clc optimizing the hr operating model

CLC HUMAN RESOURCES™CORPORATE LEADERSHIP COUNCIL

CORPORATE EXECUTIVE BOARD

Optimizing the HR Operating ModelFour Emerging Solutions to Realize the Value from Your HR Structure

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LEGAL CAVEAT

CLC Human Resources has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and CLC Human Resources cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, CLC Human Resources is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Corporate Executive Board Company nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by CLC Human Resources or its sources, or b) reliance upon any recommendation made by CLC Human Resources.

From CLC HUMAN RESOURCES™www.clc.executiveboard.com

© 2011 The Corporate Executive Board Company. All Rights Reserved. CLC7222310PRO

3

ORGANIZATIONS FOCUSED ON CONTROLLING COSTS WHILE DRIVING GROWTH

Expectations on Revenue Growth and Cost Pressure in the Next 12 MonthsBusiness Executives’ Sentiment Index, October 2010

Organizations are facing significant pressure to maintain tight cost controls while aggressively growing revenues.

■■ Although 76% of executives expect revenue growth, growth predictions are modest.

Revenue Cost Pressure

14%

10%

76%

10%

22%

68%

Higher

No Change

Lower

Source: Finance and Strategy Practice, Business Barometer Quarterly Report, Rosslyn, Va. The Corporate Executive Board, 2010.

n = 467.



4

MOST ORGANIZATIONS ARE ADAPTING TO ECONOMIC PRESSURE BY RESTRUCTURING

Percentage of Organizations Undergoing Major Redesign Initiative1 in the Past 12 Months

Percentage of Organizations Starting Major Redesign Initiative1 in the Next 12 Months

Most organizations experienced a redesign in 2009, and many still anticipate major change in 2010.

■■ Organizations typically redesigned to reduce costs; improving efficiency and quality were also common reasons for undertaking a redesign.

“Organization redesign used to be a once every ten year event

where you mainly worried about change management; now it is once every three months because we have so many divisions and things change so quickly.”Head of Organizational EffectivenessRetail Organization

19% Not Undergoing Major Redesign

Initiative44%

Not Anticipating Major Redesign

Initiative81%Undergoing Major Redesign Initiative

56%Anticipating Major Redesign Initiative

Reduce Costs 72%

Reduce Process Inefficiency 49%

Improve Product/Service Quality 35%

Growth in Current Market 24%

Merger or Acquisition 20%

Expansion into New Market 13%

Improve Customer Alignment 3%

Most Common Reasons for Redesign Percentage of Organizations Citing Reasons

1 A redesign initiative refers to significant changes to reporting relationships, operations, job design, ownership, or other structures of the organization, business unit, or function.

Source: CLC HR Organization Redesign Survey; CLC HR Employment Value Proposition Survey.



5

HR FUNCTIONS RESTRUCTURING TO SUPPORT REORGANIZED BUSINESS UNITS

Is Your Organization Planning to Restructure Your HR function?Percentage of Organizations, October 2010

Which HR Sub-Function Has Experienced the Most Severe Budget Cuts in 2010?Percentage of Organizations, September 2010

More than 80% of HR functions have either recently experienced or will soon experience a restructuring.

■■ Many HR functions have had severe budget cutbacks during the year, most frequently affecting Learning and Development teams.

17% Restructuring

Within the Next 12 Months

23% No Function Experienced Severe Cuts

4% Labor Relations

Function

6% HR IT Function

10% Compensation

and Benefits Function

32% Already

Restructured in the Past 12 Months

34%Currently Restructuring

15%Organizational Development Function

30%Learning and Development Function

12%Recruiting Function

17%No Plans

n = 368. n = 155.



6

BUSINESS LEADERS CONTINUE TO LACK CONFIDENCE IN HR TO SUPPORT CHANGING NEEDS

How Effective Is Your HR Function at…Percentage of Business Leaders (2009–2010)

Since the downturn, HR restructurings and budget reprioritizations have failed to generate consistent, high-quality services.

■■ While few business leaders rate HR as outright ineffective, the number of neutral responses indicate that the majority of HR functions have significant room for improvement.

Source: CLC HR Business Alignment Tool 2.0.

…Talent Management …Workforce Management …HR Operations

n = 11,670.

10% Ineffective

5% Ineffective

8% Ineffective

55% Neutral

42% Neutral 48%

Neutral

35%Effective

53%Effective

44%Effective

Learn more about the CLC Human Resources Business Alignment Tool, which allows you to receive detailed feedback from the line on your HR function’s effectiveness.

https://clc.executiveboard.com/Members/Benchmarking/Abstract.aspx?cid=100015810&fs=1&q=business+alignment+tool&program=&ds=1

https://clc.executiveboard.com/Members/Benchmarking/Abstract.aspx?cid=100015810&fs=1&q=business+alignment+tool&program=&ds=1



7

TWO ROOT CAUSES FOR LACK OF CONFIDENCE IN HR

Root Causes Behind Business Leaders’ Lack of Confidence in the HR Function

Two root causes behind business leaders’ lack of confidence in the HR function are inadequate HR capabilities and the inflexibility in HR structure.

■■ CLC Human Resources’ studies, HR–Line Partnerships and Building Talent Champions, provide best practice guidance on building HR capabilities.

■■ This study focuses on improving HR functional structures to support the business better.

Root Cause #1:HR Lacks the Capabilities Required by the Business

Root Cause #2:HR Functional Structure Limits Business Responsiveness

Key Questions Answered by CLC Human Resources

Key Questions Answered in This Study

■■ What areas of HR should we focus on improving first?

■■ What is the profile of the best-in-class strategic HR business partner?

■■ How are successful HR–line partnerships designed?

■■ What HR function-wide changes enable improvement across all HR business partner staff?

■■ How can the different parts of my HR function work better together?

■■ How can I make sure my HR function supports the business while still executing on HR functional activities?

■■ How do I decide where to globalize/localize different HR processes and activities?

■■ How do I minimize the cost and maximize the productivity of my HR shared service center?

CLC Human Resources Capability Toolkit

Building HR–Line Partnerships

Business Alignment Tool HR Leadership Academy

https://clc.executiveboard.com/Members/ResearchAndTools/Abstract.aspx?cid=100052071

https://clc.executiveboard.com/Members/ResearchAndTools/Abstract.aspx?cid=100052071

https://clc.executiveboard.com/Members/Benchmarking/Abstract.aspx?cid=100015810

http://www.leadership-academies.com/



8

FOUR KEY STRUCTURAL CHALLENGES IMPEDE HR BUSINESS RESPONSIVENESS

Four Member Challenges with Increasing HR’s Business Responsiveness

There are four key challenges HR faces in being agile enough to support changing business priorities.

■■ CLC HR gathered the perspectives of 119 member organizations on these four challenges through member polls and interviews.

Challenge 1: Strained Working Relationships Within the HR Function

Challenge 2: Inability to Balance Recurring HR Activities and Project Work for Business Units

“My HRBPs and specialists just can’t seem to get on the same page….”

“I would love to help the business with this big change initiative, but all my HR people already have their agendas built for the quarter…”

Challenge 3: Poor Coordination Between Global and Local Talent Management Stakeholders

Challenge 4: Inability to Grow HR Shared Services Capabilities Beyond Transaction Processing

“I found out that my local HR team in China created this whole new process. I thought we owned that activity…”

“When forced to cut costs, I look to my HR shared service center, but I feel like I have done all I can do without sacrificing quality…”

9



FOUR EMERGING SOLUTIONS TO REALIZE THE VALUE FROM YOUR HR STRUCTURE

Challenge #2

Inability to Balance Recurring HR Activities and Project Work for Business Units

HR Imperative #2

Prioritize Business Needs over HR Functional Silos

Supporting Resources

Nokia’s HR Project Based Staffi ng and Communities of Practice


Vista’s Targeted Service Expansion Paths


Shell Global Governance of Leadership Activities

Dow Corning’s Building Talent Management Connectivity

Guidelines for Centralizing HR Processes and Activities

The Current Structure of the HR Function Limits Business Responsiveness


Nestle Business-Aligned Service Delivery

Map of Key Opportunities to Build Strategic HR Team Relationships

Challenge #1

Strained Working Relationships Within The HR Function

HR Imperative #1

Create Strategic Partnerships within HR

Challenge #3

Poor Coordination Between Global and Local Talent Management Stakeholders

HR Imperative #3

Integrate Key Connections Between Talent Processes

Challenge #4

Inability to Grow HR Shared Service Capabilities Beyond Transaction Processing

HR Imperative #4

Grow Shared Service Solution Delivery Capability



10

CHALLENGE 1: STRAINED HR WORKING RELATIONSHIPS REDUCE THE VALUE OF THE HR FUNCTION

Root Causes of Strained HR Working Relationships

HR’s value is compromised by unresolved tensions between HR sub-functions and departments.

