MAHA Global and IPR: Do Actions Speak Louder Than Words?
Booz co: investing in talent for sustained growth
1. Perspective DeAnne Aguirre
Ashley Harshak
Laird Post
Sonia Storr
Investing in Talent
for Sustained Growth
A Capabilities-
Driven Approach
to People Strategy
2. Contact Information
Berlin Mumbai San Francisco
Carolin Oelschlegel Jai Sinha DeAnne Aguirre
Principal Partner Senior Partner
+49-30-88705-838 +91-22-6128-1102 +1-415-627-3330
carolin.oelschlegel@booz.com jai.sinha@booz.com deanne.aguirre@booz.com
Buenos Aires Munich Laird Post
Ariel Fleichman Christian Burger Senior Principal
Partner Senior Partner +1-415-281-4924
+54-11-4131-0432 +49-89-54525-546 laird.post@booz.com
ariel.fleichman@booz.com christian.burger@booz.com
Shanghai
DC New York Sarah Butler
Kristy Hull Reid Carpenter Partner
Principal Principal +86-21-2327-9800
+1-703-682-5764 +1-212-551-6389 sarah.butler@booz.com
kristy.hull@booz.com reid.carpenter@booz.com
Stockholm
London Rio de Janeiro Per-Ola Karlsson
Ashley Harshak Paolo Pigorini Senior Partner
Partner Partner +46-8-506-190-49
+44-20-7393-3405 +55-21-2237-8448 per-ola.karlsson@booz.com
ashley.harshak@booz.com
Rome Sydney
Sonia Storr Alessandro Gazzini Varya Davidson
Principal Partner Partner
+44-20-7393-3726 +39-06-69-20-73-1 +61-2-9321-2820
sonia.storr@booz.com alessandro.gazzini@booz.com varya.davidson@booz.com
Booz & Company
3. EXECUTIVE A company’s approach to talent is a core component of its
overall strategy. Yet too often, we find a disconnect between
SUMMARY
how companies define their strategy and how they shape
and invest in their workforce. This can be a costly mistake
during the best times, let alone in today’s strained economic
environment. Instead, senior leadership teams and human
resources executives should develop focused people strategies
that align with and support the foundation of their company’s
success: its capabilities system, the few things the company
does exceptionally well that distinguish it from competitors.
By following four steps, executives can identify, prioritize,
and develop the employee segments across the organization
that are critical to its long-term differentiation and success—
and in so doing, achieve sustained growth.
Booz & Company 1
4. THE PEOPLE All too often, however, companies
don’t consider their people strategies
programs, recruitment drives, and
reward packages.
STRATEGY in the proper context. For instance,
CHALLENGE when companies seek to grow, their
leaders must decide where to invest
There is a better way. Senior
leadership teams and HR executives
resources. And when they seek to can maximize the effects of their
reduce costs, they must decide where decisions on people and performance
to cut back. They tend to pursue by first asking what to focus on
these objectives by spreading invest- and strengthen—by determining
ments or clipping budgets across the few differentiating capabilities
Companies face a variety of chal- the board. Most leaders recognize that provide their company with
lenges in today’s economy: reducing the limitations of such approaches sustained competitive advantage—
costs, pursuing growth organically on corporate performance, and the before deciding if and where to
and via M&A, implementing new negative impact these approaches invest or cut. Such a capabilities-
business models, and expanding can have on their employees. But driven approach can measurably
geographically, among others. But in an effort to be fair, they treat all improve the chances of successfully
all the challenges have one thing in parts of the business the same, espe- meeting all kinds of strategic
common: People are at the heart of a cially with regard to their people- challenges, and of resolving the
successful response. People imagine related spending, including head people-related issues that invariably
change and they make it real. count, talent initiatives, training accompany them.
A capabilities-driven approach
can measurably improve the
chances of success.
