1. Creating People
Advantage 2012
Mastering HR Challenges in a Two-Speed World

2. The Boston Consulting Group (BCG) is a The World Federation of People Manage-
global management consulting firm and the ment Associations (WFPMA) is a global net-
world’s leading advisor on business strategy. work of professionals in people manage-
We partner with clients from the private, ment. It was founded in 1976 to aid the
public, and not-for-profit sectors in all regions development and improve the effectiveness
to identify their highest-value opportunities, of professional people management all over
address their most critical challenges, and the world. Its members are predominantly
transform their enterprises. Our customized continental federations, which are made of
approach combines deep insight into the dy- up of more than 90 national personnel asso-
namics of companies and markets with close ciations representing over 600,000 people
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zation. This ensures that our clients achieve mation, please visit www.wfpma.com.
sustainable competitive advantage, build
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more information, please visit bcg.com.

3. Creating People
Advantage 2012
Mastering HR Challenges in a Two-Speed World
Rainer Strack Pieter Haen
Jean-Michel Caye Horacio Quiros
Vikram Bhalla
Peter Tollman
Carsten von der Linden
October 2012 | The Boston Consulting Group

4. Contents
3 Executive Summary
6 The Big Picture: Global Trends in 2012
7 The World’s Top Priorities for 2012
9 Under the Radar, But in Need of Attention
10 The Perception Gap on Critical Capabilities
12 The Case for Integrated Sourcing Management
2
0 Building Up Your Critical Assets:
Talent and Leadership Development
20 Building Talent: Six Essential Steps
21 How Do Companies Stack Up?
4
2 Managing People in the World’s Fastest-Growing
Economies
24 Falling Short in Key HR Capabilities
25 Wanted: Strong Managerial, Leadership, and Technical Skills
25 Employee Development and Retention Strategies
8 Enabling Workforce Flexibility in
2
a Two-Speed World
29 Understanding Surpluses and Shortages
31 Coping with Contradiction: Managing the People Side
of Transformation
4
3 HR Governance: Global or Local?
35 Where Global Governance Counts Most
36 When Maintaining Local Flexibility Matters
7 Appendix I: FOCUS report—From Capability
3
to Profitability
7
4 Appendix II: Methodology
8
4 Appendix III: Executive Interviewees
51 Appendix IV: Supporting Organizations
4
5 Note to the Reader
2 | Creating People Advantage 2012

5. Executive Summary
B usiness leaders throughout the world continue to struggle
with the complexities of a two-speed world: they face economic
crisis in Europe and weak growth in the developed economies while also
facing rapid growth in the developing world. Volatility and uncertainty
have become the new constant. These realities create difficult people-
management challenges that range from keeping up with supply-and-
demand fluctuations to ensuring an adequate talent pipeline for the
future. Aggravating these challenges are the growing talent shortage
and rising leadership deficits, which are fueled in part by profound
demographic changes and are expected to worsen significantly in the
coming years. This situation creates a buyer’s market for talented
individuals.
Many companies recognize that today, more than ever, their people have
become their most critical competitive asset. But they need to sharpen their
efforts, integrate processes for greater impact, and manage globally while
allowing for regional adaptation. That’s a tall order—particularly consid-
ering the resource squeeze that has forced many HR organizations to do
more with less.
This global report, the third conducted by The Boston Consulting
Group and the World Federation of People Management Associa-
tions (WFPMA), examines critical trends in people management
by exploring 22 key HR topics that our Creating People Advan-
tage research has explored every year since 2007. (The first joint
BCG/WFPMA report was completed in 2008. BCG has also part-
nered with the European Association for People Management in
three similar surveys with a European focus.)
•• We explore the topics in terms of both their current and future im-
portance to companies and how they relate to companies’ existing
strengths. We also probe the practices and strategies that highly
capable companies have implemented to boost their people-man-
agement efforts.
The Boston Consulting Group • World Federation Of People Management Associations | 3

6. •• The online survey polled 4,288 executives from companies
throughout numerous industries, 102 countries, and six major
regions. We also interviewed 63 executives (both within HR and
beyond) from well-known companies all around the world.
•• This report presents our findings and analysis of the 22 HR topics
that constituted the core of the survey. Also included are short case
studies on individual companies.
•• In addition, we have inserted in the Appendix of this report our
Creating People Advantage prepublication highlighting one of the
most significant findings from our research this year: the correla-
tion between companies’ capabilities in people management and
their economic performance.
This year, the critical topics—those considered of the greatest ur-
gency—remained the same as in our 2010 global survey. Three
topics stand out as the most critical.
•• Managing talent ranks at the top of our survey respondents’ critical
list. Given the growing scarcity of talent worldwide, this is hardly
surprising.
•• Improving leadership development, another still-critical topic, was
rated second highest in urgency.
•• Strategic workforce planning maintained its ranking as a crucially
important topic for the future, as companies struggle with forecast-
ing long-term scenarios for workforce supply and demand.
Each of the report’s six chapters focuses on the people manage-
ment topics of highest relevance this year. Drawing on the survey
findings and interviews, we offer analysis of the current perfor-
mance and challenges, along with strategies and tactics to help
leaders set priorities and take action.
•• “The Big Picture: Global Trends in 2012” provides a summary
of survey results, showing the topics executives consider most
important today and in the future—and which ones most need
improvement.
•• “The Case for Integrated Sourcing Management” emphasizes the
importance of a holistic approach to people sourcing, from people
planning and employer branding to formulating a recruiting strat-
egy and retaining employees. By integrating their sourcing activi-
ties, companies can ensure consistency across their messages and
achieve important synergies.
•• “Building Up Your Critical Assets: Talent and Leadership Develop-
ment” discusses the importance of six key—and highly interdepen-
dent—steps in developing talent and leadership, from developing
a talent strategy to creating a talent magnet culture.
4 | Creating People Advantage 2012

