chapter6 us

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THETALENTPOWEREDORGANISATION

Truegeniusresidesinthecapacityforevaluationofuncertain,hazardous,andconflicting

information WinstonChurchill

Chapter6 EmbeddingandSustainingTalentPower

Intheprecedingchaptersweexplainedhoworganizationsthatbuilddistinctive

capabilitiesindefiningtalentneeds,discoveringsourcesoftalent,developingtalent

potential,anddeployingtalentintherightplaceattherighttimewilloutperform

competitors. Whenthesecapabilitiesarealignedwitheachotherandwithbusiness

strategyandwheninvestmentsineachareaaremeasuredandtracked,talentcan

multiplyandpoweryourorganizationtohighperformance.

Inthefirsthalfofthischapter,weexplaintheimportanceofunderstandingand

measuringhowtalentcontributestoyourorganizationsperformance. Experience

remindsusthatwhatgetsmeasuredgetsmanaged. Talentpoweredorganizations

measureinvestmentsintalentprocessesandcapabilitiestoensurethattheyare

defining,discovering,developinganddeployingtalentinwaysthatcreatevaluefor

themselves.. Wepresentarobustmeasurementframeworkthatcanfocusyour

organizationsenergiesandinvestmentsasyoubuildyourtalentpower.

Ofcourse,embeddingandsustainingtalentmultiplicationcapabilitiesisnotsimplyamatterofmeasurement.. Itrequiresrobustandintegratedprocessesthatsupportall

aspectsoftalentmanagementthroughouttheemployeelifecycle,anditrequires

completealignmentofmindsetsandeffortswithintheorganization.Talent

multiplicationhappensinthecourseofthedailybusinessoftheorganizationas

employeesengageintheirworkactivities,createandinnovatetogether,andinteract

withcustomersandclients. Forthisreason,everyoneinyourorganizationmustbe

involvedinmultiplyingtalentfromtopleaderstoHRtolinemanagerstoemployees.

Thereforethesecondpartofthischapterfocusesontheneedto:

maintainvisibleleadershipthatkeepsyourorganizationpermanentlyfocused

ontalentasitstoppriority

clearlyencourageandrewardlinemanagersfortheirperformanceinnurturing

talent,and

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ensurethatHRdepartmentsandtrainingorganizationsaremodernizedand

retainthecapabilitiestoactastheexpertadvisors,supporters,adjudicatorsand

enablersofdiscovering,developing,anddeployingtalentintheorganization.

Measuringtalentscontributiontoperformancethecurrentposition

Theneedforrobustmeasuresoftalentorhumancapitalisessentialtoallthe

stakeholdersofanenterprise. Topmanagementandleadershipmustunderstand

whereandhowinvestmentsarenecessaryinimprovingtheperformanceofthe

workforcetodrivegreaterbusinessvalue,anditisequallyessentialforeveryline

managertounderstandhowthecompetenciesoftheirteamslineupandhowwellthey

areperformingagainstspecificorganizationalobjectives. HRleadersneedadeep

understandingofgapsandneedsintalentacrosstheorganization,andwhereandhow

investmentsneedtobemade,andtheymustbeabletopresentthebusinesscasesforinvestmentsthattalkaboutvalueoutcomes,notjustpossiblecostsavingsinprocess

improvements. Outsideinvestorsorstakeholdersalsoneedmorevisibility. Aswe

exploredinearlierchapters,giventhecontributionofhumanandintellectualcapitalto

futurebusinessvalue,outsidestakeholdersneedsomebetterframeworksfor

assessment.

Measurementtodatehasgenerallyfocusedoncostsofhumanresourceadministration

activitiesorsomemeasuresofprocessefficiency. Thesearetheeasiestaspectsoftalent

managementto

measure,

and

are

well

supported

through

benchmarks

such

as

from

the

SaratogaInstitute.Costmetricsforpeoplerelatedprocessesareimportanttotrack,

especiallywheretheoperatingmodelforHRrequirescrosschargingofHRservicesto

businessunits,suchasthroughasharedservicesmodel,whichwewillreviewlaterin

thischapter.However,sincesomanyHRfunctionsstillworkwithfragmentedsystems,

processes,andcapabilities,itcanbechallengingsimplytogetreliablecostdata.

Intheend,costdataofthistypepointonlytoefficiencyofprocesses,andnotto

effectivenessorvalue. Sincecostsofhumanresourceadministrationactivitiesare

actuallyasmallcomponentofoverallorganizationalcosts(typicallyintherangeof13

percentofSG&Acosts)thenevenifadministrationactivitiesareveryefficient,theoverallsavingstotheorganizationissmall. Andifyouhaveefficientfirstquartilecost

benchmarkedrecruitmentprocesses,forexample,butthoseprocessesarenotgiving

youtherightpeople,thenthatefficiencyisvalueless.

Differentsurveysacrossmanyorganizationscontinuetoshowthatdespitethewide

recognitiontodayoftheimportanceofbusinessoutcomemeasuresrelatedtoworkforce

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investments,thereisasignificantlackofactualmeasurementoragreedframeworks.

Forexample,researchbytheCharteredManagementInstituteintheUKfoundthat

therewasawidedivergenceonwhatseniorexecutivesanddirectorsofUKcompanies

thoughtwasimportanttomeasure,andwhatwasactuallybeingmeasured:for

example,60percentofrespondentsthoughtsuccessionplanningimportant,butfewer

than10percentthoughttheywereeffectivelymeasuringit.Therewasasimilar

dichotomyon managerseffectivenessmappedagainstdepartmentalperformance(over

60percentthoughtthisimportanttomeasure,fewerthan10percentthoughtthey

wereachievingthis.1

OurownresearchinthisareasuggeststhatmeasurementofeffectivenessofHRand

trainingsupportorimpactofinvestmentsinpeopleonbusinessperformanceis

generallyunsatisfactory,althoughitisnowreceivingmuchmoreattention.Amongkey

findingofourHighPerformanceWorkforceStudy,previouslycited:

nearly40percentofrespondentssaidtheyhadnoformalmeasurestogauge

theimpactoftheirHR/trainingeffortsontheperformanceoftheirtopthree

workforces 39percentsaidtheyhavesuchmeasuresbutonlyforsomeHR

andtraininginitiatives

customersatisfaction&retention,employeeattraction&retention,and

employeeproductivityarethemostcommonoutcomebasedmetrics

59percentofrespondentssaidtheyusemargin/profitability

50percentuserevenues/sales.

Thestudyalsoseparatedoutwhatwetermedhumanperformanceleaders.Only9

percentofthesurveyedpopulationratedtheperformanceoftheirtopthreeworkforces

atthehighestlevel,ratingthem5outof5,andtheyratedtheperformanceoftheirHR

andtrainingfunctionshighly.Toillustratetheseleadersaccomplishmentsmorefully,

wecomparedtheirresponsesandexperienceswiththoseofrespondentsfrom

laggardcompanies,whichaccountfor54percentofouroverallsurveysample. We

definedlaggardsasthosecompaniesinwhichnoneofthethreetopworkforcesis

performingatthehighestlevel(ie,receivedaperformanceratingof5). Incomparing

thetwogroupsonthesubjectofmeasurement,35percentoftheleadershadformal

measuresofgaugingtheimpactofallHR/trainingsupportactivitiesversus19percentofthelaggards,and65percentoftheleadersusedmarginorprofitabilityasameasure

togaugethesuccessoftheHRfunctionssuccessversus56percentofthelaggards.

1See:Measuresofworkforcecapabilityforfutureperformance,CharteredManagementInstitute

supportedbyOracleandOxfordBrookesUniversity.

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Toplevelperformancemeasures

Atthehighestlevel,measuresoforganizationalperformanceforallbarpublicsector

organizationswillalwaysincludeprofitability. Giventherealitytodayofthehigh

proportionofvalueandmarketcapitalizationtiedupinintangibles,thenassociating

talentwithprofitabilitywouldseemtobeasensibletoplevelbusinessperformance

measure. Thesimplestmeasurewouldbeprofitperemployee. Totalprofitisinthe

endtheresultofthetotalnumberofemployeesandhowmuchprofitisattributableto

eachemployee,soitwouldbevaluablemakethesemeasuresvisibletocontributeto

greaterunderstandingoforganizationperformance.Althoughtheymaybedifficultto

compareacrossindustries,especiallyforthosethataremoreorlesscapitallyintensive,

suchmeasureswouldilluminatethekeypartofintangiblevaluewhichissuchalarge

constituentoftotalvalue,andhowitischanging. Alongsideothertraditionalmeasures

suchasreturnoninvestedcapital,itwouldprovidemoretotalinsightonperformance.

Organizationscanimproveprofitabilityandperformancebyinvestingmorecapital,or

increasingorreducingtheirinvestmentinandcostoflaborieinitssimplestformby

addingorsheddingstaff. Clearly,ifprofitabilityperemployeeisrisingthenthatwould

showgooduseoftalentineithercircumstance.

Accountingmeasureswillgivevisibilitytocapitalinvested,butascostoflabornow

accountsforsuchalargepartofthecostbase(forservicebasedcompaniesthesecosts

willbe

the

largest

single

cost

category

and

typically

will

be

of

the

order

of

60

per

cent

or

moreofthetotalcostbase),thenweshouldalsohavevisibilitytocostoflabor how

manyemployeesandhowmuchistheaveragecostperemployee. Otherbasic

measuresofthehealthofhumancapitalwithinabusinesswouldincludeattritionor

staffturnoverrates,absenteeismrates,engagementlevelsorfeedbackfromemployee

satisfactionsurveys,averagelengthofemployeeservice,andtotaltrainingdaysper

employeeandlevelsoftraininginvestmentasaproportionofemployeecosts.

Noneofthesetoplevelmeasuresaredifficulttoobtainforanyorganization,although

theyarerarelyreported. Wewouldadvocatethemasbasicmeasuresthatall

organizationsshouldtrackandifdoneconsistentlywouldprovidegreaterinsightonwhatisreallydrivingperformancetodayandexpectationsinthefuture,forall

stakeholders.

InthesamestudybytheUKCharteredManagementInstitutequotedearlier,their

surveysofwidesamplesoftopexecutivescameupwith5keyhumancapitalmeasures

seentobemostsignificantinimpactingfuturefinancialperformance. Thesewere

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consistentforbothUKbasedandinternationalcompanyexecutives. Themeasures

were:

leadership

staffmotivation

traininganddevelopment

performanceimprovement

payandrewardstructures.

Thesemeasuresarebroadlysimilartothebasicmeasuresofhumancapitaldescribed

above,withtheexceptionofleadership. Thereisnodoubtthatthisisacriticalmeasure

ofthehealthandfuturevalueofanorganization,butischallengingtomeasure

objectively. Thestudyproposedvariousmeasuresfocusingonaspectssuchastopteam

reputation,assessmentofpercentageofmanagerswithnecessaryleadershipcapability,

andpercentageofmanagersreadytoassumeagreaterrole.

Thereisnodoubtthatmoreandmoreorganizationsaretryingtomeasurekeyaspects

oftalentandlinkthesetoperformanceoutcomes,usingtheseaspartoftheirinternal

measurementorbalancedscorecards.

