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Transforming Your Business Hewitt Associates The Circle Of Simplicity Presented at HR Round Table organized by ISPe & UPES, Dehradun Smita Anand

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The Next 15 minutes... <ul><li>Quick look at what you already know </li></ul><ul><ul><li>A Sector Overview </li></ul></ul><ul><li>Business Alignment Essentials - </li></ul><ul><ul><li>lets acknowledge reality </li></ul></ul><ul><li>Crafting People Strategy In An Uncertain World </li></ul><ul><ul><li>A value creation paradigm </li></ul></ul><ul><ul><li>Value creation through alignment </li></ul></ul><ul><ul><li>Simplicity - aligning people development to business performance </li></ul></ul>

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Sector Overview Key Success Factors Macro-economic Legal & Regulatory Competition Process <ul><li>Political Transformation </li></ul><ul><li>Environmental Awareness </li></ul><ul><li>Privatization </li></ul><ul><li>Deregulation </li></ul><ul><li>Competition from global players </li></ul><ul><li>Volatility of oil prices </li></ul><ul><li>Rapid technology change </li></ul><ul><li>Process integration </li></ul><ul><li>Optimal product mix </li></ul><ul><li>Cost competitiveness </li></ul><ul><li>Infrastructure/Logistics </li></ul><ul><li>Integration into attractive segments of the energy value chain </li></ul><ul><li>Alliances and increased M&A activity </li></ul><ul><li>Enhancement of customer value </li></ul><ul><li>Increasing retail presence </li></ul><ul><li>Technological superiority </li></ul><ul><li>Marketing, brand building, pricing and risk management </li></ul>Drivers of Change

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Sector Overview-Lets Acknowledge Reality Create a higher order purpose The Five Lessons... … And Specific People Issues Establish alignment and agility Build capabilities that address hearts and minds Talent Pipeline acceleration Drive organizational performance <ul><li>Performance & productivity </li></ul><ul><li>Workforce efficiencies </li></ul><ul><li>Change management </li></ul><ul><li>Organization structuring </li></ul><ul><li>Managing unions </li></ul><ul><li>Leadership </li></ul><ul><li>Workforce demographics </li></ul><ul><li>Reward & recognition </li></ul>

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The Value Creation Paradigm Distribution of wealth must be preceded by creation of wealth Organizations require social legitimacy/credibility to be attractive It’s a myth that old organizations cannot really change Organizations first create value for those they serve and then for those who own it It’s a myth that organizational efficiencies invariably decrease when change is effected

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Value Creation - People Issues For Addressal <ul><li>Performance & productivity </li></ul><ul><li>Workforce efficiencies </li></ul><ul><li>Change management </li></ul><ul><li>Organization structuring </li></ul><ul><li>Managing unions </li></ul><ul><li>Leadership </li></ul><ul><li>Workforce demographics </li></ul><ul><li>Reward & recognition </li></ul><ul><li>Align to Business Drivers </li></ul><ul><li>Build business Line of Sight </li></ul><ul><li>Link HR Strategy to Business Strategy </li></ul><ul><li>Organisation Design </li></ul><ul><li>Job and work levels </li></ul><ul><li>Manage Talent </li></ul><ul><li>Staffing/ Redeployment </li></ul><ul><li>Targeted retraining/ re-skilling </li></ul><ul><li>Talent pool/ Leadership development </li></ul><ul><li>Benefits & lifestyle / recognition program </li></ul><ul><li>VRS schemes </li></ul><ul><li>Perform to Reward </li></ul><ul><li>Building a performance culture/ system </li></ul><ul><li>Fixed pay / performance based pay </li></ul><ul><li>Team performance and pay linkages </li></ul>

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Value Creation - Aligned & Adaptive Cultures Matters <ul><li>Adaptive Companies </li></ul><ul><ul><li>Encourage risk-taking </li></ul></ul><ul><ul><li>Receptive to innovation and change </li></ul></ul><ul><ul><li>Trusting environment </li></ul></ul><ul><ul><li>Leadership encourages change </li></ul></ul><ul><ul><li>Entrepreneurship highly valued </li></ul></ul><ul><ul><li>Proactive management </li></ul></ul><ul><ul><li>Shared feelings of confidence to be able to manage problems and take advantage of opportunities </li></ul></ul>1000% Revenues 0% 200% 400% 600% 800% 682% 166% Adaptive Companies Other Companies Return on Shareholder Investment 0% 200% 400% 600% 800% 1000% 901% 74% Adaptive Companies Other Companies

