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Smartsizing

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Learn about how to shape the organization structure, processess, and functions in line with the business strategy and realities of the business. HR becomes a strategic partner with the business leaders in driving bottom-line results.

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Smartsizing

  1. 1. Empowering Organizations to Achieve Extraordinary Results SmartSizing The Employment Law Conference September 21, 2009
  2. 2. Outline • What is the business scenario? • How can HR contribute to the bottom-line? • SmartSizing process • Tangible next steps Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  3. 3. Typical actions in a downturn Reduce all the discretionary expenses Contractors/consultants/temps Training T&E Advertising Search fees Capital spending Overtime Temporary actions hoping for market recovery • Bonuses • Promotions • Hiring freeze • Merits • Furloughs • Pay cuts • 401(k) match • Headcount reductions Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  4. 4. WHAT’S NEXT? Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  5. 5. Deep Cuts for Today’s EPS $ P R O F I T S Today Future Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  6. 6. SmartSizing The “tipping point” where actions taken preserve the company’s future potential Strategy and core competencies are preserved in your market space Key customer service levels are maintained Bold actions are taken instead of a series of minor actions over time Senior leaders are committed to the actions Employees fully understand and embrace the direction Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  7. 7. SmartSizing process Assess the business situation Ensure strategic alignment and executive commitment Challenge historic business mechanisms Build business strategy consensus Develop go-forward plans/Implement/Monitor Risk management Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  8. 8. What is your business scenario? High Value Short Sale Foreclosure Growth Decline Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  9. 9. Assess the business situation Key business metrics and cost drivers Current organization structure Employee concerns Business opportunities and risks Sacred cows Senior leadership competency Resources required Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  10. 10. Ensure Strategic Alignment Updated strategy and financial goals Senior leadership commitment levels Organization effectiveness criteria Must do’s at all costs Data requirements Project organization and staffing Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  11. 11. Challenge historic business mechanisms New and different processes and approaches What can you outsource, divest, consolidate, improve efficiencies, find alternative distribution channels, reduce layers, reduce costs, etc. while preserving the future potential? Review the organization structures Bring in external benchmarks for key functions, processes and the business Survey your customers – Value, Need, Satisfaction? Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  12. 12. Organization structure for targeted discussions VP There’s always a story! Administrative Assistant Director Director Director Director Research Production Quality Purchasing Supervisors Managers Managers Leads Managers Supervisors Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  13. 13. HR Functional Benchmarking HR Functional Ratios 2005 2006 2007 HR FTE ratio 89 89 94 Recruiting/staffing FTE ratio 463 441 543 Business Partner FTE ratio 941 974 1,016 HR leadership & strategy FTE 1,092 1,180 1,282 ratio Compensation FTE ratio 1,157 1,254 1,635 Benefits FTE ratio 879 771 746 HR spend per employee $1,400 $1,611 $1,610 Revenue per employee $284k $330k $355k Source: PwC Saratoga US Human Capital Effectiveness Report Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  14. 14. Sales Functional Benchmarking Industry Metric Current (2000 companies) Net New Business 23.4% 36.5% Forecast Acc. - Wins 60% 57% Quota per Rep $1.6m $0.92m Start-up Ramp 4 mos 6 mos Attrition - Sales Force 12.6% 29.7% Sales Rep to Manager 4.4 5.3 Reps > 100% Quota 40.5% 62% Average Deal Size 16k Bottom 42.1% Sales Channel Direct 87% 70% Indirect 13% 19% Telesales 0% 11% SG&A 27.3% 33.2% Sales to SE Ratio 2.2 n/a Average Sales Cycle 4 mos Top 10% Variable Compensation 53% 42% Targeted Comp to Plan 178K Top 40% Lead Generation Unknown 52% marketing Revenue/Quota Rep $1.1m $0.81m Attainment 69.5% 88.2% Source: CSO Insights 2009 Survey Results Copyright 2009 Revenue Governance
