State-of-the-Art HR in High Performing Organization

State-of-the-Art HR in High Performing Organization

Jay J. Jamrog Sr. VP Research, i4cp

Enabling High-Performance Organizations™

1

Institute for Corporate Productivity i4cp is the fastest growing and largest corporate network focused on the practices of high-performance organizations.

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Members (partial list) 3M 7-Eleven Adobe Systems Alliance One Allstate American Mgt. Assoc. Ameriprise Amway Apollo Group AT&T Boston Scientific Cameco Catholic Health CitiGroup ConAgra Foods ConnectiCare Darden Restaurants Deloitte & Touche Depository Trust drugstore.com Duke Energy Duke University Edwards Lifesciences

Eli Lilly & Co ExxonMobil FedEx Express FedEx Ground Federal Reserve Fidelity Investments Flextronics General Electric General Mills Home Shopping Network ING Americas Intel Jack in the box KFC Kraft LG Electronics Lockheed Martin McDonald’s Corp MetLife Microsoft MITRE Northrop Grumman Olive Garden

Pelco PETCO Pfizer Pizza Hut PNC Financial Services Prudential Financial Qualcomm Raytheon Rio Tinto Group Samsung SaskTel Shell Oil Starbucks Takeda Pharmaceuticals Tampa Electric Company T-Mobile Toyota Motor Sales United States Navy U.S. OPM U.S. SEC United Water The Y YUM! Brands

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i4cp Membership Started at the University of Michigan over 40 years ago as the Human Resource Institute (HRI) Corporate membership, available to all employees, to access actionable research and community of experts Majority of members are Fortune 500 No vendors or consultants allowed Research, trend analysis and predictions for the future to facilitate innovation and enable high performance.

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Defining High Performance High-performance organizations consistently outperform most of their competitors for extended periods of time. These companies performed better over the past five years, based on these four indicators: 1.Revenue growth 2.Market share 3.Profitability 4.Customer satisfaction 5

The 5 Domains of High Performance i4cp research has shown that high performance companies excel in five core areas: 1. 2. 3. 4. 5.

Strategy Leadership Talent Culture Market (customer focus) 6

What Does i4cp Do? i4cp helps organizations leverage the core domains of high performance through 4 delivery vehicles: 1. Research 2. Peers 3. Tools 4. Technology 7

Research. 8

The 5 Domains & Knowledge Centers

9

Recent Surveys

Indicates i4cp member-requested survey.

http://www.i4cp.com/library/survey

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Stay Current with New Research Twice a month. You choose what to follow. Great for company intranets.

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Webinars

http://www.i4cp.com/library/webinar

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Peers. 13

Peer-to-Peer/Group Discussions

This is a diagram displaying a small amount of peer connections made for members in Q4 of 2010.

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Annual Conference / Workshops

Majority i4cp-member event No vendors/consultants permitted Intimate networking opportunity

No breakouts (no picking/ choosing) 5 domain presentations Panels and 1:1 interviews Archived presentation slides

http://www.i4cp.com/conference

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Tools. 16

Quality of Hire Scorecard New Hire Information Date 2010 (YTD) 2009 2008 2007 2006

Number of New Hires 170 549 659 790 705

Number of Management 28 (16%) 66 (12%) 119 (18%) 119 (15%) 99 (14%)

Number of Professionals 95 (56%) 346 (63%) 402 (61%) 514 (65%) 423 (60%)

To provide context about hiring patterns

New Hire Fit 2008

Survey Questions

2010

2009

% of Managers that would hire again Manager Satisfied w/ Candidate Pool % of Employees that would accept the position again Number of “bad hires” Number of “at risk” hires

85% 83%

88% 78%

79% 64%

89%

75%

81%

4 (2%) 36 (21%)

27 (5%) 137 (25%)

16 (10%) 48 (29%)

(sampling)

“Real” Time Indicators

Retention over Time Population Overall Management Professionals Term first 90 days 2010 11% 14% 12% Term less than one 2009 22% 7% 8% year Term 1-2 Years 2008 14% 3% 7% Still with Organization 2008 65% 72% 68% In future years, compare the Still with Organization by year – looking for improvements

Retention by Hiring Class

Performance over Time Population

Outstanding/ Exceeds 5% 2%

Meets

With one year of 2009 85% tenure 2008 83% With two years of 2008 6% 86% tenure In future years, compare the tenure bands - looking for improvements

Needs Improvement 10% 15% 8%

Performance by Hiring Class

17

Quality of Attrition Scorecard

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Quality of Attrition Scorecard

19

Technology. 20

Interactive, Open Data Simple Segmentation Customized Visuals Customized views into our survey data based on any number of cuts such as: Industry Company Size High/Low Performing Org

Interactive Data

Segmented by Higher/Lower Performing Organizations

The same data and views are being made available to members via downloadable workbooks. Distinguishes us from the competition by providing open access to our data with pre-built visuals to help guide our members to better data.