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Value Creation - Aligning organisation to business drivers From Business Unit... … To Opportunity Based Design <ul><li>Organizing around skill bases: </li></ul><ul><ul><li>Clear cut accountability and authority </li></ul></ul><ul><ul><li>Dedicated resources </li></ul></ul><ul><ul><li>Stable opportunities </li></ul></ul><ul><li>Organizing around customer bases: </li></ul><ul><ul><li>Opportunity centric </li></ul></ul><ul><ul><li>Process/technology integration </li></ul></ul><ul><ul><li>Delayering/ removing overlaps </li></ul></ul><ul><ul><li>Speed to market enabled </li></ul></ul><ul><ul><li>Customer focussed and driven by multi-disciplinary teams </li></ul></ul>

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Value Creation - Define Performance Philosophy First Variable Enterprise-Business Mix Enterprise-wide Consensus Performance Focus Financial Results Business Unit Driven Customer Process Business Unit Chosen Capability Perception Usage Reward&Recognition Developmental Rater Constitution Single Rater Multi-Rater Unit of Measurement Individual Team Degree of Differentiation No Differentiation High Performers Low Performers Frequency-Depth Mix Project-based Review Quarterly Review with Lower Depth Annual Review with Greater Depth Options

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Value Creation - Aligning Performance Metrics to business drivers Performance Scorecard <ul><li>Map objectives to the balanced scorecard framework </li></ul><ul><li>Establish metrics, baseline, and set targets </li></ul>Value Drivers <ul><li>Identify value levers </li></ul><ul><li>List metrics in view of short- and long-term business strategy, anchored to value creation requirements </li></ul>Strategy <ul><li>Articulate how the business will create value, from high- level strategies to specific initiatives that will support the business objectives </li></ul>

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People issues require a proactive strategy for addressal <ul><li>Performance & productivity </li></ul><ul><li>Workforce efficiencies </li></ul><ul><li>Change management </li></ul><ul><li>Organization structuring </li></ul><ul><li>Managing unions </li></ul><ul><li>Leadership </li></ul><ul><li>Workforce demographics </li></ul><ul><li>Reward & recognition </li></ul><ul><li>Build Capability </li></ul><ul><li>Develop business leaders </li></ul><ul><li>Skill shortage in leadership </li></ul><ul><li>Leadership bench strength </li></ul><ul><li>Defining a clear leadership paradigm </li></ul><ul><li>Manage Change </li></ul><ul><li>Communication/ integration </li></ul><ul><li>Career mapping / promotion / policy integration </li></ul><ul><li>Cultural issues </li></ul><ul><li>Transformation related </li></ul><ul><li>Trust building </li></ul><ul><li>Building a new image </li></ul>

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Aligning talent strategy to business Business Strategy Initial Talent Strategy Questions Focused Talent Strategy Questions Grow Revenues by 10% over FY02 through M&A’s and JV’s Sourcing Do you have the necessary talent inside the company, or will you look outside ? Assessing What goals will the leadership team have to accomplish? Developing What skill sets and competencies are critical for success? Compensating What are the right target reward levels given this new challenge? Do these skills exist in-house and with whom? Where these skills are missing, do we build internally or seek externally? For whom is this an ideal developmental assignment? How will we measure our success developing these skills and assess the need for other skills?