Forexample,anumberofyearsagoSears,RoebuckandCompanybuiltsome

sophisticatedstatisticalanalysestolinktalenttofinancialperformance. Sears,alarge

NorthAmericanretailer,mappedtherelationshipsbetweenhumancapitalpractices,

employeeattitudes,customerattitudesandbehaviors,andrevenue. Theysawexactly

howtheir

employees

attitudes

toward

the

job

and

the

company

drove

customer

service,whichinturninfluencedcustomerssatisfactionwiththeshoppingexperience

andthelikelihoodthatcustomerswouldrecommendSearstofriendsandfamilyasa

goodplacetoshop.2 Customerenthusiasmpromotedcustomeradvocacy,whichis

directlylinkedtorevenuegrowthandisakeydriverofprofitabilityatSears. Through

theirresearchandanalysistheyfoundthata5pointimprovementinemployee

attitudeswouldleadtoa1.3pointimprovementincustomersatisfactionthatproduced

ahalfpercentincreaseinrevenuegrowth.3 Investmentsinthespecifichumancapital

processesthatimprovedhowemployeesfeltabouttheirjobsandtheorganization

wouldincreasecustomerreferralsandenhancebusinessresults.

2 The Value of People: The challenges and opportunities of human capital measurement and reporting.The Conference Board, 2003 Research Quarterly, citing Becker, Huselid, & Ulrich. 2001. The HRScorecard: Linking People, Strategy, and Performance, p. 124. Boston: Harvard Business School Press.3 Huselid, M. A. 2005. The impact of human resource management practices on turnover, productivity,and corporate financial performance. Academy of Management Journal, 38: 635-672; The Value ofPeople: The challenges and opportunities of human capital measurement and reporting. TheConference Board, 2003 Research Quarterly.

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OtherorganizationssuchasRoyalBankofScotlandhavebuiltonthisideaalsofocusing

onestablishinglinkagebetweenimprovementinpeoplemeasures,suchasengagement

andemployeesatisfaction,andimprovementinsalesandcustomerservice. Theyare

oneoftheleadersinmeasurementofpeopleandrelationshiptobusinessperformance,

andasNeilRodentheGroupDirectorHR,saystheyaretryingtofurtherdevelopideas

thatcamefromorganizationssuchasSearsweretryingtotakethatonestepfurther

bysayingifyoucangetyourpeoplescoresupbyacertainfigure,thisiswhatitwilldo

toyourbusinessoutputmeasures.

SYSCOCorporation

SYSCOCorporation,isaUSbased$33billionFortune100globalfoodservicemarketer

anddistributor,with50,000employeesacross172operatingunits. Asexecutivevice

presidentandchiefadministrativeofficer,KenCarrig

makessureSYSCOshuman

capitalstrategysupportsthebusinessstrategy. MuchofthevalueSYSCOprovidesto

customersisafunctionofthestrongrelationshipsassociatesformwithcustomers.

SYSCOtrackskeyfinancial,operational,customer,andhumancapitalmetricsforallof

theirautonomousoperatingcompanies. Thethreecriticalhumancapitalmetricsare

workclimateandemployeesatisfaction,productivity(measuredasemployeesper

100,000casessold),andretention. Afterseveralyearsofmeasuringandanalyzingthese

keymetrics,SYSCOhasbeenabletolinkeffectivetalentmanagementpracticesto

businessresults.

4The

operating

companies

with

highly

satisfied

employees

had

higher

revenues,lowercosts,andsuperiorcustomerloyaltyandemployeeretention.5 Thisisa

causalrelationship,suchthatemployeesatisfactionleadstocustomersatisfactionwhich

driveslongtermprofitabilityandgrowth.6

SYSCOhasdemonstratedempiricallythateffectivetalentmanagementdrivesemployee

satisfactionandemployeeretention,sotheyroutinelymeasureandmanageseven

dimensionsoftheworkenvironmentthatarerelatedtoemployeesatisfaction:

leadershipsupport,frontlinesupervisor,rewards,qualityoflife,engagement,

4Cascio,WayneF.2005. Frombusinesspartnertodrivingbusinesssuccess:Thenextstepinthe

evolutionofHRmanagement.HumanResourceManagement,44(2):159163.5Cascio,WayneF. 2006. Theeconomicimpactofemployeebehaviorsonorganizationalperformance.InEdwardE.LawlerIIIandJamesOToole(Eds.),AmericaatWork: ChoicesandChallenges. New

York: PalgraveMacmillan.6Cascio,WayneF.2005. Frombusinesspartnertodrivingbusinesssuccess:Thenextstepinthe

evolutionofHRmanagement.HumanResourceManagement,44(2):159163.

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diversity,andcustomerfocus.7 Underperformingunitsareidentifiedandhelpedto

improve. Talentretentionimprovedfrom65percentto85percentin6years,and

savedthecompanynearly$50milliondollarsintheprocess.Measuringthereturnoninvestmentintalentdevelopment

Besidespayroll,thelargestinvestmentinpeopleisusuallyinlearningand

development. Measurementinthisarea,aswenotedinchapter4,isusuallylimitedto

inputmeasuresofthingsliketrainingattendanceandtrainingdaysprovided,orsoft

assessmentmeasuresofwhetherrecipientsoflearningenjoyedtheprogramorfeel

thatithassomehowhelpedthemintheirwork. Moreinsightfulmeasurementand

morevaluabletodecisionmakingwouldbemeasuresthatevaluatelearningasa

strategicinvestmentandlooktoestablishreturnoninvestment.

SinceAccentureinvestsheavilyinlearning,wesetaboutdevelopingarobustlearningROImodelbuiltonoutcomesforwhichgooddatacouldbefound.Theseelements

includerecruiting,retentionandperformance. Performancewasdefinedasper

personmarginandmeasuredasthepersonsbillratetimesthenumberofhoursbilled

minusthecostofthatemployeeoverthesametimeperiod. Perpersonmarginis

widelyacceptedinthefirm,andinsimilarservicescompaniesasameasureofpersonal

contributiontocompanyperformance. Asimpleconceptualmodelwasdevelopedas

showninFigure27.

7Cascio,WayneF. 2006. Theeconomicimpactofemployeebehaviorsonorganisationalperformance.InEdwardE.LawlerIIIandJamesOToole(Eds.),AmericaatWork: ChoicesandChallenges. New

York: PalgraveMacmillan.

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Figure27TheAccentureLearningROIModel

TrainingContribution

No training(Performance:Slope of lines =effect on speed tocompetency) Benefits of learning: The area under the

training line minus the area under the no-training line

Time with company(Retention: Length of lines = people stay with company longer)

TheYaxisofthemodel,contribution,canbedefinedintermsofwhateveractivityis

mostmeaningfultoacompanyandparticularworkforce. ForAccenture,the

contributionmeasurementistheperpersonmargin. TheXaxisrepresentsemployees

timewiththecompany. Thepresumptionhereisthatthelongertheemployeesare

withthecompany,themoretheycontribute. Basedonliteratureresearch,itisassumed

thatifthecompanyofferedtraining,thenpeoplewouldremainwiththecompany

longer,hencethelongerdottedlineversustheshortdashedlinewhichrepresentsno

training. Inaddition,thepeoplesspeedtocompetencyandcontributionwouldbe

fasterandhigherwhentheywereofferedtrainingasrepresentedbythehigherand

steeperslopeofthedottedlineversusthedashedline. Theoveralleffectoftrainingon

thebusinessshouldbetheareaunderthelineforthecompanythattrainsminusthe

areaofthatforthecompanythatdoesntprovidetraining.8

TheROIforAccenturewascalculatedasthenetbenefitoftrainingbasedonthe

assumptionsabovedividedbythenonpayrollcostsoftraining. Thefinalreturnon

investmentturnedouttobeanimpressive353percent.Thefirmcouldtakethis

numbertotheoutsideworldofinvestorsandsayconfidently: Investmentinhuman

8 This very robust model holds up to statistical analysis. The team used the total hours of trainingemployees had received as an independent variable. They controlled for factors that might confound therelationship, such as experience, inflation and business cycle. And they used per-person margin as theoutcome or dependent variable. This allowed them to calculate the effect of training on performancewhile controlling for factors that might cloud the picture

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capitalisimportant. Learninginvestmentsarenotjusttherightthingtodoforour

people. Theymakestrongfinancialsense.

Measuringprocesseffectivenesstheconceptofmaturity

Assessinghowwellanorganizationdevelopsandmanagesitshumancapitalassetsis

notaneasytask.Humancapitalprocessesareamongthesoftestprocessesinan

organization.Evenwhenahumancapitalprocessdoeshaveatangiblemetric

associatedwithitliketimetohireforrecruitingortrainingdollarsperemployee

forlearningthesemeasuresaddressonlytheefficiencyoftheprocess,ortheinput

costs.Theytelluslittleornothingatallabouttheeffectivenessoftheprocess how

welltheactivityiscarriedoutandhowreliablyitachievesitsintendedimpact.

Oneveryimportantcontributorofunderstandingaboutprocessesistheconceptof

maturity ameasureofrobustness,integrityandconsistencyinapplicationofthoseprocesses. Allorganizationswillsaythattheyhavethemajortalentmanagementand

developmentprocessesinplaceinsomeformperformancemanagement,succession

planning,rewardsandsoon. Therealquestionagainishoweffectivetheseare,and

whethertheyarewelldesigned,welldocumentedandunderstood(bothbythepeople

applyingthemaswellastherecipientsoremployees),consistentlyapplied,and

effectivelyintegratedwitheachother. Inotherwords,aretheprocesses

institutionalizedanddoestheorganizationhavethecommitmentandabilitytoperform

theprocessesconsistently? Ifitiscarryingoutperformancemanagement,arethe

meansby

which

people

are

being

assessed

visible,

fair

and

consistent;

do

the

results

clearlylinktorewards;canitalsolinkperformanceshortcomingstolearningand

developmentprograms? Integrationofthiskindisnecessaryforthemosteffectiveand

impactfulprocesses,anditneedstobeassessedconsistentlyagainstsomereliable

benchmarks.

Theconceptofprocessmaturityandmeasurementhasbeenwidelyappliedinthe

softwareindustryinparticular.ThepioneeringworkoftheSoftwareEngineering

InstituteatCarnegieMellonUniversityintheUSfromthelate1980screatedthe

CapabilityMaturityModel.Thishasbeenwidelyappliedandprovensoimportantin

helpingthesoftwareindustryarriveatstandardstodistinguishamongvendorsaccordingtothereliabilityandrepeatabilityofcoreprocessesassociatedwiththe

development,testingandreleaseofsoftware. ThedevelopersoftheCMMcarriedtheir

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workfurther,toincludewhattheyrefertoasthePeopleCapabilityMaturityModel(P

CMM)9 ,applyingthesamesortofthinkingtothematurityofpeopleprocesses.

