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HR contributions to the 4 pillar strategy

HR on the Move

So Paulo, December 5th, 2005

Corporate Human Resources

Content

Objectives HR Contribution Methodology Conceptual approach Contribution to the strategy Next Steps Attachments

Corporate Human Resources

Objectives

Corporate Human Resources

Objectives
The major objective of this work is to develop a set of key HR metrics which will not only help the management of the HR functions but also add value to the organization. As it was presented, the HR Dashboard will contain indicators that allows measurement in 4 (four) dimensions.
Metrics that assess
HR Strategy the level of contribution of HR practices to the implementation of the business goals

HR Effectiveness

internal customer satisfaction level and meeting of expectations

HR Efficiency

efficiency of HR in terms of structure, costs, time & headcount

HR Compliance

compliance with regulatory rules (internal and external) and existing controls

Corporate Human Resources

Objectives
The focus of this part of the workshop will be placed on metrics that allows to measure HR STRATEGY, exploring the following aspects:

Define HR contributions to the strategy Ensure that the contributions are aligned with: Corporate strategy Leadership framework The visioning of a flat and flexible organization Breakdown this contributions describing: Why these are the core contributions? How these contributions are going to support the corporate strategy? How do we measure these contributions?

Corporate Human Resources

HR Contributions

Corporate Human Resources

HR Contribution
Methodology
This methodology support a relationship between corporate and human resources strategy. Moreover, it represents the stages and steps to improve performance at: business, people and operation dimensions.

Values and sustainability

Shareholder Value
Improved Business Performance

Increase productivity Increase competitively Costumer Satisfaction New Business Model

Performance Competences

Philosophy Politics

Superior People Performance Drivers of People Performance Mgt of People & People Programs

HR Systems HR processes

Corporate Human Resources

HR Contribution
Conceptual Approach
From Strategy to operation From Strategy to operation Nestl

Corporate and Business strategy

Low Cost Operations

Innovation & Renovation

Availability

Consumer Communication

Human Resources Strategy

Empower Leadership

Improve Retention & Talent Management

Facilitate Knowledge Management

Enhance Brand Alignment

o i t ub i rt no C RH

Human Resources Operations

HR Flexible Organisation1 Efficiency Effectiveness Compliance

(1) Will be detailed forward in relation to KPIs of efficiency, effectiveness and compliance.

Corporate Human Resources

HR Contribution
How HR is going to contribute with corporate strategy

Summary Strategy Highlights

Empower Leadership
Developing team skills focused on results

Improve Retention Facilitate Knowledge & Talent Management Management

Reducing turn over costs (recruitment, training, etc.) Assuring knowledge availability decreasing search time

Enhance Brand Alignment

Working on competences and skills to assure costumers loyalty increasing productions scale Developing communications programs increasing innovations aligned to the brand Enhancing the target Availability Wherever, whenever and However as a culture of the brand more closer to the target well be Assuring consistent information is given to consumers through information alignment among companys areas

Low Cost Operations

Innovation & Renovation

Stimulating a innovate and renovate environment

Decreasing lost of key knowledge and people. Increasing labor quality on R&D by focus on management competences Creating challenging environments to increase productivity and agility on distribution and delivery, supported by a flat and flexible organization Developing key people communication skills and generating a strong Consumer Insight involvement

Centralizing information facilitating information search fostering innovation and renovation Assuring technical training and knowledge transfer contributing to processes improvement

Availability

Developing synergies between leaders and teams, increasing processes agility

Consumer Communication

Crossing leaders and teams information to identify best communication strategies

Leveraging companys knowledge to assure consumer needs

Corporate Human Resources

HR Contribution
Description
Empower Leadership Improve Retention & Talent Management Facilitate Knowledge Management Enhance Brand Alignment

HR should assist leaders with the effective management of human capital, enhancing management competencies and aligning them in common practices, so they can: Promote an attractive and challenging work environment that: Fosters innovation, renovation and open communication; Ensures corporate commitment and satisfaction stimulating people performance; Develop team skills and competencies focused on results, ensuring: The required competencies for each position are identified and aligned to corporate strategy; Preparation of new leaders and succession; Identify and implement best practices in operation and strategy: Creating internal and external network to seek for information to improve results; Identifying trends and opportunities for the area in the external environment and strategy building; Perform role-modeling assuming responsibilities and developing competences and skills like: Strategic and operational management Analysis, Risk Management, Image management and Innovation, Process and quality management, Health, Security and Environment Management, Social Responsibility, Resources management, Focus on client; Integrated action Knowledge sharing, Create a team working culture, initiative, Network development, communication; People management Climate management, Recognition, Team building;

