This presentations to AAPA\'s Materials Management Conference looks at the state of SC in the aviation industry, It focuses on why talent management must become a core activity on a par with corporate finance and strategic planning. Talent must be managed rigorously and globally, with plans that look out to at least three to five years.

1. Building Asia’s
Supply Chain Leaders
Talent development is essential if supply
chain organizations are to cope with the
immense changes sweeping Asia.
5th AAPA Material’s Management Conference 2009
Torbjorn Karlsson
Managing Partner
Aerospace, Defense and Aviation Practice; Asia-Pacific
7 May 2009
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2. Agenda
Heidrick & Struggles
We help clients build high-performance leadership teams
Setting the scene
Supply Chain Change and the economic climate - Its effecting us all
Why Talent Management
There is a clear link between investment in strategic
talent management & leadership development
and financial performance
Talent Management Strategies
Driving Business Results through Talent
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3. Heidrick & Struggles’ Overview
Heidrick & Struggles’ Overview We Help Clients Build Winning Leadership Teams
• An international, premier provider of executive search and • Searches and services for Boards and CEOs
leadership consulting services, including talent management, • Searches and services supporting CEOs and the entire C-level
board composition, executive on-boarding, M&A effectiveness executive group
• 50+ years of industry experience and brand equity • Access to large, global candidate pool
• Global team of nearly 400 consultants working from more than • Focused knowledge of candidates in specific functions and
60 locations in principal cities of the world and emerging industries
markets
• A range of services to help them build and retain effective
• Pioneer in establishing industry practices, equity billing, and leadership teams
presence in China and other emerging markets
Global Presence Industry and Functional Search Practices
With over 60 locations and more than 1,500 employees around the Global Industry Practices
world, we have the resources and contacts necessary to conduct a
• Business & Professional • Life Sciences/Health Care
global, multinational, national, or local market search.
Services • Consumer
• Private Equity & Venture • Technology
Capital
• Financial Services
• Industrial
Global Functional Practices
• Board of Directors • Human Resources
• Chief Executive Officer • Legal
• Chief Information Officer • Research & Development
• Chief Marketing Officer • Supply Chain
• Financial Officers
Specialty & Local Practices
• Diversity Services • Interim Executives
• Education/Nonprofit • Middle East & North Africa
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4. Aerospace, Defense, and Aviation
From the board, to the CEO, to the top tiers of executives, we help clients build high-
performance leadership teams across this dynamic and complex sector, including
► Aerospace ► Fractional Ownership
► Defense ► Fixed-Base Operators
► Airlines ► Government Agencies & Armed Services
► Air Transport ► National Laboratories & FFRDC’s
► Aviation Services ► Industry Trade Associations
Our depth and breadth of knowledge and experience in these markets is unsurpassed. Our
major clients include many of the leading prime contractors who provide both military and
commercial aerospace products, both at the system and subsystem level.
We have also conducted dozens of highly successful searches for the leading information
technology consulting, hardware, and services companies for whom the defense market is
central.
For leading private equity investors who have acquired companies in the defense and aerospace
sector, we have helped recruit CEOs, new management teams, and corporate directors.
We have also worked with the world’s leading electronics, structures, and specialized
component providers to the airframe OEMs.
Experience
► In last 5 years close to 200 Executive Searches and Leadership Solutions
► More than 50% at C-/Board-Level
► Airline clients like ANZ, JetStar, Tiger, Qantas as well as suppliers such as EADS, Airbus,
BAe, Bell, Boeing, Honeywell, SRT, ST Aerospace etc.
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5. Agenda
Heidrick & Struggles
We help clients build high-performance leadership teams
Setting the scene
Supply Chain Change and the economic climate - Its effecting us all
Why Talent Management
There is a clear link between investment in strategic
talent management & leadership development
and financial performance
Talent Management Strategies
Driving Business Results through Talent
4

6. A sneaky suspicion
things are
changing……
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7. Accelerated need for change
SC in Asia Aviation Challenges
• Moving from low cost sourcing to local / • Next Generation Supply Chain – Shifting
regional demand management responsibilities to suppliers and OEM,
New Technology, improved planning &
forecasting
• Customer focus – need to understand
local demand / needs
• Challenging Cost – Focus on operational
aspects, outsourcing, inventory control
• Increased focus on financial
performance, especially cash flow
• Supplier Management – Supplier
reduction, focus on collaboration, supply
• Strategic coordinated sourcing as
chain integration
opposed to procurement – multi
site/multi-region
• Changing customers and partnering
needs - LCCs continue to grow in Asia,
is Long-haul low-cost coming?, is front-
end traffic under long-term assault?
