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People, Performance, Profit Row Henson HCM Fellow Oracle
People...Performance…Profit <ul><li>People as Capital:  From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for In...
In 1982, intangible assets comprised  38%  of a company’s market value.  By 2002,  that number soared to  85%! Source: Bro...
What we mean by Intangibles? •  BRAND •  INTELLECT •  KNOWLEDGE •  INNOVATION •  TEAMWORK •  AMBITION •  COURAGE •  AGILIT...
Talent Drives the  Knowledge Organization The ability to make good decisions regarding people represents  one of the last ...
People as Human Capital Asset Liability Loss Profit People as  Means People  as Capital People as Problems People as Costs...
People...Performance…Profit <ul><li>People as Capital:  From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for In...
Strategy Execution gets a failing grade “ Less than 10% of strategies effectively formulated are effectively executed”
<ul><li>So how do we align our talent with our strategy? </li></ul>
Talent not Engaged with Objectives <ul><li>Employees don’t understand their impact </li></ul><ul><li>Employees not fully e...
Performance Not Being Managed <ul><li>MBO process is unsuccessful </li></ul><ul><li>Feedback is poorly articulated and del...
Not Creating a Performance Driven Culture <ul><li>Not truly paying for performance </li></ul><ul><li>Top performers are no...
Global Engagement Gap <ul><li>21% Engaged </li></ul><ul><li>41% Enrolled </li></ul><ul><li>30% Disenchanted </li></ul><ul>...
How Towers Perrin defines employee engagement Emotional Engagement Rational Engagement <ul><li>Emotional Engagement </li><...
Performance Management Drives Business Success Employee understands how to make a difference Employee understands company ...
Meeting The Challenge <ul><li>Drive Business Results </li></ul><ul><ul><li>Clearly define and link individual performance ...
People...Performance…Profit <ul><li>People as Capital:  From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for In...
Talent Management Solution Landscape Source:  IDC 2007 Recruiting and Staffing Competency Management Assessment Succession...
Gartner’s Talent Management
Talent Life Cycle Plan  Develop Advance  Evaluate  Lead  Analyze  Talent Planning Learning & Development Performance Manag...
Translating business strategy into workforce infrastructure <ul><li>Experience working in China confirms that many HR func...
Workforce architecture provides tangible benefits to organizations, managers and employees Organizations can: Managers can...
People...Performance…Profit <ul><li>People as Capital:  From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for In...
CEO Priorities = HR’s Mandate Top Management succession Customer retention Developing & retaining potential leaders Engagi...
What CEOs are asking from HR <ul><li>What workforce segments create most value? </li></ul><ul><li>How will business be imp...
People...Performance…Profit <ul><li>People as Capital:  From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for In...
Strategic Transformation of HR to HCM Source: IDC 2002 Decision Support Control Reporting Administration and Transaction P...
Mercer 2007 Transformation Report
 
Mercer 2007 Global HR Transformation Study Asian findings <ul><li>Half of HR functions around the world are undergoing a t...
Current state of HR transformation across Asia Country Completed % In Process % Planning % Hong Kong 39 43 4 Thailand 33 3...
Top Human Capital Challenges Challenges Responses In % Global Asia Acquiring key talent/lack of available talent 43 45 Ret...
Top Human Capital Challenges Challenges Responses In % Global Asia  Implementing people changes due to organizational chan...
Barriers to Successful HR Transformation <ul><li>HR is too busy or lacks decision making power </li></ul><ul><li>Weak HR I...
Transforming HR <ul><li>One size does not fit all </li></ul><ul><li>Innovate or be outsourced </li></ul><ul><li>Business p...
People...Performance…Profit <ul><li>People as Capital:  From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for In...
Why Measure? <ul><li>STOP: “I think….I feel” </li></ul><ul><li>START: “I know…I can prove” </li></ul><ul><li>SHIFT: From T...
The Challenge of Measuring HR <ul><li>Percentage of HR executives who… % </li></ul><ul><li>Believe ROI is their CEO’s most...