2 Booz & Company
5. DEVELOPING Aligning a company’s people strategy
to its differentiating capabilities
anyone else. Each of these capabili-
ties is composed of skills, knowledge,
THE RIGHT system can be achieved by following behaviors, processes, structures, and
TALENT a four-step process (see Exhibit 1). technology. Sometimes, a company’s
existing capabilities determine its
1. Define the Capabilities System way to play; sometimes its chosen
A company must first know what way to play requires the development
it needs to do to succeed before of new capabilities.
it can identify who should do it.
When defining its identity in the There are many ways to play and
marketplace, senior leadership teams many more possible combinations
must ask themselves three core of capabilities that can support
questions: How do we create value them. The personal computer
for customers? What capabilities industry provides a typical example.
do we need to deliver this value Four of the biggest players in the
proposition? What will we sell, industry—Apple, Dell, Hewlett-
and to whom? Coherent companies
51% Packard (HP), and Lenovo—all THE THIRD BILLIO
51% purposefully ensure that their way Outputs different ways to play and
have
70
to play, capabilities system, and different Average Zone systems. Yet
capabilities
On the Path to Success
product and service portfolios36%
are each has At the Starting Gate
been very successful in South
36% 32% aligned (see Exhibit 2). the marketplaceRightits own way:
Taking the in Steps
60 Forging Their Own Path Brazil
Apple is an “experience provider”
Average China
The key to a coherent strategy is a that introduces market-changing
23%
he Capabilities System 23%
set of three to six mutually reinforc- products and services; Dell is a
ing and differentiating capabilities— 50“customizer” that leverages Tanzania 12%
13% customer
13% 12% Ar
things the company does better than
7% information and intelligence to offer
Chad
ential Employee Segments
7% Turkey
Sudan Morocco Jordan
40
India
Overall Unskilled Skilled Engineers HR/IT/F&A Sales Customer
Production Production Service U
sedUnskilled Value Propositions
Employee Skilled Engineers HR/IT/F&A Sales Customer Pakistan Syria
Production Production Service Saudi Arabia Egypt
Yemen
30
30 40 50
Inputs
nt the People Strategy
Guidelines:
Exhibit 1 Exhibit 2 11.0 million = Subheads
A Four-Step Approach The Capabilities-Driven Strategy in Subhead
aölkdfölka = Plain text /
Bullet point
How do we create value?
32.8% = numbers in
Way to 30.1% = just white t
1 Define the Capabilities System
Play 100 % colo
TABLE HEADINGS
2 Identify Critical Employee Segments
Right A4 format:
to Win - width for 3 columns: 169 mm = 6
- width for 2 columns: 111 mm = 4
3 Create Segment-Based Employee Value Propositions Capabilities Products
What System & Services What will
Letter format:
capabilities
- width for we sell? 167,64 mm =
3 columns:
do we
- width for 2 columns: 110,35 mm =
need?
4 Implement the People Strategy
Lines: 0,5 pt
Lines for legend: 0,5 pt dotted, bla
Source: Booz & Company Source: Booz & Company Note:
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Booz & Company 3
Approved Colors, Tints and Patt
RETAILING PER CATEGORY
N EUROPE Category
Market Size
6. tailored products and services; HP have a disproportionate ability to them. Investing in improving
is a “solutions provider” that sells create value and deliver competitive the performance of these critical
devices as integrated solutions, with advantage. segments can be a major lever in
a direct link between the device on a boosting organizational results. And
desk or in a pocket and the cloud of The goal is to align your people by identifying segments that are
services that support it; and Lenovo strategy with your company’s only required to be fit-for-purpose,
is a “value player” that competes on capabilities system, so that the right companies can also reduce head
price. people are in place to support the count and control costs in other
capabilities across functions. For ways without destroying value.