■■ HR has traditionally prioritized forging high-impact relationships between HR business partners and client groups, de-prioritizing internal HR relationships.

■■ Almost one in three HR staff identify lack of clearly defined responsibilities as the greatest challenge with HR structures.

Strained HR Working Relationships Between HR Business Partners, Centers of Expertise, and Shared Service Centers

Ambiguous Hierarchies

Multitude of reporting relationships creates confusion as to whom HR staff report

Client Ownership

Conflict over when and how different staff within HR should interact with the line

HR develops the wrong solutions.

HR incorrectly prioritizes its workload.

HR is unable to adapt to evolving business priorities.

Transactional Requests

The persistent existence of necessary but low-strategic impact work within all areas of the function

Consequences of Strained Working Relationships

“It’s very difficult for us to effectively respond to the business when our HR business partners can’t properly communicate to our specialist teams what they need and then we deliver services of limited value based on flawed communications.”

“Corporate HR and business unit HR can have competing agendas. We need to figure out the right way for HR to plan and negotiate around these issues from the start to achieve the right balance. Simply stating who does what isn’t the solution.”

Source: Nestlé UK, Ltd.



11

CREATE STRATEGIC PARTNERSHIPS WITHIN HR

Components of Successful Internal HR Partnerships

Enabling strategic impact within the business requires transforming internal HR partnerships.

■■ Robust internal HR relationships are required to execute and deliver on strategic solutions first developed with the line.

Source: Davis, Edward, The Uneasy Relationship Between HR Generalists and Staffing, ERE.net, 2009.

“The relationship between COEs and generalists can be

tense and troubling, and you need to have and use the right tools and templates to build better collaboration.”HR ExecutiveAirline Company

HR Business Partners

1. Quality Control—Carefully weigh business unit requests against degree of business impact, enterprise priorities, and the potential value-add centralized support can provide.

2. Proactive Broker of Information—Effectively explain requirements including rationale, timelines, and strategic impact.

HR Specialists/Centers of Expertise/Shared Service Centers

1. Portfolio Management—Aggressively monitor requests from the line and proactively reach out to all business units to stay informed of potential upcoming requests.

2. Stakeholder Management—Develop a collaborative and consistent approach to both resource allocation and prioritization.



12

CASE IN POINT: NESTLE’S BUSINESS-ALIGNED HR SERVICE DELIVERY

Nestlé UK Solutions to Root-Cause Problems

Nestlé UK’s HR Shared Services resource-allocation process is driven by business unit needs, but simultaneously ensures execution of enterprise-wide priorities.

■■ Nestlé’s process helps heads of HR allocate finite resources to meet business needs.

Root Cause #1Poor Quality of

Requests to HR from HR Professionals

Step #1Enable the HR

Business Partner as the “Filter” of HR Shared Services

Requests

Root Cause #2Shared Services Fails to Prioritize Requests

for Resources Effectively

Step #2Establish a

Consideration Process for

Prioritizing HR Shared Services

Requests

Root Cause #3“Squeaky Wheels”

and “Renegade Divisions” Win Out

Step #3Enable Cross-

Enterprise Negotiation on

Unfunded Requests

Root Cause #4Business Unit

Priorities and Needed Investment Levels Change Over Time

Step #4Communicate

Shared Services’ Role in Business Unit Strategy and Enable Updates as Needed




13

QUALITY CONTROL ON HR SHARED SERVICES REQUESTS

Integrating business unit and enterprise priorities, the HRBP filters requests by degree of business impact and advantaged execution from the center.


Critical Inputs to Business Unit HR Planning

Key HRBP Questions for Shared Services Support

HRBP, Business Unit A

Line Leader, Business Unit A

Business Unit HR Shared Services Requests

Business Unit A: HR Shared Services Requests

Activity to Address Business Priority

Business Context

Deliverables and MilestonesRequired Timing

Shared Services Support Request

Building Sales Capability

Increase sales capability through excellence in coaching, dynamic leadership development, and best in-class functional skills

■■ Excellence in coaching ■■ Functional skills program

Q1

Throughout 2007

Learning and Development

NR Marketing—Building Strong Brand

There is already considerable work being undertaken to improve marketing capability, and this will continue through 2007

■■ Review marketing recruitment material

■■ Development centers as required

■■ Marketing capability database—quarterly

■■ Marketing director’s meeting

Jan.

Oct.

Recruiting


Enterprise-Level HR Priorities1. Coaching and Leadership

Development for Sales

2. Marketing Recruitment and Training

Enterprise-Level Business Priorities1. Building Sales Capability

2. Marketing—Building a Strong Brand

Key Questions HRBP Must Address in Business Plan to Ensure Shared Services HR Support

Does each request demonstrate a clear link to business priorities?

Does each request demonstrate a clear link to HR priorities?

Do internal services offer a competitive advantage versus external providers?

Are HR requests simple and consistent with existing Nestlé UK shared HR services, unless variation and complexity create competitive advantage?

Can the service be delivered at a lower cost than that which the business could provide for itself?

Business unit context and goals

Jointly defined HR deliverables

The HRBP fills the role of the “account executive,” managing HR requests and services for line leaders.



14

COMPARING AND PRIORITIZING REQUESTSHRBPs meet with each Shared Service function to communicate proposed HR business plans, and each Shared Service leader convenes with the head of HR to evaluate requests and create their preliminary HR plans.


1. Scalability: Similarity to requests from other business units

2. Organizational Culture Fit: Fit with Nestlé UK and Ireland organizational culture

3. Alignment with Business Priorities: HR activities resulting from corporate or business unit–dictated changes

4. Alignment with Shared Services’ Skill Base: Fit with Shared Services’ current skill base or already developed products

CompensationHead of HR

Shared Services’ Funding Considerations

One-on-One Meetings Between HRBPs and Shared Services



Compensation

Recruiting

Talent Management




Learning and Development SS

Requests

Compensation SS Requests

Organizational Effectiveness SS

Requests

Recruiting SS Requests

Shared Services’ Preliminary HR Plans

Compensation Shared Services Requests

Business Unit AlphaKey Activities for Coming Year

■■ Review benchmark compensation rates for Ireland managers and adjust salaries.

■■ Evaluate and determine changes to benefit packages.

Activity Requests to Review■■ Restructure management

incentive program.

Business Unit BetaKey Activities for Coming Year

About 75% of business unit HR requests meet all Shared Services funding considerations.

About 25% of requests may not fit some Shared Services funding considerations and are flagged for further review.

GO

STOP



15

A SECOND CHANCE TO WIN HRBPs’ SUPPORTHRBPs and Shared Services heads assemble to review each Shared Service’s proposed HR plan and to consider HRBPs’ business cases for initiatives still under review.


“Negotiation Meeting” Agenda Nestle UK’s HR “Negotiation Meeting”

NESTLE UK & IRELAND AGENDA

HR LEADERSHIP TEAM MEETING

9.00–9.15 Review Agenda for the Day

9.15–10.00 Recruitment Business Plan

10.00–10.45 Recruitment Business Plan Negotiations

10.45–11.30 Learning & Development Business Plan

11.30–12.15 L&D Business Plan Negotiations

12.15–12.45 LUNCH

12.45–1.30 Compensation Business Plan

1.30–2.15 Compensation Business Plan Negotiations

2.15–3.00 Talent Business Plan

3.00–3.45 Talent Business Plan Negotiations

3.45–4.30 Compensation Business Plan

4.30–5.15 Compensation Business Plan Negotiations

5.15–6.00 Final Agreement on Resources and Priorities

Time for Negotiation

Business Case for Restructuring Management Incentive PlanIllustrative1. Situation: Current incentive plans

do not reward employees for their

performance.

2. Data and Metrics: Annual engagement

survey finds that 75% of managers

report dissatisfaction with the current

incentive plan.

3. Anecdotal Evidence: Manager in X

division confidentially voiced interest in

joining competing company for more

attractive incentive plan.

