticized online bytion, such as sending an application. The network multi- employees and other stakeholders.plier effect means that a company’s employees couldknow tens or hundreds of thousands of potential candi- ◊ Secure senior management support. Web tools will bedates. If a Web team has sifted good candidates from the most effective if senior management takes an activesocial media platforms, the team could approach employ- role in promoting the tools and even participating asees who know some of the prospects and devise a per- users. Wolfgang Goebel, the head of human resourcessonal minirecruiting campaign. for McDonald’s Germany, blogs two or three times a month about employer branding.13 This improves theOnce a potential candidate is interested in the company, company’s credibility on this topic.Web-based technologies can streamline the applicationprocess through online screening tools, interview simula- ◊ Make responsibilities clear. The organization must betions, and a central portal that aggregates all the job post- clear about who is responsible for social media tasksings. This portal should be highly visible and well con- and budgets, and who is accountable for measuringnected through search-engine optimization techniques, progress.corporate blogging, and traditional online advertising. ◊ Develop policies on Web conduct. To minimize risks, es-Similarly, the process of on-boarding employees can ben- pecially regarding malevolent staff postings or breach-efit from social media technologies with respect to online es of confidential information, corporate policiestraining, technical forums, and internal networks to con- should set guidelines for communication. Our surveynect new hires and existing groups of employees. Asset shows that 29 percent of companies lack a social me-management company Amundi uses online networks to dia policy that addresses the risks noted earlier.allow participants in leadership seminars, conducted forexecutives of two merged companies, to continue sharing ◊ Understand the nuances of different channels and their us-ideas after the seminars. Jean-Paul Mazoyer, deputy CEO ers. Some channels, such as job search engines Mon-and global chief operations officer, explained, “The col- ster and StepStone, resemble classic one-way recruit-laborative Web tool allows members to share and discussmanagement challenges, which encourages individual de- 13. People Advantage 2011 23
  • 26. Connecting Talent with Opportunity on a Massive Scale An Interview with LinkedIn’s CEO, Jeff Weiner BCG spoke recently with Jeff Wein- SABMiller has done a wonderful job of recruiting through er, CEO of LinkedIn, which has be- these tools, saving substantial money by conducting re- come the world’s largest business- cruitment searches more effectively and efficiently. An- related social-networking site since other example is Invensys, a technology group based in it was launched in 2003. Weiner the U.K. that saved $770,000 in nine months. joined LinkedIn in late 2008 from his position running Yahoo!’s net- Recruiters no longer need to si through thousands of work division. Here’s a condensed resumés, constantly saying no. They’re now in the posi- version of the interview.1 tion to identify the ideal candidate and then do a search for specific variables. They can spend most of their time Jeff, what’s your perspective conducting the perfect search. on the importance of talent for organizations? We’ve heard a lot about peer-to-peer recruiting, which For LinkedIn, it’s not just about recruiting a world-class typically has always been a bit of a challenge to pull team; it’s also about ensuring that the people you already off. How are organizations adopting that? have in place are connected with the right tools, the right teams, and the right knowledge, so they can succeed in These tools do empower individuals throughout the orga- their roles. It means making sure every one of our employ- nization to get involved. Along with that, one common ees can optimize their career paths for the things that question I hear is, Will a platform like LinkedIn ultimately they’re best at and most passionate about. do away with executive recruiters, or will HR departments still play the same role? I think we’ll be as reliant as ever How are LinkedIn and social media in general trans- on executive recruiters and HR professionals, because forming the ability of organizations to grow a great there’s an art and a science to this world. Recruiters have team? developed an intuition over time about the chemistry be- tween an individual recruit and the companies he or she LinkedIn connects talent with opportunity at massive will work for. Our platform enables them to operate at a scale. We now have access to massively scaling infrastruc- far greater scale and with greater speed, efficiency, and ef- ture that connects hundreds of millions of people around fectiveness. the world in milliseconds. Even more important are the behavioral changes that the infrastructure has empow- What would you say to companies that get it but balk ered—the ways in which people share their identity, build at putting more control of their brand in the hands of and manage their networks, and share information and employees? ideas. Embrace it and lean into it. Explicitly state your objectives On the recruiting side, companies can now recruit passive with regard to how you can best leverage this brave new candidates—people who are not actively looking for a world. Your social-media strategy should mirror the orga- job—in a way that was never possible before. This hap- nization’s broader objectives and strategy, and it should pens by virtue of the fact that, more likely than not, these help the organization achieve those objectives in a more people regularly update their LinkedIn profile. effective and faster way. Have you seen organizations that have homed in on 1. To see the complete interview, please go to bcgperspectives. passive recruitment? com. ing channels such as newspaper ads. Others are more much that the company can’t reach all chosen interactive, but with different degrees of privacy. User groups. expectations regarding response time and other fea- tures will vary greatly, as will the characteristics of us- The good news is that social media tools make it feasible ers themselves. Interaction with each group must be to keep close tabs on how any pilot initiative is working tailored to its needs, without stretching resources so before rolling it out companywide. For a new recruiting T B C G • E A  P M
