A11 Creating People Advantage

SessionA11 Session A11
Creating peopleadvantage
HighlightsfromtheglobalsurveyconductedbytheBoston ConsultingGroup(BCG)fortheWFPMA
JeanMichelCaye
PartnerandManagingDirector Paris,France
PaulOrlander
PartnerandManagingDirector Toronto,Canada g g ,
Thesessionsinthe Personal equity track arepresentedby
Insrerlogo
Creating People Advantage

How Companies Can Adapt their HR Practices for Volatile Times
Montreal, 27th of September 2010
The Creating People Advantage series goes into fourth round

The CPA series has drawn strong participation in the past ... ... and received extensive international media coverage
TV: CNBC
Australian Fin. Review
Business Week
Financial Times
CPA Europe 2007
CPA World 2008
CPA Europe 2009
CPA World 2010
Frankfurter Allgemeine Zeitung
Handelsblatt Il Sole 24 Ore
La Repblica
1,355 participants
4,741 participants
3,348 participants
5,561 participants
Le Figaro
The Economic Times
The Herald Business
Times
CPA 2010 publication: Montreal, Sept. 27, 2010

Source: Selection of media responses 2007-2009
CPA 2010_Montreal-final_ 27-9-10 JMCPA.ppt
Bloomberg Businessweek
Le Figaro
Interview Le Figaro
1
More than 100 nationalities participated in global HR study

Sweden 121 Norway 24 Denmark 42 Netherlands 89 Andorra 2 Estonia 1 Finland 177 Poland 8 Hungary 36 Slovakia 10 Serbia 22 Ukraine 3 Czech Republic 28 Belgium 26 United Kingdom 131 Latvia 38 Ireland 30 France 270 Spain 50 Cape Verde 2 Portugal 100 Macedonia 30 Dominican Morocco 8 Republic 24 Costa Rica 42 Trinidad and Tobago 5 Venezuela 38 Senegal 20 Cte d'Ivoire 3 Benin 4 Algeria 1 Nigeria 8 Chad 1 Angola 1 Namibia 6 South Africa 97 Russia 166 Germany 173 Austria 21 Slovenia 48 Switzerland 67 Romania 52 Montenegro 2 Bulgaria 109 Italy 57 Greece 89 Turkey 53 Malta 74 Cyprus 20
Moldova 2 Japan 18 China 73 South Korea 42 Albania 1 Tunisia 4 Afghanistan 1 Taiwan 101 Thailand 33 Philippines 85 Brunei 1 Indonesia 3 Malaysia 15 Singapore 3 Australia 220 New Zealand 68
Canada 438 United States 293 Mexico 19 Guatemala 16 Saint Kitts and Nevis 2 Nicaragua 8 Panama 24 Colombia 50 Ecuador 31 Brazil 201 Peru 26 Bolivia 4 Chile 7 Paraguay 18 Uruguay 27 Argentina 25
=0 Fewer than 10 1019 2049 5099 100 or more
India 50 Sri Lanka 16 Saudi Arabia 75 United arab. Emirates 10 Kenya 11 Tanzania 33 Malawi 2 Uganda 44 Swaziland 1 Zimbabwe 5 Botswana 29
Qatar 2
Note: Not all countries shown Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis
Interviews with executives have been conducted around the world

Interviews in Europe 88 Mid. North East America 5 15 Latin America 11 Asia / Pacific 28
3 3 2 1
Africa 6
6 153
11 5 4 3 3 1 5
12 12 24
Finland
Argentina & Chile Colombia
Canada
China
Switzerland
Russia
Korea
Brazil
Singapore
India
South Africa
Philippines
USA
Norway
Source: Interviews; BCG/WFPMA analysis

New Zealand
Germany
Netherlands
France
Hungary
Spain
Turkey
Australia
UAE
Total
3
Italy
UK
153 interviews have been conducted

Europe
Germany BASF BMW Daimler UK France Finland Lloyds Banking Group Schneider Electric Nokia AmEx Google USA Pfizer Sprint Dr. H. Schwager Harald Krger Wilfried Porth Angie Risley Karen Ferguson Hallstein Moerk Kevin Cox Lazlo Bock Joann Eisenhart Sandy Price Lynelle Briggs Italia Boninelli Jianjun Bai CHRO CHRO CHRO Group HR Director EVP HR CHRO EVP HR VP of People Operations SVP WW HR Head HR Head of APSC (Australian Gov.) SVP HR Head of HR
4
North America/ Latin America
Asia/Pacific/ Australia/Africa
Australia South Africa China
APSC Gold Fields Ma Steel Group
Some Results
Google leads in ranking for best HR practices

23% of all respondents rated Google as the company with the best HR practice
4
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis
Insights on "Engaging Employees"