4. External Research: Studies find

importance of linking incentives to

performance for employee motivation

and enhanced performance.

HRBP for Business Unit Alpha

Head of HR

Shared Services

HRBPs

HRBPs and Shared Services teams reach agreement through discussion, with the Head of HR as the tiebreaker on disagreements.

1. Funded Shared Services requests

2. Requests for consideration in the next planning cycle

“Negotiation Meeting” Output

85% of all Requests

15% of all Requests

Improved Quality of HR Business Plans—As HRBPs have developed a better understanding of how to prioritize requests on their HR business plans, the percentage of requests denied pending further consideration has decreased from 30% to 15% across the past three years.

Negotiation Meeting Guidelines

■■ Shared Services heads present their HR plans to the entire HR leadership team.

■■ HRBPs present business cases for HR requests under review.

■■ Head of Team HR makes final decisions on HR investments.



16

CLARIFYING AND COLLABORATING ON COURSE CORRECTIONS

The head of HR cascades the corporate HR plan to key stakeholders to ensure clarity on Shared Services support and conducts pulse checks to inform a monthly plan-refinement meeting.

Pre-Meeting, Monthly, Six-Question E-Mail

Corporate HR Plan Communication Cascade

Output Report from HRBP Progress Checks

“By taking the time to regularly review each business partner’s HR

plan, our Shared Services are kept closer to the business reality, and it keeps them focused on what will add value. There is also a lot of great sharing, which leads to various informal conversations and coalitions between the business partners.”Gareth FendickHR Business Partner, Food

and Beverage DivisionNestlé UK and Ireland

Senior Leadership Committee

Purpose: The head of HR presents the corporate HR plan to the senior leadership committee to obtain commitment to execution support.

HR Leadership Team

Purpose: The head of HR finalizes the corporate HR plan with HR leaders to ensure the HR function is aligned around the top HR priorities.

Business Unit Leaders

Purpose: HRBPs share the plan with their GMs to clarify where HR Shared Services will be supporting their agenda.

Head of HR

HRBPs and Shared Services

Would you please, in two pages or less, answer the following questions:1. How are you doing YTD against your HR business plans

or personal objectives?2. Now that the planning process has come to a close, how

would you rate the process? Ideas for improvement?3. Is Team HR getting better or worse—for you personally?

And as a whole?4. What is your biggest HR challenge for the next six months?5. How could the HR leadership team help your with question

4?6. How can I personally help you with question 4?

GROUP HR MONTHLY REPORTContents

■■ Progress and changes to major HR projects

■■ Monthly statistics on key HR metrics

■■ Potential HR risks and areas of exposure

■■ Proposed action plans to mitigate risks

CONFIDENTIAL

HR Leadership Team Meeting

Shared Services

HRBPs

Head of HR


DERF 07-4386

Catalog # ■■ CLC18UBJIQ

Title

17



IDENTIFY AND PRIORITIZE OPPORTUNITIES FOR HR COLLABORATION


HR Partnership

Relationship Opportunities

HR Leadership Team and HR Business Partners

HR Business Partners and Centers of Expertise

Centers of Expertise and Shared Service Centers

HR Leadership Team and Shared Service Centers

1. Collaborate to translate business priorities into HR capabilities.

2. Enable HR business partners to assess and improve their own effectiveness.

3. HR leadership team consults with business partners to develop meaningful metrics and achievable targets for the function.

1. Enable the HRBP as the filter of business requests for Center of Expertise (COE) support.

2. Establish process to prioritize COE requests.

3. Define COEs’ role in business unit strategy development and execution to improve talent management solutions.

1. Entrust Shared Service Centers (SSCs) with identifying service delivery issues and recommending improvements.

2. Have Centers of Expertise teach SSCs how to solve complex issues instead of providing scripting.

3. Develop mutual accountability to ensure employees have a consistent, “one HR” experience.

1. Develop an analytical partnership to improve identification of service issues across the function.

2. Embed change management within SSC processes to provide real-time support for organization change initiatives.

3. Leverage HR SSC staff relationships with other functional SSCs to drive cross-functional collaboration.

18



KEY TAKEAWAYS

Create Strategic Partnerships Within HR

1. Assign ownership and develop criteria for filtering HR requests from the line. Designate who in HR will work with line leaders to submit requests for support and establish a common set of principles to effectively scope these requests.

2. Facilitate internal HR conversations to identify the right HR “bets.” Gather HR stakeholders together for open conversations to identify and prioritize scalable requests that align with both organization and HR strategy and are scalable; hold “negotiation meetings” periodically to preserve resource flexibility in light of evolving business needs.

3. Identify nonobvious opportunities to grow HR partnerships. Have HR staff critically reexamine their daily interactions with peers to find one or two ways they can transform them into more valuable peer discussions that drive HR strategy.

19




Challenge #2


HR Imperative #2














Challenge #1


HR Imperative #1


Challenge #3


HR Imperative #3


Challenge #4


HR Imperative #4




20

CHALLENGE 2: HR IS STRUCTURED FOR PREDICTABILITY BUT NEEDS TO SUPPORT CHANGE

HR’s Expectation of One-Dimensional Business Unit RequestsIllustrative

HR is structured around recurring activities, limiting its ability to address unique and complex business problems.

■■ Current HR structures frequently have teams of highly specialized staff, which are best positioned to respond to focused organizational issues.

■■ Most business leaders have much larger, more ambiguous requests than HR expects, and these require intense cross–HR collaboration.

Request from Business Unit

1. Business Unit Alpha needs a revised executive compensation plan.

2. Business Unit Beta needs a leadership program for emerging market executives.

3. Business Unit Gamma needs help attracting and recruiting engineers.

Lead HR Sub-Function

Compensation Team

Leadership Development Team

Recruiting Team

Line Leaders’ Actual Demands for Support on Complex Business ProblemsIllustrative

HR Sub-Functions Providing Critical Support By Project

Request from Business UnitLearning and Development

RecruitingOrganization Effectiveness

HR Analytics

Engagement

1. Business Unit Alpha needs help reorganizing its global sales team. x x x

2. Business Unit Beta needs help increasing workforce productivity. x x x x

3. Business Unit Gamma needs help increasing workforce diversity. x x

“To move from incremental to transformational

progress, HR needs to look at new ways of working. Business managers don’t really care how HR or other support functions are organized if they can get things done.”Vice President of HRTelecommunications



21

CASE IN POINT: TRADITIONAL HR STRUCTURES LIMIT BUSINESS RESPONSIVENESS

Traditional HR Structure at Nokia (2008)

Prior to the transformation, Nokia’s HR centers of expertise and HR generalists were structured in a traditional line hierarchy, which limited HR’s agility to respond to changes in business priorities.

■■ Nokia was undergoing a larger business transformation that required significant and ongoing HR support.

■■ Nokia recognized that at this point in time their HR process and policies did not require significant updates, allowing subject matter experts to more flexibly support a fast-changing business.

HR Function

Unit HR

HR staff responsible for translating business strategy into strategic people agendas and providing support to senior leaders locally.

HR Centers of Expertise

Individual centers focusing on HR activities in the following areas:

■■ Organizational Development/Change

■■ HR Strategic Planning■■ HR Development and Resourcing■■ Compensation and Benefits■■ HR Information Systems

HR Country Operations

HR staff that provide on-the-ground support for employment issues and implementation of HR policies and practices. There are also some emerging, independent service centers.

Challenges with COE–Based HR Structures

HR COE time and resources are 100% dedicated to functional agendas restricting HR agility at supporting the business.

Cross-functional HR support for complex business problems is limited, and HR employees lack cross-functional expertise.

HR development and performance management focuses on functional expertise rather than business support.

SITUATION OVERVIEW PROJECT-BASED STAFFING

HR COMMUNITIES OF PRACTICE

HR COACHING MODEL RESULTS

“In the old setup, many in our HR function were pulled into

handling immediate day-to-day-queries rather than walking the talk and being physically visible. We often talk about being one HR and in some countries, “HR United”! And this is what it is!”Trisha RobinsonHead of HR, Global HR Operations



22

INTRODUCE FLEXIBILITY TO THE HR STRUCTURE

Nokia’s Project-Based HR Structure (2009)

Nokia restructured its global and country-based centers of expertise into a Global Practices team that supports the business through projects.