  • 27. campaign on a social network site, one can track the available and refine a strategy that is right for their busi-number of views and click-throughs, and see user com- ness. Given the speed of change on the Internet, compa-ments. Real-time feedback allows companies to make nies can’t afford to delay using the Web to build a strongmidcourse adjustments quickly and to compile data on employer brand.their own and their competitors’ activities. An incremen-tal approach, centrally managed, will allow companies tofamiliarize themselves with the many channels and toolsCreating People Advantage 2011 25
  • 28. HR Without Frontiers Pathways for HR to Add Value on a Global ScaleT he acceleration of international expansion the share reaches 90 percent or more. The foreign work- among European companies, together with force of a single company can reach almost 300,000 em- the volatility of these new markets, raises ployees. the bar for HR to become a strategic part- ner with the business units. Our survey Furthermore, from 2003 through 2008, labor growth hap-shows that fewer than half of HR professionals think pened almost exclusively outside these companies’ homethat HR has reached a strategic level in their company; markets. Data available for 38 of the top 50 companiesmore than one-fifth believe HR is still only a service de- show that they added a total of about 524,000 employeeslivery function. abroad over those five years and subtracted about 293,000 at home.A globalizing environment demands even more from HR:balancing a global steering model with local flexibility, As a result, HR’s traditional emphasis on managing theand professionals who can think and act internationally. workforce of the home market has become too narrow.HR needs to play a prominent role in helping the organi- Global transparency, international frameworks and stan-zation plan and execute cross-border mergers, carve-outs, dards, and globally installed services are the hallmark ofand organic expansion abroad. (See the sidebar “Gas Nat- a superior HR function today. For most companies, thisural Fenosa: HR’s Role in Making Mergers Work.”) transition will entail a significant shift in resources and management attention.For instance, PepsiCo announced plans in early 2011 toacquire a majority stake in Russian dairy and juice com-pany Wimm-Bill-Dann. The deal, one of the largest for- Value First, Cost Savings Secondeign acquisitions in Russia outside the energy sector,meant adding 18,000 employees in a relatively unfamil- The rationale for HR to go global is, first and foremost, toiar region and product line. PepsiCo’s HR staff conducted support and add value to the company’s strategic plans.due diligence on the organization structure, HR process- Undoubtedly, because HR should be a role model in thees, and cultural fit of Wimm-Bill-Dann and prioritized constant search for efficiency, the cost perspective is alsotopics on the basis of their urgency and complexity. That important. Merely reducing costs, however, should be adue diligence was critical to a successful integration of secondary goal. Given that the HR function typically com-the two organizations and an accelerated pace for creat- prises just a very small percentage of labor costs, even aing value. large reduction in HR costs won’t yield large savings, and it carries the risk of creating substantial turmoil.A look at the profiles of the 50 largest European multina-tional companies (based on their foreign assets) shows Going global will require more resources devoted to stra-the magnitude of the globalization challenge. (See Exhib- tegic activities—more than the 2 to 5 percent of capacityit 13.) On average, 66 percent of employees in those com- that traditionally has been dedicated to strategic activi-panies work outside the local market; in five companies, ties (compared with 60 percent devoted to service activi-26 The Boston Consulting Group • European Association for People Management
  • 29. Gas Natural Fenosa HR’s Role in Making Mergers Work Even the best-laid merger plan can be derailed if the peo- HR took the lead in managing the integration. Besides of- ple and cultures don’t mesh. HR can improve the odds of fering early-retirement incentives, HR designed an ag- success by stepping up to be a true transformation part- gressive three-part mobility program to balance jobs with ner with the two businesses. available personnel: Case in point: the 2009 merger of Gas Natural and Unión ◊ Reallocation of staff into existing vacancies, according to Fenosa, two Spain-based utilities with more than 16,000 skills and geographical fit employees in 20 countries. HR was given the difficult as- signment of capturing cost synergies in the merged work- ◊ Strategic insourcing of previously outsourced work for force while retaining key talent and keeping morale and high-value-added activities, such as a director oversee- engagement high. “Our task was to capture as much sav- ing network construction and expansion ings as possible, minimizing the potential negative im- pact