Laszlo Bock
Global Vice President of People Operations at Google
Hallstein Moerck
Executive Advisor & Former Executive VP of HR at Nokia
The 21 HR topics fall into five categories

Delivering on recruiting Improving employer branding
Source
Managing demographics Managing globalization Strategically planning the workforce Improving performance management and rewards
Perform
Measuring labor cost Measuring workforce performance Becoming a learning organization Improving leadership development Managing change and cultural transformation Managing talent Enhancing employee engagement Managing corporate social responsibility Managing diversity and inclusion Managing work-life balance Managing flexibility Mastering HR processes Providing shared services and outsourcing HR Restructuring the organization Transforming HR into a strategic partner
Develop
Affiliate
Achieve HR excellence
Source: BCG analysis

Talent, leadership development, engagement and workforce planning are the most critical HR topics
High
Leadership development Workforce performance measurements HR as strategic partner Performance management and rewards Employee engagement Managing talent
2010
Strategic workforce planning Learning organization
Sample size: 5,561

Strong need to act
Future importance
Recruiting
HR processes
Employer branding Flexibility Labor costs Work-life balance
Low High
Restructuring the organization
Change & Cultural Corporate social responsibility Demo- transformation graphics GlobaliDiversity & zation inclusion Shared services & outsourcing HR
Low need to act
Medium need to act
Relevance today
Low
High
Low Current capability

Managing talent and improving leadership development ranked high in most countries
Northern America Latin Am. Europe Mid. East Africa Asia Pacific
New Zealand
Canada
Netherlands
France
Russia
United States
Saudi Arabia
Subject Managing talent Leadership development Workforce planning Employee engagement HR as a strategic partner Workforce perform. measurement Change and cultural transformation Learning organization Employer branding Performance and rewards
1 2 3 4
2 1 3 4
4 1 3
1 2
2 1 5 2 3
1 2
1 2 5 3 4
2 1 5
3 1 4
1 2 4 3
2 1 4 5
Philippines 2 1 3 5
South Africa
China
Brazil
Germany
Country
Australia
Mentions in Top 5 14 13 13 8 5
Italy
4 3
3 4
2 5 4
UK 5 3
2 5 3
5 5 4 5 2 5 3 2 3 4 4 5 1
5 4
4 3 3
Note: N of each country is above 50 Source: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis
1 2 3 4 5
10
Performance management and rewards, and employee engagement, have jumped in current importance ranking
Current importance
2008 ranking 2010 ranking
Managing talent 1 Improving leadership development 2 Delivering on recruiting 3 Managing work-life balance 4 Managing change and cultural transformation 5 Transforming HR into a strategic partner 6 Enhancing employee engagement 7 Improving performance management and rewards 8 Measuring workforce performance 9 Restructuring the organization 10 Becoming a learning organization 11 Managing demographics 12 Mastering HR processes 13 Managing diversity and inclusion 14 Managing corporate social responsibility 15 Managing globalization 16 Providing shared services and outsourcing HR 17
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Improving leadership development Managing talent Enhancing employee engagement Measuring workforce performance Improving performance management and rewards Managing labor costs Delivering on recruiting Transforming HR into a strategic partner Strategic workforce planning Mastering HR processes Becoming a learning organization Managing change and cultural transformation Managing flexibility Improving employer branding Restructuring the organization Managing work-life balance Managing corporate social responsibility Managing diversity and inclusion Managing demographics Managing globalization Providing shared services and outsourcing HR
11
Of the Five Most Frequent Projects, Four Are Poorly Managed

Lack of Focus of HR function?
Above-average satisfaction with projects
Under-leveraged Managing corporate social responsibility Becoming a learning organization Managing work-life balance Managing flexibility
Good practice Delivering on recruiting Mastering HR processes Transforming HR into a strategic partner Improving employer branding
Below-average satisfaction with projects
Difficult topics Managing change and cultural transformation Strategic workforce planning Providing shared services and outsourcing HR Managing diversity and inclusion Managing demographics Managing globalization
Poorly managed Improving leadership development Restructuring the organization Managing talent Enhancing employee engagement Measuring workforce performance Managing labor costs Improving performance management and rewards Number of projects undertaken is above average Top five HR projects (number of projects)
Number of projects undertaken is below average

Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
12
Three high-priority projects of high-performing companies are neglected by low performers

Top ten HR projects of high-performing companies Low-performing companies rank five HR projects lower than high performers
1 2 3 4 5 6 7 8 9 10
Improving leadership development Managing talent Restructuring the organization Delivering on recruiting Measuring workforce performance Enhancing employee engagement Managing labor costs
Performance management and rewards
-5
-1 -1 2 0
1 0 0 -4 -4 -5 -4 -3 -2 -1 0 1 2 3 4 5 Number of ranks different from high performer

13
Transforming HR into a strategic partner Improving employer branding
HR projects
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
When adapting HR practices for volatile times five areas of HR should be in focus
Do You Have the Right Future Leaders?
Creating a New Deal for Middle Managers
A Strategic Workforce Plan to Build the Capabilities You Need
How Companies Can Adapt their HR Practices for Volatile Times Developing Capabilities for HR to Partner with the Business Units
Building Flexibility in the Workforce
14
Do you have the right future leaders?