■■ Nokia’s HR project-based teams develop and implement solutions to support the business transformation, while communities of practice provide opportunities for all HR staff to broaden their expertise.

■■ Nokia’s HR coaching model supports project-based work by creating a flat organization where coaches help HR employees manage their career instead of assigning them activities.

HR Function

Generalist HR

Unit/Country HR generalists who provide HR support to senior leaders, translate business strategy into strategic people agenda, design and deliver development/change programs, and build Nokia’s Competitive Employee Brand

Global Practices

HR functional consultants and project managers aligned primarily to HR projects, with accountability for Nokia HR philosophies, processes, and policies.

Work Together Through HR Projects and Communities of Practice

Any member of the entire HR community can join one or more communities of practice, which revolve around building functional skills and working on HR activities.

HR Services

Centralized global HR data processing, deployment of HR tools and key process initiatives, and manager/employee service center provides consultancy for employment issues

Key Components Supporting Nokia’s Project-Based HR Structure

Project–Based StaffAlign HR around business projects instead of only functional or country-specific expertise.

HR Communities of PracticeBroaden HR capabilities with flexible membership in communities of practice.

HR Coaching ModelUse a coaching model to support long-term HR staff development.




“Within Nokia we were having a dialogue as part of our people

strategy to look at new ways of working. We were not necessarily looking to change the HR structure but to utilize different ways of working collectively.”Kirsty RussellHead of Global Practices



23

ALIGN HR AROUND BUSINESS PROJECTS INSTEAD OF FUNCTIONAL EXPERTISE

Building the “One HR” Portfolio of Projects

Nokia first staffs HR employees against projects supporting the business instead of against specialist agendas.

■■ The HR project portfolio is created based on business priorities and available resources.

■■ The resourcing manager maintains primary responsibility for project staffing.

■■ Project teams are ad hoc and disintegrated once a project is complete, allowing HR employees to work on different types of projects across the year.




Identify HR Projects by Involving Entire HR Community

Staff HR Projects Transparently

Continually Monitor Success of Projects and Overall Portfolio

3

21

■■ HR portfolio manager collects projects from across the global HR team and business leadership. The Unit HR heads, the County Operations head, and the Global Practices head pre-check the projects coming from their units.

■■ The final HR project portfolio is drafted based on the projects signed off by the HR leadership team.

■■ HR resourcing manager uses talent profiles to select staff based on interests and past experience and also reaches out to coaches to recommend staff.

■■ HR resourcing manager publishes the project portfolio on an online portal to allow employees within the global practices group to express interest.

■■ The HR leadership team assesses each project on a monthly basis against the time being spent on it, the quality of project execution, and its impact on the business.

■■ The team meets biannually to review and update the project portfolio based on business needs.

Global Practices Team

■■ Of approximately 240 people, 100 are full-time project consultants, and the others are recruiters, global HR service center employees, and occupational health and safety staff.

■■ Spread across the globe, the project consultants report into the Head of Global Practices.

■■ Allocated to projects, typically for a time span of 12–18 months

“Working in the project mode enables us to have the best resource

dedicated to a project, based on the project need and competence match. This also provides project-based employees with much broader alternatives/more diverse projects than they had in a line organization.”Katariina KraviHead of HR, Markets



24

BROADEN HR CAPABILITIES WITH FLEXIBLE MEMBERSHIP IN COMMUNITIES OF PRACTICE

Communities of Practice enable HR employees to build content expertise and have the opportunity to work on functional HR activities.

■■ Communities of Practice support employee development by offering platforms for knowledge sharing and skill building.

■■ Each community leader defines functional activities and can let the resourcing manager know the required project participation time.

■■ All members of the global HR team can join any number of the communities of practice.




Nokia’s Four Communities of Practice

The Employee Perspective on Communities of Practice

Communities of Practice Guidelines

Learning and Leadership

Organizational Development and Change

Compensation and Benefits

Resourcing, Mobility, and

Employee Relations

“You are exposed to a whole new element in the HR communities that you may not

have been. Provides a different opinion and a fresh set of eyes.”

“The HR Community Way of Working provides visibility into different projects and

opportunities to join different projects based on time and interest.”

What Are Communities of Practice?■■ Groups built around HR functional areas, made up of HR staff interested in building functional expertise or learning more about the area

■■ Group positions include executive sponsor, community leader, community facilitator, and contributors.

How Do Communities of Practice Work?■■ Allow HR staff to build functional expertise through knowledge sharing and networking.

■■ Allow HR staff across the globe to join one or more communities of their choice.

■■ Community leaders suggest potential HR project or activity ideas to the portfolio manager, based on ideas shared by community members.

How Do Communities of Practice Build HR Skills?■■ Informal, interest-based networks provide support for addressing work-related challenges and knowledge gaps.

■■ Opportunity to work on functional tasks within areas of development/interest to grow in the functional expert career path

■■ Exchange and capture of HR knowledge through the use of online discussion forums, teleconferences, and webinars

■■ Community leaders hold the functional development budget for the community on an annual basis.

“By linking different HR professionals who have experience in certain

areas with other employees, every HR professional is able to learn things outside of their own job area, link to people in other teams, and also innovate and explore new ideas.”Tiina TakalaHead of HR, Mobile Solutions and

OD & Change Community Sponsor



25

USE A COACHING MODEL TO SUPPORT LONG-TERM HR STAFF DEVELOPMENT

Nokia uses coaches instead of traditional line managers for project-based HR employees to guide performance and career discussions, which better supports the HR way of working.

■■ Coaches are responsible for helping employees interpret, and act on, feedback from project managers and community leaders.

■■ The coaching model empowers employees to be in charge of their own development instead of relying on their line managers.

■■ Employees acting as coach spend 10–20% of their working time on this role.




Challenges with Traditional Line Manager Model for Project-Based HR Employees

Role of Nokia’s HR Coaches

Benefits of Nokia’s HR Coaching Model

Line managers are from the same center of expertise as the employee, potentially limiting exposure to other areas of HR.

Coaches can be selected from across the HR team, including different areas, units, and geography.

Line managers delegate work to employees, reducing time for work outside the manager’s functional area of expertise.

Coaches do not delegate work to employees, ensuring that HR employees’ time can be tracked and resourced against the highest-priority work.

Line managers may be changed frequently, hampering long-term employee development.

Coaches maintain a longer relationship with the coachee, which drives better performance management and development over time.

Role of the Coach Not the Role of the Coach

Supports employee with setting performance goals and identifying development opportunities

Does not maintain responsibility for approving employee leave and work schedules (this is done by the resourcing manager)

Calibrates annual performance evaluation, placement on talent maps, and agrees on priorities for salary investments

Does not oversee or provide feedback on employee’s day-to-day work

Works with the resourcing manager and community leaders to identify development opportunities for the employee

Does not maintain headcount responsibility and cannot hire or fire employees

Supports employees by brokering employees’ informal networks within the organization

Does not have the authority to make decisions on internal rotations



26

IMPROVE HR SUPPORT OF THE BUSINESS AND DRIVE HR TEAM ENGAGEMENT

Higher Engagement in Global Practices (2010)

Nokia’s project-based Global Practices team and supporting communities of practice positively impact the business and HR.

■■ The new structure improved HR staff engagement levels in Global Practices and improved HR support to the business.

■■ Nokia is working on defining HR career growth in this new structure, improving coach–coachee matching, and refining the process to prioritize projects for the HR portfolio.




Increased Focus on Business Projects

All the key drivers of engagement improved between 6–22% year-over-year for the Global Practices team.

On average, all HR projects were delivered “on target” across 2010.

Rational Commitment Index

After Restructuring

Business Projects

Business Projects

HR Functional Activities

HR Functional Activities

Average for HR Function

Global Practices

5%

Average for HR Function

Global Practices

10%

Emotional Commitment Index

Before Restructuring

20%

80%90%

10%

“The project way of working has brought the different parts of

HR close together to support our business transformation agenda. We have the right focus now for this stage of our Nokia journey, and we have the flexibility and agility to execute where it matters most.”Juha ÄkräsHead of HR, Nokia

27



KEY TAKEAWAYS

Prioritize Business Needs Over HR Functional Silos

1. Determine HR staffing assignments according to business needs, not functional expertise. Focus HR on implementing solutions and staffing projects teams with individuals across traditional HR functional areas that increase collaboration, creativity, and the function’s responsiveness to the business.