Corporate Human Resources

HR Contribution
Metrics
Name: 1) Leaders impacts on team performance Description: Measure the relation between leaders actions and staff performance, mapping the employees perceptions of the leadership. Formula: Average of answers assuring leaders performance (% - average score). Example of questions included:
Does your leader establish a clear communication? Is your leader easy to reach? Does your leader practice what he preaches? Does your leader ask your opinion and suggestions before making decisions on your work/team? Is your leader concerned about the learning and development of his team? Do you have the necessary support from your leader when you need it? Does your leader have a structured plan of the activities of your area? Do you always exchange information with your leader? Do you receive feedback on your performance on time?

Source Data: Employee Satisfaction Survey External Benchmarking: No.

Corporate Human Resources

HR Contribution
Metrics
Name: 2) Challenge work environment Description: Measure the employees perception of the environments challenging and motivating level Formula: Average of answers assuring a challenge environment (% - average score). Example of questions included:
Do you feel challenged at your work environment? Do you have clearly defined directions and expectations set for your work? Do you have clearly defined targets to perform the role? Do you have the company support to reach your objective? Does your leader takes the initiative to make changes? Does your leader promote innovations and renovations?

Source Data: Employee Satisfaction Survey External Benchmarking: No Name: 3) Leadership Development Description: Measure the level of development of leadership competences. It is necessary to define a required level (target) on average or for each competence, in order to identify gaps between required and mapped levels of competences. Also, this metric can be analyzed by different management level. Formula: a) Average of score obtained in performance appraisals leadership competences b) % of leaders that have a score higher than xx. c) Gap between individual competence ratio and required one. Evolution of the gap evaluated Source Data: Performance appraisal process Nestl Leadership Framework (identify if all or some competences will be include in this metric) External Benchmarking: No.

Corporate Human Resources

HR Contribution
Description
Empower Leadership Improve Retention & Talent Management Facilitate Knowledge Management Enhance Brand Alignment

Focusing on this practice HR would help to: Retain key people: Benefits in retaining people: Decreases lost of key knowledge Reduces turn over costs (recruiting, training e etc.) Avoid project/products launching delays; Enhance culture and values; Retention systems: Developing the anchors of the retention Compensation (Salary, short-term benefits, long terms bonus, fringe benefits) Challenge and change management (environment and career) Recognize and Reward Learn opportunity Improve talent management: Training the human capital with future competences required; Aligning competency management to best practices; Allowing progress in compensation dissociated from promotion; Developing capability to identify and better evaluate talents and potentials;

Corporate Human Resources

HR Contribution
Metrics
Name: 1) Non desired Hi potentials Separations* Description: Measure the percentage of Hi potentials that leave voluntary the organization. High potential is the individual that has the competencies to assume a Key position on the organization. Formula: Voluntary Hi Potentials resignations / total Hi Potentials Source Data: Personal administration - Payroll External Benchmarking: Yes, Saratoga This KPI could be extended to High performers (Individuals that have outstanding performance on his particular position) and, specifically to High Performers of certain business areas positions only out-of-collective agreement people. Reasons for leaving This metric will be complemented by reasons why employees leave the company (exit surveys), to understand the main reasons that generates the dissociation of employees from the corporation. Reasons need to be collected through exit surveys. For example, exit surveys ask about:
Remuneration: Were you satisfied with the compensation? (salary, benefits and etc.) Training and development: Were you satisfied with your training participation?, How often do you participate on training? Training helps you to develop your job? Do you think the company has a good training program? Do you have professional growth opportunity? Relations: How was you relation with the leadership, pairs and others areas? What do you think about the companys environment? Internal communications: Does the company communicates its Results, actions, indicators, strategy, mission, vision, values, etc.? What are the reasons for leaving the company? (better salary, new objective, etc.)? What you like and dislike the most in company?