PCMMisanapproachthatallowspeoplerelatedprocessestobeevaluatedagainsta5

pointmaturityscalethatrangesfrombasiclevel1tooptimizinglevel5,withmanaged,

definedandpredictableaslevels2through4. Eachmaturitylevelhasdefined

characteristicsforhowprocessesaredesignedandimplemented. ThePCMM

frameworkhasbeenmuchlesswidelyadoptedthanCMM,butinrecentyearsithas

hadsignificantapplication,especiallyintheaerospace,softwaredevelopmentandIT

servicesindustrieswhohadalreadyadoptedCMM. Ithasbeenusedandapplied

notablyinIndiawherethereissuchfastgrowthandfiercecompetitionfortalentinthe

ITServicesindustry. Mostofthemajorplayerstherehavegonethroughthe

certificationprocessandarerecognizedatlevel5. Tobelevel5youmusthavevery

mature,embeddedprocessesthatintegrateconsistently. Theprocessesassessed

throughthePCMMframeworkarecomprehensiveandinclude: staffing(includesrecruiting,selectionandplanning)

managingperformance

training

compensation

workenvironment

careerdevelopment

organizationalandindividualcompetence

mentoringandcoaching

teamand

culture

development.

PCMMpointstotheuseofcompetencyframeworksasacentralconstructinmature

andintegratedprocesses.. Evenatthelowerlevelsofmaturity,itisacommonthemeto

haveacompetencyframeworkwithabilitytoassesscompetencyandhaving

competencybasedpractices. PCMMalsohighlightstheimportanceofprocess

measurementasthemeanstoverifythatprocesseshavebeenperformedconsistently,

andreinforceaccountabilityfortheirexecution.

Level5certificationrequiresahighlevelofcapabilityinpeoplerelatedsupport

processes.ItsadoptionbyITservicescompaniesinIndiademonstratesthedegreeofsophisticationinpeoplemanagementtheyhavehadtodevelopinordertoattractand

retaintheirpeople. Assessedthisway,theseorganizationstodayhavesomeofthebest

talentmanagementcapabilitiesintheworld.

9 The Software Engineering Institute - The People Capability Maturity Model, by Bill Curtis, William E.Hefley, and Sally A. Miller (Addison-Welsey, 2002)

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However,whilstPCMMisapowerfulandthoroughapproachtomeasuringand

assessingtheunderlyingtalentdevelopmentandsupportprocesses,itdoesnot

measurethelinkagetobusinessperformanceandoutcomes.Itisassumedthathigh

levelsofmaturityinpeopleprocessesandpracticesimprovesoutcomes. However,Bill

Curtis,oneoftheoriginalauthorsofPCMM,hascarriedoutfurtherresearchover

severalyearsthroughlongitutidinalanalysesofdataatthesamecompanies.Hehas

beenabletoshowintheexamplesofsoftwaredevelopmentthathigherlevelsof

maturityofprocessesleadtosignificantreductionsindefectandreworkratesas

organizationsmaturefromthelowerlevelsuptolevel5,andsignificantimprovements

inprogrammingproductivity.Evidencefromourfirmalsoconfirmsthathighlevelsof

process maturitydoequatewithbetteremployeeretentionandengagement,andwe

areengagedonfurtherresearchinthisareaourselves.

Thekeylinkagethatweareseekingisbetweeninvestmentsinpeopleandpeopledevelopmentprocessesandbusinessoutcomesandperformance. Understandingthis

linkageiscrucialforimproveddecisionmakingandprioritizationsofhowtodrive

highperformanceinatalentpoweredorganization.

Measuringinvestmentsinhumancapitalfromprocessestoperformanceoutcomes

Itisessentialtoprovidegoodinformationtomanagersatalllevelsontheeffectiveness

ofthetalentmanagementorhumancapitalsupportprocessesandonhowinvestments

inpeople

are

resulting

in

useful

business

performance

outcomes.

It

is

afamiliar

concerntohearmanagerscomplainthattheyhaveallthesedatabutnoreal

intelligence. Youneedtomeasurewhatmattersbuttoknowwhatmattersyoumust

establishafirmconnectionbetweenbusinessororganizationalstrategyandhuman

capitalstrategyaswediscussedinchapter2. Otherwise,youwillmeasuretonoavail.

Inotherwords,youneedtohaveaclearsenseofhowtalentleadstovalue. Talent

poweredorganizationsunderstandhowtheirworkforcetalentandtheirhumancapital

capabilitiescontributetotheachievementofthefirmsstrategicobjectivesandcreate

valueforthefirm. Forthesehighperformers,itisimpossibletotalkabouthowthe

businessachievesitsobjectivesandcreatesvalueforstakeholderswithouttalkingabouttalentscontribution. AtSouthwestAirlines,theleadinglowcostairlineintheUnited

States,workforcecapabilitiesareessentialtoexecutingtheirlowcostoperationsand

highqualitycustomerservicestrategy. BusinessguruTomPetersoncedescribed

Southwestsformulaforsuccessinthisway: Cost,cost,cost,customers,customers,

customers,andpeople,people,people. Anythreeyearoldcanunderstandit. An

organizationsformulaforsuccessmustbepowerful,butitneednotbecomplicated.

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Anyapproachtomeasurementneedstolinktalenttovalue. Forexample,inFigure28

belowwedistinguishfourlevelsofmeasurementarrayedinacausalflow,verysimilar

tothestructurewedescribedinchapter2oflinkingbusinessstrategythroughtoHR

strategywhichcontrolsmanyoftheunderlyingprocessesoftalentmanagement. Atthe

topareanorganizationsstrategicobjectives.Thesecanbedepictedmanydifferent

ways:whatmattersisthattheyaremeasurable.

Directlybeneatharetheleversordriversofgreatestinfluenceinachievingthose

objectives;thesearecommonlyreferredtoasperformancedriversinthe

managementliterature. Theyarefewinnumberandvaryinimportancedependingon

themarketsinwhichagivenorganizationcompetes,egaccordingtoMichaelTreacy

andFredWiersema,authorsofthebusinessstandard,TheDisciplineofMarket

Leaders,mostbusinesseselecttocompeteonthebasisofproductleadership,

operationalexcellenceorcustomerintimacy. Eachbasisforcompetitionreliesonadifferentprioritizationofinnovation,productquality,productivity,andcustomer

satisfaction.

Beneaththeperformancedriversarethedistinctivecapabilities;thesearethehuman

andorganizationalcompetenciesthatmostdistinguishthecriticalelementsofsuccess

forthebusinessandforexamplemakeitpossibletobeinnovativeorproducehigh

levelsofqualityorratchetupproductivityorkeepcustomerssatisfied.

Finally,at

the

base

of

the

model

are

the

processes,

activities,

practices,

and

programmes

thatfuelthecreationofthosedistinctivecapabilities. Capabilitieslikecreativityand

engagementdonotcomeaboutoftheirownaccord;theyarethemselvestheproductof

enablingconditions,deliberatemanagerialeffort,androbustsupportingprocesses.

Successfulinnovationmaybeimpelledbyhigherlevelsofengagement,butasChapter

5hasjustshownengagementcannotbetakenforgrantedinthefirstplace.

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Figure28Strategicandunderlyingmeasurement

ProcessesProcesses

CapabilitiesCapabilities

Performance driversPerformance drivers

Strategic objectivesStrategic objectives

ProcessesProcesses

CapabilitiesCapabilities

Performance driversPerformance drivers

Strategic objectivesStrategic objectives

Framingtheissueinthiswayallowsyoutoworkyourwayfromtoptobottomorfrom

bottomtotop. Youcanstartwithstrategicobjectivesorfromanassessmentofthe

underlyingprocesses. Eitherway,thekeyistofocusonthepaththroughwhichvalue

iscreated,notmeasureelementsinisolation. Itisonlywiththisunderstandingofthe

linksbetweentalentmanagementandperformancethatorganizationscanmeasureand

investinprocessesandcapabilitiesthatwilldirectlyaffectwhetheritachievesits

strategicobjectives.

Aframeworkforprioritizingandmeasuringhumancapitalinvestments

Variousmodelshavetriedtomakethelinkagesfromunderlyingprocessestooutcomes,

oraswesawearlierinchapter5,linkagesbetweenparticularaspectsoftalentsuchas

engagementandoverallbusinessperformance. Mostofthesemodelsseektolinkfrom

basicHRtypemeasurestosomemeasuresofbusinessvalueoroutcomes,including

BassiandMcMurrersmodelofhumancapitaldynamics;BoudreauandRamstadsHC

BridgeFrameworkwhichlinksfromefficiencytoeffectivenessandimpact;Becker,

Huselid&UlrichsHRScorecard;Kaplan&Nortonsstrategymaps;andGallups7S

path

to

business

performance.

The

challenge

with

all

the

various

approaches

it

to

track

thecompletevaluechain,fromhumancapitalprocessestohumancapitalcapabilitiesto

keyperformancedriverstobusinessresults.

Overthelastfewyearsaframeworkhasbeendevelopedthatseekstotrackthefull

valuechaintoprovideabetterassessmentofhoweffectivelyanorganizationshuman

capitalprocessescreatevalue. Thisframework,calledtheHumanCapitalDevelopment

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Framework(HCDF)10drawsonbestpracticesinthefieldsofhumanresource

developmentandlearning,aswellasstateoftheartmeasurementtechniques.It

enablesanorganizationto:

determineitsstrengthsandweaknessesinthirteenkeyhumancapitalprocesses

prioritizeandtrackinvestments

targetthoseinterventionsmostlikelytohavethegreatestoverallimpactontheir

businessresults.

Theframeworkassesses,benchmarksanddeterminestherelationshipbetween

elementsinfourdistinctareas,shownastiersinFigure29:

Businessresults,orthefinancialmeasuresoforganizationalsuccess,suchas

capitalefficiency,revenuegrowth,returnoninvestedcapitalandtotalreturnto

shareholders.(Tier1) Keyperformancedrivers,ortheintermediateorganizationaloutcomes,suchas

customersatisfactionandinnovation,thataretypicallycapturedonabalanced

scorecard(Tier2)

Humancapitalcapabilities,orthemostimmediateandvisiblepeoplerelated

qualitiesthathumancapitalprocessesproducesuchasworkforceperformance,

employeeengagementorworkforceadaptability(Tier3)

Humancapitalprocesses,orthespecificpracticesandactivitiesorganizations

undertaketodeveloptheirhumancapitalassetssuchasperformanceappraisal,

workforceplanning

or

learning

management

(Tier

4)

10 Susan Cantrell, James M. Benton, Robert J. Thomas, Meredith Vey and Linda Kerzel. 2005. TheAccenture Human Capital Development Framework: Assessing, Measuring and Guiding Investments inHuman Capital to Achieve High Performance. Accenture Institute for High Performance Business WhitePaper.

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Figure29HumanCapitalDevelopmentFramework

Theseprocesseswerecarefullychosen,basedonpreviousresearchandourthinking

andexperiencesconcerningtheprogrammesandpracticesmostlikelytoaffect

workforceperformanceandbusinessresults.TheyincludenotonlycoreHRprocesses

suchasrecruiting,careerdevelopmentandcompetencymanagement,butbroader

humancapitalprocessesaswell,suchasworkplacedesign,learningandtraining,and

knowledgemanagement.TheFrameworkexplicitlyassessesthematurityofeach

processdrawingonsomeofthethinkingthatwasdevelopedthroughPCMMthe

extenttowhichitusesbestpractices;howwellitsupportsemployees;anditsreliability

andrepeatability.