2. Drive project performance by creating opportunities for HR staff to build their expertise and professional networks. Establish meaningful professional networking opportunities to share knowledge, promote informal collaboration on functional tasks, and provide access to networks of HR experts across the organization.

3. Create a culture of informal feedback within HR. Adopt a coaching model within HR to increase the frequency and quality of feedback necessary to improve capabilities needed by the business and for a career within the function.

28




Challenge #2


HR Imperative #2














Challenge #1


HR Imperative #1


Challenge #3


HR Imperative #3


Challenge #4


HR Imperative #4




29

CHALLENGE 3: CURRENT HR GOVERNANCE MODELS IMPEDE HR COORDINATION

Two Root Causes of Poor Coordination

Redundancy, inconsistent employee experiences, and quality issues all appear when HR lacks effective governance.

■■ Creating a clear HR governance strategy is challenging because of constant organizational change, local demands, decentralized HR staff and budgets, and a lack of transparency into the overarching HR strategy.

Outcome 1: Inconsistent Employee Experience

Different parts of HR approach activities and processes uniquely, leading to employee confusion about the organization’s value proposition.

Outcome 2: Redundancy

Different parts of HR are doing the same things, resulting in higher costs and leaving less time to do other activities.

Outcome 3:Low-Quality Results

Different parts of HR customize the same activity to varying degrees of quality, missing the opportunity to leverage best practice approaches.

Unclear HR Activity Ownership

Unintegrated Talent Management Activities

Poor Coordination of HR Activities

Consequences of Ineffective HR Governance



30

REALIZING RETURNS FROM TALENT MANAGEMENT INTEGRATION EFFORTS

Siloed Talent Management Structure at Dow Corning

Most traditional talent management integration efforts fail to achieve their objectives around improvement and efficiency.

■■ Most organizations attempt to restructure their entire talent management functions in an effort to create integration across activities.

■■ Dow Corning focuses on identifying the critical connections across talent management activities to improve collaboration, efficiency, and effectiveness of key talent management processes.

Traditional Talent Management Integration Objective

Dow Corning’s Talent Management Integration Objectives

Create a fully integrated structure for the talent management function.

1. Identify key integration points between the critical inputs and outputs that matter most to talent management effectiveness.

2. Enable focused collaboration and increased awareness of key talent management connections.

Failure Points

Multiyear process

Heavy cost requirements

Difficult to manage stakeholder involvement

Benefits

Connection points that can be identified and introduced in less than one week

Quick efficiency gains

Immediate returns on investment

Director Talent Management

Succession Planning

Talent Acquisition

Workforce Planning

Performance Management

Talent Development

Compensation



31

BUILDING CONNECTIVITY IN TALENT MANAGEMENT IN SIX DAYS

Dow Corning’s Process for Identifying and Prioritizing Critical Connections in Talent Management

Dow Corning identified and prioritized talent management interactions to capture the benefits of connectivity awareness.

■■ Step 1: HR stakeholders are engaged in identifying key interactions between talent management activities.

■■ Step 2: Dow Corning applies a set of prioritization lenses to identify the most talent-critical management connections.

■■ Step 3: HR prioritizes greater coordination and awareness across connections to capture benefits for the organization.

■■ Allow at least five days to complete step one. Mapping Talent Acquisition interactions takes two days, Talent Development one day, and the other areas half a day each.

1. Engage Talent Management Process Owners in Mapping Interactions

2. Prioritize Talent Management Connections

3. Target Coordination and Awareness of Key Connections

Stakeholders

■■ Director of Talent Management

■■ Manager of each talent management process

Stakeholders


■■ VP of HR

Stakeholders


■■ Manager of each talent management process

SUCCESSION MANAGEMENT

Input Process OutputSuccession Planning

Workforce Planning

Critical Positions

170 Non-Critical Connections

50 Core Connections

10 Critical Connections

■■ High-potential compensation data

■■ Key role identification

■■ Talent market analysis

■■ Identify key positions

■■ Assess successor candidates

■■ Assess high-potential development needs

■■ Successionplan gaps

■■ Key roles■■ Success

profiles

Time Required: 5 days Time Required: 1/2 day Time Required: 1/2 day to

determine next steps

Note: Dow Corning partnered with The Newman Group to facilitate this process.

DERF 10-6023

Catalog # ■■ CLC6876910SYN

Title ■■ THO: Leadership 1028



32

DERF 10-6502

Catalog # CLC7042110SYN

Title HO: Leadership 1130 London AER

ENGAGE TALENT MANAGEMENT PROCESS OWNERS IN SURFACING INTERACTIONS

Surface Inputs, Activities, and Outputs for Each Talent Management ProcessConnection Identification Exercise for Each Talent Management Activity

PERFORMANCE MANAGEMENT

TALENT DEVELOPMENT

TALENT ACQUISITION

COMPENSATION

WORKFORCE PLANNING

SUCCESSION PLANNING

Objectives Inputs Activities Outputs

■■ The most critical positions have top talent incumbents.

■■ True high-potential employees are identified, developed, and retained.

■■ High-potential compensation data

■■ Key role identification

■■ Talent market analysis

■■ Identify key positions.

■■ Assess successor candidates for key positions.

■■ Assess high-potential development needs.

■■ Succession plan gaps

■■ Key roles

■■ Success profiles

Owner of Succession Planning Process Completes Exercise

Key Questions for Talent Management Process Owners to Surface Connections

What are the data inputs required to meet the objectives of your talent management process?

What are the objectives and activities of your talent management process?

What are the key assumptions required to meet the objectives process?

What are the data outputs produced from your activities?

Which talent management processes might be consumers of your output data?

1 Refer to the appendix for more information on the SIPOC process.

Each process owner documents inputs, activities, and outputs for their talent management processes to identify key interconnections.

■■ Each process owner is given five key questions to help surface the key objectives, inputs, outputs, and activities for their talent management process.

■■ The Director of Talent Management shares early drafts of each talent management process map with the other talent process owners.

■■ This ensures the surfacing of all critical information needs and objectives and drives early awareness and collaboration across the talent management team.

Applying the SIPOC Process1

Dow Corning based its talent management integration process on the SIPOC model, which is commonly used in engineering and process improvement projects, such as Six Sigma.



33

AGGREGATE TALENT MANAGEMENT CONNECTIONS

Dow Corning’s Talent Management Connections MapIllustrative (Full Overview in Appendix)

Dow Corning’s Director of Talent Management aggregates process inputs, activities, and outputs to identify connections.

■■ The Talent Management Connection Map allows Dow Corning to obtain a complete overview of inputs and outputs needed to effectively run the six core talent management processes.

■■ Dow Corning identified 230 input/output connections between the six core talent management processes.

Performance Evaluations

TALENT ACQUISITIONObjectives

■■ Hire the right person for the right job at the right time at the right pay.

■■ Hire a diverse workforce.■■ Hire both internal and external

resources, including temporary resources activities.

Activities■■ Requisition Management■■ Posting Management, both internal and

external■■ Screening and Assessment Interviewing

SUCCESSION PLANNINGObjectives

■■ The most critical positions have top talent incumbents and a strong multi-generational bench.

■■ True high-potential employees are identified, developed, engaged, and retained.

Activities■■ Identify high-potentials, including new

hires.■■ Assess successor candidates for key

positions.■■ Assess high-potential development

needs.

PERFORMANCE MANAGEMENTObjectives

■■ Manage the process to objectively measure, calibrate, and provide feedback to employees

■■ Enable managers to make employment decisions based on performance

Activities■■ Develop goal-setting process to align

with business needs■■ Providing periodic employee feedback■■ Manage process for evaluation of

employee performance to goals and competencies

COMPENSATIONObjectives

■■ Pay competitiveness.■■ Recognize exceptional performance.■■ Accrue and budget all compensation

programs.Activities

■■ Set job levels and salary ranges.■■ Determine salary increase budget.■■ Calculate incentive awards.

Development Progress Information

Ski

ll N

eed

s A

sses

smen

tP

ast

Wo

rk H

isto

ry/E

du

cati

on

Tale

nt

Mar

ket

An

alys

is

Job Evaluations

Executive Hiring Needs

Risk Analysis of Critical Skills

Performance Reviews

TALENT DEVELOPMENTObjectives

■■ To provide the right development for the right talent at the right time

■■ To ensure that employees are growing stronger and smarter

Activities■■ Managing “one-stop shop” for training

(Dow Corning University)■■ Managing Compliance Training

programs■■ Curriculum Management, including

Instructional Design, and Development

Connections are identified based on the inputs and outputs that enable the talent management processes to achieve objectives.