High
Leadership development Managing talent
2010
Sample size: 5,561

Strong need to act
Future importance
Low need to act
Medium need to act
Relevance today
Low High Current capability

Low Low
High
15
The region-industry matrix highlights likely skill shortages in 2020 and 2030
Projections 2020 2030
Transport, Manufa Constr commu cturing uction Utilities nication Trade CAN USA MEX BRA SWE UK FRA GER POL ESP ITA TUR RUS IND CHN KOR JPN AUS Low Medium High High talent shortage or skill gaps Very high talent shortage or skill gaps Talent shortage or skill gaps America Hotels, It & Public restaur- Finan. Bus. Health adminis Eduants service service care tration cation
Others
Pacific
Employability/immigration capability No pressing talent shortage or skill gaps
Source: BCG analysis. Note: The country assessment scoring is derived from a combination of the employability score and the ease-of-immigration score. The country/ industry assessment scoring is based on the size of the current employment situation, the CAGR difference between supply by country and demand by industry, and the CAGR difference between labor supply and demand on the country level.
Asia
Europe
16
Talent management: from serendipity to strategy

~x 5 ~x 3 ~x 3
Talent risks & strategies by geographies
Ratios Leadeship Pipeline Business Strategy
1 Anticipate & Invest 2 5
Attract & identify
Talent risks by functions

% Talents / total staff
Affiliate
Develop Proactive career management Leadership & Learning Center

1 Division 2 Divisions 3 Divisions+
Assess & select
Function 1
Function 2
Function 3
Talent HR processes
17
Talent issues to differentiate upon maturity of organization

Mature Organizations
+ + Low turn-over and low growth Status-quo and silo oriented executives Overload of low performers Important HR systems legacy Complex decision making on talents More attractive for farmers than developers Highly educated talents Internal sourcing more important than external + Important HR systems legacy + Profitability and excellence oriented KPIs +
Rapidly Developing Organizations

Often talent massive education required in RDEs Unstability of talents and management Often non adapted managers Little culture of meritocracy in RDEs Lack of cohesion External sourcing is crucial Little equipement in HR systems + High turn-over and growth + Rapid decision making on talents though some opacity + Growth oriented KPIs + Attractive for developers +
18
Top performing companies are able to fill top executive positions internally Low performers struggle
Internal fill rate (%)
80
60
60%
63% 51%
High performer
60% 47%
Low performer
40
20
13%
Frontline managers
Senior middle managers
Top managers
Sources: Proprietary Web survey with 5,561 responses; 1,089 responses in this section; BCG/WFPMA analysis
19
In North America women make up 1/3 of talent pools - in Europe less than 1/4 of employees in talent pools are women
Women North America Pacific Emerging Asia Europe Latin America Africa Established Asia Middle East 4% 0 20 40
33% 32% 27% 24% 24% 24% 15%
Men
67% 68% 73% 76% 76% 76% 85% 96%
Companies with 10% women in talent pool
38% 31% 42% 44% 50% 49% 61% 90%
60
80
100
Makeup of talent pool

Source: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis
21
The best leaders will demonstrate differentiated leadership

Need to navigate an uncertain, ambiguous world with a shortage of key talent
Leadership differentiators
N avigate
Embrace global uncertainty and chart a clear course
Ethics
Timeless
Integrity Vision
Compelling aspiration
Resilience
W in & win
Deliver sustainable success to company and stakeholders
Drive to achieve
Intelligence
E mpathize
Right trade-offs
IQ and people smarts

Achieve through network influence and authority
Courage
Judgment
Ownership and risk
S elf-correct
Unlearn outmoded success models
Source: Interviews, survey responses and BCG analysis
22
Development conversations and plans are relatively popular but not considered effective
Training actions performed (% of respondents)
Technical and functional training Regular development conversations and plans On-the-job projects Individual coaching Internal executive-development program Mentoring Cross-functional assignments International assignments Tailored career tracks along functions, regions, position External assignments (such as joint ventures and NGOs
8% 48% 47% 44% 40% 33% 30% 30% 22% 21%
Effectiveness of each training action
Sources: Proprietary Web survey with 5,561 responses; 1,089 responses in this section; BCG/WFPMA analysis.
Low
High
23
Example practices
Top 10 stand-out preparation practices for Leadership development