on morale and keeping a reasonable budget for em- ◊ Tactical insourcing of external jobs, such as administra- ployee exits,” explained Miguel Angel Aller, HR director tive services, on a temporary basis for Gas Natural Fenosa. Two dedicated units in the shared-service center oversaw To augment HR’s interactions at the business unit level the mobility program, tracking progress in workforce size during and after the merger, the company created the role and structure, updating forecasts of personnel costs, and of HR business partner with a vertical reporting line to managing the insourcing initiatives. Governance of the corporate HR. The company also set up a shared-service mobility program fell to a committee that met regularly. center for transactional activities such as payroll and ben- efits, as well as HR IT-systems subsidiaries in Europe and In two years, HR has generated substantial success with Latin America. the mobility program, covering 1,000 positions in Spain.ties). This entails a shift in mindset away from administra- lyzed 16 core HR activities within large companies andtive transactions to acting as expert consultants on how clustered them into strategic, functional, and administra-talent can advance the business goals in every foreign tive activities. (See Exhibit 14.) The survey suggests thatmarket. Instead of viewing HR staff as jacks-of-all-trades, no common model has emerged for organizing HR acrossHR will require analytically proficient experts in areas borders. In 11 of 16 activities, at least 15 percent of re-such as workforce planning and leadership development spondents fall in both the lowest category (not involvedto work side by side with the business leaders. And the in the activity) and the highest category (central execu-more basic activities such as payroll should be optimized tion of concepts). And no activity has been standardizedthrough centralized technology-intensive processes. Be- globally by a majority of respondents.coming true strategic partners can add tremendous valueby advising the businesses on where to invest in talent, There is one common denominator, however, in the cat-how to recruit the right people, and how to retain and de- egories of strategic and functional HR activities: a plural-velop them for fruitful careers. (For an example of how ity of respondents said the degree of central guidance liesHR is becoming more global, see the sidebar “PSA Peu- between setting guidelines and creating concepts. Amonggeot Citroën: HR Transformation for a Global World.”) the 12 activities in this category, 4 stand out in terms of central guidance: people strategy, talent management, compensation, and performance management. For all 4,How Centralized and Standardized Is at least 40 percent of respondents said they create con-HR? cepts centrally.As a prelude to discussing how HR can best go global, Other strategic or functional activities are managed lo-let’s assess the current state of HR in terms of depth of cally or have not yet been rolled out internationally. Toguidance and degree of process standardization. We ana- be sure, some activities, such as on-boarding and laborCreating People Advantage 2011 27
  • 30. Exhibit 13. Large European Multinationals Have Been Expanding Their Foreign Workforces Total foreign workforce, 2008 Share of foreign workforce, 2008 Change in local and foreign (thousands) (%) workforce, 2003–2008 (thousands) Decrease Increase Company 1 295 69 –38 48 Company 2 284 63 –40 108 Company 3 274 97 27 3 Company 4 239 76 Not available Company 5 220 66 14 12 Company 6 197 78 –8 111 Company 7 196 53 0 35 Company 8 154 73 31 6 Company 9 144 83 –35 –25 Company 10 116 58 27 9 Company 11 114 57 –7 22 Company 12 108 90 Not available Company 13 105 39 –117 28 Company 14 102 81 73 2 Company 15 96 42 –42 21 Company 16 95 48 –16 41 Company 17 95 90 –56 –32 Company 18 88 91 Not available Company 19 85 83 –15 –2 Company 20 84 69 –53 10 Company 21 84 45 –5 –28 Company 22 76 83 –11 –1 Company 23 74 63 Not available Company 24 73 72 0 26 Company 25 70 71 –11 33 Company 26 69 87 –2 21 Company 27 66 79 –7 15 Company 28 64 60 Not available Company 29 61 65 12 9 Company 30 60 62 –1 –13 Company 31 57 61 –3 27 Company 32 54 83 Not available Company 33 54 51 28 42 Company 34 51 32 –6 0 Company 35 50 51 –3 13 Company 36 48 50 7 11 Company 37 46 57 –12 27 Company 38 44 85 Not available Company 39 39 50 –39 13 Company 40 38 95 Not available Company 41 30 68 –2 –3 Company 42 27 40 –27 –34 Company 43 26 26 –4 0 Company 44 24 72 Not available Company 45 18 51 3 2 Company 46 18 54 Not available Company 47 17 63 –8 8 Company 48 16 86 Not available Company 49 11 39 4 6 Company 50 4 67 Not available Total foreign workforce: 4,463,895 Average share of foreign workforce: 66% Total change local: –292,730 Total change foreign: +524,264 Foreign Local Source: United Nations Conference on Trade and Development. Note: Foreign workforce refers to the workforce outside the country in which the company is headquartered.28 The Boston Consulting Group • European Association for People Management