Corporate Human Resources

HR Contribution
Metrics
Name: 2) Succession Planning Ratio Description: % of Key Positions with at least one fully and unique qualified candidate ready for succession. Provides high level insights into the depth of and organizations succession planning program for key roles.* Formula: N Potential successors / Key positions Source Data: Hi potential map structure appraisal External Benchmarking: Yes, Saratoga * The succession plan need to have a unique qualified person by position, it could not have repeated successors. Name: 3) Hi Potentials occupying key positions * Description: % of Key Positions occupied with Hi potentials. Assess the effectiveness of the depth of career management process. Formula: N Key positions occupied with Hi potentials / Key positions Source Data: Hi potential map structure appraisal External Benchmarking: No Name: 4) Internal Hire Rate for Key positions * Description: % of Key positions occupied with internal person. It looks at internal opportunities and talent development. Formula: N Key positions occupied with Internal person / Key positions Source Data: Hi potential map structure appraisal External Benchmarking: No
(*) The company may choose to select one of this 2 metrics as they measure the same from a different perspective

Corporate Human Resources

HR Contribution
Description
Empower Leadership Improve Retention & Talent Management Facilitate Knowledge Management Enhance Brand Alignment

Focusing on this practice HR would assure: Knowledge availability: Foster innovation and renovation; Decrease costs due to synergies among markets / business; Facilitate self-study Individual and organizational learning Relationship between different areas of the company and different companies and environments; Development of individual and organizational competences Connectivity between people; Measurement of companys intellectual capital All the knowledge is shared and transferred Knowledge management benefits Best practices adoption through Nestl markets / businesses; Change of companys behavior with Not sharing is not acceptable culture; Equalization of knowledge, minimizing risk of loosing key knowledge people; Leverage individual and companys knowledge

Corporate Human Resources

HR Contribution
Metrics
Name: 1) Knowledge management Description: This KPI measure the employees perception of the knowledge management in company Formula: Average of answers assuring the employees perception (% or average). Example of questions included:
Is it easy to find knowledge when you need? Do you participate in knowledge sharing activities (affinity groups, technical chats, etc.) Do you have ways to contribute with the knowledge sharing? Do you or your team have critical knowledge documented and formalized? Do you receive newsletters or white-papers on special subjects? Do the company value the knowledge as an asset?

Source Data: Internal survey External Benchmarking: No Name: 2) Employees global database contribution Description: This KPI measure the level of employees contribution to the base and indicates the level of knowledge sharing practices adoption. Formula: N of database contribution Source Data: IT controls ?? External Benchmarking: No

Corporate Human Resources

HR Contribution
Metrics
Name: 3) E-learning penetration Description: Measures how much e-learning is deployed in comparison to the total learning hours. Formula: E-learning hours / Total learning hours (including e-learning hours) Source Data: e-learning local applications softwares Learning Database where hours of training are registered External Benchmarking: No.

Name: 4) Training Headcount Investment Factor Description: It is the average amount spent on training per employee. Reflects the organizations investment in training and allows equal variables comparison of their training investment. Formula: 1) Total Training Costs / Regular Headcount 2) Total Training Costs / Total Costs + Operational expenses Source Data: Balance sheet Learning Budget External Benchmarking: Yes, Saratoga

Corporate Human Resources

HR Contribution
Description
Empower Leadership Improve Retention & Talent Management Facilitate Knowledge Management Enhance Brand Alignment

Focusing on this practice HR would help the alignment between: Polices and Practices to the Brand Safety and Health Peoples quality of life Products knowledge Commitment Corporate Values

Corporate Human Resources

HR Contribution
Metrics
Name: 1) Satisfaction and commitment Index Description: This KPI measure the employees satisfaction and commitment Formula: Average of answers assuring employees satisfaction and commitment. Examples of questions included:
Are you pride to work on Nestl? Are you optimistic of your future at the company? Are you satisfied with your job? Is the company offering good conditions to work? Does the company have a formal recognition program? Would you recommend the company as a good place to work?

Source Data: Internal Survey External Benchmarking: No. Name: 2) Values adoptions Description: This KPI measure the level of corporate values adoption by employees. Formula: Average of Answers assuring values adoption by employees. Examples of question included:
Do you know the values of the company? Do you understand these corporate values? Do you agree with these corporate values? Do you live these corporate values? Is the company acting according to its corporate values?