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Manage talent proactively Who are your essential people? Crucial Employees Identification of the critical talent pool within the organisation is imperative to survive the “War For Talent”

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Manage talent proactively What should we do with our most important people? Plan Engage Develop Deploy Reward By identifying the right levers for change within each employee group, we can adapt and orient talent to the changing business needs Critical Important Low Priority Optimise Productivity Link Performance to Rewards Optimise Workforce Recruit/ Train/ Mentor Succession Planning Knowledge Workers Middle Management Skilled Workers Less- Skilled Workers Top Executives

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Align leadership to business strategy A firm’s Leadership strategy must align with its business strategy and the change required in their environment Growth Return Transformational Change Leadership systems reinforcing: Vision, Speed, Aggressiveness, Risk-taking, Managing Change, Driving Results Leadership systems reinforcing: Speed, Aggressiveness, Process Management, Risk-taking, Planning, Task Focus Leadership systems reinforcing: Vision, Decision-making, Financial Acumen, Managing Change, Risk Management, Cost Control Leadership systems reinforcing: Risk Management, Process Management, Financial Acumen, Cost Control, Rule Orientation, Task Focus Transactional Change

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Align Capability Requirements To Business <ul><li>“ Stream of New Products” </li></ul><ul><ul><li>Breakthrough innovation </li></ul></ul><ul><ul><li>Speed to market </li></ul></ul><ul><ul><li>Big risks/big rewards </li></ul></ul><ul><li>“ The Most Value at the Lowest Costs” </li></ul><ul><ul><li>Tight value definition </li></ul></ul><ul><ul><li>Process improvement/cost reduction </li></ul></ul><ul><ul><li>Rigorous measurement and accountability </li></ul></ul><ul><li>“ Superior Levels of Service” </li></ul><ul><ul><li>Tailored solutions/fabulous service </li></ul></ul><ul><ul><li>Deep commitment to customers </li></ul></ul><ul><ul><li>Responsiveness and flexibility </li></ul></ul>Product Leadership Operational Excellence Customer Intimacy

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Building Commitment- Providing Real-World Road Maps of Opportunities High-Level View of Next Career Move Architect 3–People 2–Sales 1–Service 1–Knowledge 2–Culture Architect On a higher complexity engagement 3–People 2–Sales 1–Service 1–Knowledge 2–Culture Technical Strategist On an equal or lower complexity engagement 2–People 1–Sales 2–Service 1–Knowledge 2–Culture Project Manager On an equal or lower complexity engagement 1–People 3–Sales 1–Service 2–Knowledge 3–Culture Note: Numbers indicate mega -process focus for each role (1=highest significance) Designer 3–People 3–Sales 1–Service 1–Knowledge 2–Culture On a higher complexity engagement Knowledge Manager On an equal or lower complexity engagement 4–People 3–Sales 2–Service 1–Knowledge 5–Culture Team Leader On a higher complexity engagement 1–People 2–Sales 1–Service 1–Knowledge 3–Culture You Are Here

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Is There Training Without ROI Analysis? Sample Training ROI Analysis Tool

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Is There Training Without ROI Analysis? Sample Training ROI Analysis Tool High-Level Findings

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Aligning Your Workforce With Your Change Direction Fwd Rew Exploring Creating Home

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Managing Change - From Insight to Action <ul><li>What Do We Need To Do? </li></ul><ul><li>Attract </li></ul><ul><li>Develop </li></ul><ul><li>Engage/retain </li></ul><ul><li>Redeploy </li></ul><ul><li>Contract/source </li></ul><ul><li>Reinforce </li></ul><ul><li>Change </li></ul><ul><li>Identify </li></ul><ul><li>Develop </li></ul><ul><li>Engage </li></ul><ul><li>What Do We Need? </li></ul><ul><li>Critical roles and competencies (e.g. SAP specialists, project managers, go-to-market savvy) </li></ul><ul><li>Culture (e.g. performance, global, customer focused, ownership innovation) </li></ul><ul><li>Leadership bench strength (e.g. Succession planning,re-deployment ) </li></ul><ul><li>What’s Our Time Frame? </li></ul><ul><li>Urgent </li></ul><ul><li>Intermediate </li></ul><ul><li>Long-term </li></ul><ul><li>Urgent </li></ul><ul><li>Intermediate </li></ul><ul><li>Long-term </li></ul><ul><li>Urgent </li></ul><ul><li>Intermediate </li></ul><ul><li>Long-term </li></ul>Fwd Rew Exploring Navigating Creating Home

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In summary, Five Lessons on What needs To Change 1 Speed of change 2 Recognizing full impact of technology & customers 3 ROI on people - key measure for HR effectiveness 4 Distribution of wealth-competitive fixed,attractive variable 5 Drive organizational performance