WORKFORCE PLANNINGObjectives

■■ Align human capital to the strategies and objectives of the business.

■■ Participate in the business planning process to identify talent strategies and issues.

Activities■■ Develop role segmentation based on

relative criticality to business strategy.■■ Provide supply/demand analysis to

identify talent gaps.

Source: Dow Corning.

DERF 10-6023





34

PRIORITIZE CRITICAL TALENT MANAGEMENT CONNECTIONS

Prioritization Criteria Used to Identify Critical Connections

Dow Corning’s Director of Talent Management and VP of HR apply a set of prioritization criteria to identify the few critical connections on which to focus.

■■ Dow Corning assessed each connection by impact on talent outcomes, process efficiency gains, and implementation cost.

■■ Ten connections were shown to have most impact and potential efficiency gain and implementation cost.

■■ Dow Corning identifies key connections involving talent acquisition due to the current level of high growth.

Focus on High Business and HR Impact■■ What talent management inputs/

outputs have the greatest number of connections?

■■ Which talent management inputs/outputs have the greatest impact on the effectiveness of other talent management processes?

■■ Which talent management inputs/outputs matter most to functional process effectiveness outside of HR?

Maximize Efficiency Gains■■ Are there cost-/time-efficiency savings

from improving coordination of input/output connections?

■■ Would greater connectivity positively impact corporate HR, local HR, and the line?

Consider Implementation Costs■■ What processes need to change to

make a connection a reality?

■■ How many stakeholders need to be involved to change those processes?

■■ How long would it take to make needed process changes?

Key Question Addressed What are the few critical talent management connections that would have the biggest impact on talent outcomes and HR operational efficiency?

230

10

Connections Surfaced

Connections Prioritized

Critical Connections

1. Past Work History (Talent Acquisition to Talent Development/Succession Planning)

2. Performance Feedback of New Hires (Performance Management to Talent Acquisition)

3. Competency Gap Analysis (Talent Acquisition to Talent Development)

4. Talent Forecast (Workforce Planning to Talent Acquisition)

5. Headcount Forecast (Workforce Planning to Talent Acquisition)

6. Competency-Based Job Descriptions (Talent Acquisition to Talent Development)

7. Succession Planning Gaps (Succession Planning to Talent Acquisition)

8. Key Roles Identified (Workforce Planning to Succession Planning)

9. Assessment Results (Talent Acquisition to Talent Development)

10. Successful Profiles (Succession Planning to Talent Development)

DERF 10-6023





35

IMPROVE COORDINATION AND AWARENESS AROUND KEY CONNECTIONS

Focused Actions Against Critical Activities

Dow Corning’s Talent Management team agrees on coordination improvements around the connections that matter most to talent outcomes.

■■ The Talent Management team focuses on awareness and transparency of key talent management input/output, as opposed to longer-term process improvements.

■■ Dow Corning finds that increased awareness and coordination alone across the critical connections improves talent management effectiveness and efficiency.

■■ Having identified the key talent management interactions to be integrated, Dow Corning is planning, developing, and implementing integration of its talent management activities.

Immediate Actions to Improve Talent Management Through Better Coordination and Awareness

1. Increase Alignment Awareness and Collaboration – Agree on rules of thumb with talent management leaders for

ongoing sharing of data and information between their different areas.

– Identify stakeholders outside of talent management that would benefit from receiving key output information.

– Determine how the evolution of connections will be managed over time.

2. Improve Talent Management Processes – Identify “quick wins” for improving individual talent management

processes. – Target process improvements that have greatest impact across

talent management. – Agree with leaders on next steps to close gaps in processes.

3. Focus Systems Integration Activities – Determine the touch points that should be fully integrated versus

just raising awareness. – Identify where compromises can be made between “tight

integration” versus “best of breed” for individual talent management areas.

– Determine the must-have connectivity requirements to inform IT integration analysis and vendor search.

170 Noncritical ConnectionsExample:

■■ Paid Time Off Data

50 Core ConnectionsExample:

■■ Performance Evaluation Summaries

10 Critical ConnectionsExample:

■■ Key Role Identification

DERF 10-6023





36

USE KEY DECISION VARIABLES TO REINFORCE HR GOVERNANCE

Sample Talent Management Governance Framework

Use decision variables to clarify HR activity ownership at key connection points.

■■ Five common variables to review when deciding how to govern a HR process or policy are strategy, workforce profile, technology, compliance, and business expertise.

Globalized Localized

The process is highly strategic and important to the organization’s goals.

The process does not have a large impact on business strategy or goals.

Decision Variable 1: Strategic Process

The company has a uniform workforce profile.

The company has a highly varied workforce profile.

Decision Variable 2: Workforce Profile

Standardized technology can produce economies of scale.

Customized technology is needed.

Decision Variable 3: Technology

High level of regulation Low levels of regulationDecision Variable 4: Compliance

Low specialized business knowledge needed; process is generic and static.

Specialized business knowledge needed; process is unique and dynamic.

Decision Variable 5: Business Expertise



37

Shell establishes clear local and global ownership rules to create focus on the leadership activities where global alignment is critical.

■■ Shell mandates that most leadership activities have to be consistent across the organization, but communicates clear criteria where local exceptions are allowed.

DERF 10-6502



CASE IN POINT: IDENTIFY HR ACTIVITIES WHERE GLOBAL CONSISTENCY IS CRITICAL

Guidelines: Global Versus Local Ownership of Leadership Activities

Allow Localization for Business Units

■■ Bonus payments (particularly applicable to the trading organization)

■■ Attraction of local leaders■■ Talent needs planning

Keep Consistent Across the Organization

■■ Leadership assessment criteria■■ Performance appraisal■■ High-potential assessment■■ Annual performance increases (rewards principles, LTI)■■ Talent acquisition screening■■ Development (e.g., executive coaching)■■ Internal mobility ■■ Expatriate compensation policy framework

Indicators of Local Ownership

■■ Is the activity governed by regulatory issues?■■ Would changes to the activity fall under trade union/works

councils regulations or agreements?■■ Is the activity important to maintaining local competitive

advantage?■■ Does the activity play a big role regarding local leadership

reputation and perceptions (leadership brand)?

Indicators of Global Ownership

■■ Is there a high impact on behavior?■■ Is the activity important to global business results?■■ Is the activity important to the overall development

experience of leaders?■■ Does the activity have a large impact on global operations?■■ Does the activity have a large impact on equity?

Leadership Processes

Source: Shell.



38

Shell maintains consistency of talent management practices through global accountability.

■■ Shell creates a leadership governance cascade to ensure global oversight of top talent.

■■ Its talent management network supports consistent leadership issues across the organization and is held accountable for enforcing global mandates.

■■ By providing simple and consistent leadership tools, adherence to global rules is facilitated.

DERF 10-6502



DERF 10-4885


Title ■■ HO: EMEA Mtg_London 0908

ENFORCE OWNERSHIP STRUCTURE THROUGH GLOBAL TALENT MANAGEMENT NETWORK

Clarity of Roles Between Local and Global Levels

Alignment of Local Accountability to Global Talent Management for Critical Activities

Simplicity and Consistency of Leadership Tools in Application

Source: Shell.

BU HR Director

HRBP HR Specialist

A direct reporting line to the head of talent management enforces accountability for global mandates.

Shell clearly assigns talent ownership to different stakeholder groups.

Key Roles and Responsibilities of Embedded Talent Director

■■ Advises and supports local leadership decisions and issues

■■ Escalates local leadership risks to global talent management leaders

■■ Monitors local leaders’ and HR staff’s compliance with ownership governance mandates

■■ Benchmarks performance against global talent management goals

Talent Director

Talent Management Reporting and Governance Structure

Shell’s Talent Management Network

Cascaded Leadership Governance

Attributes of Shell’s Leadership Tools and Frameworks

■■ Facilitated by Global Talent Management Network—Talent management directors facilitate application of talent management tools to specific local leadership needs.

■■ Mandated Use of Central Toolkit—Global talent management team requires all business units to use the same toolkits and frameworks.

■■ Maintains Consistency Over Time—Talent management directors ensure that local business units resist temptation to frequently change tools and frameworks.