  15. 15. What’s in your line of sight for ROI? Base pay/merit Headcount Spans of control and layers Vendors and contracts Human capital metrics Annual and Long-Term incentives Benefits Promotions Learning HR administration HR service delivery Talent development Workforce planning Leadership development Succession planning Executive retreats Holiday functions Food subsidies Vacation carryover Executive compensation practices Perquisites Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  16. 16. 2010 plan design options - Impact MAXIMUM 1 – Increase Medical Contributions-low ABC Company Cost Savings 22 $385k 2 – Increase Medical Contributions- moderate 3 – Increase Medical Contributions - 6 $169k severe $148k 4 – Medical Plan Design Changes - low 3 21 $131k 5– Migrate PPO Participants to HMO/POS - moderate 6 – Medical Plan Single Option High 2 $81k Deductible - severe 7 – Medical Spousal Surcharge - low 20 $65k 8 – Medical Tobacco Surcharge - $51k moderate 4 $48k 12 9 – Increase Waiting Period New Hires - 9 $41k severe 1 $39k 10 – Increase Dental Contributions - low 5 $30k 11 – Increase Dental Contributions - $28k moderate 7 $26k 18 12 – Increase Dental Contributions – severe 8 $16k 13 – Life – Reduce Executive Benefit to 17 $14k that of All Other - low 11 $13k 14 –Reduce amount of life insurance to flat $50k – moderate 15 – Reduce amount of life insurance to 16 $7k 15 $7k flat $25k - severe 16 – LTD Employee Contribution 25% - low $4k 17 – LTD Employee Contribution 50% - 14 moderate MI IMUM 18 – LTD Voluntary Plan – severe ABC 13 $3k 10 $3k Company 19 - Vision Employee Contributions to 99% - low Cost Savings $1k 19 20 – 401(k) – Reduce Match to 50% 21 - 401 (k) Eliminate Match MI IMUM egative MAXIMUM egative 22 – Freeze salaries Employee Relations Impact Employee Relations Impact Copyright © 2009 The McCart Group. All rights reserved. Use, duplication, or sale of this illustration or data contained herein, is prohibited.
  17. 17. Build Business Strategy Consensus Senior team review and approvals Finalize plans and budgets Develop rollout strategy and tactics Deploy effective change management Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  18. 18. Develop Go-Forward Plan/Implement/Monitor Develop master plan that is led and coordinated across the functions and businesses Includes restructuring, strategic use of performance coaching, and outplacement Create oversight group to monitor progress Resource the project management function Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  19. 19. Risk Managment Most actions need to be scrutinized for unintended consequences and risk mitigation This mindset helps you with downsizing, terms and conditions, vendor management, severance agreements, etc. Use strategic outplacement services to help mitigate your risks and coaching to increase productivity The last thing you need are large penalties, poor PR, and employee ill-will in the community Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  20. 20. Risk Management – Strategic Outplacement New reality of planning and reaction to outplacement Helps mitigate your risks, productivity of remaining employees, and outgoing employee goodwill Prevents costly litigation Identify key employee issues and proactively address issues Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  21. 21. Risk Management - Coaching Right people in right seats Align organization goals with individual skills and expectations Increases productivity Prevents costly turnover at the top (6x to 9x annual compensation) Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  22. 22. Tangible steps to model the way Conduct a customer satisfaction and value survey Develop ways to replace talent pools as demand increases Scrutinize the big cost drivers and figure out how to improve efficiencies and drive costs out of the business – LEAN, Work-Out, etc. Help your customers deal with the problems – especially sales effectiveness Identify and deploy external benchmarks for the various functions – HR, IT, Marketing, Sales, etc. Every vendor and vendor contract reviewed for services, pricing, SLA’s, and bundling Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  23. 23. Starting Over Scenarios If you were given a clean slate and could re-design HR: What would you want to do? What does the business need? What does the business value today? What can the business afford? What are your big gaps? How can you transform? Who will lead the transformation? How will your stakeholders participate and provide feedback? How will you sell this internally? Copyright © 2009, Corporate Performance Strategies, All Rights Reserved
  24. 24. Contact Dave Brookmire with any comments: 404-593.5001 www.cpstrat.com dbrookmire@cpstrat.com Whit Blakley OI Partners/Career Management Resources 678-393-3330 www.cmresources.net whitb@cmresources.net Copyright © 2009, Corporate Performance Strategies, All Rights Reserved

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