7. •• “Managing People in the World’s Fastest-Growing Economies” de-
lineates the specific skill shortages and capability gaps that plague
companies operating in high-growth markets.
•• “Enabling Workforce Flexibility in a Two-Speed World” highlights
a rising challenge facing the majority of companies in our survey:
simultaneous workforce shortages in some areas and surpluses
elsewhere. The chapter describes useful strategies for deploying
talent effectively to reconcile these imbalances.
•• “HR Governance: Global or Local?” looks at the three levels of HR
governance that companies currently practice across 16 key HR ac-
tivities. Moreover, we also discuss what could be the most effective
approach in each activity.
An additional element rounds out and enhances the content of
the report.
The Focus report From Capability to Profitability: Realizing the Value of
People Management compares the practices of high-performing compa-
nies against those of lower-performing ones in key areas and in doz-
ens of activities, including talent management, leadership develop-
ment, and performance management and rewards. The report finds
that companies that demonstrated proficiency in 22 key HR areas ex-
perienced revenue growth that was up to 3.5 times higher and profit
margins that were 2.1 times higher than those of less capable compa-
nies. Such data may provide important insights as leaders decide how
best to invest their people-management resources.
The Boston Consulting Group • World Federation Of People Management Associations | 5

8. The Big Picture
Global Trends in 2012
S ince the previous BCG/WFPMA global
survey was conducted in 2010, we’ve wit-
nessed improvements in capabilities across
their people-management skills—a trend
that recognizes and affirms the competitive
advantage that people increasingly repre-
some topics. (A European survey was con- sent. At the same time, several topics re-
ducted in 2011.) The shaky global economy tained low ratings in both future importance
and chronic business uncertainties appear to and companies’ capabilities—a situation
have motivated many companies to sharpen we consider risky. As Exhibit 1 shows, 4,288
Exhibit 1 | Nearly 4,300 Executives in More than 100 Countries Responded to the Survey
Finland 102 Number of responses
Sample Size: Romania 82 Belarus 3 Fewer than 30
4,288 Estonia 1 Bulgaria 42 30–59
Latvia 28 Ukraine 8
60–99
Hungary 22 Greece 44
Turkey 39
100 or more
Slovakia 23
Syria 3 No data collected
Poland 10
Egypt 1
Czech Republic 58
Sweden 44 Russia 464
Norway 33
Germany 210
Denmark 8
Netherlands 74
Belgium 54
France 150
United Kingdom 120
Switzerland 55
San Marino 1
Ireland 48
Canada 20 Monaco 1 Kazakhstan 1
Italy 119 Uzbekistan 1
Spain 87 Kyrgyzstan 1
Portugal 108 Tajikistan 1
United States 337 Austria 10 Japan 4
Slovenia 13 South Korea 78
Malta 43 China 77
Mexico 207 Morocco 29 Tunisia 1 Taiwan 339
Belize 1 Croatia 1 Philippines 4
Guatemala 20 Albania 1 India Vietnam 2
Macedonia 17 17
Nicaragua 48 Thailand 20
Panama 29 Senegal 1 Bangladesh 1
Dominican Republic 41 Gambia 1 Afghanistan 1 Malaysia 1
Nigeria 4 Pakistan 1 Indonesia 42
Ecuador 59 Liberia 1 Cyprus 18 United Arab Emirates 37
Qatar 2 Papua New Guinea 11
Colombia 34 Solomon Islands 1
Peru 42 Bahrain 1
Brazil 32 Saudi Arabia 2
Saint Kitts and Nevis 2
Grenada 1 Mauritius 3
Paraguay 6 Uruguay 18 South Sudan 1 Singapore 4
Chile 31 Kenya 4 Fiji 1
Argentina 60 Angola 2 Tanzania 1 Tonga 1
Malawi 22 Australia 224
Botswana 7 Uganda 1 New Zealand 46
Swaziland 4
South Africa 84 Rwanda 8
Zimbabwe 1
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
Note: There were 59 respondents who did not specify a country.
6 | Creating People Advantage 2012

9. executives from six major regions and more study looks at how challenges in HR and
than 100 countries responded to our online people management are evolving; we base
survey this year. our analysis on 22 topics that we have iden-
tified as key priorities among our survey re-
The respondents, a mix of HR executives spondents. As we have in the past, the latest
(88 percent of the total) and non-HR survey asked executives three questions on
executives (12 percent), represented each HR topic: How capable was their com-
companies spanning more than 15 industry pany in that topic today? How important was
sectors. The services, public, and industrial the topic currently? And what future impor-
goods sectors collectively accounted for tance did they assign the topic? The most
35 percent of the responses. We also pressing challenges—those ranked most im-
conducted 63 in-depth interviews with a mix portant in the future and in which compa-
of HR and non-HR executives from well- nies also showed the lowest current capabil-
known companies throughout the globe. ity—appear in the “red zone” in the matrix
(For more about the survey methodology, shown in Exhibit 2.
see Appendix II; for a list of executive
interviewees, see Appendix III.) In 2012, three topics fell within the red zone:
managing talent, improving leadership develop-
ment, and strategic workforce planning.
The World’s Top Priorities
for 2012 Managing talent continues to top the list of
Each year, through our survey and in-depth critical topics; it remains apparent that com-
interviews, the Creating People Advantage panies still perceive their current capabilities
Exhibit 2 | The Most Critical Topics Are Managing Talent, Improving Leadership Development, and
Strategic Workforce Planning
High Managing talent Sample Size:
Improving
performance
management Enhancing Improving leadership
4,288
and rewards employee development
engagement
Trans-
On-boarding forming
and retaining HR into
new hires a strategic
partner
Delivering
on recruiting Strategic
workforce
planning
Future Improving Medium Strong
Mastering
employer need need
importance branding to act to act
HR processes
Managing change
Managing and cultural
flexibility transformation
Delivering critical and labor
learning programs costs Managing Low Medium
work-life balance need need to
Managing
Actively using
to act act
corporate
Managing social Web 2.0 for HR
health responsibility Managing diversity Relevance today
and security and inclusion Managing an
aging workforce
Restructuring
the organization
Integrating global people Low High
Low management and expansion
Providing shared services
and outsourcing HR
High Low
Current capability
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
The Boston Consulting Group • World Federation Of People Management Associations | 7