Tier4measuresintheHCDFandthePCMMaresimilarinmanyrespectsandHCDF

usestheconstructofmaturityinassessingthehumancapitalprocesses,butwhatmakes

theHCDFdistinctiveisitsdirectlinkagetoorganizationalattributesandbusiness

outcomes.

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Matureprocessesarecapable,robust,worldclassintheiroperationandfinelytunedto

thebusinessmodeloftheorganizationthatemploysthem. Thisdistinctionis

important: matureprocessesprovidethegreatestbenefitwhentheyarealignedwith

thebusinessmodel. MaturityscoresinTier4resultfromthecombinationof

quantitativeandqualitativeinformationcollectedfromasurveysampleofhuman

resourceexecutivesandemployeeswhoanswerquestionsrelatedtothefollowingthree

dimensions:

1. Humancapitalbestpractices

Thedegreetowhichanorganizationincorporatesbestpracticesineachprocessarea

cantellusmuchabouttheeffectivenessoftheprocess.Bestpracticequestionsalso

servetoassessthecompletenessoftheunderlyingpracticesforeachprocessandthe

degreetowhichtechnologyandotherresourcesareusedtomaximumeffect.The

definitionofeachbestpracticerepresentsthecollectiveknowledgeandexpertiseofAccenturespecialistsandacademicresearchersastowhatconstituteshighlyeffective,

stateoftheartperformance.Samplebestpracticequestionsforthecareerdevelopment

processarelistedinTable5below.

Table5 SampleBestPracticeQuestionsfortheCareerDevelopmentProcess

Questions include the extent to which:

the organization provides employees with access to web-based tools (24 hours a day, 7 days a week)for:

o documenting career development plans and skill gapso identifying appropriate training

o recording and reviewing feedback

the organization provides employees and supervisors with access to web-based tools (24 hours a day, 7days a week) for viewing the career paths and associated job descriptions for all jobs in the organization

employees use feedback from others (i.e., multi-rater feedback) on their strengths and weaknesses asinput into their career development plans

employees have career development plans that describe such things as development activities (e.g., jobexperiences or training) and/or possible future roles

career counselors (i.e., supervisors or team leaders) review employees development plans, looking forsuch things as realistic career goals, development activities and timelines

employees meet with their career counselors to discuss their progress against their career developmentplans

17


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2. Executionandsupportoftheprocess

TheHumanCapitalDevelopmentFrameworkalsoadoptstheassessmentofmaturityof

processesasakeymeasureofeffectivenessandrobustnessofprocesses.Itincorporates

keyareasofassessment,includingtheextenttowhichanorganizationhas:

people(includinghumanresourcemanagers,supervisors,and/oremployees)

withtheskillsandabilitiesnecessarytosupportandusetheprocesses

clearlydefinedgoalsforeachprocessandmanagementsupportoftheirpursuit

clearandconsistentpoliciesforeachprocess

measurementandcontinualimprovementoftheprocesses.

3. Employeeuseoftheprocess

TheHCDFalsoseekstounderstandtheemployeeperspective.Dataobtainedfrom

employeesservetwopurposes:asacrosscheckforthereliabilityofthedataprovidedbyhumanresourceexecutives,andasanassessmentoftheeffectivenessoftheprocess

insupportingitsendusers.Samplequestionsaddressedtoemployeesforthecareer

developmentprocessinclude:

Towhatextentdoesyourorganizationscareerdevelopmentprocessprovide

youwiththetalentyouneedtomeetcurrentandfuturebusinessneeds?

Towhatextentdoyouhaveacareerdevelopmentplanthatprovidesyouwith

clearguidelinesforachievingyourcareergoals?

Thetooloffersorganizationsguidanceonwhichhumancapitalprocessestoinvestin

andenablesthemtobegintoevaluatethereturnontheirhumancapitalinvestments

ametricthatiscriticallyimportantyetlargelyunavailable.

Forexample,researchersusedtheHCDFtodeterminewhichhumancapitalcapabilities

andprocesseswouldneedtobeenhancedifanorganizationsoughttoimproveits

abilitytoinnovate(seeFigure30below) Fromdatacollectedinovertwodozen

applicationsoftheHCDF,researcherscouldshowthatthemostdirectpathto

improvedinnovationbeganwiththeeffectiveandmatureprocessesinrewardsand

compensation,employeerelations,workplacedesign,andknowledgemanagement.These,inturn,enhancedemployeeengagementandemployeeengagementturnsout

tohavethehighestcorrelationwiththeleveloforganizationalinnovation. TheHCDF

thereforesuggestedthatifanorganizationreallydependsoninnovation,itsbestbetsin

spendingmoneyonpeoplewouldbeonrewards,employeerelations,workplace

design,andknowledgemanagement.

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Figure30 Driversofengagementandinnovation

Employee Engagement

Key Performance Drivers

Human Capital Processes

Human Capital Capabilities

Tier 2

Tier 3

Tier 4




Tier 2

Tier 3

Tier 4

Number in bubble represents the correlation (r) with the element at the next tier

*r=.05 **r=.01

WorkplaceDesign

Rewards andRecognition

EmployeeRelations

KnowledgeManagement

WorkplaceDesign


EmployeeRelations

KnowledgeManagement

Employee Engagement

Innovation

.698**.698**

.63*.63* .72**.72** .61*.61*

.62*.62*

Employee Engagement




Tier 2

Tier 3

Tier 4




Tier 2

Tier 3

Tier 4

Number in bubble represents the correlation (r) with the element at the next tier

*r=.05 **r=.01

WorkplaceDesign


EmployeeRelations

KnowledgeManagement

WorkplaceDesign


EmployeeRelations

KnowledgeManagement

Employee Engagement

Innovation

.698**.698**

.63*.63* .72**.72** .61*.61*

.62*.62*

Thisframeworkhasimplementedwithorganizationsinavarietyofindustriesaround

theworld. Basedonagrowingdatabase,theframeworkhasestablishedempiricallinks

betweenspecifichumancapitalinvestmentsandbusinessresults. Itenables

organizationstodiagnosetheirstrengthsandweaknessesinkeyhumancapital

processes,benchmarktheirperformanceagainstothers,andtrackperformancechanges

overtime. Mostimportantly,theframeworkenablesexecutivestoassesstheircapacity

toachievesuperiorbusinessresultsthroughinvestmentsinhumancapital.

Casestudy:SAPAmericaandtheHCDF11

SAPAmerica,theNorthAmericasalesandservicesdivisionofenterprisesoftwaregiantSAP,embarkedonanewbusinessstrategyin2002inordertoturnaroundits

11 Susan Cantrell, James M. Benton, Terry Laudel, and Robert J. Thomas. 2006. Measuring the value ofhuman capital investments: the SAP case. Strategy & Leadership, 34(2): 43-52; Susan Cantrell, James M.Benton, Robert J. Thomas, Meredith Vey and Linda Kerzel. 2005. The Accenture Human CapitalDevelopment Framework: Assessing, Measuring and Guiding Investments in Human Capital to AchieveHigh Performance. Accenture Institute for High Performance Business White Paper.

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decliningrevenueandmarketshare. SAPAmericasfuturedependsonitsabilityto

deliverasteadystreamofinnovativesoftwareapplicationstoitscustomersandtotailor

themtotheirtargetedmarketsegments. Executivesthereforewantedtoensurethatthe

companyfocusedonthehumancapitalprocessesthatcouldhelpitinnovate. As

PresidentandCEOBillMcDermottputit,Thepeoplecomponentofexecutingour

strategywasbyfarthemostimportant. Ifwedidntgetthatpartright,wewouldnt

win. Andwewereinthisgametowin.

SAPwantedtosethumancapitalinvestmentprioritiesaccordingtotheirexpected

businessimpact. Inordertomakestrategicinvestments,SAPexecutivesneededtools

thatenabledthemtoevaluatetheimpactofabroadrangeofhumancapitalprocesses

andcapabilities. ThecompanyusedtheHCDFtogatherempirical,quantifiabledatato

informstrategicdecisionsonhumancapitalinvestments. Theframeworkresults

showedthatthecompanywouldbebestservedbyfocusinginvestmentsonalimited

setofhumancapitalprocesses: learningmanagement,humancapitalinfrastructure(egthefirmsHRprocesses)andsuccessionplanning. Thesethreeprocesseswere

identifiedasthosethatwouldhavethegreatestimpactonworkforceperformanceand

thusbusinessperformance.

SAPsubsequentlyinvestedin1)identifyingclearlearningandtrainingrequirements

foritsjobfamiliesandensuringthatmanagersworkmorewithemployeesascoaches

andmentorstodeveloplearningplans;2)improvingtheaccuracyanduserfriendliness

ofprocessesinvolvingpayroll,benefitsadministration,withanHRcallcentretoboost

employeesatisfaction

and

engagement;

and

3)

establishing

processes

to

give

managers

aclearerpictureofpeoplewhomightlaterqualifyforkeypositions,andtoensurethat

highpotentialindividualsreceiveddevelopmentplanstohelpthembuildtheirskills.

Oneyearintotheirturnaroundefforts,manyinitiativeswerepayingoffinimproved

processandcapabilityscores.

SAPssuccessrestedonthefactthattheHCDFprovidedalogicforhumancapital

investmentsandalanguageforcommunicatingthestrategicvalueofhumancapital

processes. AccordingtoSeniorVicePresidentofHumanResources,TerryLaudal,The

frameworkisimmenselyusefulbecauseitgivesussomethingtheHRcommunityis

generallylacking:acommonlanguageandvocabularyforwhatwedo. Itframeshumancapitalprocessesintermsofbusinessresults,providingaprofessionaltoolkit

forourHRteammemberstospeakwithbusinessexecutivesaboutthevalueofhuman

capitalinvestmentandthecontributiontothebottomline.

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Casestudy:SKMandhumancapital12

SinclairKnightMerz(SKM)isanAustraliancompanythatprovidesconsultingservices

insectors

including

the

environment,

infrastructure,

building

and

property,

and

power

andmining. Inthisindustry,companiescompetelargelyonthebasisoftheirpeople

specifically,theirknowledge,skillsandtheabilitytoprovideexcellentclientservice.

SKMwaslookingforwaystoincreaseitsabilitytomanageandgrowitsworkforce

capabilities. ThecompanyusedtheHumanCapitalDevelopmentFrameworkto

identifywaysofenhancingitshumancapitalcapabilities.

SKMshumancapitalprocesseswereamongthestrongesteveranalyzedusingthe

framework.However,theanalysisdidmorethanjustconfirmexistingstrengths.Italso

identifiedanumberofareaswherefurtherimprovementscouldgainthemvital

competitiveadvantagesinworkforceperformance.Forexample,althoughtheHRfunctionhadmanybestpracticesinplace,executivesweresurprisedtolearnhowfew

employeesinnonmanagerialrolesknewaboutthem.ThisfindingpromptedHRto

increaseitscommunicationtostaff.