Metrics That Matter: Analytic Taxonomy Information Distribution Metrics Delivery (Dashboards) Contextual Embedded Analytic...
TM Metrics that Matter: Recruitment Time to fill vacancy Acceptance per offer ratio Number of vacancies Turnover forecasti...
TM Metrics that Matter: Learning % employees trained Cost per training hour Number of training days/programs per yr Impact...
TM Metrics that Matter: Performance % employees reviewed Perf. ratings distribution Number of  reviews completed on-time I...
 
Evolution of Workforce Analytics Greater Workforce Insight Today Where Are We Headed Collaborative <ul><li>Correlate peopl...
Final Asian Research
Talent Implications <ul><li>Within the next seven years, over 33 million individuals in Japan (26% of the population) are ...
Policies to relieve and prevent work-related stress Source:  The Hudson Report – April-June 2007 Review job  description W...
What makes a Best Employer in Asia? <ul><li>Effective and committed leadership.  Best Employers display a more caring appr...
Contact Information <ul><li>Row Henson </li></ul><ul><li>[email_address] </li></ul><ul><li>404/312-9221  </li></ul>
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Ihrim Global Forum 2008 San Francisco, July 17-18

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Ihrim Global Forum 2008 San Francisco, July 17-18

  1. 1. People, Performance, Profit Row Henson HCM Fellow Oracle
  2. 2. People...Performance…Profit <ul><li>People as Capital: From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for Increased Performance </li></ul><ul><li>Talent Management Implication </li></ul><ul><li>What does the CEO expect from HR? </li></ul><ul><li>HR Transformation </li></ul><ul><li>Human Capital Impact On Your Bottom Line </li></ul>
  3. 3. In 1982, intangible assets comprised 38% of a company’s market value. By 2002, that number soared to 85%! Source: Brookings Institute, 2005 From HR to HCM in 20 Years
  4. 4. What we mean by Intangibles? • BRAND • INTELLECT • KNOWLEDGE • INNOVATION • TEAMWORK • AMBITION • COURAGE • AGILITY • SYSTEMS • PRODUCTS At Least 75% of S&P Assets Today Are Intangible TALENT • GOODWILL • INVENTORY • TERMINALS • PIPELINES • MATERIALS • SYSTEMS • EQUIPMENT • MACHINERY • BUILDINGS • LAND TANGIBLE ASSETS INTANGIBLES
  5. 5. Talent Drives the Knowledge Organization The ability to make good decisions regarding people represents one of the last reliable sources of competitive advantage.   -- Peter Drucker
  6. 6. People as Human Capital Asset Liability Loss Profit People as Means People as Capital People as Problems People as Costs Source: Chapman Condy Company
  7. 7. People...Performance…Profit <ul><li>People as Capital: From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for Increased Performance </li></ul><ul><li>Talent Management Implication </li></ul><ul><li>What does the CEO expect from HR? </li></ul><ul><li>HR Transformation </li></ul><ul><li>Human Capital Impact On Your Bottom Line </li></ul>
  8. 8. Strategy Execution gets a failing grade “ Less than 10% of strategies effectively formulated are effectively executed”
  9. 9. <ul><li>So how do we align our talent with our strategy? </li></ul>
  10. 10. Talent not Engaged with Objectives <ul><li>Employees don’t understand their impact </li></ul><ul><li>Employees not fully engaged with enterprise objectives </li></ul><ul><li>Managers don’t have line of sight into talent </li></ul>Outcome: Enterprise performance suffers
  11. 11. Performance Not Being Managed <ul><li>MBO process is unsuccessful </li></ul><ul><li>Feedback is poorly articulated and delivered </li></ul><ul><li>Employees not developed for success </li></ul><ul><li>Fragmented process </li></ul>Outcome: Employee not leveraged or developed
  12. 12. Not Creating a Performance Driven Culture <ul><li>Not truly paying for performance </li></ul><ul><li>Top performers are not rewarded or enticed to remain </li></ul><ul><li>Can’t identify tomorrow’s leaders </li></ul><ul><li>Outcome: </li></ul><ul><li>Rewards ineffective </li></ul><ul><li>Talent leaves </li></ul><ul><li>Jeopardizes organizational future </li></ul>