1. Mandate experiences via development formulas, e.g. 2x2x2+5 Immerse leaders completely in unfamiliar markets (e.g., live in rural India, favelas, Iraq) Temporarily assign leaders to external groups, e.g. industry policy groups, payers Embed social causes into the business to generate leader loyalty
Expand horizons
2. 3. 4.
Create fast tracks
5. 6.
Provide opportunities for very high-potential leaders to "skip a chair" Create critical assignments bank to develop next generation leaders and enable late career leaders to migrate to new role while still making value-adding contribution
7.
Map external top talent in key markets to determine the market's best
Accelerate 8. Provide limited-authority experiences, e.g. peer-group leadership, JV leadership skills 9. Conduct "after-action reviews" every Friday or after every assignment development
10. Conduct quarterly talent reviews with templates reporting action plan follow-up, senior team health, succession confidence, high-potentials pipeline, and diversity
24
25
Creating a new deal for middle managers

High
Leadership development Employee engagement
2010
Sample size: 5,561

Strong need to act
Future importance
Low need to act
Medium need to act
Relevance today

Low Low
High
26
White paper on engagement was released in July 2010

Title: "Creating a New Deal for Middle Managers Empowering a Neglected but Critical Group"
......
27
Engagement of middle managers is still suffering after crisis

Difference in engagement before and after the financial crisis
Top managers Middle managers
-8% -14%
Team members
+7%
Indicator of engagement
Performance management
3.3
3.1
3.1
Recognition
3.5
-5%
3.2
-14%
3.1
-6%
People manager capabilities
3.7
-5%
3.5
-10%
3.4
+3%
Engagement score
Engagement score
Engagement score
Engagement level of top management is slightly down

Note: Scale of engagement indicators: 1 = strongly disagree, 2 = disagree, 3 = neither disagree nor agree; 4 = agree; 5 = strongly agree Sources: Engaging for Results database; BCG/WFPMA analysis
Middle managers are increasingly disengaged Engagement 2009
Engagement of team members has not suffered Change 2007-2009: <-7% <0%
28
>0%
The importance of middle managers

Middle managers...
make up the vast majority of managers have often been neglected, in favor of top managers and high potentials are unengaged after the crisis
need support to develop leadership skills
The Middle Matters
have a direct impact on employee engagement
manage day to day business and are key to execution
should translate vision and strategy to employees should function like a v-belt between top mgmt and employees
29
Middle managers need new roles, responsibilities, and levers
Illustrative company with a workforce of 50,0001
Do we have too many management layers?
elayer and create larger, exciting roles for middle managers
~ 50-200 top managers
Top mgmt
Do middle managers have the right levers to manage and engage?
mpower managers to act
Hig hp ote nti a
~ 7,000 middle managers
Middle management
Front-line management
ls
Do middle managers have the required leadership skills?
ccelerate leadership skills
~ 43,000 non-managers
Non-managers Is middle management actively involved in company affairs? everage the power of middle managers
Source: BCG/WFPMA analysis 1. Span of control of 7 used in this example

30
New DEAL interventions

D
Delayer and create larger, exciting roles
Significantly reduce micro-teams1 and increase average span of control Design new role mandates defining accountabilities, decision rights, key performance indicators, and desired leadership behavior for each middle manager Redesign their vertical and horizontal career paths and performance management and incentive systems Give the middle managers the levers and the authority to manage Make middle managers accountable for their team organization Provide them with rigorous objective setting and evaluation systems for their teams Give middle managers leeway to reward and recognize their teams Grant them the responsibility and the means to develop employees Train middle managers on managerial skillsespecially goals setting, performance evaluation, and employee coaching and development Develop leadership behaviors in middle managers consistent with company strategy through 360 feedback, development workshops, performance management, and coaching Establish modules along the hierarchy ("first leadership experience", "dealing with Generation Y", etc.) Involve middle managers in strategy development, continuous improvement processes, and innovation Establish "middle-out" programs and platforms to engage employees with corporate vision, strategy, values and actions Establish recognition programs to celebrate success in the middle
E
Empower managers to act
A
Accelerate leadership skills
L
Leverage the power of middle managers
1. Span of control less than six Sources: BCG/WFPMA analysis

31
Due diligence can help pinpoint

Illustrative company with a workforce of Spans and layers analysis 50,0001
Assess structural symptoms for sources of disengagement and inefficiency Narrow spans of control (below 6) ~ 50-200 Too many layers
Engagement survey (EFR)

Assess engagement levels of employees for: Low overall engagement scores Dissatisfaction in specific domains Top Differences among management cohorts
top managers
mgmt
Elements of engagement
Illustrative example of spans of control of executives