Board and Executive Committee are consulted on, and accountable for, all talent decisions for Shell’s top 200 senior leaders, and sign off on succession candidates and nominations for mid- and top-level leadership programs.

Business Leaders are accountable for the main talent decisions for the next level of leaders (heads of functions and business units) with a clear impact on business results.

Heads of Business Units own the talent decisions for their units together with local HR.

Head of Talent Management

Board

Business Leaders

Heads of Business Units

Talent Director

Talent Director

Talent Director

39



GUIDELINES FOR CENTRALIZING ACTION OF HR ACTIVITIES AND PROCESSES

HR Process Common Structure Role of Corporate HR Role of Business Unit HR

Recruiting Globalized—A majority of organizations (more than 60%) maintain globalized recruiting function structures, followed by hybrid structures (24%).

■■ Set recruiting strategy.■■ Administer and coordinate recruiting efforts.

■■ Interview and hire individual candidates who fit the job description.

Compensation Globalized—Organizations are increasingly moving toward globalizing the compensation function to ensure consistent compensation practices across locations.

■■ Set compensation strategy.■■ Establish compensation guidelines that will be consistent across the organization (long-term incentives, short-term incentives, and expatriate compensation).

■■ Accommodate regional compensation differences by collecting market data, performing pay calibration, and ensuring compliance with local laws.

Training Globalized—Training function structure is becoming increasingly globalized due to technological advances, which allow organizations to leverage economies of scale and easily measure the impact of training.

■■ Set the training strategy.■■ Develop the training infrastructure and design the training content.

■■ Measure training results.

■■ Deliver training locally.■■ Advise corporate HR on training content specific to the business unit.

Employee Relations Localized—Most organizations maintain decentralized ER function structures, as they allow for policy and process customization across geographies.

■■ Set employee relations policy.■■ Assess ER trends across the organization.

■■ Process local grievance disputes.■■ Train line managers on ER issues.■■ Ensure that the ER policy complies with local employment laws.

HR Policy Creation Hybrid—Organizations typically maintain hybrid structures for the HR policy function to establish overarching corporate policies, while still maintaining regional customization.

■■ Set corporate HR policies and ensure they align with the organizational values.

■■ Periodically review and update policies to ensure they comply with legal norms and are not redundant.

■■ Ensure that HR policies comply with local laws and customs, and can be applied to all employees.

40



KEY TAKEAWAYS

Integrate Key Connections Between Talent Management Processes

1. Improve talent outcomes by targeting high-level, high-impact collaboration opportunities. Focus the HR leadership team on identifying and prioritizing the most critical connections between talent management processes to improve information sharing and decision making in these processes.

2. Align local talent management team accountability with global standards. Create alignment of accountability between local and global talent management teams to ensure that global talent management standards (e.g., criteria for identifying HIPOs) do not break down when implemented at the local level.

3. Build HR governance around key variables to clarify activity ownership. Reduce process redundancies and improve consistency by defining the key decision variables at your organization to evaluate when determining ownership of corporate HR and business unit HR responsibilities.

41




Challenge #2


HR Imperative #2














Challenge #1


HR Imperative #1


Challenge #3


HR Imperative #3


Challenge #4


HR Imperative #4




42

HR needs to continue to improve its services without increasing the size of the overall HR budget.

■■ A majority of HR executives expect to have either flat smaller or shrinking budgets in 2011 compared to 2010.

CHALLENGE 4: HR COST PRESSURES PERSIST; DOING MORE WITH LESS IS INCREASINGLY DIFFICULT

The Challenge of Finding Further Cost Savings Within the HR Function

Decline in HR Spend per Employee, 2009–2010

Majority of 2011 HR Budgets to Remain at or Below 2010 Levels

$2,403 $2,226

2009 2010 Med

ian

HR

Exp

ense

per

E

mp

loye

e H

ead

coun

t (U

SD)

Per

cent

age

of

HR

E

xecu

tive

s’ A

ntic

ipat

ed

Cha

nge

∆ = 7.4%

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

0%

25%

50%

Source: To come.

Source: Shared Services Roundtable, Shared Services Across Functions: Is Integrated Business Services the End-State, Rosslyn, Va: The Corporate Executive Board, 2010; CLC HR Budget and Efficiency Benchmarking; CLC HR Barometer, Q3 2010; Grossman, Robert J., “Saving Shared Services,” HR Magazine, September 2010.

Increase

No Change

Decrease

“In 2008 our costs of running HR declined by 40%, but you can only cut so many bodies from HR. The customers don’t care. All they know is, ‘I want to get what I need quickly, easily. And if there’s a problem, I want it resolved quickly.’ In a place where they’ve already cut costs to a minimal level, it takes a leap of faith to say you can keep on cutting.”

HR VP of Shared Services Consumer Products

“Our central functions are running out of room to cut costs. The only way to get step-change efficiencies is to start merging them.”

CIO and Head of Supply Chain European Chemical Company



43

Compared to stand-alone HR Shared Service Centers, Integrated Business Services can increase cost savings by more than 38%.

■■ Integrated business services improve overall effectiveness through best practice sharing and agility in responding to business change, in addition to significant cost savings.

FULLY INTEGRATED BUSINESS SERVICES OFFER COMPELLING VALUE

Savings from Migration to Multifunction Shared Services (Indexed)

50–60

100

44–54

37–44

Decentralized Functions

Unintegrated Multifunctional Shared Services

Functional Shared Services

Integrated Business Services

Additional Benefits of Multifunction Shared Services

■■ Improved quality and consistency of service ■■ Process standardization and integration ■■ Best practice sharing■■ Agility in responding to business change

■■ Better cross-functional data integration and visibility ■■ Job enrichment opportunities and high-potential talent sharing

■■ Improved support for M&A integration

Source: Shared Services Roundtable; CIO Executive Board.

DERF 10-1596

Catalog # ■■ CIO5584810SYN

Title

∆ = 38%



44

INTEGRATED BUSINESS SERVICES

Combining Shared Services from Across the Enterprise

Integrated Business Services is a holistic approach to the functional support you deliver to your internal customers combining shared service teams and identifying and exploiting synergies across functions.

■■ Many organizations operate shared services for Finance, HR, IT and beyond, but not all as part of the same framework or organization. An increasing number of companies are discussing how to integrate these disparate operations, and are in different development stages in doing so.

■■ In the final state of Integrated Business Services, corporate center service delivery is organized not by traditional function (HR, IT, Finance) but by internal or external customer type.

IT

Hu

man

Res

ou

rces

Fin

ance

Pro

cure

men

t

Sal

es a

nd

Mar

keti

ng IT

Hu

man

Res

ou

rces

Fin

ance

Pro

cure

men

t

Sal

es a

nd

Mar

keti

ng

Integrated Business ServicesFunctions including most of IT are organized horizontally into end-to-end business shared services.

Customer Services

Supplier Services

Common interface

with business

unitsFacilities Services

Standalone Functional Shared Services

Service Example P

ayro

ll

Acc

ou

nt

Pay

able

Su

pp

lier

Hel

pd

esk

Cu

sto

mer

C

all C

ente

r …

Unintegrated Multifunctional Shared ServicesFunctions are grouped into one service organization.

IT

Hu

man

Res

ou

rces

Fin

ance

Pro

cure

men

t

Sal

es a

nd

Mar

keti

ng

Hybrid of Business Services Provided Through a Functional Structure Functions collaborate to offer a business service (e.g., Supplier Services).

Integrated interface with business units

Employee Services

34

21

DERF 10-6067

Catalog # ■■ SSR6922710SYN

Title

Current maturity state of most advanced SSCs



45

45% Within Three Years

19% More Than Three Years

36% No Plans Yet

HR HAS THE OPPORTUNITY TO LEAD THE TRANSITION TO INTEGRATED BUSINESS SERVICES

Expected Migration to Multifunction Shared Service OrganizationBusiness Leader Perspective

HR should pursue a smart growth strategy to mature its shared services before the move to integrated business services.

■■ With 45% of organizations moving to integrated business services within three years, HR should act now to optimize its current shared service capabilities.

■■ The ownership of integrated business services is the result of organic growth of shared services capabilities within the organization.

The HR Opportunity

Create targeted shared services expansion paths to mature HR shared service solution capabilities to lead future business services transition from a position of strength (and even manage the function).

