Smartsizing

Empowering Organizations to
Achieve Extraordinary Results

SmartSizing
The Employment Law
Conference
September 21, 2009

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

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


WHAT’S NEXT?


Deep Cuts for Today’s EPS

$
P
R
O
F
I
T
S

Today Future

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


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


What is your business scenario?

High Value Short Sale Foreclosure

Growth Decline


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


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


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?


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


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


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

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


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.

Build Business Strategy Consensus

Senior team review and approvals

Finalize plans and budgets

Develop rollout strategy and tactics

Deploy effective change management


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


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


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


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)


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


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?


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


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