2. Identify Critical Employee example, Apple’s capabilities system Further, the monies saved can be
Segments requires people who have superior redirected in ways that make the
A company’s differentiating branding and design skills, whereas most difference in employee and
capabilities are almost always cross- Dell values people with sales and business performance.
functional, thus the people needed to marketing and forecasting skills (see TH
51% Outputs
execute them effectively will likely be Exhibit 3). For example, a major package
Average Zone
spread throughout the organization. shipping company was able to On the Path to Success
But by zeroing in on the capabilities Identifying critical employee reduce costs and grow stronger At the Starting Gate
36% Taking the Right Steps
32%
that will provide their company with segments and their required by segmenting its workforce and Forging Their Own Path
sustained competitive advantage, contribution to the company’s identifying which employee segmentsAverage Chin
HR executives can begin to identify differentiating capabilities system
23% were critical to delivering superlative
employee segments that support enables the company to determine service to its customers—one of its
differentiating capabilities. These where to direct their investments in differentiating capabilities. This Tanzania
are the people in the company who people, as well as where to reduce led to a number of insights. The
Morocco
India
Pakistan Syria
Saudi A
Yemen
40
Guidelines:
Exhibit 3 11.0 million =
Ways to Play in the Personal Computer Industry
aölkdfölka =
32.8% =
Apple Dell Hewlett-Packard Lenovo
Way to Play Way to Play Way to Play Way to Play 30.1% =
- Experience provider - Customizer - Solutions provider - Value player
Capabilities Capabilities Capabilities Capabilities TABLE HEADIN
- Provision of customer experience - Direct sales - Direct B2B sales - Cost management
A4 format:
- Brand management - Product customization - End-to-end product/service - Lean manufacturing - width for 3 colum
- Support and integration of - Automation and forecasting provision - Fast-follower innovation - width for 2 colum
external partners
Talent Needs Letter format:
Talent Needs Talent Needs
Talent Needs - width for 3 colum
- Direct sales and marketing skills - B2B sales and marketing skills - Financial management and - width for 2 colum
- Intuitive user interface modeling expertise
- Customized manufacturing/supply - Solution development and
development expertise - Lean Six Sigma skills
chain management expertise engineering skills
- Branding skills Lines: 0,5 pt
- Engineering and analytics skills - Acquisition expertise - Competitor and supplier Lines for legend: 0
- Application platform engineering intelligence
skills
Note:
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otherwise InDesig
file.
These colors can’t
Source: Booz & Company
Approved Colors
4 Booz & Company
7. company found, for instance, that understanding the strategic value 3. Create Segment-Based Employee
although its pilots were important, that each segment contributes to Value Propositions
additional investment in the segment the organization and optimizing A segment-based employee value
was not needed because they did not each according to that value. It is proposition needs to capture the
contribute a disproportional amount important for leadership to address essence of the relationship between
of value in terms of customer perceptions of inequality frankly, employer and employee, and articu-
service. Thus, there was little payoff openly communicate the business lates the expectations for each (see
in investing in developing better reasons for targeting specific Exhibit 4). A successful employee
pilots because it would not greatly segments for greater attention, value proposition meets the employ-
enhance the company’s competitive and be transparent about different er’s requirements while providing
advantage. On the other hand, the value propositions offered to other, the competitive advantage needed
company found that its delivery less critical employee groups. to attract and retain superior talent
drivers were a critical segment Employee segmentation is not about in the company’s most critical roles.