  13. 13. Global Engagement Gap <ul><li>21% Engaged </li></ul><ul><li>41% Enrolled </li></ul><ul><li>30% Disenchanted </li></ul><ul><li>8% Disengaged </li></ul>Source: Towers Perrin global Workforce Study – 2007-2008
  14. 14. How Towers Perrin defines employee engagement Emotional Engagement Rational Engagement <ul><li>Emotional Engagement </li></ul><ul><li>I would recommend my company to a friend as a good place to work </li></ul><ul><li>My company inspires me to do my best work </li></ul><ul><li>I am proud to tell others I work for my company </li></ul><ul><li>My job provides me with a sense of personal accomplishment </li></ul><ul><li>I really care about the future of my company </li></ul><ul><li>Rational Engagement </li></ul><ul><li>I understand how my unit contributes to the success of my company </li></ul><ul><li>I understand how my role is related to my company’s overall goals, objectives, and direction </li></ul><ul><li>I am willing to put in a great deal of effort beyond what is normally expected to help my company succeed </li></ul><ul><li>I am personally motivated to help my company be successful </li></ul>Nine Core Engagement Factors Source: 2005 Global Workforce Study. Towers Perrin
  15. 15. Performance Management Drives Business Success Employee understands how to make a difference Employee understands company goals 38% more engaged Understand Do not understand 84% 46% 68% more engaged 91% 23% Understand Do not understand
  16. 16. Meeting The Challenge <ul><li>Drive Business Results </li></ul><ul><ul><li>Clearly define and link individual performance to enterprise objectives </li></ul></ul><ul><li>Process for Sustained Change </li></ul><ul><ul><li>Iterative and collaborative communication </li></ul></ul><ul><li>Transfer Ownership to Users </li></ul><ul><ul><li>Planning/linking objectives, defining responsibilities, training plans, and career planning </li></ul></ul><ul><li>Increase Employee Success </li></ul><ul><ul><li>Improve quality & timeliness of feedback </li></ul></ul><ul><ul><li>Enable performance driven development </li></ul></ul><ul><li>Support End-to-End Business Processes </li></ul><ul><ul><li>Link the right rewards directly to performance </li></ul></ul><ul><ul><li>Link feedback to development plans </li></ul></ul>
  17. 17. People...Performance…Profit <ul><li>People as Capital: From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for Increased Performance </li></ul><ul><li>Talent Management Implication </li></ul><ul><li>What does the CEO expect from HR? </li></ul><ul><li>HR Transformation </li></ul><ul><li>Human Capital Impact On Your Bottom Line </li></ul>
  18. 18. Talent Management Solution Landscape Source: IDC 2007 Recruiting and Staffing Competency Management Assessment Succession Planning Workforce Performance Management Learning Management Compensation Core HR Recruiting Specialists Talent Suite Specialists ERP or HRIS Learning Specialists Point Solutions
  19. 19. Gartner’s Talent Management
  20. 20. Talent Life Cycle Plan Develop Advance Evaluate Lead Analyze Talent Planning Learning & Development Performance Management Career Planning Measure and Report Competency Management Jobs & Positions Recruiting (internal employees and contractors/consultants) Compensation Teams & Projects Succession Planning
  21. 21. Translating business strategy into workforce infrastructure <ul><li>Experience working in China confirms that many HR functions still have much work to do to build basic programs to drive business success. Further, the programs that are in place often are not integrated resulting in misalignment and misdirection (i.e. pay and performance, competencies and assessment, job descriptions and recruitment, assessment results and individual development plans, etc.) </li></ul><ul><li>Mercer March 5, 2007 report. </li></ul>