  • 31. PSA Peugeot Citroën HR Transformation for a Global World Like many automakers, PSA Peugeot Citroën faces the First, HR established centers of excellence with a clear in- substantial challenge of gaining market share in rapidly ternational mandate in eight expert-based activities, developing economies. This challenge, the HR unit decid- ranging from strategic workforce planning to career man- ed, should translate into three specific objectives: making agement. To underscore the global mandate, all HR re- HR processes and structures far more international; be- sponsibilities for the French operations were carved out coming leaner and more efficient; and developing capa- from the corporate level and moved to subsidiary levels. bilities (in talent planning, sourcing, and development) to The centers of excellence define guidelines and tools in help the businesses prepare for imminent technological their respective areas for international use but explicitly skill shifts and changes in location. do not execute activities locally. Based in France, the company employs roughly half its Second, the company bundled transactional activities workforce of 198,000 people outside its home market, in- into regional shared services, like payroll and labor rela- cluding 64,000 throughout Europe and 34,000 in other re- tions, in order to reap efficiencies. Where possible, the ac- gions. But HR was starting with a strongly France-centric tivities are harmonized and offered internationally. The focus and little central steering of international activities, design of training programs is also bundled at a regional as most HR transactions occurred at the local level, leav- level, ensuring a high standard consistent with globally ing little room for HR to act as a consultant to the busi- defined job and skill requirements. ness heads. “We will have to recruit and on-board thou- sands of talented individuals every year,” said Rémi Boyer, Third, HR aimed to become a true partner with the busi- the company’s head of HR development. “While this is ness units. To do so, it reduced the amount of local trans- only starting to be a challenge in France, it already is one actional activities, especially staffing and career manage- in Russia, China, and Latin America.” ment, by adjusting the missions and tasks of HR business partners. At the same time, HR strengthened certain HR’s subsequent transformation involved three main ini- skills, such as HR strategy formulation. tiatives.relations, are mostly local by nature. By contrast, others, often don’t know how many people actually work in HRsuch as HR controlling and employer branding, benefit or which people handle which function in a particularfrom global standards and should be steered by the center, foreign market. (See the sidebar “Getting a Line on Whoyet only 33 percent and 28 percent, respectively, do so. Does What for Whom.”)As for administrative activities such as payroll, fully one- The second change needed is to define and prioritize thethird of the respondents manage them centrally, and few activities that will create the most value when expandedhave rolled out globally standardized processes. Activities to a global scale. Our survey analysis shows that peoplethat support employees, such as answering requests, re- strategy, talent management, performance management,main highly local, meaning that companies are not taking and compensation and benefits currently stand out asadvantage of communication technologies to centralize the most global activities. In these areas, HR leadersand standardize. Among all respondents, only 21 percent should be addressing several issues:use online “self-service” portals where employees can getresponses to their inquiries. ◊ People Strategy. Define the HR controlling data that should be assembled in a globally consistent format toGiven the current situation, creating a successful global plan the supply and demand of workforce skills.HR regime will involve several changes. The first is togain a clear view of who does what for whom. Global ◊ Talent Management. Define the right size and interna-transparency about capacities and accountabilities in the tional scale for the talent pool that should be attractedHR function is currently more the exception than the and developed. Create policies and tools to managerule. Because of mergers and divestments, organizations talent centrally.Creating People Advantage 2011 29
  • 32. Exhibit 14. Despite a Relatively High Degree of Guidance by Corporate HR, Many Activities Have Not Been Standardized Depth of guidance of corporate HR Degree of process standardization (% of respondents) (% of respondents) Not Set Create Execute Fully Guidelines + Globally involved guidelines concepts concepts localized local adjustments standardized People strategy 12 21 47 19 25 45 30 Strategic activities HR controlling 21 29 33 17 43 45 12 Talent management 7 24 46 24 16 49 35 Change management 19 35 37 9 50 33 17 Employer branding 20 30 28 22 45 43 12 Recruiting 20 29 27 24 44 46 10 On-boarding 36 26 31 7 57 37 6 Functional activities Compensation 4 27 40 29 21 50 29 Performance management 15 27 44 15 31 40 29 Training and 17 24 39 20 39 52 10 development Labor relations 24 32 17 28 61 37 2 Health management 28 35 20 17 60 37 4 Payroll 26 28 9 37 63 33 4 Administra- Employee data 46 37 17 management 16 31 20 33 tive activities HR-IT 17 28 17 39 42 39 19 Employee support 37 24 19 20 56 44 0 Sample: Greatest share Companies > 5,000 FTEs of responses Sources: Proprietary Web survey with 2,039 responses; 442 responses in this section; BCG/EAPM analysis. Note: Because numbers were rounded, not all percentages total 100.◊ Performance Management. Design the right approach nal customer. Quality measures such as correct payroll for a performance management system to work slips and fast response time to employee or management globally. Determine the degree of globally identical requests matter a lot, because HR’s performance of these objectives, performance criteria, and appraisal pro- basic activities shapes the perception of HR throughout cesses. the organization.◊ Compensation and Benefits. Determine the character- One area ripe for improvement lies in creating global istics required for a global job-grading system and data warehouses and systems with globally compatible the guidelines needed to define compensation lev- HR applications. HR has traditionally attracted people els. Balance central guidance with local flexibility who have not focused on advanced quantitative or tech- for subsidiaries to make individual compensation nical skills, and as a result few companies can produce decisions. detailed analysis of people issues that inform strategic de- cisions. Our survey shows that HR remains quite de-For HR service activities, globalization involves maintain- tached from managing the IT side of its activities: only 18ing the right balance between economies of scale that percent of respondents have a dedicated unit within thearise from standardizing and automating processes and HR function that is accountable for HR IT, while 27 per-the high quality of service demanded by each local inter- cent place accountability in the hands of the IT function.30 The Boston Consulting Group • European Association for People Management