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State-of-the-Art HR In High Marketing Performance Organizations

22

According to the

HR’s Role and Business Strategy Study… 23

HR’s Role Remains Stubbornly Traditional 1,000 to 9,999 Employees

10,000 or more employees

Low Market Performers

High Market Performers

13.5%

4.9%

18.5%

5.6%

HR is involved in implementing the business strategy

21.2

25.3

29.6

17.7

HR provides input into the business strategy and helps implement it once it has been developed

38.9

46.7

33.3

46.8

HR is a full partner in developing and implementing the business strategy

26.4

23.1

18.5

29.8

HR plays no role in business strategy

Respondents in Organization with 1,000 or more employees indicating “Great Extent” or “Very Great Extent”

24

Strong HR Partnership in Strategy and Market Performance Overall



HR is a full partner in strategy dev and implementation

44.4%

36.7%

52.3%

77.5%

Help design the organizations structure to implement strategy

43.9

36.7

53.3

74.2

Assess the organization’s readiness to implement strategy

31.4

31.7

44.3

61.8

Help decide among the best strategy options

26.0

23.3

36.4

65.2

Help identify or design strategy options

24.2

18.3

37.7

63.6

Assess possible merger, acquisition or divestiture strategies

22.3

11.7 32.1 Highest positive

44.9

Work with corporate board on business strategy

19.9

Help identify new business opportunities

6.1

Help plan the implementation of the strategy

Highest positive correlation with market 15.5 performance 29.6

5.0

11.2

49.4 21.3


25

According to the

HR Programs and Activities Study… 26

Popular Activities With NO Correlation to Market Performance Overall



48.1%

51.4%

48.7%

Admin processes centralized in shared services

43.9

45.9

35.4

COEs provides specialized expertise

33.5

28.8

32.2

There is a low HR / Employee ratio

31.7

31.5

27.2

Provides HR data to support change management

29.9

Decentralized HR generalist supports BUs

23.3 No 28.5 correlation 19.4 correlated with with market performance 25.6 17.8

41.7

Some transactional activities are done by employees on a selfservice basis

24.6

18.9

25.2

HR “advise” is available on-line

22.3

28.4

24.3

Makes rigorous data-based decisions about HCM

21.8

17.8

28.7

Drives change management There is a HC strategy that is integrated with the business strategy

39.1 33.0


27

Evidence and Data-based Change Characterizes High Performers Overall

Decentralized HR generalist supports BUs Admin processes centralized in shared services COEs provides specialized expertise


48.1% 51.4% Highest positive correlation with 43.9 45.9 market performance 33.5 28.8


48.7% 35.4 32.2

There is a low HR / Employee ratio

31.7

31.5

27.2

Provides HR data to support change management

29.9

23.3

41.7

Drives change management

28.5

19.4

39.1

There is a HC strategy that is integrated with the business strategy

25.6

17.8

33.0

24.6 18.9 Largest Gap between High and Low 22.3 28.4 Performers 21.8 17.8

25.2

Some transactional activities are done by employees on a selfservice basis HR “advise” is available on-line Makes rigorous data-based decisions about HCM

24.3 28.7


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According to the

HR Metrics Study… 29

The Sad State of Workforce Measurement The correlation to Market Performance is .13** **correlation was significant at p=<.01 (two-tailed)

To what extent does your organization have a “workforce measurement strategy”? Definition: Workforce measurement strategy refers to disciplined and cohesive efforts – as opposed to ad hoc efforts – to gather and use employee-related metrics in the organization. Overall Response Percentage of respondents indicating “High” or “Very high extent”

n=356

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Efficiency is Good, but Impact is Best Overall



Financial efficiency of HR operations

42.3%

41.8%

42.1%

Benchmark against data from outside organizations

43.7

43.3

51.5

HR scorecards and dashboards

31.3

37.3 No correlation correlated 29.9 with with 34.0 market performance

44.6

Specific effects of HR programs

26.4

26.3

Business impact of HR programs and processes

33.7

Conduct cost / benefit analysis

24.4 16.7 Highest positive correlation with market performance 21.6 20.9

Business impact of high versus low performance on Jobs

15.5

10.4

21.2

Quality of talent decision made by non-HR leaders

13.5

13.4

16.2

Cost of HR programs and processes

26.9

35.6

22.0

Respondents in organizations with 1,000 or more employees indicating his/her company currently has these measurements in place

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The Who, How and When of Reporting is Not as Important as the Actual Act of Reporting… Who is responsible for calculating the workforce results?