10. to be insufficient to cover expected future de- ing programs)—or simply leave it to chance.
mands. This is hardly surprising, given the Moreover, companies need to make leader-
growing shortage of talent worldwide. ship planning an integral part of their people-
planning efforts, rather than simply focus on
CEO and senior-executive succession.
“If you have the right people, the Strategic workforce planning maintained its
business will be able to face any ranking as a crucially important topic for the
challenge and provide the right future, as companies struggle with forecast-
ing long-term scenarios for workforce supply
set of services and solutions for and demand. Predicting future supply and
your clients.” demand at a job-family level is challenging
enough in healthy economic times; in volatile
Senior executive, Asian technology times, the challenge is even greater. Increas-
company ingly, strategic workforce planning calls for
more robust models that integrate it tightly
with other sourcing activities.
Improving leadership development, another
still-critical topic, was rated the second most Throughout most of the regions represented
urgent in terms of current capabilities and in our survey, these three topics were consis-
future importance. Top executives increas- tently ranked utmost in relevance, with man-
ingly need to place greater emphasis on de- aging talent and improving leadership develop-
veloping future leaders, rather than leave ment at the very top of the respondents’ list.
the task to HR (and traditional formal train- (See Exhibit 3.)
Exhibit 3 | Managing Talent and Improving Leadership Development Ranked High in Many Countries
Matrix analysis
Americas Europe Middle East Asia-Pacific
& Africa
United Arab
Middle East
Asia-Pacific
Argentina
Americas
Germany
Romania
Kingdom
Australia
Emirates
Portugal
& Africa
Finland
Taiwan
Mexico
Europe
France
United
United
overall
overall
overall
overall
Russia
States
Korea
China
South
South
Africa
Spain
Italy
Managing talent 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 2 3 1 1 3 1 2
Improving leadership 2 2 2 1 2 4 2 4 3 2 6 4 2 2 5 4 1 2 2 2 2 3
development
Strategic workforce 3 5 7 3 3 2 5 2 5 14 2 2 7 5 2 1 6 3 3 1 3 1
planning
Enhancing employee 4 3 3 4 5 6 6 16 4 15 12 3 3 7 6 7 2 10 4 5 18 15
engagement
Managing change and 6 12 13 6 4 3 3 6 2 4 4 9 6 8 7 8 5 6 5 9 4 5
cultural transformation
Actively using Web 2.0 7 8 5 5 6 5 8 8 14 8 5 13 10 3 8 5 10 4 6 8 9 8
for HR
Transforming HR into a 11 6 15 13 8 15 16 7 6 6 16 6 4 14 4 3 15 5 15 4 5 4
strategic partner
Managing work-life 5 16 4 12 10 17 7 5 15 5 14 14 11 16 3 6 9 17 17 13 11 11
balance
Improving performance 8 4 14 10 12 7 9 17 9 3 13 5 5 9 12 14 8 9 9 6 12 7
management and rewards
Improving employer 17 15 12 17 13 11 4 13 10 7 3 11 8 12 14 11 18 12 13 19 17 13
branding
Overall Rank 1 2 3 4 5 Rank 1 2 3 4 5
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
Note: Data from countries with more than 75 respondents—and from Argentina and United Arab Emirates. Ranking based on combined values of future
importance and current capabilities. Sorting based on number of top 5 rankings per topic across regions and countries.
8 | Creating People Advantage 2012

11. Under the Radar, But in Need a presence on major sites such as Facebook
of Attention and LinkedIn, few consider them effective; as
Respondents worldwide rated their companies of our 2011 survey (which covered Europe),
low in current capabilities in five topics—top- only 19 percent did. We suspect that many
ics that they also consider of low current and companies lack a strategy for effectively us-
future importance: actively using Web 2.0 for ing Web 2.0 efforts, so they use the tools only
HR, integrating global people management and minimally. It takes training to learn about
expansion, providing shared services and out- the interactive nature and possibilities of
sourcing HR, managing an aging workforce, and these tools, as well as more resources. And
managing work-life balance. (See Exhibit 4.) both require greater commitment from sen-
ior management.
In our view, these perennial “under the ra-
dar” topics are underappreciated even Integrating Global People Management and
though they tend to be directly related to Expansion. As more companies expand
megatrends that are of rising importance for globally and shift their focus to the new
companies and executives. high-growth regions, they face growing skill
and talent gaps. Companies must pay more
Actively Using Web 2.0 for HR. Overall, HR attention to sourcing talent locally and
departments have made modest progress redeploying talent from low- to high-growth
with Web 2.0 tools in their efforts to source markets where it’s needed more acutely. To
and retain people. But they can, and should, improve global people management so that it
do much more. Social media and other Web effectively supports global expansion, we see
2.0 tools are valuable places for people to two imperatives:
discover new career opportunities (both
internally and externally), learn about •• Clarify HR roles and accountabilities. Com-
companies, and exchange information and panies must specify which of these should
intelligence about which companies are the be handled centrally, handled region-
best to work for. ally, or handled locally. (See the chapter
“HR Governance: Global or Local?” for a
So why is this topic still registering low on discussion about the various jurisdictional
the radar? Although many companies have approaches to HR governance.)
Exhibit 4 | Several Topics Were Consistently Ranked Lowest
Topics with the lowest Topics of lowest future Topics of lowest current
current capabilities importance importance
Providing shared services
22 Actively using Web 2.0 for HR 22 and outsourcing HR
22 Actively using Web 2.0 for HR
Integrating global people Integrating global people Providing shared services
21 management and expansion
21 management and expansion
21 and outsourcing HR
Providing shared services Integrating global people
20 and outsourcing HR
20 Actively using Web 2.0 for HR 20 management and expansion
19 Managing an aging workforce 19 Managing an aging workforce 19 Managing an aging workforce
Managing diversity and Managing diversity and
18 Managing work-life balance 18 inclusion
18 inclusion
# Ranking
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
The Boston Consulting Group • World Federation Of People Management Associations | 9