  22. 22. Workforce architecture provides tangible benefits to organizations, managers and employees Organizations can: Managers can: Employees can: <ul><li>Translate business goals into explicit talent requirements </li></ul><ul><li>Segment the workforce so that accountabilities, performance standards and competencies can be assigned to right roles </li></ul><ul><li>Cascade goals and objectives from the top to the bottom of organization </li></ul><ul><li>Create an infrastructure and reporting system for analyzing, managing and deploying talent </li></ul><ul><li>Cut across traditional HR silos to take an integrated approach to talent management </li></ul><ul><li>Give more specific guidance to employees regarding their roles, accountabilities and performance expectations </li></ul><ul><li>Speak to employees in a consistent language about performance and how they can contribute to organizational success </li></ul><ul><li>Obtain better information about talent resources within the organization </li></ul><ul><li>Make objective decisions about how to best deploy talent to meet business needs and goals </li></ul><ul><li>Gain better line of sight and understand how their role supports the business </li></ul><ul><li>Know what they need to do – or do differently – to contribute day to day </li></ul><ul><li>Understand what skills and competencies they will need to do their role well </li></ul><ul><li>Know how their performance will be measured and rewarded </li></ul><ul><li>Understand what they need to do to advance </li></ul><ul><li>Gain ready access to more robust up-to-date information that empowers them to better manage their careers </li></ul>Mercer – “Translating business strategy into workforce infrastructure” – Mar. 5, 2007
  23. 23. People...Performance…Profit <ul><li>People as Capital: From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for Increased Performance </li></ul><ul><li>Talent Management Implication </li></ul><ul><li>What does the CEO expect from HR? </li></ul><ul><li>HR Transformation </li></ul><ul><li>Human Capital Impact On Your Bottom Line </li></ul>
  24. 24. CEO Priorities = HR’s Mandate Top Management succession Customer retention Developing & retaining potential leaders Engaging employees in the company’s visions, values, goals Improving product innovations Reducing costs Talent identification and growth 9% 45% 24% 31% 25% 43% 12% 28% 33% 31% 18% 28% 18% 22% 2003 2008
  25. 25. What CEOs are asking from HR <ul><li>What workforce segments create most value? </li></ul><ul><li>How will business be impacted by impending retirement and are we prepared? </li></ul><ul><li>Where is talent demand outpacing supply? </li></ul><ul><li>What skills will we need in next 5 years that we don’t have today? </li></ul><ul><li>Turnover? How much is it costing in customers? In productivity? In innovation? In quality? </li></ul><ul><li>Do we have a workforce plan to communicate financial consequences of talent decisions on our business? </li></ul>Source: Deloitte Study – “It’s 2008 Do You Know Where Your Talent Is?”
  26. 26. People...Performance…Profit <ul><li>People as Capital: From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for Increased Performance </li></ul><ul><li>Talent Management Implication </li></ul><ul><li>What does the CEO expect from HR? </li></ul><ul><li>HR Transformation </li></ul><ul><li>Human Capital Impact On Your Bottom Line </li></ul>
  27. 27. Strategic Transformation of HR to HCM Source: IDC 2002 Decision Support Control Reporting Administration and Transaction Processing Strategic Decision Support Outsource to Service Provider Control Reporting Self Service Value Added Services Cost Structure Cost Function Business Partner
  28. 28. Mercer 2007 Transformation Report
  29. 30. Mercer 2007 Global HR Transformation Study Asian findings <ul><li>Half of HR functions around the world are undergoing a transformation, driven by changing business and organizational needs </li></ul><ul><li>In Asia, the number of HR roles with direct reports to CEO has doubled since 2003 </li></ul><ul><li>Building talent as opposed to buying talent is on the up trend for HR professionals in Asia </li></ul><ul><li>HR leaders expect talent management to remain a top priority in two to three years. </li></ul>“ HR transformation is the process of recreating or reinventing the HR function with the specific intent of enhancing HR’s contribution to the business.”