HR Analytics Team (22.0%) Head of HR (21.2%) Within the Business (11.4%)

No Significant Statistical Difference

What systems/technology are used to calculate the workforce results?

HRIS system (41.1%) “Talent Management” System (15.3%)


Note: Spreadsheets & Databases (34.7%) do not correlate to TMSI

How often workforce results are produced? Monthly (28.5%) Quarterly (30.2%)


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…but Who receives the workforce reports is important Only one correlated with Market Performance

Q: Who receives the workforce metrics reports? (Select all that apply)

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Some Good News About Workforce Reports Are you able to take action on the information provided in these regular reports or analysis? NOTE: This question was only shown to respondents who indicated receiving reports or analysis about the organization’s workforce/talent. Overall Response

n=133

Is the information provided specifically aligned to your business and talent strategy? Overall Response

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Closing the Should/Do Gap on "Outcome" Metrics? The smallest gap is Cost of Hire The 3 largest gaps are Quality of Hire ROI per Employee Time to Full Productivity Correlated with Market Performance Cost of Hire Quality of Hire ROI per Employee

35

Lower Performers are often more likely to measure tactical recruiting metrics vs. Higher Performers.

36

Higher Performers are more likely to measure quality of recruiting efforts than Lower Performers

37

According to the

HR Leadership Development Study… 38

More high performers' say their HR staffs possess the skills for today’s business environment than low performers Overall



0 percent

0.7%

3.2%

0%

1 - 20 percent

12.9

14.5

8.4

21 - 40 percent

21.0

25.8

16.9

41 - 60 percent

24.0

32.3

18.1

61 - 80 percent

28.8

16.1

34.9

81 - 99 percent

11.1

8.1

18.1

100 percent

1.5

0

3.6

Respondents in organizations with 1,000 or more employees

39

There seems to be a need for HR professionals with strategic skills and knowledge Overall



Interpersonal skills

67.4%

57.4%

71.6%

HR Technical skills

62.5

62.3

67.1

Team skills

53.4

46.7

61.0

Leadership / Management

52.6

44.3

58.5

Business understanding

47.8

45.9

58.5

Consultation skills

44.2

Process execution and analysis

37.9

Highest positive 37.3 correlated with 52.4 correlation with 31.7market performance 46.8

Change management

37.7

28.8

50.0

Strategic planning

30.7

25.0

41.3

Information technology

30.2

21.7

37.0

Organization design

29.3

26.7

35.0

Cross-functional experience

28.9

18.0

37.0

Global understanding

22.3

15.0

28.0

Respondents in organizations with 1,000 or more employees indicating “Satisfied” or “Very Satisfied”

40

Competencies Covered HR Leadership Development Programs Use to a “High” or “Very High” Extent

Overall

Leadership

72.3%

Teamwork

68.1

Strategic thinking

61.7

Business acumen

60.9

Business ethics

57.4

HR functional competencies

55.3

Change management

53.2

Consultative skills

51.1

Verbal communications

48.9

Decision making

48.9

Project management

46.8

Presentation skills

46.8

Highly Correlated correlated Highly with with Market Market Performance Performance

41

Competencies Covered in HR Leadership Development Programs Use to a “High” or “Very High” Extent

Overall

Networking / collaboration

44.7

Written communications

42.6

Coaching

40.4

Measurement / analysis

34.0

Creative thinking

34.0

Cultural / diversity issues

32.6

Risk management

31.9

Virtual leadership

21.3

Scenario planning

19.1

Highly Correlated correlated with Market Performance

42

Strategies Used to Develop HR Leaders Use to a “High” or “Very High” Extent

Overall

Company developed training

60.0%

Group projects

47.9

Stretch assignments

40.0

Individual coaching

38.0

360 feedback

38.0

Partnering with leaders in other functions

36.7

Assigned mentor

36.0

E-Learning

34.7

Attendance at conferences

32.7

Courses at external educational Institutions

28.0

Job rotations with the HR functions

26.0

Projects outside the organization

12.0

Highly correlated with Market Performance

43

According to the

Integrated Talent Management Study… 44

The State of Talent Management Is Not Good To what extent does your organization have systematic “talent management” practices? Definition: For purposes of this survey, talent management is defined as an organizational approach to leading people by building culture, engagement, capability and capacity through integrated talent acquisition, development and deployment processes that are aligned to business. Overall Response Percentage of respondents indicating “High” or “Very high extent”

n=426

45

But, an effectively Integrated Talent Management process is positively correlated with Market Performance Please state the extent to which you agree with the following statements: Percent indicating high or very high extent