12. •• Identify and prioritize activities that, when take these alarms in earnest and create ac-
scaled up globally, can yield high returns. tion plans. Only in Germany does this top-
Such activities include people strategy, ic appear among the top five most relevant
talent management, performance man- topics as ranked by respondents. In fact, the
agement, and leadership development. demographic shift is acute beyond Western
economies. In the financial services sector
Finally, our findings also indicate the lack of in Japan, for example, the number of work-
a global mindset among many HR profession- ers aged 50 or older is projected to grow by
als. Our 2010 report found that HR profes- 61 percent through 2020. And even in emerg-
sionals generally lacked extensive overseas ing economies such as China, the number of
work experience, an international education, manufacturing workers over the age of 50 is
and knowledge of international labor laws. expected to double in the next 15 years.
Providing Shared Services and Outsourcing Changing demographics pose significant chal-
HR. Respondents’ views of these topics have lenges—indeed, risks—for all companies,
scarcely changed since our previous global large and small. They compound the already
survey in 2010. Many companies, it seems, significant challenges of managing the talent
are either avoiding pursuing shared services pipeline. Specifically, companies face capac-
or are dissatisfied with the results they deliv- ity risks—the loss of critical knowledge and
er. Frequently, executives associate providing skills—as well as productivity risks. And the
shared services with cutting personnel costs effects of these risks are further exacerbated
and dismissing employees. But that view is by successive waves of layoffs associated with
one-sided. Although cost savings are typically cost-cutting moves over the past decade and
the major goal of shared services, companies beyond. (For more on this topic, see “Man-
also turn to them for other benefits, such as aging Demographic Risk,” a Harvard Busi-
improved quality and customer service and ness Review article written by Rainer Strack,
the ability to adopt HR best practices more Jens Baier, and Anders Fahlander in February
widely. A major benefit of providing shared 2008, and Global Talent Risk—Seven Respons-
services is that it creates efficiencies and frees es, a joint report published by the World Eco-
HR resources at the local level. In this way, nomic Forum and BCG in 2011.)
HR can deal with more-strategic topics, such
as strategic workforce planning, managing tal- Managing Work-Life Balance. It’s a well-
ent, and improving employer branding. Ade- known fact that the millennial generation
quate implementation is the key to realizing places great importance on balancing work
the anticipated benefits. and private life. Savvy companies recognize
the importance of having a culture that actu-
Outsourcing is certainly a more sensitive is- ally promotes this balance—in actions, not
sue. If cost pressures are high and the activi- merely in words. Companies that respect work-
ties an external provider can assume are non- life balance do more than simply promote
essential, then outsourcing is an option worth fair and reasonable work schedules; they also
exploring. However, it is crucial to consider make allowances for family priorities and con-
the sensitivities of the individual business, to siderations, offering flex time and job-sharing,
keep core competencies within the company, maternity and paternity leave, and resources
and to be able to control and steer the out- for the “sandwich generation”—those cop-
sourcing partner. ing simultaneously with the demands of aging
parents and their own growing children.
Managing an Aging Workforce. The aging
workforce can be regarded as the megatrend
of all the megatrends. Many executives are The Perception Gap on
aware of the major demographic shifts under Critical Capabilities
way; they hear a constant drumbeat about On a number of topics, we discovered impor-
the massive exodus of baby boomers from tant differences between how the survey’s
the workforce and how this contributes to the HR respondents (88 percent of the total) and
talent shortage. But most leaders have yet to non-HR respondents (12 percent) perceived
10 | Creating People Advantage 2012