because they were customer facing. creating haves and have-nots: It is Such a value proposition is more
As a result, it invested in improving a conscious approach for optimizing than a job and the compensation that
51% Outputs
the customer service skills and investments in people by recognizing comes with it. It also encompasses
70
performance of its drivers, and which employee segments can the work environment, culture, Zone
Average
On the Path to Success
generated significant additional make the most difference in the career opportunities, and chance to Gate
At the Starting
Taking the Right Steps
revenue and profits by providing 36%
a company’s success. Of course, do meaningful work. Forging Their Own Path
32% 60
better customer experience. over time, companies’ strategies Average
may change, and the capabilities For example, a large U.K. financial
23%
When it comes to employee and employee segments needed to institution undertook a major
50
segments, fairness doesn’t support those capabilities must transformation effort in its contact
13% 12%
always mean equality. It means change with them. centers that identified team leaders
Chad
7%
Sudan Moro
40
Indi
Overall Unskilled Skilled Engineers HR/IT/F&A Sales Customer Pakistan Syr
Production Production Service Yemen
30
30 40
Exhibit 4
The Employee Value Proposition Guidelines
11.0 millio
aölkdfölka
- Compensation and benefits - Vision
- Performance management - Integrity and trust
32.8%
(including recognition) Reward & - Competency
Leadership
- Career development Recognition - Access and people management 30.1%
TABLE H
- Recruitment
- Employer brand equity Employee
Employer - Team performance
- Differentiation Value Role & Team A4 format:
Brand - Behaviors - width for
- Opportunity Proposition
- width for
Letter form
- width for
- width for
Social
Work
Responsibility &
- Social impact Environment - Job design
Purpose Lines: 0,5
- Corporate social responsibility - Challenge
Lines for le
- Community relations - Physical work
- Work/life balance
Note:
Please alw
otherwise
Source: Booz & Company file.
These colo
Approved
Booz & Company 5
8. as a critical employee segment 4. Implement the People Strategy for product managers in which it
given their role in developing Once employee value propositions enhanced their decision making by
and executing a strong service are created, the company needs to developing their cross-functional
capability. It developed a new value determine and execute the practical skills in manufacturing, engineering,
proposition for these employees, steps needed to bring them to life and marketing. Another company
which articulated the organizational and deliver on their promise of focused on recruiting talent
expectations of the team leaders attracting, developing, and retaining instead, and developed a strategic
and the organization’s commitment people in the segments critical to relationship, including an endowed
to develop and provide them with the company’s success. This requires professorial chair, with a single
rewarding careers. This included asking several key operational university that it identified as its best
specialized training in products, questions: source for engineering talent. A third
performance management, and company also focused on recruiting
customer service; new career paths • What is the optimal way to attract new talent, but chose to hire it
that encouraged experienced team the best talent in our most critical away from a competitor that was a
leaders to mentor and develop segments? good trainer of talent but did not
peers; and new opportunities, offer attractive career development
such as transfers to other contact • What is required from HR to opportunities.
centers and internal assignments deliver the tailored segment value
that were previously offered only to propositions? In each of these examples, HR
operational managers. played a leading role in marshaling
• How will the organization ensure the resources needed to deliver on
In designing the value propositions that it is achieving the outcomes the company’s people strategy and
for critical employee segments, articulated by the employee value enhance its people capabilities.
it is necessary to elicit employee propositions? And in each case, HR needed to
participation. Often there are understand the people priorities
disconnects between what employees The answers to these questions of the business in order to decide
value and what their employers think will vary widely by industry where to invest and not to invest,
they want (see “Case Study: A Global and company. For example, one and develop the skills the company
Pharmaceutical Company’s New Way manufacturing firm, whose product needed to effectively implement the
to Play”). Not only does involving managers were a critical employee solutions it proposed.
employees ensure the relevance of segment because of their role in
the proposition, but the act of giving ensuring a differentiating capability
people an opportunity to voice their in the innovative design and
views about what they want builds timely delivery of new products,
engagement and buy-in. established a unique talent model
In designing the value propositions
for critical employee segments,
it is necessary to elicit employee
participation.
6 Booz & Company
9. Case Study: A Global Pharmaceutical Company’s New Way to Play
Booz & Company recently worked with a global pharmaceutical company that
followed the process described earlier to refresh its people strategy in response to
changes in its corporate strategy. Like many others in the industry, the company’s
long heritage of producing blockbuster drugs eventually led to an overly complex
product portfolio and broad customer focus. In response, the senior leadership
team reexamined the company’s way to play and decided to focus its efforts on a
new more targeted strategy.