  30. 31. Current state of HR transformation across Asia Country Completed % In Process % Planning % Hong Kong 39 43 4 Thailand 33 35 10 China 30 33 5 Taiwan 30 37 7 Malaysia 28 54 4 Singapore 26 37 18 Japan 18 71 5 India 17 63 3 Indonesia 15 62 10 Philippines 14 63 7 Korea 6 47 17 All 24 48 9
  31. 32. Top Human Capital Challenges Challenges Responses In % Global Asia Acquiring key talent/lack of available talent 43 45 Retaining key talent 38 40 Building leadership capability 40 39 Driving cultural behavioral change in the organization 24 25 Succession planning 26 25 Increasing line manager capability for people management 22 22 Increasing workforce productivity 20 19 Constraints on head count (“making do with less”) 17 17
  32. 33. Top Human Capital Challenges Challenges Responses In % Global Asia Implementing people changes due to organizational changes 18 17 Lack of consensus around organization’s strategy and direction 16 17 Encouraging organization innovation 18 16 Reducing overall human capital costs 16 16 Increasing the return on investment in remuneration 14 15 Resourcing and managing HR in new geographies 15 14 Workforce planning – merger/acquisition 14 14 Coping with an aging workforce 12 13
  33. 34. Barriers to Successful HR Transformation <ul><li>HR is too busy or lacks decision making power </li></ul><ul><li>Weak HR Information/Technology </li></ul><ul><li>Skills and capabilities of HR staff </li></ul><ul><li>Negative business perception of HR </li></ul><ul><li>Insufficient capability of line managers </li></ul><ul><li>Weak HR and business leadership </li></ul>Source – “Keeping the promise of HR transformation in Asia” - Mercer
  34. 35. Transforming HR <ul><li>One size does not fit all </li></ul><ul><li>Innovate or be outsourced </li></ul><ul><li>Business partner/business alignment </li></ul><ul><li>Owner of corporate culture/ employee brand </li></ul><ul><li>Competency/talent identification & development </li></ul><ul><li>Process flexibility and adaptability </li></ul><ul><li>Better analytical skills </li></ul>
  35. 36. People...Performance…Profit <ul><li>People as Capital: From “HR” to “HCM” </li></ul><ul><li>Aligning the Workforce for Increased Performance </li></ul><ul><li>Talent Management Implication </li></ul><ul><li>What does the CEO expect from HR? </li></ul><ul><li>HR Transformation </li></ul><ul><li>Human Capital Impact On Your Bottom Line </li></ul>
  36. 37. Why Measure? <ul><li>STOP: “I think….I feel” </li></ul><ul><li>START: “I know…I can prove” </li></ul><ul><li>SHIFT: From Tangible to Intangible Asset Accounting </li></ul>
  37. 38. The Challenge of Measuring HR <ul><li>Percentage of HR executives who… % </li></ul><ul><li>Believe ROI is their CEO’s most important metric: 53 </li></ul><ul><li>Say better aligning HR metrics to corp strat is top priority: 60 </li></ul><ul><li>Believe HR metrics spend will grow over the next 5 years: 84 </li></ul><ul><li>Measure the impact of HR activities to a great extent: 5 </li></ul><ul><li>Believe providing analytical tools is biggest challenge: 71 </li></ul><ul><li>Reported having a fully automated HR metrics system: 2 </li></ul><ul><li>Percentage whose system was not automated at all: 57 </li></ul><ul><li>Cited lack of technology infrastructure as a major challenge creating HR metrics: 50 </li></ul>
  38. 39. Metrics That Matter: Analytic Taxonomy Information Distribution Metrics Delivery (Dashboards) Contextual Embedded Analytics Correlated Analytics Predictive Modeling COMPLEXITY I M P A C T
  39. 40. TM Metrics that Matter: Recruitment Time to fill vacancy Acceptance per offer ratio Number of vacancies Turnover forecasting Workforce planning Cost of filling vacancy Recruiting Source Analysis Percent of internal fills Performance of hires Ratio of contacted to interviewed applicants COMPLEXITY I M P A C T
  40. 41. TM Metrics that Matter: Learning % employees trained Cost per training hour Number of training days/programs per yr Impact of learning on business results Learning forecasting Efficiency of training enrollment Learning Effectiveness Analysis % of ees w/ dev plans Performance of trained vs. untrained Trainee progress vs. dev plans Impact of learning on dept schedules/budget COMPLEXITY I M P A C T