13. their companies’ HR capabilities. Generally, flict resolution. Furthermore, as people are
non-HR executives were more critical in their increasingly seen as a source of competitive
assessments than were HR executives—a advantage, HR professionals need consulting
somewhat predictable result for those judging skills and business acumen along with capa-
others’ work rather than their own. bilities in change management. They need to
help shape people strategies that conform to
This year, the topics in which the two groups the company’s business objectives and strat-
showed the greatest disparity in perception egy. In addition, business executives want HR
were transforming HR into a strategic part- professionals to be more proactive, and more
ner, delivering on recruiting, and mastering HR proficient, at supporting them in becoming
processes. (See Exhibit 5.) The disparities in better people managers—providing help for
perception have largely remained constant example with recruiting, promotion decisions,
over the surveys in recent years, particularly and low performers.
for the topic transforming HR into a strategic
partner. These new requirements, of course, require
training. And unfortunately, training has re-
There may be several reasons for opinions mained inadequate: last year’s survey found
to deviate so widely on this topic: HR profes- that only 40 percent of respondents trained
sionals believe that their HR expertise is the HR professionals on business issues.
most important skill to bring to the strategic
partnership. Business executives have a dif-
ferent view: they see traditional HR exper-
tise as being less important for HR profes-
sionals today than their skills in other areas,
such as business planning, analytics, and con-
Exhibit 5 | Non-HR and HR Respondents Perceived HR Capabilities Differently, Especially in Three
Topics
High
Managing talent Current capabilities
assessed by HR
Improving leadership development respondents
Enhancing employee engagement
Current capabilities
Improving performance management and rewards
assessed by non-HR
Strategic workforce planning respondents
Transforming HR into a strategic partner
Delivering on recruiting
On-boarding and retaining new hires
Improving employer branding
Ranking in Managing change and cultural transformation
overall Managing flexibility and labor costs
future Delivering critical learning programs
importance Mastering HR processes
Managing health and security
Managing work-life balance
Managing corporate social responsibility
Restructuring the organization
Managing diversity and inclusion
Managing an aging workforce
Actively using Web 2.0 for HR
Integrating global people management and expansion
Providing shared services and outsourcing HR
Low
Low High
Current capabilities
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
The Boston Consulting Group • World Federation Of People Management Associations | 11

14. The Case for Integrated
Sourcing Management
T he demographic data show un-
equivocally that companies face major
challenges in filling their job pipelines with
their current capabilities in strategic workforce
planning, improving employer branding, deliver-
ing on recruiting, and on-boarding and retain-
well-qualified employees. The most desirable ing new hires. We then compared companies
candidates aren’t making things any easier: that respondents said had high capabilities
top talent today seeks—indeed, demands— in these topics against those that had report-
career opportunities, the freedom to work ed low capabilities across a range of specific
anywhere, diversity in the workplace, an measures. In Exhibit 6, we highlight our find-
inspiring working environment, and generous ings by activity rather than topic—that is,
compensation and benefits. on strategic workforce planning, employer
branding, recruiting strategy, recruiting proc-
Most companies, irrespective of industry, con- ess, on-boarding, and retaining employees.
centrate on isolated aspects of this overarch-
ing talent challenge. They put effort and in- Strategic Workforce Planning. Our research
vestment into new recruiting activities—using shows that strategic workforce planning, along
social media, for example—or build programs with improving employer branding, are the
to retain their “A” players. What they tend not two topics on which companies need to fo-
to do is approach people sourcing in a holistic cus the most. At companies that had lower-
way. As a result, crucial synergies are lost. rated capabilities in these topics, executives
have not yet adopted the tools and the mind-
We advocate that companies take an inte- set needed to manage the workforce for the
grated approach to managing people sourcing long term. Leaders at these organizations
amid all the complexities of today’s dynamic, tend to react to short-term trends and act on
fast-changing environment. Put simply, this an ad hoc basis. But such an approach will
approach addresses the entirety of the ac- become increasingly untenable. Unless work-
tivities needed to acquire and keep top tal- force planning tools are developed and put
ent. (For more on one company’s end-to-end into action now, organizations will have trou-
talent-sourcing organization, see the sidebar ble filling critical gaps for professionals, tech-
“Thinking Globally, Acting Locally: Samsung nicians, and managers in 2020 and beyond.
Group’s Talent Incubator.”)
Strategic workforce planning involves model-
To understand how companies are approach- ing the labor supply and demand for differ-
ing the various processes that comprise sourc- ent job families in order to understand cur-
ing, we asked our survey participants to rate rent and future imbalances and to develop
12 | Creating People Advantage 2012

15. strategies for addressing them. Alarmingly, workforce planning, only 32 percent of re-
however, strategic workforce planning re- spondents indicated that they have a mid-
mains an uncommon practice, used by only term supply-and-demand model in place.
a minority of the companies covered by our Fewer than half that number—15 percent—
survey. use a long-term model.
Just as a sales strategy requires a customer To model supply, a company first assesses its
segmentation, we believe, a people strategy existing internal capacity, then looks at nat-
requires a people segmentation. Therefore, ural attrition, retirement, and other trends
the prerequisite step in strategic workforce (such as potential workforce reductions driv-
planning is creating job families. Having clas- en by the economic outlook or company
sifications of job families fosters transparen- projections). Supply modeling also entails
cy throughout all the units of a company, yet, surveying labor sources—for instance, deter-
less than half of survey respondents report- mining how many new MBAs and engineers
ed that their companies used job families as the education system is producing. Demand
a part of efforts in strategic workforce plan- modeling is significantly more complicated,
ning. (See Exhibit 7.) The next step is supply- for many reasons. For one thing, it depends
and-demand modeling, which enables a com- on understanding the corporate strategy sev-
pany to simulate the labor pool a company eral years out, and from that, extrapolating
expects to have—as well as the amount that human-capital needs. Among those surveyed,
the business environment is expected to re- 37 percent said their companies had a clear
quire. Although it’s the central element of view of capacity gaps for each job family.
Exhibit 6 | Strategic Workforce Planning and Employer Branding Are Sourcing Activities Requiring Focus
Integrated Strategic Employer Recruiting Recruiting
sourcing workforce branding strategy process On-boarding Retention
management planning
A speedy initial
Systematic analysis response to Personal
Forecasting is The importance of Retention measures
Main to understand each interested development
difficult, online channels is must be established
targeted group's candidates is opportunities
challenges especially over
specific needs is
frequently
should be offered
to track personal
the long term underestimated crucial—and development
often lacking often lacking early on
3.3x 2.5x 1.4x 1.6x 2.3x 2.0x
...more likely ... more likely ... more likely to ... faster in moving ... more likely ...more likely to
Compared with to implement to conduct regard social media from an unofficial to identify the define career tracks
companies with long-term quantitative as a valuable position opening to development for individuals'
low-rated forecasting and qualitative channel approval needs of new hires development
research on target early on
capabilities, groups
companies with
highly rated 2.4x 2.8x 1.3x 1.7x 1.8x 1.8x
capabilities ...more likely to ...more likely to have ... more likely to ... faster in moving ... more likely to ...more likely to
are...1 provide transparency an established consider the from position assign mentors to implement 360-
for capacity gaps process for refining company's web approval to the initial new hires degree feedback
per job family the employer brand site an opportunity recruiting action processes
Demand-driven The employer's Targeted groups Interfaces to the On-boarding begins Clear development
people planning is value proposition are mapped with businesses are right after the paths are discussed
based on business is defined using job-group needs clearly defined offer is accepted at the interview
Best scenarios research on stage
targeted groups The talent pool Recruiting Cultural
practices Capacity planning strategy includes channels are on-boarding Trainee programs
is tailored to skill Communication push and pull tracked (Boot-camp events, span the
clusters is targeted to approaches buddy programs, organization
specific groups mentoring)
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
1
Companies with highly rated capabilities in a topic were those averaging a rating of 4 or 5 on a scale from 1 to 5; companies with low-rated capabilities
averaged 1 or 2 on a scale from 1 to 5).
The Boston Consulting Group • World Federation Of People Management Associations | 13