  • 33. Getting a Line on Who Does What for Whom It’s easy for multinational companies to lose sight of how these activities and the assigned responsibilities for each HR activities are allocated across the organization. They process. don’t know how many people inside and outside the HR function are involved in HR activities or for which group of Analysis of the status quo often reveals a reality in which internal customers. Before one starts to reshape the HR HR activities are spread widely across the organization. A function for global operations, then, it’s important to get a company with ten business units might have two or three clear picture of its current state. (See the exhibit below.) employees in each unit investing 20 percent of their time in recruiting, even though none of them has a defined role Companies will have to identify the capacities required to or mandate for the activity. Quantifying such fragmenta- deliver key HR processes. This analysis should cover how tion at a detailed activity level is essential for prioritizing many people—and at what level or in which unit—en- HR activities and identifying key improvement levers for gage in specific HR activities. It can also define the cur- going global. rent degree of standardization of the processes behind A Clear Picture of HR Activities Main activities (illustrative) Strategy Learning Perfor- Em- Adminis- Resourc- Rewards and mance tration IT HR Non-HR and ing ployee develop- manage- relations and systems commu- activities Total planning nication in HR HR Total Units ment ment services FTEs workforce Ratio Corporate center 229 5,439 B 309 24,093 1:78 C 282 18,567 1:66 D 99 6,839 1:69 E 175 13,697 1:78 F 138 9,876 1:72 G 70 4,950 1:71 H 48 3,294 1:69 I 30 2,103 1:70 J 67 4,839 1:72 K 57 3,749 1:66 L 37 2,847 1:77 Total HR FTEs 200 185 139 308 62 80 431 46 31 62 1,541 100,293 1:65 = HR FTEs Source: BCG analysis. Note: Numbers are rounded.In most cases, accountability is split between HR and IT, land. Gustavo Bracco, human resources and organisationwhich raises the risk of HR reacting to, rather than direct- director for Pirelli, noted that as more KPIs have been in-ing, changes in IT systems. “The key is to create interna- stituted to cover various HR dimensions, their value totional standards for processes like talent management the business units has increased. “Now we are more rel-and performance measurement, which depend on a glob- evant to the businesses and our position is well consid-al HR-IT backbone,” said Volker Stephan of ABB Switzer- ered in key decisions,” he said.Creating People Advantage 2011 31
  • 34. Beyond Structures, Creating a Global by 43 percent of respondents. Many respondents attrib-Mindset uted this problem to a lack of career development oppor- tunities and the poor image of HR among high-caliberEven the best global structure, process, and systems will potential without HR staff who have deep international experi-ence, including employees who work with the business HR needs to become more attractive to high perform-units and translate their business needs into global HR ers—a task that HR leaders can take on by promoting thesolutions. Sanofi implemented a global development function at universities, at business conferences, and inacademy for the top 200 HR people. Roberto Pucci, se- the media. Inside the company, HR leaders should morenior vice president of human resources, explained, “This actively communicate how the function helps the busi-includes exposure to best practices, action learning, and ness, using vignettes and descriptions of powerful ana-experimentation to develop management relationship lytic tools.skills and business problem-solving capabilities.” Sourcing such skills externally won’t be sufficient. HR willWhat background and skills should HR business partners also have to invest more in its existing staff. An effectivehave in order to globalize the function? Our survey shows “HR for HR” program will use three levers to close thethat the greatest gaps between the importance of certain gaps:backgrounds and the availability of HR professionals whohave them lie in three areas: extensive work experience ◊ Recruiting. It is important to select the background andabroad, knowledge of international labor law, and an in- capabilities that future HR professionals will need international education. (See Exhibit 15.) order to advance the business. Google, for instance has a “three-thirds” HR staffing policy: it hires one-third ofFinding highly skilled HR professionals, especially recent employees with a classic HR background, one-thirdgraduates and young professionals, was judged difficult former management consultants, and one-third with Exhibit 15. Few HR Professionals Have International Experience and Background International and business skill availability and importance Long-term international working experience Knowledge of international labor law International education Short-term international working experience Flexibility to work abroad for a fixed-term period Working experience outside the HR function Working experience at other companies (minimum five years) Sensitivity to cultural differences Knowledge of line management issues Foreign-language skills Communication and presentation skills Low High Availability Importance Sources: Proprietary Web survey with 2,039 responses; 442 responses in this section; BCG/EAPM analysis.32 The Boston Consulting Group • European Association for People Management