AAPA members are not alone in their needs
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8. Recruiting & Leadership is a challenge today in the industry
• In the face of continued globalization and consolidation, respondents considered the human resource
shortage as their companies’ greatest challenge. 41% ranked a human resource shortage as their
top concern amongst possible challenges
• Looking at the impact of recruiting, the vast majority of respondents felt it was a significant or
moderate issue for the MRO industry in 2008
• It is expected to become an even more important issue just three years into the future, as evidenced
by a stated shift toward considering the issue more quot;significantquot; than “moderate” (68%/30%
significant/moderate in 2011 vs. 45%/50% significant/moderate in 2008)
• Over one-third (37%) of all MRO organizations do not believe their organization has the right
management in place to deal with expected growth and changes
• Independent MROs and OEM maintenance divisions have the most confidence in their leadership.
Airline maintenance departments have the least trust in their management (45%)
Challenge Ranking #1 #2 #3
Human resource shortage 41% 30% 13%
Qualified leadership shortage 31% 30% 20%
Adequate training 4% 18% 26%
Parts and materials / supply chain issues 9% 13% 22%
Marketing and business development 13% 10% 20%
Other 3% 1% 1%
Source: Heidrick & Struggles and TEAM SAI 2008 MRO survey
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9. Agenda
Heidrick & Struggles
We help clients build high-performance leadership teams
Setting the scene
Supply Chain Change and the economic climate - Its effecting us all
Why Talent Management
There is a clear link between investment in strategic
talent management & leadership development
and financial performance
Talent Management Strategies
Driving Business Results through Talent
8

10. There is a clear link between investment in strategic talent
management & leadership development and financial performance
Research done to determine correlation between investment in lean manufacturing, talent management
►
and performance management and financial performance
Government policy and industrial sector does influence productivity and financial strength BUT
►
management decisions have a greater impact. This hold true even when controlling for the firm’s country,
sector and skill levels
Talent management strategies generates improved sustainable operational, and financial performance. A
►
single point improvement in management practice score is associated with the same increase in output as
a:
• 25% increase in the labour force
• 65% increase in invested in capital
Additionally the research “ calculated” the % improvement across a range of key business
In overview the research showed that companies
metrics that a one point improvement in “management score” would generate
with stronger financial performance had higher
“management scores”
Index: management score before improvement = 100
Poor financial Good financial
Productivity (sales Market share Market
performance performance
per employee) growth capitalization2
2 0 Number of
19 53 26
100%=
companies Management score
100 100 100
before improvement
50 40 27
Management score
106 171 126
improved by 1 point1
100
Sales growth, % Return on capital employed (ROCE),%
Management score
5.6 8.7
before improvement
50 60 73
Management score
0 7.9 11.5
improved by 1 point1
1 2 3 4 5
1) On scale of 1 to 5, where 1 is low and 5 is high
Lowest Highest 2) Tobin’s Q ratio (market value of company ’s assets + their replacement value), assuming constant book value
Management Score
Sources: McKinsey on Operations: LSE and Stanford research project, Feb ‘06.
1) 5 year ROCE greater than sector average Management Practice & Productivity, why they Matter July ‘07
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11. Current Economic climate
• 97% of global executives say
accessing and retaining key talent is
important – and 72% say it is critical
• High performers are more likely to
job hunt actively – 47% compared to
18% for low-performing employees
• 74% of “survivor” employees say
their productivity declined after a
layoff
• 30% of companies retain knowledge
poorly or not at all when workers
leave
Sources: nGenera Corp, PricewaterhouseCoopers 12th Annual Global CEO Survey 2009;
Leadership IQ, 2006 and 2008; Institute for Corporate Productivity,
2009; Leading through Unprecedented Times, Mercer, 2009
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12. Agenda
Heidrick & Struggles
We help clients build high-performance leadership teams
Setting the scene
Supply Chain Change and the economic climate - Its effecting us all
Why Talent Management
There is a clear link between investment in strategic
talent management & leadership development
and financial performance
Talent Management Strategies
Driving Business Results through Talent
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13. H&S Approach - 4 Key Questions that create Value
What Leadership does our company need to succeed today & tomorrow?
Tailor a set of Competencies / Attributes for your unique business context (not a generic list).
• What are the key business priorities and challenges?
• What made us successful in the past?
• What will be required in the future?
What Leadership does our company have in place to day?
Early & transparent communication on the assessment purpose, process & output to participants.
• There are many different assessment methodologies depending on the time, budget and the competencies
being assessed.
• Critical to success is that the participants feel that the assessment process is a collaborative partnership with
the company & consultant. This is created through early & transparent communication on the process &
ensuring that the participants are the first to see their reports prior to the board.
How do I close gaps in a way that impacts business performance?
Do not stop at Assessment – Follow Up with Development linked to business results.
• Too often organization’s make significant investment in detailed assessments reports that lie on shelves &
do not translate into a sustainable shift in executive capabilities & performance. Either executives do not
buy-in to the feedback; or the assessment process does not provide sufficient follow-up.
• The desire to address development needs frequently gets overtaken by business priorities.
How do I keep the gaps closed (sustain momentum)?
Succession is not a ‘one-off’. Developing successors needs to be an internal practice.