TheframeworkresultshavealsopromptedSKMtoreviewitsmethodsofrecruitingtop

talentandputinplaceaninternalcapabilityinkeygeographies. Thisinitiativehas

beenimmediatelyeffective;ithasreducedtimetorecruitkeystaff,increasedthefirms

abilitytohandlelargerecruitingassignments,andsignificantlyincreasedthe

satisfactionof

managers

with

the

HR

recruiting

service.

ThetransformationandreorganizationofHR

TheHCDFandalltheothermeasurementtechniquescommonlyusedshowclearlythat

underpinningthevaluedriversofhumancapitalarethehumancapitalortalent

managementprocesses. Itisimpossibletodriveuptheperformanceofpeople

consistentlyifthebasicsupportprocessesareinconsistent,poorlyapplied,orpoorly

structuredandenabled.

MostoftheseprocessesaretheresponsibilityoftheHRfunction.However,aswe

indicatedinchapter2,HRistoooftenpoorlypositionedandlackinginsomeofthe

12 Susan Cantrell, James M. Benton, Robert J. Thomas, Meredith Vey and Linda Kerzel. 2005. TheAccenture Human Capital Development Framework: Assessing, Measuring and Guiding Investments inHuman Capital to Achieve High Performance. Accenture Institute for High Performance Business WhitePaper.

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capabilitiesthatareneededtooptimizetheseprocesses,andisthereforeunableto

understandandachievefocusedimprovementsleadingtorealtalentmultiplication.

TheHRfunctionhasbeenreceivingalotmoreattentionandinvestmentinthelastfew

yearsthanitprobablyeverdidinthepast. ItisHRsmomentinthespotlight.Leading

organizationseverywherelookingathowtosignificantlyimprovethecapabilitiesandvalueaddofthefunctionforallthereasonswehaveexploredthroughoutthisbook,

andmanyarewelldownthispath.

ManyglobalorganizationsareintheprocessofscalinguptheirHRcapabilitiesand

seekingtomanagetheirpeopleconsistentlyacrossallpartsoftheirorganization. Itis

partoftheessenceofatrulyglobalbusiness,orindeedanybusinessthatrunsacross

differentlocationsandorganizationalentities,tomanageanddevelopitspeople

throughconsistentandprovenpracticesandprocesses. Visibilitytothetotalworkforce,

mobilityofpeoplearoundorganizations,andthefocusondistinctivecompetenciesand

criticalworkforces,allrequirethis.

Wealsodescribedinchapter2theevolutionaryjourneyofHRandtheorganizationsit

supports,andcomparedthistothejourneyfrequentlyundertakenbythequalityandIT

functions. Thejourneybeginswithimprovingthecapabilitiesandfocusofattention

fromadministrationandcontrol,ultimatelytovalueaddingandenablingoftalent

multiplication.

However,HRhasoftenfoundithardtoshiftitsfocusofattentionandcapabilityfrom

administration.HR

still

tends

to

concentrate

on

transactional

and

administrative

activitiespayrollandpersonneladministrationandrecordkeeping. AsJacFitzEnzof

theSaratogaInstitute,theHRbenchmarkingorganization,saidin2000 Only10per

centofcurrentHRcontributionsaddvalue.Theother90percentistransactional

nonsense.

Workingwith awiderangeofHRorganizations,ourownresearchhasshownthat

evenwhereHRhasorganizeditselftosplitouttherolesofmorespecialistHR

personneltofocusonmorestrategicactivities,itstillspendsmostofitstime

administrativeortransactionaltypesofactivity.ThisisshowninFigure31below,

basedonawiderangeofactivityanalysisdatafrommanydifferentorganizations.

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Figure31HRactivityanalysis

0

10

20

30

40

50

60

70

80

Administrative Generalist Specialist

Administrative Execution Strategic

Type of Role: Work Type

% ofTime Spent

0

10

20

30

40

50

60

70

80

Administrative Generalist Specialist

Administrative Execution Strategic

Type of Role: Work Type

% ofTime Spent

Althoughitmaybetransactional,ofcourse,thisworkhastogetdone. Theissueishow

tobestdothisworktoensurethatitisdoneasefficientlyaspossibleandinafocused

partoftheorganization.

ThekeypillarsofefficientandeffectiveHRcapability

MosttransformationsandreorganizationsofHRhaveincludedanumberofcommon

elements. Aswehaveseen,aprimarygoalistofocustransactionalactivitiesandto

improvethevalueaddofHR. Welookatfourbasicbuildingblocksorpillars:

harmonizedprocessesandpolicies consolidationofprocessesandpolicies

toconsistentformatsandapproachesleadingtomoreconsistentmanagement

ofpeople

integratedHRsystemsandinformationconsolidateddatabaseof

informationprovidingonetruthforHRinformation,andintegratedsystems

tosupportintegratedprocesses.

sharedservicesconsolidationofadministrativeandtransactionalactivities

intoacommonorsharedservicestructurethatsupportstherestofHRacross

thebusiness,supportedbyanintegratedservicemanagementmeasurement

framework

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focusedandimprovedcapabilitiesandgovernancetheactivitiesofHR

havetobebrokenoutandorganizedtospecificareasofcapabilitytoensure

focus,beginningwiththesharedservicepiece. GovernanceofHRisalso

vitalinensuringadequateoversightandappropriatemanagementofallparts

ofHRacrosstheorganization.

Theseareasaretoalargeextentinterdependentitishardtohavegoodshared

servicesforexample,unlesstheprocessesandpoliciesareharmonized,andlikewiseit

ishardtoreorganizeHRtoprovidemorefocuswithoutthesetwoaspectscoordinating.

EachareaisworthsomefurtherexplorationgiventheimportanceoftheHRfunctionto

enablingaproperlytalentpoweredorganization.

Harmonization

of

processes

and

policies

HRrelatedprocessesandpolicies,inallbutthemostcentrallymanagedorganizations,

haveevolvedasthebusinessitselfhasevolved. Whenneworganizationalentitiescame

intobeing,orpartsoforganizationsweredevolvedoracquired,thepeople

managementprocessestendedtocomeorgowiththem.Theythereforegrewupin

manydifferentways,withdifferentstandardsandpoliciesthatreflectedmanagements

viewsatthetime. Organisationsoftenhavemanydifferentpayschemes,performance

managementprocesses,recruitmentprocessesandchannels,rewardprograms,and

others. Thismakesitdifficulttocompare,measure,andprovideconsistencyofbest

practiceto

managing

the

talent

across

the

organization.

Gettingmorealignmentonprocessesandpoliciesisessentialforconsistencyand

efficiency,buttheevolutionoftheseprocessesoftenmakesitdifficulttoachieve

agreementonthis.HRisoneofthefewfunctionsonwhicheverylinemanagerand

businessleaderislikelytohaveanopinion. Manyleadersacrossthedifferentpartsof

organizationsrelishtheelementsofempowermenttheyhave,andtheirabilityto

managetheirpartofthebusinessastheyseefit,andthisisusuallytrueintheirthinking

aboutpeople. Thecommonrefrainofyoudontunderstandweredifferenthas

beenheardthousandsoftimesasorganizationsseektogetmoreconsistency,yetinthe

areaofHRorpeopleprocesses,goodprocessesarenotonlyconsistent,buttheyareabletoflexwheretheyneedtosupportwhattrulyneedstobedifferentorlocalized. Bring

togetherthecommonelements,executetheminacommonway,andallowforvariation

whereitisreallyneeded.

Sothemanagementofsalespeople,theirrewardandcompensationprogramsetc,will

bedifferentfromthatrequiredforthepeopleoperatingmachineryonthefactoryfloor,

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buttheadministrationoftheseactivitiescanbedonetogether,allowingthebestpeople

tosupportbothofthesegroupsofemployeesinaconsistentway.

However,tomakethishappenrequirescompromiseandunderstandingofthe

organizationsambitionsforthecommongood. Objectivessuchastheabilitytotakea

consistentviewofpeopleacrossthebusiness,consistentassessmentofskillsandcompetencies,andconsistentmeasurementanddata,aremucheasiertoachieveif

processesandpoliciesarestandardized.

BestpracticeprocesseshavebeenwelldocumentedPCMM,forexampleprovidesa

viewofhowpracticesandprocessesshouldalignandbeimplemented,andotherbest

practiceprocessmodelsdescribeefficientworkflowsandprocessstepsforeachofthe

coreHRfunctions. Weusetheseextensivelytoprovideabaselineagainstwhichto

compareexistingpracticesandthisisusuallyabetterstartpointthanarguingover

whichparticularversionofthevariousexistingprocessesacrosstheorganizationisa

best.

Bestpracticeprocessreengineeringisnowalsowellunderstoodandshouldbeapplied

thingssuchashavingprocessowners(whichwewillcomebacktoinconsideringHR

organization),processmeasures,processdocumentationandtraining,andgood

structureandworkflow. Measurementofprocessesshouldincludetheconceptsof

maturitywediscussed howconsistentlytheyarebeingexecuted,howwellintegrated

theyareaswellaswhethertheyaremeetingefficiencyandcosttargets.

SinceHRprocessesofteninvolvedifferentpeopleatdifferenttimes,workflowand

understandingprocessintegrationisessential. Wehavenotedbeforethatintegratingthekeytalentprocessesisanessentialpartoftalentmultiplication. Employeesneedto

seeandunderstandhowtheprocessofobjectivesettinglinkstoperformance

managementandhowthatconnectstorewards,andwhereandhowtheythenneedto

focusonlearninganddevelopmenttoimprovetheirperformance. Theyalsoneedto

understandhowtheircareersaredevelopingandhowperformanceassessment,skills

andcompetencyneeds,andopportunitiestolearnthenewskillstheyrequirefornew

rolescanbestbeachieved. Skillsandcompetencyframeworksthatunderpinthis

integrationareessentialinprovidingacommonlanguageandcontext.

Thesearecrucialconnections,buttheyhappenalltoorarelytoday.Inmanyofthe

organizationswehavestudiedconcernordissatisfactionwiththeirpeoplearisesmost

significantlywhenthevisibilityacrosstheseprocessesisnotclear.Aswenotedin

earlierchapters,clearperformancefeedbackandrecognitionofdevelopmentalneeds,

togetherwiththesupportthattheorganizationcanprovide,arebecomingevermore

importanttothenewgenerationsofworkers.

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IntegratedandcommonHRsystems

HRhasrarelyreceivedgoodinvestmentinsystemsanditoftenmissedoutonthewave

ofenterprisemanagementsystemsthatfirstsweptthroughorganizationsinthe1990s.

HRitselfwasusuallyunabletoarticulatetheneed,andsincethefunctionsitsoutside

themainstreamprocessesofabusinessfromdevelopingcustomerstomanaging

suppliers,ithasgenerallyacquiredalegacyofpoorlyintegratedandfragmented

systems.

Thisisreflectedinthemultiplicityofspreadsheetsandlocaldatabasesthathavegrown

upinsupportoflocalmanagementneedortoplugthegapsofthepoorinformation

and

functional

support

provided

by

the

various

HR

systems.