  • 35. advanced degrees in analytical or experimental fields. Roughly one-third of the organizations we surveyed have Attracting high-potential candidates to HR may re- a solid, vertical reporting line to corporate, with another quire investment to upgrade the function’s “brand.” third having that line plus a dotted line to the head of the respective business unit. The final third use a model that◊ Developing. Training programs and development op- focuses on the business side, with a solid reporting line portunities should reach beyond HR topics to also between the HR business partner and the head of the build business acumen and leadership skills. Deutsche business. Telekom provides its HR business partners around the world with the analytical tools necessary to increase Any of these reporting lines can work, as long as the ar- their strategic contributions. As part of the company’s rangement reflects the role the HR business partner will Total Workforce Management effort, it built an HR play. HR business partners with a clear mandate to act as cockpit that shows financial and HR KPIs in seven cat- consultants to the business heads should, for instance, egories, from productivity to workforce development, have at least a dotted line into the business. which helps HR professionals control strategically im- portant processes. Deutsche Telekom reinforced the The transition to a global HR function will not be easy. It program through a major training session and knowl- will inevitably disrupt certain services for a time and up- edge exchange forums at the company’s annual inter- set line managers if certain services take longer. HR lead- national HR conference, where HR professionals run ers should pick their battles carefully. In general, they through real-life case studies to discuss solutions. should first work on narrowly defined projects that prove that HR can deliver greater value, rather than focus on◊ Rotating. Our survey shows that 57 percent of HR busi- cost cutting. That will buy them some goodwill for pos- ness partners have spent at least five years in their po- sible disruptions down the road and will help open a seat sition, with 29 percent at nine years or more. That’s at the decision-making table. too long a period without rotation through other posts. HR leaders should work in the field or in a different As Attilio Invernizzi, deputy general manager for the function and region for defined periods in order to ex- group human resources and organization area of the in- pand their horizons and gain a new perspective on surance company Generali Group, put it, “In the next few what internal customers need. Rotating non-HR man- years, we will see much more cooperation between HR agers, such as a business controller, into the HR func- and the businesses, but you need open-minded managers tion for a period is also valuable. and investment in special, even transformational projects that have the full involvement of both parties. True part-Besides background and skills, how should a company nerships are born from substantial change, not the stan-structure the role of HR business partner in reporting dard day-to-day stuff.”terms, to balance the needs of the individual businesswith the broader need of the enterprise to have consis-tent global approaches?Creating People Advantage 2011 33
  • 36. Appendix I MethodologyWe started our original research in 2006 by compiling a importance and to rate their organization’s current capa-list of 40 topics in human resources and subsequently fo- bilities in the topics on a scale of 1 (low) to 5 (high).cusing on the 17 most relevant topics. We narrowed thefield by conducting an exhaustive literature search both To adjust for high- or low-scoring tendencies among on-in general business publications and in HR journals. In line survey participants in particular countries and mar-our literature search, we considered how the number of kets, we normalized the assessment of current capability,mentions for each topic had changed over time, and we current importance, and future importance for each coun-ranked each topic according to whether interest in it had try and industry.been increasing or declining. Next, in order to discoveremerging topics whose importance might not have been In the four optional sections, respondents could answercaptured in the literature search, we gathered input on questions on HR globalization, diversity, talent manage-the topics from HR experts within BCG and the EAPM. ment and leadership development, and social media inReiterating this process in every annual installment, we the context of HR.developed 22 HR topics in 2011. We conducted the online survey from February 2011The survey of the current study consisted of two parts: through April 2011, receiving 2,039 responses from exec-one mandatory part and a second part seeking responses utives in 35 countries. In conjunction with that survey, wein any of four optional sections. In the mandatory sec- interviewed 58 executives. In these one-on-one inter-tion, respondents were asked questions about themselves views, we explored HR topics in greater depth and triedand their organizations. They were presented with a list to gain insights into best practices.of 22 topics and asked to assess their current and future34 The Boston Consulting Group • European Association for People Management