300
Micro teams
200
100
Objectives Middle Aspirations ~ 7,000 management Accountability middle managers Collaboration Performance management Front-line management Average span of control: 5.3 Recognition People manager capabilities ~ 43,000 Interactions Non-managers non-managers Overall engagement 2 3 4 5 6 7 8
Hi gh
po ten tia ls
10 11 ...
Top managers Middle managers Non-managers
Span of control
3 4 5 Engagement score
Sources: Engaging for Results database, data from 2009; BCG/WFPMA analysis
32
33
A strategic workforce plan to build the capabilities you need

High 2010
Workforce performance measurements Strategic workforce planning
Sample size: 5,561

Strong need to act
Future importance
Low need to act
Medium need to act
Relevance today

Low Low
High
34
The time horizon is often shorter for workforce planning than for corporate strategy
6 or more years 2% 3% Percentage of respondents 5 years 2% 14% 2% Companies that use the same time horizon for workforce planning and strategic planning
4 years Companys time horizon for workforce planning 3 years 2% 17%
1%
2%
7%
2 years
5%
5%
1%
3%
1 year
9%
4%
10%
5%
1 year
2 years
3 years
4 years
5 years
6 or more years
Companys time horizon for strategic planning

Note: Values below 1% not shown. Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA analysis.
35
Basic workforce models are prevalent, but more sophisticated simulations are rarely used
Consider current job groups Consider age of current workforce Simulate new hires Have a supply model: 15%1 Simulate retirement Derive workforce supply for the entire company along job Simulate attrition Simulate different scenarios Consider current job groups Have a supply-anddemand model: 9%2 Derive actions from a supply-anddemand model: 6%3 Simulate different scenarios Derive workforce demand for the entire company along job Simulate productivity increases Simulate technology changes Recruiting actions with quantified goals Qualification actions with quantified goals Staff reductions Apprenticeship actions with quantified goals 57% 53% 47% %
36
72% 62% 47% 42% 36% 36% 33% 70% 53% 47% 45% 39% 77%
1. Subgroup is asked to further specify workforce supply model. 2Subgroup is asked to further specify demand model. 3Subgroup is asked to further specify actions derived. Sources: Proprietary Web survey with 5,561 responses; 883 responses in this section; BCG/WFPMA analysis.
Strategic workforce planning at Lufthansa Technik
2 Simulate workforce supply per

job role
Current workforce Assumptions--for example, Fluctuation Retirement Phased retirement Development scenarios Future supply
4 Identify gaps/risk
Gap analysis per qualification group
Specialist mechanical engineer Specialist electrician Supervisor mechanical engineer Specialist electroplater
2008
-19% 9% -15% -11% 6% 21%
2009
-27% -25% -33% -38% -10%
2010
-34% -41% -40% -41%
2011
-39% -35% -39% -38%
2012
-42% -50% -33% -51%
2013
-46% -55% -38% -58%
2014
-49% -65% -61% -65%
2015
-64% -71% -66% -67% -46% -19%
1 Define job
roles
Job family group
5 Propose
measures
Recruiting Training Transfers
Insourcing/outsourcing
FY10 FY11 FY12 FY13 FY14 FY15
Specialist machinist Instrumentation engineer ERI Specialist for nondestructive testing
-7% 23% -18% -9% -12% -2% 5%
Job family
3 Simulate workforce demand

per job role
Workforce demand logic Assumptionsfor example, Strategic planning Growth scenarios Technological changes Strategic scenarios Future demand
Specialist for blasting Specialist painter/graphics Supervisor electroplater Instrumentation engineer electrician Supervisor machinist
Job function
I llu -22% str -33% -44% -44% -45% at 20% 17% iv 17% e 15% 15% 7% fi -36% -42% -48% ct -9% ive -57% -57% n 21% 21% 20% 14% u 21% 11% m be -38% -51% -64% -67% -58% r -62% s
-21% -22% -13% -1% -36% -24% -15% -21% -36% -33% -21% -38% -40% -37% -21% -47% -47% -40% -24% -53% -61% -51% -31% -65%
-58% -9% -62% -61% -48% -38% -67%
Capacity reduction
Surplus or shortage of requirements in the respective year (%) >20 >15 to 20

FY10 FY11 FY12 FY13 FY14 FY15
>5 to10 <-5 to 5 <-20 to -5
<-35 to -20 <-50 to -35 <-65 to -50
<-80 to -65 -80
>10 to 15
Source: BCG analysis.