Without

proper

systems

support,notonlyaretheprocessesdescribedearlierpoorlysupportedandinefficient,

butthedataorinformationneededtounderstandtalentandvaluearemissing.

Withoutdata,HRcredibilitywithbusinessleadershipiscompromisedandweakened.

Today,themajorenterprisesystemorERPvendorsdominatedbySAP,

Oracle/PeoplesofthavebroadbasedandflexibleHRsystemsplatformsthathavebeen

implementedineverytypeofbusiness. Theyincorporatemanyofthebestpractice

processesinHR,andprovideofftheshelfintegrationacrosstheseprocesses,andinto

othersystemssuchasfinance.

ThesalesofthesesystemsareacceleratingasorganizationsconsolidatetheirHR

processesandlookformoreintegratedHRsystemsplatforms. Thereismuchinterest

andinvestmentintheHRsystemsmarketplace,andtherearealsomanynichesolution

providers,providingricherfunctionalityinparticularthehighervalueHRprocesses

suchasrecruitmentandresourcing,performancemanagementandlearning.

Consolidationishappeningandwillcontinueasthismarketmatures.IDC,Gartnerand

otheranalystsallseegrowthinthesemarketsof810percentormoreperyearforsome

timetocome,andinsomeregionsoftheworldthegrowthrateissignificantlyhigheras

organizationsseektocatchup.

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Figure32depictionofintegratedHRsystems

Oracle Web Employees

Work-forceAdm.

IR Comp.

HRMS Intelligence

RewardRe-

sourc.

HRMS

Learning Mgmt Case MgmtKnowledge

Base

ExternalInterfac

es

For example: Payslips Applicant Packs Offer Letters Total Reward

Statement

Accessedvia

SelfServiceandProfessionalGU

I

Management and Operational Reporting (Sample)

ServicePerformance

Headcount/FTE Salary Spread

PerformanceSpread

Training Enrolments Training

Effectiveness Training Delivery

Number of Applicants

Electronic DataRecord Mgmt

PrintingService

HR and Service Centre Systems

Number ofLeavers

Types of Absence Time at level

Time to Recruit

EAI & Workflow

Applicants

Vendors

External

Contact Centre

HR Advisors

TransactionSupport

HR ServiceDelivery

Employees

Managers

Clients

Case WorkersPayroll

ExternalLettersandForm

s

For example: Time &

Attendance Finance

Active Directory

Banks

Oracle Web Employees

Work-forceAdm.

IR Comp.

HRMS Intelligence

RewardRe-

sourc.

HRMS

Learning Mgmt Case MgmtKnowledge

Base

ExternalInterfac

es

For example: Payslips Applicant Packs Offer Letters Total Reward

Statement

Accessedvia

SelfServiceandProfessionalGU

I

Management and Operational Reporting (Sample)

ServicePerformance

Headcount/FTE Salary Spread

PerformanceSpread

Training Enrolments Training

Effectiveness Training Delivery

Number of Applicants

Electronic DataRecord Mgmt

PrintingService

HR and Service Centre Systems

Number ofLeavers

Types of Absence Time at level

Time to Recruit

EAI & Workflow

Applicants

Vendors

External

Contact Centre

HR Advisors

TransactionSupport

HR ServiceDelivery

Employees

Managers

Clients

Case WorkersPayroll

ExternalLettersandForm

s

For example: Time &

Attendance Finance

Active Directory

Banks

OneareaofmodernHRsystemsisprovidingbetterenablementoftalentprocessesand

integrationacross

organizations.

It

is

generally

titled

eHR

amoniker

for

eenabled

HR. SincemanyHRprocessesdirectlyengagepeopleandmanagers,itmakesmuch

sensetoprovidemoreabilityforthemeithertoperformdirectlypartsofthose

processesortoaccessdirectlyandmoreeasilyinformationthatisrelevanttothose

processes. Socalledselfservicehasemergedinmanyorganizationsasaresponse,

butalsoasameanstodrivegreaterefficiencies. Forexample,ratherthanemployees

havingtosendanoteormakeacalltosomeoneinHRtoupdatepersonaldetailssuch

asaddresschangesorbankaccountdetails,theycandoitthemselvesdirectlyintothe

system. Thisassuresthemthatthedetailshaveactuallybeenrecordedandallowsthem

tocheckcurrentinformation,butalsoremovesasimpleadministrativetaskfromHR.

SelfserviceandeenabledHRprocessesneedtobewelldesignedtoensureeaseofuse

fortherangeoflikelyusers,andtheirimplementationanduptakeneedtobeproperly

communicated. Theymustalsobesupportedbywelldesignedandconsistent

processes,andtheirassimilationintotheorganizationcarefullymanaged.Users,

whetherlinemanagers,employeesoroutsiders,havetoseeandunderstandthevalue

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ofsuchprocessestoovercomethenaturalresistancetousingthemandthebeliefthat

theyareameanstoreducecostforHRbutaddtaskstoeveryoneelse.

HRsharedservices

Theidea

of

shared

services

for

support

functions

is

far

from

new,

and

many

organizationshavesharedservicesinsomeform,typicallyaspartoffinance,

procurement,andITfunctions,aswellasHR. Whenexecutedwell,sharedservices

provideconsistentsupportandcapabilityinadministrativeandtransactionalprocesses

inacostefficientwaytotherestoftheorganization.

Theconceptisessentiallytobringtogetherasfaraspossiblecommonactivitiesintoone

placetoexecutethemconsistentlyandefficiently. Theactivitieswhichcanmostbenefit

fromthisarethemoreadministrativeandtransactionaltasksfrompayrollrelated

processes,topersonneldatamanagementandtheadministrationofhighervalue

functionssuchaslearningandresourcing. Moreover,muchHRinformationandquerysupportcanbeprovidedfromasharedservicecentresuchasinformationonHR

policiesandprocedures,andstandardHRreporting.

ConnectiontotherestoftheHRfunctionandthemanagersandemployeesisthen

providedthroughacontactcentre,orthroughselfservicetechnologies. SincetheHR

processeswillneedtoworkacrossthesharedservicecentreandtherestofthe

organization,thereneedstobeworkflowtypetechnologythatfacilitatesthepassingof

casework,forexamplefromthelineHRorganizationtothesharedservicecentre.

Wellrun

shared

service

centers

filter

the

work

coming

in

to

the

centre

to

ensure

that

it

isprocessedefficientlyandeffectively. ThemoreexperiencedHRpersonnelinthe

centrewillbeassignedthemorecomplexcasework,whereasbasicqueriesor

administrativeactivitiescanbedonebylesstrainedorlessskilledstaff. Effectiveuseof

selfservicecanalsofilteroutmanyminoractivitiesfromthecentre.

Organisationswithmultiplelocationsandacrossmultiplegeographiesinevitablyhave

toconsiderhowmanysharedservicecenterstheyshouldhaveandwheretolocate

them. Inthelastfewyearstherehasbeenacleartendencytoconsolidateintoasmall

numberofcentersessentiallydeterminedbyconsiderationssuchaslanguagesupport

andtimezones. AsmoreandmorebignameorganizationslikeP&G,BT,Unilever,IBM haveforgedapathinmovingthesecenterstolowcostlocationsacrosstheworld

suchasIndia,confidenceandcapabilitieshaveincreasedtoallowradicalrestructuring

ofHRsupportinthisway. Costhaspromptedfurtherconsolidationandlocationof

centerstolowcostcountries:thecostsavingscanbeveryconsiderable,atleast20to30

percentoncurrentoperationsformostbusinesses.

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However,theseprogramsofchangearenotforthefaintheartedandrequiresignificant

effortandinvestmenttomakethemhappensuccessfully.Givenalsothedifficultiesin

settingupnewcentersinthelowcostlocationsoftheworld,andtheissuesof

availabilityofsuitablyqualifiedresourcestostaffthesecenterswith,therehasalsobeen

asignificantgrowthinoutsourcingthesecenterstoothers.

Aswenotedinchapter1,thefavoritelocationsforthesetypesofbusinessprocessesare

rapidlybecomingcrowded.Staffcostsrise,issuesofstaffrecruitmentandretention

grow,andwithoutthescaletobeabletorespondtothesepressuresandmovework

aroundoropencentersinothercities,thesecanmakelifedifficult. Outsourcingservice

providersarelocatingcapabilityforHRacrossmanycentersaroundtheworldtoday;

theyareconstantlylookingatlocationsandflexingthesupportinfrastructuretobeable

tomoveworkaround.

Figure33belowshowssomeexamplesofprocessesandhowtheymightsplitbetween

differentpartsoftheorganization.

Figure33Sharedserviceprocessexamples

Functional Responsibility / Governance

Line Manager/Employee

Call Center Back Office HR Business Partner(primarily subgroup specific)

Service Delivery Center (Group-wide)

Center of Expertise

Efficient execution ofadministrative activities

Processing of complexHR transactions

Management ofindividual employee

cases

Process routine HRtransaction

Resolve 80% of callsat first point of contact

Employee / Managerself-service

HR Policies

HR Reports

E-Learning

Development ofconceptual frameworkfor HR BusinessPartners, ServiceCenter and Self-Services (programs,policies and

processes)

Translate Businessneeds to HR programrequirements

Ensureimplementation of HRprograms in Business

Examples: Examples: Examples: Examples:Examples:

Apply for a jobRecruitment candidatesifting and screening

Development andcommunication ofrecruitment policy

Conduct recruitinginterview with linemanager

Register for trainingProvide guidance onpolicy and procedure

Schedule trainingrequests


Define priorities forthe business areain conjunction withline managers

View Pay informationAnswer generic payenquiries

Check Pensionscalculations

Definition of endyear reports

Approval for bonuspayment

Manage personaldata

Sick and absenceadministration

Changeorganizational Datain ERP

Need of systemmodification/customizing

Need fornew/modified report

StaffingData ManagementPayrollWorkforce Development

Functional Responsibility / Governance

Line Manager/Employee

Call Center Back Office HR Business Partner(primarily subgroup specific)

Service Delivery Center (Group-wide)

Center of Expertise

Efficient execution ofadministrative activities

Processing of complexHR transactions

Management ofindividual employee

cases

Process routine HRtransaction

Resolve 80% of callsat first point of contact

Employee / Managerself-service

HR Policies

HR Reports

E-Learning

Development ofconceptual frameworkfor HR BusinessPartners, ServiceCenter and Self-Services (programs,policies and

processes)

Translate Businessneeds to HR programrequirements

Ensureimplementation of HRprograms in Business

Examples: Examples: Examples: Examples:Examples:

Apply for a jobRecruitment candidatesifting and screening


Conduct recruitinginterview with linemanager

Register for trainingProvide guidance onpolicy and procedure

Schedule trainingrequests


Define priorities forthe business areain conjunction withline managers

View Pay informationAnswer generic payenquiries

Check Pensionscalculations

Definition of endyear reports

Approval for bonuspayment

Manage personaldata

Sick and absenceadministration

Changeorganizational Datain ERP

Need of systemmodification/customizing

Need fornew/modified report

StaffingData ManagementPayrollWorkforce Development

Withtheadditionalcomplexitiesofsplittasksandprocesses,andtheneedtoensure

thatthesharedservicecentreisoperatingeffectivelyandefficiently,itisessentialto

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havegoodmeasurementandmanagement. Acomprehensiveservicemanagement

frameworkthatcoversalloftheHRprocessesshouldprovide:

planningandprioritisation identificationandprioritisationofservice

requirementsaccordingtobusinessobjectives

servicereporting enablesthedeliveryofanagreed,defined,measurableand

continuouslyimprovingservice

visibility measurementofserviceperformanceagainstagreeduponkey

performanceindicatorsandservicelevelagreements,andregularreportingand

reviewofmeasurements

improvements identificationofareasforimprovementbasedonfeedbackand

measuredperformancetrends

flexibilityto

change

controlledandformal,butnotbureaucraticchange

mechanism.