  • 37. Appendix II Executive IntervieweesIn interviews, many senior execu- Sylvie François Shafie Shamsuddintives shared their insights and dis- Head of Human Resources Executive Director, Global Talentcussed our findings. We thank them La Banque Postale Management and Organisationfor their valuable contributions. Development Jean-Claude Le Grand CarrefourBulgaria Human Resources Director,Marina Bancheva Consumer Products; and Corporate Armand SohetHR & Communication Manager Diversity Director Vice President, HRSchneider Electric L’Oréal Alcan Engineered ProductsBoris Tatchev Jean-Paul Mazoyer Christian VieHR Director Deputy CEO and Global Chief Group Human Resources,Cosmo Bulgaria Mobile (Globul) Operations Officer Organisation Development, Head Amundi of Strategy, R&D and MetricsFrance AXAVictor Agnellini Marie-Hélène MimeauSenior Vice President, Transforma- Director, Group Training & Talent Patricia Waldrontion Learning and Accreditation Development Senior Vice President, HumanAlcatel-Lucent Carrefour Resources France Telecom OBSAnne Marion-Bouchacourt Jérôme NantyHead of Group Human Resources Group Human Resources Director GermanySociété Générale Caisse des Dépôts Alwin Fitting Chief Human Resources Officer andRémi Boyer Eric Olsen Member of the Management BoardHead of HR Development Group Executive Vice President, RWEPSA Peugeot Citroën Organisation and Human Resources Lafarge Harald KrügerPierre Deheunynck Director of HR and IndustrialSenior Executive Vice President, HR Veronique Poulard Relations and Member of the BoardCrédit Agricole Global Head of Leadership and of Management Talent Management BMW GroupRoberto di Bernardini Société GénéraleHR Head of Emerging Markets/ Wolfgang MalchowEMEA Roberto Pucci Member of the Board of Manage-Janssen Member of the Executive Committee ment and Director of Industrial and the Management Committee; RelationsKaren Ferguson Senior Vice President, Human BoschExecutive Vice President, Global HR ResourcesSchneider Electric SanofiCreating People Advantage 2011 35
  • 38. Martin Schmitt Mario Mairano Antonio PeñalverSenior Vice President, Corporate Director of Human Resources and Corporate Director of HRPersonnel Policy General Secretariat NatraLufthansa Ferrari SwitzerlandThomas Wessel Monica Possa Barbara BouroubaChief Human Resources Officer Director of HR and Organization Head of HREvonik Industries RCS Media Group HelsanaHungary Pierangelo Scappini Christian G. MachateZsuzsanna Hevesi Tóth Director for Organizational Head of HR for Private Banking andHead of HRM Department Development and Planning SwitzerlandMAVIR Hungarian Transmission Poste Italiane Credit SuisseSystem Operator Company Spain Jean-Marc MommerSzabolcs Lénárt Miguel Angel Aller Corporate Vice President, HumanVice CEO, Chief Operations Officer HR Director ResourcesKÉSZ Holding Gas Natural Fenosa FirmenichJohanna Mezővári José Luis Gómez Alciturri Beat SigristHR Director Executive Vice Chairman and Head of Corporate HumanAstraZeneca Hungary Director of the Human Resources Resources Management Division SulzerÉva Somorjai Banco SantanderMember of the Management Volker StephanCommittee, Chief Human Resources Susana Gutierrez Head of Human Resources,Officer Director of Human Resources Switzerland/Central EuropeMagyar Telekom General Optica ABB SwitzerlandLászló Szőcs Luis Hidalgo TurkeyDirector of HR Corporate Director of HR Esra BozkurtMOL Group Sage Spain Assistant General Manager, HR Groupama Pension & InsuranceItaly Luis MassaGustavo Bracco Director of Human Resources Osman TüzünHuman Resources and Organisation AstraZeneca Spain HR CoordinatorDirector GarantiBankPirelli & C. José Antonio Molleda Group Chief Executive Officer of United KingdomAttilio Invernizzi Strategy and Corporate Resources John AinleyDeputy General Manager for the Multiasistencia Group HR DirectorGroup Human Resources and Aviva GroupOrganization Area Marta PanzanoGenerali Group Head of HR EMEA Celia Brown Cemex Executive Vice President and Group Human Resources Director Willis Group36 The Boston Consulting Group • European Association for People Management
  • 39. Angela Hamlin Malcolm Swatton Mike WinstoneHuman Resources Director Global Head of Human Resources HR DirectorJanssen Universal Music Group HomeserveRupert McNeil Keith WilsonHR Director Global Director, ChangeAviva UK Management, HR Global Commercial OrganisationJill Shedden AstraZenecaGroup Director, Human ResourcesCentricaCreating People Advantage 2011 37
  • 40. Appendix III Supporting OrganizationsThe following member organizations German Association for Personnel Portuguese Association of Humanof the EAPM helped with or were re- Management / Deutsche Gesellschaft Resources Managers / Associaçãosponsible for the preparation, distri- für Personalführung e. V. (DGFP), Portuguesa dos Gestores e Técnicosbution, and collection of the online Germany dos Recursos Humanos (APG),survey. Without their assistance, this Portugalreport would not have been nearly Greek People Management Associa-as comprehensive and insightful. tion (GPMA), Greece HR Management Club, RomaniaAustrian Center for Productivity and Hungarian Association for Human National Personnel Managers’ UnionEfficiency / Österreichisches Produk- Resources Management (OHE), (ARMC), Russiativitäts- und Wirtschaftlichkeits- HungaryZentrum (ÖPWZ), Austria Association of Human Resource Pro- Chartered Institute of Personnel and fessionals, SerbiaPersonnel Managers Club (PM Club), Development (CIPD Ireland), IrelandBelgium Slovak Association for Human Re- Associazione Italiana per la Direzi- sources Management and Develop-Bulgarian Human Resource Manage- one del Personale (AIDP), Italy ment (ZRRLZ), Slovak Republicment & Development Association(BHRMDA), Bulgaria Latvian Association for Personnel Slovenian HR