Source: CIO Executive Board, The Future of Corporate IT: IT Embedded in Business Services, Rosslyn, Va., The Corporate Executive Board, 2010; Shared Services Roundtable, Shared Services Across Functions: Is Integrated Business Services the End-State, Rosslyn, Va., The Corporate Executive Board, 2010.

n = 58.

Flexible Ownership of Integrated Business ServicesOwned by CFO (Organization A)

Owned by CIO (Organization B)

1 Major business units are merchant gases, electronics and performance materials, and tonnage, gases, equipment, and energy.

2 Strategic divisions are research laboratories, supply and manufacturing, global human health, consumer care, and animal health.

Business Unit C1

Business Unit A1

Business Unit B1

HR and Communications

Supply Chain

General Counsel

Global Director Enablement

Services

Global Director Human

Resources Services

Global Director Requisition

to Pay and Supply

Chain Services

Global Director Customer Support Services

Global Director Customer Service

VP Global Business

Support Services

CFO

Global Business Support Services

CEO/Chairman

Human Resources

Finance

Strategy Office

Global Compliance

Legal/Communications and Global Public Policy and Corp. Responsibility

Division A

Division B

Division C

Division D

Division E

CEO

EVP Global Services and CIO

CEO Direct Reports

Strategic Divisions2



46

CASE IN POINT: CALCULATED HR SHARED SERVICES EXPANSION

Vista’s Expansion Channel Segmentation

To ensure long-term shared service expansion, Vista1 segments opportunities into channels and evaluates their potential for growing the customer base or service portfolio.

■■ Vista develops a growth plan for its shared services by identifying four distinct growth strategies.

Expansion of Customer Base

Exp

ansi

on

of

Serv

ice

Off

erin

gs

Proactive Service Development

Identification and development of capabilities to meet future strategic needs

Lead Customer Partnership

Identification of strategic services for one major partner that can then be leveraged across all potential customers

Organic Growth

Growth increase driven solely through process improvementsCandidates are selected through:

■■ Optimized current processes and services provided, and

■■ Tailored service provision to increase current customer base satisfaction.

Staged Customer Partnership

Phased introduction of current service offerings to new customers

Expansion Potential: 50–60% of overall expansion across Shared Service Center lifecycle

HighLow

Low

High

Expansion Potential: 5–10% during life cycle

Example: HR analytics capability

Example: Enhanced employee self-service capabilities

Example: Pay communications training for managers

Example: Organizational redesign support

Expansion Potential: 20–30% during life cycle

Expansion Potential: 5–10% per year

1 Pseudonym.

Source: Vista.

CLC Implementation TipUse this matrix to brainstorm growth opportunities in all four channels to later prioritize resources based on ROI.



47

FEEDING THE HR SHARED SERVICES GROWTH PIPELINE

Growth Channels

Vista1 creates a tailored expansion plan for each channel by identifying opportunities, evaluating these opportunities, and weighing key benefits and drawbacks.

■■ Create a tailored expansion strategy for each growth channel through identification of shared service supporters within the client pool, identification of lead customers to drive product optimization, and quick realization of economies of scale or proactive product gap identification and closure.

1 Pseudonym.

Source: Vista.

Staged Customer Partnership Lead Customer Partnership Proactive Service Development

OpportunityIdentification

Consider potential new shared service clients based on:

■■ Openness to the idea of shared services;

■■ Initial evaluation of benefit to the client; and

■■ Initial evaluation of benefit to the shared service organization.

Consider potential lead customers based on:

■■ Opportunity to drive significant scale and synergy effects through partnership around one specific product; and

■■ Potential to improve a particular product based on the collaboration.

Consider introduction of potential new service offerings based on:

■■ Technology or market trends; and ■■ Unmet current or future client

needs.

OpportunityEvaluation

In-depth analysis of business partner readiness, focused on:

■■ HR–related questions; ■■ Business management;■■ Service delivery; and■■ Service support.

■■ Map current and potential customers to main current products to identify lead customer opportunities

■■ Identify major needs of key stakeholders and evaluate whether synergies can be attained through optimization around their needs

■■ Analysis whether optimized services can be rolled out to the organization at large

■■ Gap analysis between current and future required or desired state of technology

■■ Creation of a short list of potential candidates for proactive development based on strategic importance to Vista

KeyAdvantages

■■ Front-loading of risk identification and mitigation through early identification

■■ Inclusion of business partners who are bought into the concept of shared services

■■ Concerted effort to realize economies of scale with a product champion

■■ Inclusion of innovative and strategically important projects in shared service planning and provision

KeyDisadvantages

■■ Potentially growth-stifling if criteria are too stringent

■■ Depending on maturity of partner understanding of own cost and service structure, analysis might be misleading

■■ Heavy dependency on one customer

■■ Potentially suboptimal level of specification

■■ Cost-intensive projects with long lag for return on investment

■■ Occasional expansion

CLC Implementation TipEvaluate where the organization is in its life cycle (e.g., expansion, contraction) to identify key advantages and disadvantages for each growth channel.



48

DESIGN CUSTOMIZED HR SHARED SERVICES GROWTH STRATEGIES

Growth Components

Vista1 combines multiple growth drivers to create customized growth lifecycles for each service.

■■ Drive expansion through customized growth strategies that use different channels depending on the shared service organization’s lifecycle, objectives, and environment.

1 Pseudonym.

Source: Vista.

Growth Life Cycle Models

Lead Customer Partnership

Staged Customer Partnership

Organic Growth

Proactive Service Development

Phase 1: Proof of Concept

Phase 2: Growth

Phase 3: Optimization

Example 1: Customer Build Out

Example 2: Service Build Out

Lead Customer

Partnership

Staged Customer

Partnership

Lead Customer

Partnership

Phase 1 Phase 2 Phase 3

Lead Customer

PartnershipProactive Service

Development

Staged Customer

Partnership

Phase 1 Phase 2 Phase 3

Identify genuinely new opportunities or optimize around largest stakeholders for scale economics then aggressively expand services to larger clientèle.

Simultaneously drive growth by providing existing services to a larger client base and developing new service opportunities through lead customer partnerships.

CLC Implementation TipUse the growth channel forecast to anticipate “peak and trough” funding periods to better anticipate short- and long-term budget requirements.

49



KEY TAKEAWAYS


1. Articulate a clear vision of the role HR will have in Integrated Business Services. Determine what should be HR’s future role in an integrated, multifunctional shared service environment at your organization; do not wait for another corporate function to define it for you.

2. Build a robust HR shared service capability through segmented expansion plans. Drive HR shared service center maturity by separating different-in-kind expansion opportunities for a consistent, continuous shared service development strategy.

3. Leverage strategic partnerships with the line and lead customers to design growth plans. Create a tailored expansion strategy for different growth channels by identifying supporters and lead customers to drive product optimization.

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HOW CLC SUPPORTS YOUR HR TRANSFORMATION EFFORTS

CLC Human Resources

CLC Learning and Development

CLC Recruiting CLC Compensation CLC Benefits

Recruiting Structures Report

This research piece details the benefits and challenges of various recruiting structures and provides examples of reporting relationships within recruiting functions.

Boosting Recruiting Process Effectiveness

Increase the overall efficiency of your current recruiting process either through tools to help you make shorter-term, “low-hanging fruit” improvements or to aid with longer-term process reengineering efforts.

Compensation Function Management Results

This full-length benchmarking analysis provides detailed information on how compensation executives manage their functions to ensure they deliver value effectively and efficiently.

Global Compensation Administration Practices

View data on who is responsible for global compensation and how resources are allocated to global compensation management.

The State of the Benefits Function

This research brief describes the trends in benefits function management and provides benchmarking data across different sizes of organizations and functions.

Benefits Function Organizational Charts

This document profiles benefits function organization charts from seven companies with approximately 10,000 employees.

Benchmarking the Global L&D Functions of European-Based Organizations

This research details the structure and effectiveness of global L&D functions at 16 European-based organizations.

Structuring the L&D Function

Understand the main ways L&D organizes the function. This report includes information on L&D organizational structures from a variety of companies around the globe.

HR Transformation Topic Center

HR transformation is the process of responding to business strategy by creating an aligned HR strategy that focuses on delivering the right HR skills, structure, and priorities to achieve organizational objectives.

HR Functional Design Center

Use this interactive HR organizational chart to learn more about structuring, evaluating, or restructuring your HR function.

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