16. Thinking Globally, Acting Locally
Samsung Group’s Talent Incubator
In the late 1990s, as part of its global begins with a panel consisting of an inter-
growth strategy, Samsung Group undertook viewer from Korea and an interviewer from
various HR initiatives to strengthen its abroad; the pair assess the appropriateness
global leadership. As part of these efforts, it of the candidate’s background and person-
established a new unit, the Global Strategy ality. In the second step, a case interview
Group (GSG), in 1997. The expectation was is conducted to evaluate the candidate’s
that GSG members—high-potential em- general problem-solving capabilities, and
ployees recruited from the world’s top MBA a presentation session tests for leadership
programs—would provide a fresh global potential, presence, communication skills,
perspective and innovative ideas to help and intellectual abilities.
enhance the company’s performance. In
return, Samsung would offer these employ- New GSG hires receive considerable
ees a stimulating career in a dynamic and on-boarding support, beginning with an
fast-growing Asian conglomerate. intensive two-week orientation program
designed to provide an introduction to
At its core, GSG seeks to satisfy two over- Samsung, its key industries, and South Ko-
arching goals. First, it assembles a group rean culture. Additional sessions over the
of foreign talent that can serve as strategic subsequent six months include a detailed
advisors to executives in Samsung’s affili- introduction to the operations of Sam-
ates and subsidiaries. Second, it develops sung’s affiliates, training in problem-solving
and positions members to assume signifi- and project management, and an overview
cant leadership positions upon their transi- of core consulting skills. GSG prefers that
tion from GSG, and to, eventually, become its members stay with GSG for at least one
leaders in Samsung’s headquarters and year, during which time they participate
overseas subsidiaries. in in-house consulting projects and are
mentored by senior GSG members and
As GSG has grown in size and complexity, GSG alumni. The GSG employees also work
considerable attention and effort has fo- with Samsung’s affiliate companies to learn
cused on core aspects of the management more about the various businesses.
of human capital at the company, including
people planning, recruiting, on-boarding, GSG employees are asked to choose be-
and retaining employees. Over time, GSG tween one of two career tracks: consulting
has emerged as an example of an inte- or industry. Those on the consulting track
grated, end-to-end recruiter and developer act as generalists and provide advisory
of global talent. services—such as corporate strategy and
business development work—to Samsung
In order to create a focused and inte- affiliates. After two years with the company,
grated human-capital action plan, GSG members can choose either to stay in GSG
receives the affiliate companies’ global or to transition to affiliate management. By
talent requirements annually, including contrast, those opting for the industry track
the skills needed to support the specific work on industry-specific projects—such
corporate strategies at each of the compa- as developing marketing strategies for new
nies, and it incorporates them into GSG’s products—for the affiliates that they would
people planning. ultimately like to transition to when their
year at GSG is complete.
As an initial step in the recruitment proc-
ess, GSG screens candidates for both their In addition to finding strong candidates,
global orientation as well as their local Samsung concentrates on retaining its best
“fit.” Next, a two-step interview process performers. For example, GSG employees
14 | Creating People Advantage 2012