• After the initial intensive assessment, it is important that internal practices & processes in are place and
integrated with its business & performance cycles to assess and review the progress made in addressing
key gaps / development needs
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14. Driving Business Results through Talent
Alignment of Business and Talent
Transitioning Succession Planning Leadership Pipeline
► Enable smooth transitions ► Role and needs definitions ► Identify and develop high
potentials
► Stay connected with ► Evaluation criteria
alumni and retired employees ► Leadership development and
► Develop, support, and coach
coaching
successors
► Sustaining the process
Identifying & Attracting Promotion & Rotation
► Workforce strategy ► Talent development process
► Differentiating the Company ► Link to succession planning
► Communicating the talent ► Clearly defined promotion
agenda and rotation criteria
► Building diversity ► Assessment, feedback, and
coaching
Talent
Recruiting & Hiring Engaging & Retaining
► Understanding talent needs ► Active communication
and sources ► Performance and career
► Executing business/talent management
plans ► Work/life balance issues
► Interviewing methods and ► Recognition and rewards
skills Continuous Learning &
► Leading people through
Onboarding & Integration
Development Experiences
► Managing the talent change
acquisition investment ► Pre-employment support ► Developing a learning mindset
► Managing expectations for the ► Learning to enable business
entry process execution, productivity and
efficiency
► First 90 days onboarding
► Competency and skills
► Planning and supporting mergers
development
and acquisitions
► Experience and relationship-based
learning
► Coaching, follow-through, and
support
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15. An Integrated Talent Management Framework –
setting the policy, standards and direction
Communication and Management of Change
Consequence
Management
Strategic Talent
Management
Career Management
Corporate
Governance Career Succession Talent Hiring Mobility and
Model Planning Planning Support Progression
Talent
Management
Feedback
Strategy Management of Potential
Potential
Talent Competencies’ Competencies’
Evaluation &
Strategic Segmentation Gap Analysis Development
Analysis
Competencies
Management of Performance
Strategic
Performance
Business Performance Salary Compensation
Evaluation
Indicators Evaluation Benchmark and Benefits
Model
(Company, BU,
Exec)
Talent Management Information System
© 2008 Heidrick & Struggles
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16. Case Study from Another Industry in Asia:
Leadership for Business Growth – Hindustan Lever
What Leadership is required for Success?
In 2002, HUL faced market and internal challenges which included:
► A slowdown in overall business growth
► Key business units missing KPI’s
► Being at threat of losing status as first choice for top talent and new MBAs
What are the Key Gaps?
Addressing and meeting the business needs demanded an insight to these emerging leadership issues:
► Autocratic styles contributing to lack of ownership and apathy towards goal achievement
► A ‘play it safe’ mentality generating an aversion to risk
► A diminishing commitment to development resulting in talent departure
► Insufficient emotional engagement resulting in a lack of trust, teamwork, accountability & creativity
How did we close Gap?
The “Developing Leadership Engagement” (DLE) program was designed and delivered across the business as both an immediate
intervention and a sustainable solution:
Catalyst Workshop Apply in the Workshop
Finale (1 day)
(4 months)
(4 days)
 Deep bench strength of coaches with  Performance presentation to Top
 Self Awareness (Mindset Change)
both business and development Team
 Focus on personal responsibility experience
 Deep debrief on learning and design
 Feedback rich environment  Benchmarked checkpoints to ensure of next phase of development
success
 Ownership of development needs
 End-to-end support from HR as a
 Coaching plan that ties development
to business results business partner
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17. Case Study (cont’d):
Leadership For Business Growth – Hindustan Lever
Outcomes of the DLE Program:
► A 100% growth in the business over the next five years
► Linking leadership behavior and actions to a development culture that supported the business objectives and ultimately contributed to the
succession of the Management Committee
► HUL regarded as the top choice for career development by Business Schools
Key Success Factors:
The key success factors of the program included:
► The explicit support of DLE from the CEO & Board
► Demonstrated results on real business issues that were a priority to management
► A commitment to growth and development that was integrated with performance through skilled coaching
“I firmly believe that DLE was the first breakthrough in getting the people in Business to acknowledge their
lack of leadership and began to empower themselves to lead. From 2004, the Business started doing well –
10% top-line and 15% bottom-line growth. Last year onwards, we are on a real roll – 20% growth quarter-
on-quarter and by next year we will have doubled the business in size since 2003. The new Management
Committee is mostly 40 years old and are the biggest symbols of the change in HUL.”
Leena Nair – Executive Director HR HUL
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18. “I firmly believe that DLE was the first breakthrough in getting the people in
Business to acknowledge their lack of leadership and began to empower
themselves to lead. From 2004, the Business started doing well – 10% top-
line and 15% bottom-line growth. Last year onwards, we are on a real roll –
20% growth quarter-on-quarter and by next year we will have doubled the
business in size since 2003. The new Management Committee is mostly 40
years old and are the biggest symbols of the change in HUL.”
Leena Nair – Executive Director HR HUL
Thank you!
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19. #20-01 Suntec Tower One
7 Temasek Boulevard
Singapore 038987
+65-6332 5001
tkarlsson@heidrick.com
www.heidrick.com
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