Withoutsuchaframework,itiseasytolosesightoftheobjectivesandinefficienciescan

easilybuildup. Inparticularmanyorganizationshavefoundthatworkintendedfor

transferfromthelineHRorganizationstothesharedservicecentredoesnotmove

completelyorstartstocreepback. Shadoworganizationsbuildupandduplicatework

andeffort,andkeycostsavingobjectivesarethenlost.

ThechangesinbehaviorsrequiredfrombothHRpeopleandfromtheemployeesand

linemanagementshouldnotbeunderestimated. FormanyHRpeople,administrativeandmeasurementworkistheircomfortzonewhileemployees,andlinemanagersin

particular,needtoletgooftheoldwaysofworkingwheretheywereaccustomedto

hightouchHRsupportortheabilitytowalkintotheHRdepartmenttogettheir

questionsanswered. Again,goodmeasurementraisesvisibilityofhowwellthenewly

definedprocessesandorganizationareworkingandwillshowifandwherethechange

isincomplete.

LeviStrauss&CocasestudyTheBusinessChallengeSanFranciscobasedLeviStrauss&Co.(LS&CO.)isamongtheworldslargestapparel

marketersandmostwidelyrecognizedbrands.In2003,LS&CO.sseniormanagementlaunched

acompanywideefforttoreducecostsandrefocusthebusinessonprofitablegrowth.This

requiredatransformationofHR,notonlytoreducecostsofthefunction,butalsotobetter

enablethestrategyandmanagementoftalentacrosstheorganization.

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TheHRtransformationprogramThecompanysetaboutamajorchangeprogramforHRfromearlyin2004,including

consolidationofHRsystems,andprocessesandtransactionalactivitiesintosharedservice

centers,tightlydefinedperformancemetricsandaservicemanagementframework.Muchofthe

administrativeoperationswereoutsourced,toallowthecompanytofocusitsattentionontransformingthehighervaluefunctionsandcapabilitiesofHRinternally.InApril2004,

AccentureassumedresponsibilityforallHRadministrativeoperationsforLS&CO.sactiveand

retiredemployeesinNorthAmerica,including:recruiting;trainingdesign,developmentand

administration;benefitsadministration;leaveofabsence;compensation;customerservice;HR

administration;expatriateandrelocation;performancemanagementadministration;andHR

systemsandapplications.

HighperformanceoutcomesLevisStrauss&Co.nowenjoysacosteffective,employeecentricapproachtothedeliveryofHRservices,completewithimprovedservicelevels,predictablefixedcosts,andtangiblesavings.

OverallHRcostsatLS&CO.havefallenby35percent,andtheHRorganizationoffersmore

andbettertools,processesandservices.

Standardized,practicebasedHRprocessesarenowinplaceacrossNorthAmericaprocesses

thatareenhancingemployeedataquality,reportingandanalysis.LS&CO.sHRorganization

alsoisbetterpositionedtosupportcompanyleadersintheirquestforprofitablegrowth;for

example, byhelpingexecutivesselecttherighttalent,emphasizetherightcapabilities,and

developcreativesolutionstomotivateandrewardpeople.Theneteffectisanewlevelofhigh

quality,costeffectiveHRservice,withflexible,scalableprocessesthathelpdelivermoresavingsandstrongerbusinesssupport.

ImprovingHRorganizationandcapabilities

Whenthemoreadministrativeandtransactionalactivitiesarelocatedinsharedservice

centers,therestoftheHRfunctionisabletofocusmoreonthehighvalueaddingand

businessfacingprocessesandfunctions.

ThebestpracticeHRorganizationisdisciplinedandorganizedaccordingtocapabilities.

Experienced,businessorientedHRprofessionalsworkcloselywiththebusiness

functionsandleaders,abletounderstandtheirneedsandtorelatethesedirectlyto

talentandpeoplerelatedneedsandcapabilities. Acommontermfortheserolesisthe

HRbusinesspartner.

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HighervalueandcomplexityspecialistHRcapabilitiesarebroughttogetherinto

centersofexpertise,toconsolidatethedeepexpertiseandprovideaconsistentsupport

totherestofHRandthebusiness. Thesewillincludeareassuchaslearning,resource

planning,compensationplanning,industrialrelationsandemploymentlaw,butalso

someoftheadditionalcapabilitiesthatHRismoreoftendevelopingsuchas

organizationdesign,changemanagement,andHRintelligenceandreporting.

Figure34belowshowsthebasicelementsofanHRorganizationthatisorganized

aroundcapabilitiestoprovidethemostefficientandeffectivesupporttothe

organizationandemployees.

Figure34HRorganization

HRBusinessPartners

HR Centreof

Expertise

HR SharedServiceCentre

Plan for HRsolutions byidentifying

business needs

Operate HRprocesses to

produce servicelevels

consistently &efficiently

Build HR processesthat leverageorganisational

capabilities

Deliver HRprocesses andsupport to meet

needs

Design HRsolutions by

applying best

practices tobusiness needs

One HR

Team

HRBusinessPartners

HR Centreof

Expertise


HRBusinessPartners

HR Centreof

Expertise


Plan for HRsolutions byidentifying

business needs

Operate HRprocesses to

produce servicelevels

consistently &efficiently

Build HR processesthat leverageorganisational

capabilities

Deliver HRprocesses andsupport to meet

needs

Design HRsolutions by

applying best

practices tobusiness needs

One HR

Team

Foralltheelementstocometogether,andforthismodeltowork,stronggovernance

andoversightofHRisrequiredacrosstheenterprise. ManyHRfunctionshave

developedwithadevolvedgovernance,wherethecorporateHRleadershiphasvarying

degreesofinfluencebutoftennotdirectcontrolofHRacrossallthebusinessdivisions

or

entities.

The

shared

service

centers

and

centers

of

expertise

should

all

report

centrallyandhaveservicelevelagreementsandkeyperformanceindicatorsthatallow

thebusinessentitiestomanageandmeasuretheservicestheyneed. Thebusiness

partnerrolesshouldhavejointaccountabilitytothebusinessentitiestheysupport,and

tocorporateHRtomaintainoversight. Finally,giventhewayinwhichHRprocesses

canbesplitacrosstheHRorganizationalcomponents,strongprocessgovernanceis

required. ProcessownersforthekeyHRprocessesneedtobeestablishedandhavea

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levelofimportance,andcredibility,equivalenttobusinessentityHRleadersandother

directreportstothecorporateheadofHR.

OrganizingHRinthiswaywillfocusontheneedsforupskillingornewcapabilities.

Thebusinesspartnerrolesforexample,reallyrequireverybusinessorientedand

capablepeoplewhoalsohaveexpertiseacrossthebroadrangeofHRfunctions,atleastatahighlevel,andfamiliaritywithpoliciesandprocesses. Inthepast,HRhasnot

alwaysbeenthefunctionthathasattractedthebestandbrightest. AttheUniversityof

MichigansRossSchoolofBusiness,whichhasoneofthebestfacultiesintheUSfor

organizationalissues,just1.2percentofthe2004graduatesjoinedanHR

organization.13

Forthemostpart,HRprofessionalsinthepasthavenotconsideredtraininginbusiness

orientedskillstobethatimportant,andHRfunctionshaveusuallynotdemandedit

either. TheUSbasedSocietyforHRManagement,orSHRM,carriedoutasurveyin

2005askingHRprofessionalsaboutwhattheyfeltwasimportantfromtherangeof

academiccoursesandsubjectsforasuccessfulcareerinHR. Nofewerthan83percent

saidthatclassesininterpersonalcommunicationsskillshad extremelyhighvalue.

Employmentlawandbusinessethicsfollowed,at71percentand66percent,

respectively.Changemanagementandstrategicmanagementweremuchlowerat35

percentand32percent,andfinallyfinancewasatonly2percent.

ForHRtochangeandbecomeafullyintegralbusinessfunction,itneedsmorebusiness

qualifiedandsavvypeople,alongsidedeepspecialistsincoreareasoftalent

management. ThedaysofHRbeingtheplaceforgeneralistsornonbusinessoriented

peoplearerapidlydisappearing.

BusinessacumenisthesinglebiggestfactorthatHRprofessionalsintheUSlack

today, saysAnthonyJ.Rucci,executivevicepresidentatCardinalHealthInc.,abig

healthcareprovider. RucciwastheHRexecutivewholedtheworkatSearswe

mentionedearlierseekingtoestablishthelinksbetweenemployeecommitment,

customerloyalty,andprofitability:beforeCardinalHealthhewasheadofHRand

strategyatBaxterInternational,anotherhealthcarecompany. Suchpeopleare

becomingmorecommonasleadersofHR. MuchashappenedinfunctionslikeITin

thepast,

business

experienced

leaders

are

increasingly

moving

in

to

senior

roles

in

HR,

sometimesaspartoftheirtourofdutyastheygainexperienceacrosstheorganization.

Thiscanonlybeagoodthing,andwillencouragethespreadofexperienceandideasof

talentmanagementbetweentheHRfunctionandtheotherbusinessfunctionsand

entities. Developingcommonunderstandingandaccountabilityforthedevelopmentof

13 See Keith Hammonds Fast Company, op cit

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talentisoneofthekeyaspectsofbeingatalentpoweredorganization,andachieving

talentmultiplication. Weshouldnextexaminewhatcollectiveresponsibilityfortalent

developmentandmultiplicationreallymeans.

UnilevercasestudyTheBusinessChallengeUnileverisoneofthelargestconsumergoodscompanyintheworldwithrevenuesofc.42

billion.OneineverytwohouseholdsintheworldhasaUnileverbrandintheirhome;everyday,

150millionpeoplein150countriesuseUnileversproducts.Unileversmissionistoadd

vitalitytolife.

In2005PatrickCescau,thenewUnileverCEO,institutedtheOneUnileverprogramme,

targetedwithdeliveringannualsavingsof700millionthroughtheimplementationofaunified

andstreamlinedoperatingmodelforthecompany.Aspartofthis,Unileverestablishedaglobal

HRtransformationprogramwiththeaimofcommercializingandstreamliningHR,providing

linemanagerswithnew/enhancedselfservetools,increasingaccesstoglobalworkforcedata,

leveragingbenefitsfromUnileversglobalscaleanddeliveringsavingsofatleast20percent.