Association (SHRA), Management (LAPM), Latvia SloveniaCyprus Human Resource Manage-ment Association (CyHRMA), Cyprus Macedonian Human Resource Asso- Asociación Española de Dirección y ciation (MHRA), the Former Yugo- Desarrollo de Personas (AEDIPE),Czech Association for Human Re- slav Republic of Macedonia Spainsources Development (ČSRLZ),Czech Republic Foundation for Human Resources Sveriges HR Förening, Sweden Development (FHRD), MaltaPersonnel Managers in Denmark, HR Swiss—Schweizerische Gesell-Denmark Dutch Association for Personnel schaft für Human Resources Man- Management & Organization Devel- agement / Société Suisse de GestionEstonian Association for Personnel opment / Nederlandse Vereniging des Ressources Humaines,Development (PARE), Estonia voor Personeelsmanagement & Or- Switzerland ganisatieontwikkeling (NVP),Finnish Association for Human Re- Netherlands Türkiye Personel Yönetimi Derneğisource Management (HENRY), (PERYÖN), TurkeyFinland HR Norge, Norway Chartered Institute of Personnel andAssociation Nationale des Directeurs Polish Human Resources Manage- Development (CIPD), Uniteddes Ressources Humaines (ANDRH), ment Association (PHRMA), Poland KingdomFrance38 The Boston Consulting Group • European Association for People Management
  • 41. Note to the ReaderThis report, the fifth installment in sight; their names and positions are Tansan, Antonio Turroni, Natashaour research on current and future listed in Appendix II. We also thank Winton, and many other colleaguesHR challenges, presents new and de- Tatjana Claus, Niklas Hellemann, as well as representatives of thetailed results on the European situa- Karin Hinshaw, and Torsten Kordon EAPM.tion. It is based on a close collabora- for their research, analysis, and coor-tion between The Boston Consulting dination of the writing process. We extend further thanks to theGroup (BCG) and the European As- EAPM member organizations thatsociation for People Management The authors also thank the members supported this study. A complete list(EAPM). of the EAPM sounding board—Filip- of these organizations is provided in po Abramo, Genoveva Bakardjieva, Appendix III.BCG has worked closely with leading Max Becker, Even Bolstad, Catherinecompanies around the world on a Carradot, Boyana Mecheva, Kim Finally, we thank John Campbell forwide range of HR issues, helping with Staack Nielsen, Donna Peevska, Ei- editorial guidance during the prepa-HR strategy, management, KPIs, and leen Pevreall, and Rudolf Thurner— ration of this report, as well as thestrategic workforce planning. BCG as well as all the other EAPM repre- editorial and production teams: Ra-has assisted its clients in managing sentatives who supported the study. chel Brundige, Gary Callahan, Olivertalent, organizing HR functions, man- Dost, Kim Friedman, Gina Goldstein,aging performance, redeploying the Furthermore, we thank the following Bernd Linde, Sharon Slodki, Saraworkforce, and managing demo- people for their help in coordinating Strassenreiter, and Mark Voorhees.graphic risk. It has also helped com- and conducting interviews across Eu-panies establish shared-service cen- rope and for their expert advice: Al- For Further Contactters and outsourcing arrangements. fonso Abella, Olivier Abtan, Marco If you would like to discuss our ob- Airoldi, Vassilis Antoniades, François servations and conclusions, pleaseThe EAPM and its member associa- Aubry, Jens Baier, Rolf Bixner, Massi- contact one of the authors.tions have worked to enhance the mo Busetti, Gennaro Casale, Jacquesquality of HR management and to Chapuis, Paul Clark, Filiep Deforche, Rainer Strackdevelop and elevate professional Ralf Dicke, Ralf Dreischmeier, Pat- Senior Partner and Managing Directorstandards. Through its programs, HR rick Ducasse, Andrew Dyer, Eric El- Leader of the Organization Practice inexecutives garner insights and ex- lul, Federico Fregni, Jörg Funk, Nora Europe, the Middle East, and Africachange ideas that enhance corporate Grasselli, Bent Hansen, Bruce Holley, Global Topic Coleader for People Ad-and personal capabilities in HR. David Hörmeyer, Michael Imholz, vantage and HR Rune Jacobsen, Daniel Kessler, Klaus BCG DüsseldorfWe believe that our findings will ap- Kessler, Balázs Kotnyek, Ádám Kotsis, +49 2 11 30 11 30peal to HR professionals and senior Daniel López, Pablo Marina, Anto- strack.rainer@bcg.combusiness executives alike. On the ba- nella Mei-Pochtler, Stéphanie Min-sis of the positive feedback from our gardon, Riccardo Monti, Yves Jean-Michel Cayeprevious reports, we plan to continue Morieux, Tomas Nordahl, Gokhan Senior Partner and Managing Directorour regular research on HR issues. Ozevin, Philippe Peters, Nicola Pi- Global Topic Coleader for People Ad- anon, Pedro Rapallo, Fabrice Roghé, vantage and HRAcknowledgments Michael Schmälzle, Alexander Schül- BCG ParisWe would like to thank the executive ler, Tuukka Seppä, Michael Silver- +33 1 40 17 10 10interviewees for their time and in- stein, Peter Soos, Nick South, Burak caye.jean-michel@bcg.comCreating People Advantage 2011 39
  • 42. Caroline Teichmann Gerold FrickPrincipal General ManagerBCG Munich German Association for Personnel+49 89 23 17 40 Management (DGFP), frick@dgfp.dePieter Haen Stephanie BirdPresident Director of HR CapabilityEuropean Association for People Chartered Institute of PersonnelManagement and Development (CIPD), United+31 34 35 78 14 0 The Boston Consulting Group • European Association for People Management
  • 43. For a complete list of EAPM publications and information about how to obtain copies, please visit our website at a complete list of BCG publications and information about how to obtain copies, please visit our website receive future BCG publications in electronic form about this topic or others, please visit our subscription website