  41. 42. TM Metrics that Matter: Performance % employees reviewed Perf. ratings distribution Number of reviews completed on-time Impact of perf mgmt on business results Perf Mgmt / Learning linkage Efficiency of perf mgmt process Pay for Performance Alignment % of ees unreviewed for > 2 yrs. Effectiveness of perf mgmt Perceived credibility of perf mgmt COMPLEXITY I M P A C T
  42. 44. Evolution of Workforce Analytics Greater Workforce Insight Today Where Are We Headed Collaborative <ul><li>Correlate people metrics with operational and financial metrics </li></ul><ul><li>Drive workforce engagement with relevant, contextual performance metrics </li></ul>Proactive <ul><li>On-demand Dashboard </li></ul><ul><li>Event-based problem identification & resolution </li></ul>Reactive <ul><li>Historical Reporting on headcount and movement </li></ul>Strategic <ul><li>Alignment of HR initiatives with Enterprise goals </li></ul><ul><li>Predictive Analytics </li></ul><ul><li>Demand planning </li></ul><ul><li>Workforce cost simulation </li></ul>
  43. 45. Final Asian Research
  44. 46. Talent Implications <ul><li>Within the next seven years, over 33 million individuals in Japan (26% of the population) are expected to be over 65 years old. </li></ul><ul><li>India is expected to have a shortfall of 150,000 IT engineers and 350,000 business process staff by 2010. </li></ul><ul><li>One-child restrictions in China have created a labor shortfall that will impact cheap labor in the region for years to come. </li></ul><ul><li>Current Bloomberg report states: “Globally, Singapore, Peru, India, Argentina, Australia, Japan and Hong Kong were top countries reporting strongest hiring prospects for the coming quarter. </li></ul><ul><li>Mercer 2006 survey states attraction and retention has been consistently highlighted as one of top three challenges facing organizations in Greater China. </li></ul><ul><li>Hudson survey for Q2 2007 shows employment expectations remain high for key business sectors in China, Hong Kong, Japan and Singapore </li></ul><ul><li>Work related stress is rising, with almost half of respondents in China, Hong Kong and Singapore saying that their company’s employees have experienced higher levels of stress over last year – China the highest. – Hudson survey </li></ul>
  45. 47. Policies to relieve and prevent work-related stress Source: The Hudson Report – April-June 2007 Review job description Work fewer hours Work/ life balance Learn add’l skills Eliminate non essential work Hire more staff No policy other China 14% 11% 17% 20% 10% 18% 7% 3% Hong Kong 11% 7% 19% 10% 9% 19% 12% 13% Japan 13% 11% 18% 13% 11% 21% 9% 4% Sing-apore 11% 5% 19% 12% 18% 17% 10% 8%
  46. 48. What makes a Best Employer in Asia? <ul><li>Effective and committed leadership. Best Employers display a more caring approach to people, and place great importance on ethics, integrity, and the creation of a working environment that nurtures learning. Leaders act as role models and are trustworthy. </li></ul><ul><li>Powerful leadership and talent strategy that is a key part of the company’s overall business strategy. Best Employers conduct robust performance and competency assessments leading to talent segmentation, and offer compelling development practices. </li></ul><ul><li>A high-performance workforce built through ensuring accountability for achieving results, valuing key staff, managing opportunity so the strongest performers are in key jobs. </li></ul><ul><li>Strategic HR functions that are structured in ways to deliver strong business results. Employees with Best Employers feel that HR is able to identify and implement HR strategies that are critical to meeting business needs. </li></ul><ul><li>Address customer needs as a way of building a sustainable business. They understand the link between engagement and customer satisfaction and use customer retention as a measure to manage the business and shareholder return. </li></ul>Hewitt – Best Employers 2007
  47. 49. Contact Information <ul><li>Row Henson </li></ul><ul><li>[email_address] </li></ul><ul><li>404/312-9221 </li></ul>

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