TheHRTransformationProgramInMay2006Unileversignedasevenyearbusinessprocessoutsourcingagreementtohelpthem

transformtheirHRoperationsin100countries.Accentureastheoutsourcingpartnerwill

providerecruitment,payrolladministration,rewardadministration,performancemanagement,

workforcereportingandcoreHRadministration.Accenturewillalsoprovidevendorandcontentsourcinganddevelopment,programplanninganddelivery,learningsystemhosting,

andmanagementandadministrativeservices.

TheHRprocessesandsystemsarebeingredesignedtosupportmorecommonwaysofworking

andsharedserviceoperationsglobally. SupportacrossUnileversthreegeographicregionswill

beprovidedthrough6sharedservicecentres,withsomehightouchservicesremaininginthe

localbusinessentitiessuchassomeinstructorledtraining,recruitmentinterviewingetc.

UnileverisretainingkeyareasofcapabilityaroundhighvalueHRprocesses,andalloftheHR

businesspartnerswhoworkalongsidebusinessleadership.

Everyonesresponsible

Talentmultiplicationcapabilitiesmustbeembeddedintheactivitiesoftheorganization

andsustainedbyeveryone. DiscoveryoftalentcannotbelefttotheHRfunctionalone

linemanagersandemployeesmustseetheidentificationofnewtalentsourcesastheir

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responsibilitytoo. Formallearningactivitiesarenecessarybutnotsufficientfor

developingyourtalenteveryoneintheorganizationmustcontributetobuilding

capabilitiesofothersthrougheverydayactivitieslikeperformancefeedbackand

coaching,aswellasmentoringanddevelopmentalrelationships. Everymanagerand

supervisorhastheopportunitytodeploytalenttocreatevaluewhentheyassignpeople

jobsandtasks. Everyemployeecanpursuedevelopmentalexperiencesthatcontribute

tothebusinessbyproactivelytakingonnewresponsibilitiesorgettinginvolvedin

activitiesoutsideoftheirnormalroles.

Talentpoweriscreatedbyeveryoneinanorganization,butthevirtuouscycleoftalent

multiplicationissetinmotionbyleadership. Visibleleadershipontalentissuesis

absolutelynecessarytoensurethateveryoneintheorganizationunderstandsthattalent

ismissioncritical. Leadersmustalsocultivateatalentmindsetintheorganizationto

createthemomentumthatsustainstalentmultiplicationandpowersperformance.

Theimportanceofvisibleleadership

Leadersneedtotakeresponsibilityfortalentissuesbecauseaswehavestressed

constantly talentisstrategic. Leadershaveamultitudeofcompetingclaimsontheir

attentionandenergy,andforthatreasonalonetheyneedtoprioritizetalentissuesby

dedicatingsignificanttimetothem.Bygivingprioritytotalentissues,leaderscansignal

toeveryoneintheorganizationthattalentisstrategicallyimportanttothebusiness.

ThemostrecentAccentureHighPerformanceWorkforceStudyfromwhichwehave

previouslyquotedshowedthatcompanieswedefinedasleadershadamuchhigher

levelofinvolvementoftheirleadersdirectlyinpeopleandtalentissues,asFigure35

shows.

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Figure35 Leadersaremorelikelytohavetheheadsoftheirtopfunctionsdeeply

engagedintalentmanagementinitiatives

Aboveall,leadersnotspecialistfunctionslikeHRdecidewhatissuesarestrategic.

Theynotonlysetstrategyfortheirorganizationbutdecidethebuildingblocksand

determinantsof

strategy.

Leaders

alone

have

the

power

to

make

long

term

strategic

decisionstakepriorityovershortterminterests.Thisisparticularlyimportantinthe

fieldoftalent,sincetherewardsforinvestingintalentarelessapparenttomarketsthan

thoseofotherdecisions.Therearefiercepressuresoncompanyleaderstoproduce

goodlookingshorttermresults.BillZollars,CEOofYRCWorldwide,isoneleader

whohasresistedthesepressurestokeephiscompanyfirmlyfocusedonitstalent

strategy.TheonethingthatIprobablyunderestimatedwastheshorttermfocusthat

publiccompaniesnowhavetodealwithintermsofWallStreet.Iknewitwascrazy,

butIhadnoideahowcrazyitactuallyis.Itsreallygottentothepointwherelongterm

tomostanalystsisnextweek.14

Zollarsisoneofagrowingnumberoftopexecutiveswhohavetakenpersonal

responsibilityfortalentissueswithintheirorganization.Hewasoneof20CEOsor

COOsofmajorglobalcompaniesinterviewedinanEconomistIntelligenceUnitSurvey

TheCEOsroleintalentmanagement. Thesurveyfoundthat14ofthe20were

14 Source: EIU 2006 survey: The CEOs role in talent management

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devotingatleast20percentoftheirworkingtimeontalentmanagement:sevenofthese

weregivingitbetween30and50percent.However,theireffortswerenottypically

guidedbyaformaltalentstrategydirectlylinkedtotheircompanysmajorgoalsor

embeddedintheirbusinessplanningprocesses.The20leadersgenerallyengaged

insteadinselectedsupportingactivitieswheretheybelievedthattheycouldaddvalue.

Amajorfocusofleadershipistodirectthehumancapitalstrategyandcapabilities

requiredtoexecutetheorganizationstoplevelstrategicobjectives.However,before

eventhatessentialtask,leadersneedtocreateacommonbeliefsystemthroughouttheir

organization,inwhicheveryoneisfocusedongrowingandmultiplyingtalentand

assumesthesamecommitmenttoachievethis.Putsimply,leadersneedtocreatea

talentmindsetaswedescribedinchapter2.

Creatingatalentmindset

Whenanorganizationhasatalentmindset,theobjectiveofmultiplyingtalentunitesthe

individualandcollectiveeffortsofallitspeople,anddirectitspractices,cultureand

ambition.InJMKeynessmemorablephrase,itbecomespartoftheorganizations

animalspirits.

Thismindsetisbuiltontwosharedbeliefs.First,peoplerecognizethattalentisvitalto

theorganizationsimmediateandfutureneeds,andtheirown,andthattalentsetsthem

andtheirorganizationapartfromothers.Second,peoplerecognizethattheycan

contribute

personally

to

increasing

the

talent

available

to

their

organization.

Based

on

thesesharedbeliefs,organizationswithatalentmindsetshapeandachieveashared

vision,alignitwithcustomersandotherstakeholders,andconstantlyraisetheir

performanceandvalue. InthewordsofAnnetteLaw,manageroforganizational

developmentatUPSYourvisioniswhereyouwanttobeandtalentistheengineto

getyouthere.15

Tobuildthattalentmindsetleadersmustlookfirsttoestablishahighperformance

environment.Theysethighexpectationsandhighlighttheirachievement,both

individuallyandcollectively.Theymakedecisionsbasedoncriticalskills,attitudesand

valueswhichfostertalent.

Theythendeveloptherighttalentcapabilitiesbyidentifyingthesourcesoftalent

development,investinginthemandmanagingthem,andmonitoringandbuildingtheir

15 Lynne Morton. 2005. "Talent Management Value Imperatives: Strategies for Execution." TheConference Board Research Report R-1360-05-RR, pg 8.

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results.Theydiffuseroles,responsibilitiesandauthoritytostretchtheirpeople. They

constantlyseekandcreateopportunitiesforalltheirpeopletodowhattheyalreadydo

bestanddiscoverotherthingstheymightbeabletodo.

Allofthesetasksrequirevisibleandcommittedleadershipfromthetop,as

demonstratedbyKenChenaultofAmericanExpress. AnexcerptfromTheConference

BoardsprofileofAmericanExpressintheir2005reportontalentmanagement

strategiesappearsintheboxbelow.

AmericanExpressCompany: MindsetBeginsattheTop16

CEOKenChenaultsvisionisforthecompanytobetheworldsmostrespected

servicebrandwithcentralizedstrategydevelopmentandthecreationofarangeof

integratedinitiatives.Adecentralizedlineofbusinessstructurethenprovidesimplementationandfurtherinterrelationships.Thelinesofbusinessareglobal,soa

globaltalentmanagementframeworkisbeingdevelopedtosupportthem.

Inkeepingwiththiscustomerfocusedvision,AmericanExpresssubscribestothe

employeeserviceprofitchainphilosophy,whichlinksemployeesatisfactionto

customersatisfaction.Thisalignsthecompanysemploymentbrandtothebeliefthat

motivatedorengagedemployeescreatesatisfiedcustomers.Whenemployeescommit

totheemploymentbrand,theycontributetheirbesttalent,skills,andideasandplaya

criticalrole

in

the

organizations

success.

TheCEOdrivesthistalentmindset.Herecognizesthatpeoplearethecompanys

greateststrength. Hespends30to40percentofhistimeonleadershipissues,working

directlywithleaders.HisinvolvementincludesleadingatwiceyearlyCEOsummit,

wheretoptalentmeetwithhimfortwodaystoworkthroughasignificantbusiness

issue.Healsodinesquarterlywithtoptalentandannuallyhasseveralchairmanled

sessionsduringwhichtalentisdiscussed.Heispersonallyinformedabouthow

employeesfeelhelistensandisveryapproachable.Notonlydoesheplayavisible

andactiverolewithallemployees,buthealsohassimilarrequirementsofhisstaff.

Thereisclearlyatopdownemphasisontalent.

16 Lynne Morton. 2005. "Talent Management Value Imperatives: Strategies for Execution." TheConference Board Research Report R-1360-05-RR, pg 28.

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Givingpeoplemanagementbacktomanagers

Themostcriticaltaskistointegratehumancapitalmanagementpracticesintothevery

fabricofbusiness.Thewaytodothatistoensurethatlinemanagers,towhomthe

majorityofpeopleinanyorganizationactuallyreport,takeonproperaccountability

andresponsibilityfortalentmanagement.

Onsomelevel,thisisjustcommonsense. Alinemanagersrolehasalwaysbeentoco

ordinateanddirectpeopleandresourcesinpursuitofbusinessresults.Furthermore,as

wehavealreadyhighlighted,anemployeesimmediatemanagermattersmosttohisor

herperformanceandengagement.Andyetcommonsensemessagesoftengetlostinthe

clutteroflargeorganizations.DebraHunterJohnson,avicepresidentofhuman

resourcesatAmericanAirlines,toldushowgoodintentionseventuallydisconnected

toomuchofthedaytodayresponsibilityforpeoplemanagementfromlinemanagers:

Overtime,ashumancapitalmanagementbecameacentralizedspecializationunderthedomainofHR,westartedtakingawaysomeofmanagerspeoplemanagement

responsibilitiessotheycouldfocusonthebusiness.Althoughnumerousbenefitswere

achievedbythis,wehavegoneoverboard,anditistimewegivepeoplemanagement

backtomanagerswherethebiggestperformanceimprovementscanbemade.

Beyondthecommonsensepremise,however,laysthemajorquestion howdoesan

organizationaccomplishthischange? Theprincipalwaysbeingusedbycompaniesto

giveasignificantboosttoworkforceperformancethroughhandsontalentmanagement

include:shifting

active

people

management

responsibilities

back

to

line

managers;

creatingtheexp

chapter6 us

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