17. Thinking Globally, Acting Locally
transitioning to affiliate companies are and it has been engaged by nearly every
sometimes sent as a team—or are sent affiliate company and by all of the busi-
to affiliates that already have a number of ness units within Samsung Electronics.
GSG alumni. The idea is that the cultural As a leadership program, GSG has seen
cohesion and solidarity that these employ- the number of its alumni quadruple over
ees forged in GSG will motivate them to the last four years, and they are having a
stay together as a leadership team. As one significant impact in domestic and over-
GSG member explained, “GSG’s culture is seas business operations. One top execu-
like that of business school. When you first tive said of GSG, “Their project work never
come to Seoul, you join a diverse group of fails to give me new perspectives.” These
people with whom you develop deep bonds new perspectives, have, in turn, added to
through work, exploration of a new place, Samsung’s success and continue to further
and numerous group activities.” globalize Samsung.
GSG has been successful at bringing fresh
ideas to Samsung’s many business units,
Once supply and demand scenarios based less-capable ones was considerable: compa-
on those classifications of job families are nies deemed by respondents to have high
in place, companies can begin identifying capabilities in improving employer branding
the gaps that exist and uncovering poten- were 2.5 times more likely to carry out
tial capacity risks by business unit and pos- quantitative and qualitative research on
sibly by department, as well. A driver-based target groups than low-capability companies.
model enables companies to calculate differ- Proficient companies were also 2.8 times
ent scenarios and thus adequately respond more likely than lower-capability counter-
to the uncertainty accompanying future pre- parts to have an established process for
dictions. Only then can a company begin to refining their employer brands.
plan concrete measures to fill gaps and miti-
gate specific risks. Among our respondents, A sound employer-branding process consists
32 percent institute such actions (such as of five steps. (See Exhibit 8.) The first is con-
transfers, vocational retraining, specific re- ducting an employer brand audit. As Janine
tention strategies). Stewart, group director of people and culture
at News Limited, the Australian media con-
The other half of the demand picture, and glomerate, explained, “You want to know:
the final step in strategic workforce plan- ‘What is our current brand positioning—and
ning, is aligning recruitment targets with the current talent market’s perceptions? Are
future needs and adapting existing recruit- the two aligned? What do candidates experi-
ment and market strategy accordingly. Many ence when they engage with us?’” An essen-
companies, however, recruit in isolation; an tial audit practice—holding focus groups to
aligned approach is used by less than half analyze a company’s brand image as an em-
(48 percent) of the companies covered by ployer—was applied by only 27 percent of
our survey. the companies covered by our survey.
Employer Branding. Companies that are Next, companies need a clear picture of the
successful in people management recognize needs and beliefs of their targeted talent
that they cannot afford to be passive about groups: what they seek in an employer and
managing their employer brands. Among our in their jobs and careers. This calls for the
respondents, the gap between the generally second step, market research on internal as
proficient companies and the generally well as external employee groups. Of all the
The Boston Consulting Group • World Federation Of People Management Associations | 15

18. Exhibit 7 | Only a Minority of Companies Used Strategic Workforce Planning
A systematic approach to strategic workforce planning
1 Definition of and 2 Implementation 3 Transparency on
4 Measures to
5 Alignment of
assignment to of a supply and
capacity gaps overcome gaps recruiting targets
job families demand model
• Job families are • Simulate workforce • Analysis of different • Internal • Define recruiting
defined based on supply per skill clus- scenarios for supply optimization: needs
required ter (e.g., based on and demand transfers, cross- • Adapt recruiting and
Description
qualifications attrition, retirement) • Identification of qualification, marketing strategies
retention, and other
• Relevant employees • Simulate workforce capacity gaps
initiatives
are assigned to job demand per skill – Overall
families cluster (e.g., based – Job family
on the strategy,
technology changes)
» Job families are » Model for supply » Transparency is » Measures to over- » Recruiting targets
defined; employees and demand is provided on capacity come gaps within are aligned with
selected practices
are assigned to them implemented gaps per job family job families are strategic workforce
Usage rate of
in place planning
15
32 37 32
52 48 63 52 48
68 85 68
Medium term Long term
% of companies % of companies
not following practice following practice
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
Note: The pie charts reflect responses to the question, “Which of the following steps are executed in your company to plan workforce needs?”
key steps, companies ignored this one the files ranging from untrained to senior profes-
most: only 23 percent of respondents per- sionals) for certain entry-level positions via
formed such research. different channels (from employee referral
programs to career fairs).
Our survey revealed that most companies
overlook these first two steps in the brand- Increasingly, companies are recognizing the
ing process—the key analytical steps. (For power of technology to amplify their re-
more on the critical role that analysis plays, cruiting efforts. Our respondents assigned
see the sidebar “Analyze First: The Right high future importance to online-recruiting
Way to Achieve Your Recruiting Targets.”) channels. All four online channels that we
Like the people-sourcing process, the brand- asked them to assess—company websites,
ing process also involves an integrated ap- job portals, online advertising, and social
proach, so any one step can be truly effec- media pages—were ranked among the sev-
tive only when all the steps are carried out. en most important recruiting channels. (See
Thus, companies that pour resources into Exhibit 9.)
the third step—employer brand position-
ing—without having first conducted a base- Recruiting Process. In today’s hypercom-
line audit and market research are under- petitive age, the recruiting process itself has
mining their existing efforts. to be fast and effective. Companies deemed
by respondents to have high capabilities in
Recruiting Strategy. Within any integrated delivering on recruiting significantly outper-
sourcing-management process, the challenge formed their counterparts with lower-rated
for any company is receiving an adequate capabilities at every stage of recruitment.
amount of applications from a sufficient They moved 1.6 times faster from the un-
number of high-caliber candidates. A recruit- official opening of a position to approving
ing strategy should specify the initiatives that that position, and they were 1.7 times quick-
target specific labor pools (groups of people er at moving from approval to the first re-
with similar educational backgrounds or pro- cruiting action.
16 | Creating People Advantage 2012