37
Companies rely more on basic input-related KPIs and often lack efficient follow-up processes
Input-related KPIs are used much more widely than output-related metrics (% of respondents) Target values, processes to improve results, and compensation linkage to KPIs are rarely used (% of respondents)
Input-related KPIs
Employee head count Cost of personnel Training time per employee Training costs as % of total budget 46% 41%
68% 62%
Output-related KPIs
Value added per person ROI of training ROI of recruiting % of new hires receiving top performance ratings
0 10
27% 14% 13% 12%

20 30 40 50
Target value Process to improve results Use of metric

60 70
0 10 20
Compensation link
30 40 50 60 70
38
Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA analysis.
39
Building flexibility in the workforce

High 2010
Sample size: 5,561

Strong need to act Managing flexibility
Future importance
Low need to act
Medium need to act
Relevance today

Low Low
High
40
Labor cost reduction was often achieved by reducing head count

In 48% of companies, labor cost reduction equaled head count reduction
1%
>40%
In 34% of companies, labor cost reduction was higher than head count reduction
Percentage of respondents
21%40% 1% 1% 3% 4%
11%20%
Labor cost reduction in 2009

5%10%
2%
2%
6%
7%
2%
6% 2%4% 7%
6%
16%
4%
1%
6%
4%
<2% 14% <2% 2%4% 2% 5%10%
In 13% of companies, labor cost reduction was lower than head count reduction
11%20% 21% 40% >40%
Head count reduction in 2009
Note: Values below 1% not shown. Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
41
Flexibility and cutback measures are used during difficult times

Flexibility measures
% of companies that Cutback measures performed action 50% 14% % of companies that performed action 64% 47% 44% 29% 21% 19% 9% 9%
Comp. and benefits
Performance management is tightened Profit-related component of salary is increased
Company events are cut back Training activities are cut back Bonus payments are cut back or postponed Fringe benefits are cut back or postponed Overtime is no longer paid out Base salary is reduced Non-monetary component of salary is increase Pension plans are reduced
Work time
Employees take time off for earlier overtime Flexible work time is set up Work week is shortened temporarily Job mobility is reinforced: employees are trained to perform different jobs within company Fixed-term contracts are not extended Hiring criteria are tightened Number of hierarchies is reduced Tasks are centralized in shared services centers Work is outsourced Sub-contracted activities are insourced Work is offshored
31% 25% 16%
Employees are forced to take their vacations 35% Part-time work arrangements are increased 19% Unpaid leaves are increased 18% Employees are encouraged to go on sabbaticals 11% Recruiting is cut back Employees are laid off Share of temporary employees is increased Early retirement is increased 63% 48% 24% 21%
Headcount
43% 40% 38% 34% 29% 27% 19% 9%
Work organization
Source: Proprietary web survey with 5,561 responses; 1,338 responses in this section; BCG/WFPMA analysis; Percentage of companies using measure during crisis
42
Flexibility measures tend to be more effective

Actions performed in 2009 Performance management is tightened Profit-related component of compensation is increased Employees take time off to compensate for earlier overtime Flexible work time is set up: pay is reduced for reduced work hours Workweek is shortened temporarily Job mobility is reinforced Fixed-term contracts are not extended Hiring criteria are tightened Processes are streamlined Work organization The number of hierarchies is reduced Tasks are centralized in shared-service centers Work is outsourced Subcontracted activities are insourced Work is offshored
9% 34% 29% 27% 19%
Actions maintained in the future 79% 79%
Effectiveness compared to average 4% -1% 6% 10% 2%
C&B1
50% 14% 31% 25% 16% 43% 40% 38% 61%
Work time
53% 71% 19% 66% 30% 72% 75% 61% 62% 65% 46% 61% -5% 0% -4%
Head count
9% 5% 9% 9% 1%
1%
1. Compensation and benefits Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
Less More effective effective