Source Data: Internal survey External Benchmarking: No

Corporate Human Resources

HR Contribution
Metrics
Name: 3) Risk index Description: Measure the occupational accidents and their impacts on revenue, costs increases and human and social lost Formula: (Total work accidents / HC x Worked hours) x 1.000.000 Source Data: HR data External Benchmarking: Yes, Saratoga Name: 4) Absenteeism Description: Shows an absence rate due to accidents, unjustified absences, permissions, etc which is a predictable index of turnover to come. This metric is an indicator of employee engagement and a high absence rate may be an indicator of an under-performing workforce. Formula: 1) (Absences / Total employees x 242*) x 100 (SARATOGA) 2) Worker days lost / (Average employee populations * Number of work days available per employee per month) Source Data: Time Management - Personal administration External Benchmarking: Yes, Saratoga
* 22 working days in 11 months

Name: 5) Extra Hours Description: Measure % of extra hours and their impact on organizational equilibrium, restructuring costs and satisfaction Formula: (Total extra hours / Nominal Salary) x 100 Source Data: Personal administration - Payroll External Benchmarking: Yes, Saratoga

Corporate Human Resources

Next Steps

Corporate Human Resources

Next Steps
In order to implement this Strategic HR Dashboard and be able to obtain the proposed metrics, the following action must be taken : Develop a global internal survey aligned to what we want to measure Develop a standard HR internal customer survey Unify performance appraisals criteria (ex.: evaluated concepts) and method (ex.: score that can be obtained) Define the required competences for each leader position (level), so we can measure the gaps (target vs real) Develop an standard exit survey Map knowledge that the company consider strategic and/or critical for business Develop a global knowledge database (ex. Intranet) and establish a global procedure to centralize / manage critical information in order to improve knowledge management

Corporate Human Resources

Attachments

Corporate Human Resources

HR Contribution
Rationale - Consistence analysis
HR Contributions

Methodology and Approach

Why does Empower Leadership will contribute to the corporate Strategy?

Formulating Formulating the the vision vision for for the the company company Establishing Establishing core core values values and and principles principles Selecting Selecting and and training training employees employees Helping Helping people people to to share share knowledge knowledge Disseminating Disseminating knowledge knowledge for for the the collective collective Reducing Reducing costs costs centralizing centralizing information information Facilitating Facilitating connectivity connectivity between between people people Ensuring Ensuring people people & & strategy strategy alignment alignment Improving Improving commitment commitment and and motivation motivation Enhancing Enhancing images images preservation preservation Establishing Establishing stakeholders stakeholders relation relation Ensuring Ensuring long-term long-term sustainability sustainability Promoting Promoting synergies synergies between between areas areas

Impacts on the organization

Empower Leadership
Improve Retention & Talent management

Nurture Nurture companys companys way way Long-term Long-term success success Performance Performance excellence excellence Adequate Adequate right right people people to to positions positions Leverage Leverage corporate corporate knowledge knowledge Enhance Enhance brands brands reputation Increase Increase productivity Cost Cost reduction reduction Increase Increase profits Leverage Leverage work work environment environment Improve Improve stakeholders communication Increase Increase Sales Sales and clients confidence Innovation Innovation and and renovation renovation focus focus

Promoting Promoting changes changes Ensuring Ensuring companys companys competences competences Enhancing Enhancing values values and and culture culture

Facilitate Knowledge management

Innovating Innovating and renovating products Leveraging Leveraging corporate corporate knowledge knowledge Ensuring Ensuring cooperation cooperation

Enhance Brand Alignment

Structuring Structuring the the organization organization

Corporate Human Resources

HR Contribution
Rationale - Consistence analysis
HR Contributions

Methodology and Approach

Why does Improve and Retention & Talent Management will contribute to the corporate Strategy?
Formulating Formulating the the vision vision for for the the company company Establishing Establishing core core values values and and principles principles Selecting Selecting and and training training employees employees Promoting Promoting changes changes Ensuring Ensuring companys companys competences competences Enhancing Enhancing values values and and culture culture Helping Helping people people to to share share knowledge knowledge Disseminating Disseminating knowledge knowledge for for the the collective collective Reducing Reducing costs costs centralizing centralizing information information Facilitating Facilitating connectivity connectivity between between people people Ensuring Ensuring people people & & strategy strategy alignment alignment Improving Improving commitment commitment and and motivation motivation Enhancing Enhancing images images preservation preservation Establishing Establishing stakeholders stakeholders relation relation Ensuring Ensuring long-term long-term sustainability sustainability Promoting Promoting synergies synergies between between areas areas