The leadership team identified three key capabilities already in place within
the company that were needed to support its new way to play: its expertise in
developing deep insights into patients’ needs and real world use of medicine,
entrepreneurship, and product development. By analyzing the people skills,
knowledge, and behaviors required to support these capabilities, the company
identified its critical employee segments—and one key area was medical affairs.
To energize and enable medical affairs to play its key role in the way to play,
the executive team defined and articulated a new set of expectations for the
segment’s members and, with the help of a series of focus groups made up of the
function’s staff, sought to identify the critical elements of the segment’s employee
value proposition. The results were surprising: Most notably, compensation was
found to be a lower priority than recognition and flexible working arrangements. It
was also discovered that the company’s brand image as an employer, which was
a significant factor in recruiting, was less important in retaining employees.
The redesigned employee value proposition was subsequently used to inform,
prioritize, and invest in HR activities. For instance, HR introduced a series of
programs for the medical affairs staff, including the following:
• Peer-to-peer manager coaching to encourage multidisciplinary teaming and
innovative thinking, including skill building and informal groups that share new
insights and experiences
• Targeted skill building to close gaps, including training to increase customer
insight capabilities and recruiting new talent with the required skills
• Exciting and challenging career paths and stretch roles designed to further
engage employees
• Professional community building to share experience and insights,
disseminating best practices and enhancing individual development
The close alignment of people strategy with the company’s differentiated
capabilities ensured that the organization focused its people efforts and
investments where they mattered most for business success. Many hundreds of
employees participated in pilots that helped improve awareness of expectations
and drove engagement in exploring new behaviors and skills. At a higher level,
management took greater ownership of people issues and the credibility of HR
was strengthened.
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10. CONCLUSION Creating effective people strategies
is a complex task that is often done
that demonstrates an employer’s
commitment to its critical segments
improperly, without clear connection and articulates what must be done to
to corporate strategy, causing ensure that both the employer’s and
sub-optimal business performance the employees’ needs are satisfied.
and inefficient use of resources. With that in place, business units
These outcomes can be avoided by and HR can prioritize their activities
aligning people and HR activities and gain maximum leverage from the
with the company’s way to play and company’s investment in people.
capabilities system. This process
ensures not only that people strategies A firm commitment to critical
and the investments associated with employee segments across functions
them are optimized, but that current on the part of the company and
gaps in critical people segments are its senior leaders is extremely
exposed. The benefits of such an important, but we must also
approach include a greater return acknowledge that strategic change
on investment, increased motivation is inevitable. When companies face
among employees who are essential new challenges, their ways to play
to the company’s success in the may require modification. Often,
marketplace, and, most important, this will also cause changes in
enhanced business performance. their capabilities systems—setting
off corresponding alterations in
Companies must ensure that the terms of which employee segments
people in each critical segment know are deemed critical; the skills,
exactly what is expected of them. behavior, and knowledge required
And because each segment typically of those employees and their value
has its own recruiting, development, propositions; and HR activity. Thus,
and retention considerations, it will distinctive capabilities are the key to
require a tailored value proposition to one of the great, ongoing challenges
attract, motivate, and retain people. in HR: creating a people strategy
This combination of expectations and that is coherent, and aligned with
benefits adds up to a de facto contract corporate strategy.
8 Booz & Company
11. About the Authors
DeAnne Aguirre is a senior Laird Post is a senior principal
partner with Booz & Company with Booz & Company based
based in San Francisco. She in San Francisco. He works
is an expert in talent effective- with global organizations in the
ness and leadership, and areas of talent management,
advises senior executives HR effectiveness, and sustain-
globally on people strategy able change.
and human capital.
Sonia Storr is a principal with
Ashley Harshak is a partner Booz & Company based in
with Booz & Company based London. She assists major
in London. He specializes organizations in achieving
in people capabilities and large-scale transformation
change management, helping through people capabilities,
global organizations tackle performance management,
their most pressing people and cultural change.
challenges.
Booz & Company 9