43
Cutback measures tend to be less effective

Actions performed in 2009 Compensation and benefits Company events are cut back Training is cut back Bonus payments are cut back or postponed Fringe benefits are cut back or postponed Overtime is no longer paid out Base salaries are reduced Nonmonetary compensation is increased Pension plans are reduced Employees are forced to take their vacations Part-time work arrangements are increased Unpaid leaves are increased Employees are encouraged to go on sabbaticals Recruiting is cut back Employees are laid off Share of temporary employees is increased Early retirement is increased 24% 21% 19% 18% 11% 63% 48% 29% 21% 19% 9% 9% 35% 52% 48% 46% 29% 43% 30% 17% 47% 33% 0% 3% Less More effective effective
44
Actions maintained in the future 30% 19% 23% 42% 50% 28% 85%
Effectiveness compared to average -10% -24% -9% -8% -3% -7% -7% -15% 5% 3% 0% -15% 4% 4%
64% 47% 44%
Head count
Work time
High performing companies are more selective in their use of specific measures
Processes are streamlined Job mobility is reinforced: employees are trained to perform different jobs Fixed-term contracts are not extended The number of hierarchies is reduced and the span of control is increased Performance management is tightened Hiring criteria are tightened Flexible work time is set up: pay is reduced for reduced working hours Employees are compensated for earlier overtime Tasks are centralized in shared service centers Work is outsourced Subcontracted activities are insourced The workweek is shortened temporarily The profit-related component of compensation is increased Work is offshored Company events are cut back Recruiting is cut back Employees are laid off Training is cut back Employees are forced to take their vacations Bonus payments are cut back or postponed Fringe benefits are cut back or postponed Part-time work arrangements are increased Overtime is no longer paid out The share of temporary employees is increased Early retirement is increased Base salaries are reduced Unpaid leaves are increased Pension plans are reduced Employees are encouraged to go on sabbaticals The nonmonetary component of compensation is increased Seldom Flexibility measures Cutback measures
high low performer more often less often Usage of measure Often
45
Flexibility measures tend to rank higher on perceived effectiveness and employee engagement
Above average
10
Examples of cutback measures 9 8 7
6 1 2
Average effectiveness
Average flexibility measure
1 2 3 4 5
Employees are laid off Early retirement is increased Base salaries are reduced Bonus payments are cut back or postponed Company events are cut back
Examples of flexibility measures Below average Average cutback measure 3 4 5 Above average Average flexibility
6 7 8 9 10
Performance management is tightened Job mobility is reinforced: employees are trained to perform different jobs within the company Processes are streamlined Hiring criteria are tightened Flexible work time is set up
Below average Measures: Cutback
Average engagement Flexibility Average cutback
Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis. Note: Size represents the percentage of companies using the measure during the crisis
46
47
Developing capabilities for HR to partner with the business units

High 2010
HR as strategic partner
Sample size: 5,561

Strong need to act
Future importance
Low need to act
Medium need to act
Relevance today

Low Low
High
48
Today, how much time does your HR function spend on what?

How much time do you spent on what? Actual vs target numbers
Strategic future focus
...%
Strat business partner
Change agent & people pertner

Human capital manager
...%
Process
People Administrative expert Functional expert

Besetzung/ Recruiting Planung Controlling Karrieremanagement Zielvereinb Vergtung
...%
Beurteilung
...%
Day-to-day business ...% ...% Allocation of the HR department's capacity

49
HR is enhancing its role as business partner, but integrating HR activities into line management is proving ineffective
Percentage of respondents that introduced a concept

Introduced or enhanced the role of the HR business partner Integrated HR activities into line management Introduced HR employee self service Bundled HR services in HR sharedservice centers Built HR centers of excellence Bundled HR services in enterprisewide shared-service centers Outsourced HR activities
0 20 43% 41% 35% 30% 26% 24% 40 60 80 73%
Effectiveness of each concept
Low
High
Sources: Proprietary Web survey with 5,561 response; 641 responses in this section; BCG/WFPMA analysis.
50
Business planning and analytics rank as high priorities, but capabilities lag
HR Business Partner Skills: Differences in Importance and Capabilities Ranked by Gap HR professionals view Business analytics Business planning Client relationship management IT acumen
Resource management
Business managers view Business planning Conflict resolution Marketing Client relationship management Business analytics
Policy implementation
8 6 2 7 5 3
2 4 10 1 6 3 11 9 7 5 8
Conflict resolution
Contracting 10 Marketing 11 HR expertise Project management

Policy implementation
IT acumen Resource mgmt. Contracting HR expertise Project mgmt Importance
1 9 4
Low
High
Capability
Low
High
Sources: Proprietary Web survey with 5,561 response, 641 responses in this section; BCG/WFPMA analysis.
51
Only 40 percent of respondents offer training on business expertise to HR partners
1 Activities performed (% of respondents)1
Effectiveness of activities
57% 56% 41% 40%
Offer training on HR expertise Offer training on leadership and managing people Develop change management capabilities Offer training on business expertise Measure and provide incentives based on business performance Prioritize business knowledge and capabilities in hiring Employ people from outside HR Build financial acumen Offer rotational programs outside the HR function
15%
37% 34% 29% 27%
Low
1. Includes only companies that have introduced the HR business-partner position. Sources: Proprietary Web survey with 5,561 response; 641 responses in this section; BCG/WFPMA analysis.
High
52
Dealing with low performers is a development priority for both groups