Impacts on the organization

Empower Leadership

Nurture Nurture companys companys way way Long-term Long-term success success Performance Performance excellence excellence Adequate Adequate right right people people to to positions positions Leverage Leverage corporate corporate knowledge knowledge Enhance Enhance brands brands reputation reputation Increase Increase productivity Cost Cost reduction reduction Increase Increase profits Leverage Leverage work work environment environment Improve Improve stakeholders communication Increase Increase Sales Sales and clients confidence Innovation Innovation and and renovation renovation focus focus

Improve Retention & Talent management

Facilitate Knowledge management

Innovating Innovating and and renovating renovating products products Leveraging Leveraging corporate corporate knowledge knowledge Ensuring Ensuring cooperation cooperation

Enhance Brand Alignment

Structuring Structuring the the organization organization

Corporate Human Resources

HR Contribution
Rationale - Consistence analysis
HR Contributions

Methodology and Approach

Why does Facilitate Knowledge Management will contribute to the corporate Strategy?
Formulating Formulating the the vision vision for for the the company company Establishing Establishing core core values values and and principles principles Selecting Selecting and and training training employees employees Helping Helping people people to to share share knowledge knowledge Disseminating Disseminating knowledge knowledge for for the the collective collective Reducing Reducing costs costs centralizing centralizing information information Facilitating Facilitating connectivity connectivity between between people people Ensuring Ensuring people people & & strategy strategy alignment alignment Improving Improving commitment commitment and and motivation motivation Enhancing Enhancing images images preservation preservation Establishing Establishing stakeholders stakeholders relation relation Ensuring Ensuring long-term long-term sustainability sustainability Promoting Promoting synergies synergies between between areas areas

Impacts on the organization

Empower Leadership

Nurture Nurture companys companys way way Long-term Long-term success success Performance Performance excellence excellence Adequate Adequate right right people people to to positions positions Leverage Leverage corporate knowledge Enhance Enhance brands brands reputation reputation Increase Increase productivity Cost Cost reduction reduction Increase Increase profits Leverage Leverage work work environment environment Improve Improve stakeholders communication Increase Increase Sales Sales and clients confidence Innovation Innovation and and renovation renovation focus focus

Improve Retention & Talent management

Promoting Promoting changes changes Ensuring Ensuring companys companys competences competences Enhancing Enhancing values values and and culture culture Innovating Innovating and renovating products Leveraging Leveraging corporate corporate knowledge knowledge Ensuring Ensuring cooperation

Facilitate Knowledge management

Enhance Brand Alignment

Structuring Structuring the organization

Corporate Human Resources

HR Contribution
Rationale - Consistence analysis
HR Contributions

Methodology and Approach

Why does Enhance Brand Alignment will contribute to the corporate Strategy?
Formulating Formulating the the vision vision for for the the company company Establishing Establishing core core values values and and principles principles Selecting Selecting and and training training employees employees Helping Helping people people to to share share knowledge knowledge Disseminating Disseminating knowledge knowledge for for the the collective collective Reducing Reducing costs costs centralizing centralizing information information Facilitating Facilitating connectivity connectivity between between people people Ensuring Ensuring people people & & strategy strategy alignment alignment Improving Improving commitment commitment and and motivation motivation Enhancing Enhancing images images preservation preservation Establishing Establishing stakeholders stakeholders relation relation Ensuring Ensuring long-term long-term sustainability sustainability Promoting Promoting synergies synergies between between areas areas

Impacts on the organization

Empower Leadership

Nurture Nurture companys companys way way Long-term Long-term success success Performance Performance excellence excellence Adequate Adequate right right people people to to positions positions Leverage Leverage corporate corporate knowledge knowledge Enhance Enhance brands brands reputation reputation Increase Increase productivity productivity Cost Cost reduction reduction Increase Increase profits Leverage Leverage work work environment environment Improve Improve stakeholders communication Increase Increase Sales Sales and clients confidence Innovation Innovation and and renovation renovation focus focus

Improve Retention & Talent management

Promoting Promoting changes changes Ensuring Ensuring companys competences Enhancing Enhancing values values and and culture culture

Facilitate Knowledge management

Innovating Innovating and renovating products Leveraging Leveraging corporate corporate knowledge knowledge

Enhance Brand Alignment

Ensuring Ensuring cooperation Structuring Structuring the organization

Corporate Human Resources