19. Exhibit 8 | Companies Overlook Most Steps in Employer Branding
Five steps for developing an employer branding strategy
1 Employer
2 Market
3 Employer brand
4 Employer
5 Employer brand
brand audit research positioning brand levers organization
• Understand current • Develop and • Develop credible • Assess the • Describe processes
positioning and conduct a market positioning for the performance of and interfaces with
perception of the research program employer brand levers and prioritize other departments
Description
brand for internal and actions • Estimate FTE and
• Derive specific
external groups messages for • Define initiatives for marketing budget
• Establish a baseline
of current marketing • Understand the targeted groups prioritized levers, • Set up a monitoring
activities needs and beliefs timelines, and goals system
of targeted groups
• Identify and prioritize
recruiting demands
» Analysis of employer » Market research on » Definition of » Adoption of channels » Process for refining
brand through focus the needs of targeted targeted groups to target talent the employer brand
selected practices
group groups groups
Usage rate of
27 23 33 31
53 47
73 77 67 69
% of companies % of companies
not following practice following practice
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
Note: The pie charts reflect responses to the question, “Does your company’s employer brand encompass the following aspects?”
On-Boarding. From its boot-camp events and ly, companies seem to underestimate the
buddy programs to early assignment of value of cultural and development-related
defined tasks, the on-boarding stage is crucial on-boarding activities: companies with highly
for employee retention. Among organizations rated capabilities in on-boarding were 2.3
we surveyed, efforts in on-boarding clearly times more likely than those with lower-rated
had a positive effect on retention. Interesting- capabilities to identify the development
Exhibit 9 | In the Future, Four of the Seven Most Important Recruiting Channels Will Be Online
Future importance of recruiting channels
Employee referral/advocacy marketing
Company website
Job portals
Partnerships (e.g., schools, universities) Top 7
Online advertising
Support programs for targeted groups
Social media pages
On-campus advertising
Friends and family
Headhunters
Job fairs
Company-sponsored events
Temporary workers
Work agencies Online channels
Newspaper advertising Other channels
Low High
Importance
Source: 2012 BCG/WFPMA proprietary web survey and analysis.
Note: The bar chart reflects responses to the question, “Please rate the future importance of the following recruiting channels.”
The Boston Consulting Group • World Federation Of People Management Associations | 17

20. Analyze First
The Right Way to Achieve Your Recruiting Targets
Brand awareness is important for recruit- and the public’s view, and forge a strategy
ing new employees—but only if it can be that would reach and resonate with its
translated into corresponding recruiting targeted groups.
performance. High recruiting demands
posed a challenge for Deutsche Bahn With these valuable insights in hand,
recently. The leading German transporta- Deutsche Bahn was ready to undertake
tion and logistics company (and operator the remaining steps in the new process for
of one of the worlds’ largest rail networks) employer branding and recruiting. To
calculated that it needed approximately develop a credible brand strategy, the
7,000 new full-time employees annually project team defined targeted group
across all major employee segments in segments, identified core brand attributes
Germany alone over the next years. The and positioning options, and developed a
tightening of the labor market was brand vision for each targeted group. Next,
perceived as an increasing threat to the the team analyzed the performance of the
company’s prospects of attracting the existing recruiting channels to define a
quality and numbers of talent it needed to new recruiting strategy including a
fulfill its strategy. systematic planning of source and in-
take means.
Before attempting to find solutions,
leaders recognized the importance of Because online channels were identified
understanding the needs of potential as the most potent ones for recruiting, the
applicants: “You have to deeply under- team focused on building an integrated
stand why your target groups in the labor recruiting system online. Finally, the team
market see you as a potential employer for built a bona fide employer brand and
them—or why not.” Ulrich Weber, member recruiting organization with clearly defined
of the management board for Human responsibilities. Strategic aspects of
Resources at Deutsche Bahn, told us. recruiting and employer branding were
“This knowledge is the essential founda- bundled in the corporate center, interviews
tion for creating a winning approach.” and assessment centers were covered by
regional units, and standardized tasks
To attain a better understanding of these such as the screening of applications were
needs, Deutsche Bahn conducted an taken over by a shared service center.
external web survey of approximately
5,000 people from across all its targeted The new strategy for employer branding
groups; it also conducted 80 in-depth and recruiting has already had a positive
focus group interviews. Knowledge of inter- impact: in Universum’s 2012 employer
nal—that is, current employees’—percep- brand survey, Deutsche Bahn rose 20
tions was just as important as external spots in the rankings from the previous
perceptions. The internal perspective was year’s survey. As Deutsche Bahn’s story
captured by a web survey of approximately shows, rigorous analysis is an essential
1,000 recently hired people and another first step in employer branding and recruit-
80 in-depth focus group interviews. This ing. It not only provided valuable insights
extensive analysis phase was designed to for strategy-setting but also generated the
help Deutsche Bahn capture diverse awareness needed at top management
perspectives and then to use the insights levels to advance the entire effort.
to define its brand positioning and recruit-
ing strategy, assess the gap between the
employees’ perception of Deutsche Bahn
(broadly and by targeted employee group)
18 | Creating People Advantage 2012

21. needs of new hires early on, and they were Retention efforts powerfully underscore
1.8 times more likely to assign mentors to the integrated nature of people sourcing:
new hires. without them, all the preceding planning and
recruiting steps will be for naught. At Sky
Retention. Our results show that in most Italia, executives clearly understand this: key
regions of the world, the lack of retention talent retention is their primary indicator for
measures related to personnel development measuring the effectiveness of their talent
is typically the primary reason employees management. “We are a young company,
give for leaving. According to our survey, and we realize that outside our walls there
companies with highly rated capabilities in are many other opportunities available
retention were twice as likely as those with to talent,” said Ilaria Dalla Riva, former
lower-rated capabilities to define career executive vice president of HR, organization,
tracks for development. Only about a quarter and facility management at Sky Italia. “High
of the companies surveyed worldwide em- retention rates are our way of measuring
ployed 360-degree feedback processes when whether we are winning our battle for
planning their workforce needs, yet compa- talent.”
nies whose retention capabilities were rated
highly were 1.8 times more likely than their
counterparts with lower-rated capabilities to
use 360-degree feedback processes.
The Boston Consulting Group • World Federation Of People Management Associations | 19