Business Managers Skills: Differences in Importance and Capabilities Ranked by Gap HR professionals view Deal with low performers Assess training needs HR strategy development Recruiting Manage staff costs Make redundancy decisions Make promotion decisions Provide training 5 3 8 2 6 4 1 7 Deal with low performers HR strategy dev. Provide training Assess training needs Manage staff costs Recruiting Make redundancy decisions Make promotion decisions Importance Capability Low High Low High 1 4 7 2 6 5 8 3 Business managers view
Sources: Proprietary Web survey with 5,561 response, 641 responses in this section; BCG/WFPMA analysis.
53
Leadership training dominates business managers curricula

1 Activities performed (% of respondents)1
Effectiveness of activities
43%
Offer training on leadership and managing people Offer training on HR expertise Offer training on business expertise Offer training on change management skills Measure and provide incentives based on people management performance Prioritize HR knowledge and expertise in hiring decisions Offer training on HR information technology Employ former HR professionals as business managers Offer rotational programs that include a stay in the HR function
0% 7% 6% 10% 20% 30% 40% 27% 27% 23% 22% 18% 17%
50%
1. Includes only companies that actually performed the activity. Sources: Proprietary Web survey with 5,561 response; 641 responses in this section; BCG/WFPMA analysis.
Low
High
54
Discussion
55
CPA 2010 comprises of the report supplemented by a CD with interactive material and a White Paper
10,000 hard copies printed will be sent out to clients, interview partners, WFPMA conference participants and survey respondents Report includes 21 HR topics, 4 deep dives and several case studies (~50p) Report can be ordered via www.bcg.com PDF version available for download on BCG Perspectives or potentially via WFPMA affiliates web sites White Paper stand-alone and attached to the report: Focus on engaging and empowering middle managers White paper has been sent out to local offices as PDF PDF version available for download at www.bcg.com or potentially via WFPMA affiliates web sites CD with electronic material and extra analyses: 33 countries: current capabilities and future importance of 21 HR topics 15 industries: current capabilities and future importance of 21 HR topics additional case studies two video interviews report and white paper
56
The partners
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insights into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit www.bcg.com. The World Federation of People Management Associations (WFPMA) is a global network of professionals in people management. It was founded in 1976 to aid the development and improve the effectiveness of professional people management all over the world. Its members are predominantly the continental federations which are made up of more than 70 national personnel associations representing over 400,000 people management professionals. For more information, please visit www.wfpma.com.
Source: WFPMA Homepage

57

A11 Creating People Advantage

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A11 Creating People Advantage

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SessionA11 Session A11

Thesessionsinthe Personal equity track arepresentedby

Creating People Advantage

Montreal, 27th of September 2010

The Creating People Advantage series goes into fourth round

Australian Fin. Review

CPA Europe 2007

CPA World 2008

CPA Europe 2009

CPA World 2010

Frankfurter Allgemeine Zeitung

Handelsblatt Il Sole 24 Ore

The Economic Times

The Herald Business

CPA 2010 publication: Montreal, Sept. 27, 2010

More than 100 nationalities participated in global HR study

=0 Fewer than 10 1019 2049 5099 100 or more

Interviews with executives have been conducted around the world

Argentina & Chile Colombia

Source: Interviews; BCG/WFPMA analysis

153 interviews have been conducted

North America/ Latin America

Australia South Africa China

APSC Gold Fields Ma Steel Group

CPA 2010_Montreal-final_ 27-9-10 JMCPA.ppt

CPA 2010_Montreal-final_ 27-9-10 JMCPA.ppt

Google leads in ranking for best HR practices

Insights on "Engaging Employees"

CPA 2010_Montreal-final_ 27-9-10 JMCPA.ppt

The 21 HR topics fall into five categories

Source: BCG analysis

Strategic workforce planning Learning organization

Sample size: 5,561

Employer branding Flexibility Labor costs Work-life balance

Restructuring the organization

Low need to act

Medium need to act

Low Current capability

Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis

Of the Five Most Frequent Projects, Four Are Poorly Managed

Above-average satisfaction with projects

Below-average satisfaction with projects

Number of projects undertaken is below average

Three high-priority projects of high-performing companies are neglected by low performers

1 0 0 -4 -4 -5 -4 -3 -2 -1 0 1 2 3 4 5 Number of ranks different from high performer

Transforming HR into a strategic partner Improving employer branding

Creating a New Deal for Middle Managers

A Strategic Workforce Plan to Build the Capabilities You Need

Building Flexibility in the Workforce

CPA 2010_Montreal-final_ 27-9-10 JMCPA.ppt

Do you have the right future leaders?

Sample size: 5,561

Medium need to act

Low High Current capability

Employability/immigration capability No pressing talent shortage or skill gaps

Talent management: from serendipity to strategy

Talent risks & strategies by geographies

Ratios Leadeship Pipeline Business Strategy

1 Anticipate & Invest 2 5

Attract & identify

Talent risks by functions

Develop Proactive career management Leadership & Learning Center

Assess & select