Correlation with MPI

Our leaders see integrated talent management as vital to organizational success

.21**

My organization has processes in place to align talent management to business goals

.20**

My organization’s voluntary turnover rates among high-performing employees is lower than the industry standard

.18**

My organization’s processes and policies support integrated talent management

.22**

My organization effectively integrates the components of talent management

.23**

Market Performance Indicator Score (MPI) Higher Performers Lower Performers

**Correlations with Market Performance Index are all significant at p<.01 (2-tailed)

46

Strategies to Integrate TM that are associated with high market performance are not widely utilized Correlation with Market Performance

Percentage of respondents answering high extent & very high extent

Integrating technologies and sharing data for the various talent management functions

13.9

.20

Appointing a single functional owner of talent management internally

26.5

.14

Standardizing talent review and feedback processes

35.9

.10

Ensuring consistency among the different TM activities

23.2

.13

Creating transparency across functional silos

15.1

.15

Establishing organizational culture that supports TM

25.4

.19

Increasing visibility of talent management initiatives

20.8

.16

Expanding number of talent management initiatives

18.8

.14

Training managers to enhance their talent management capabilities

17.9

.13

Using technology to improve talent management

18.4

.18

Gaining support from top management

40.1

.16

47

Gap Between Current Strategies to Integrate TM and What Should Be Done 61.5%

Creating transparency across functional silos Training managers to enhance their talent…

61.3%

Establishing organizational culture that supports …

59.3% 56.4%

Integrating technologies and sharing data for the … Increasing visibility of talent management initiatives

54.1%

Using technology to improve talent management

53.8% 51.2%

Ensuring consistency among the different talent …

47.2%

Gaining support from top management

43.6%

Standardizing talent review and feedback processes Expanding number of talent management initiatives Appointing a single functional owner of talent …

42.4% 33.0%


48

Barriers to Successful Talent Management Integration


49

How Do High-Performing Organizations Gauge Talent Management Success? Correlation with Market Performance

.11 Regression: Predictor of Market Performance

.24 .22

.14

Q: To what extent does your organization use the following outcomes to gauge the success of its talent management practices?

50

…with that being said…

51

Performance Management Was Found to be the Most Integrated Component of Talent Management Performance Management

…and when broken down by MPI scores, the integration score gap for Performance Management between high and low-performing organizations was one of the largest found in the study.

Market Performance Indicator Score (MPI) Higher Performers

* Please see the notes section for an explanation of how the Talent Management Integration Scores were calculated.

Lower Performers

52

Performance Management is Vital to Many Other Facets of Talent Management The Integration Scores illustrate how Performance Management feeds many other components of Talent Management.* What does this mean?

An ineffective Performance Management process will diminish other aspects of Talent Management.

Similarly, a poor Performance Management process will not make effective use of data provided by other Talent Management processes.

* Please see the notes section for an explanation of how the Talent Management Integration Scores were calculated.

53

…and according to the

Performance Management Study… 54

High-Performance Organizations Understand the Power of Performance Management To what extent are the following statements true about your organization? Percent indicating high or very high extent

Correlation with MPI

Our leaders consider performance management to be vital to organizational success

.24**

Individual performance goals are aligned with organizational goals

.18**

Performance management has a positive business impact

.20**

Our performance management processes contribute to individual performance improvement

.23**

Our performance management processes promote the desired behaviors

.20**



55

Performance Management Results Are Used More Often by High-Performance Organizations To what extent is your organization’s performance management process used for the following? Correlation Percent indicating high or very high extent

with MPI

To support compensation decisions

.21**

To identify top performers

.18**

To support promotion decisions

.18**

To support organization-wide focus on high performance

.23**

To tighten strategic alignment between skills and business goals

.23**



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The Nine Keys to Effective PM 1. The performance management process includes developmental plans for the next period 2. Training is provided to managers on conducting a performance appraisal meeting 3. The quality of performance appraisals is measured 4. There is a system in place to address and resolve poor performance 5. The performance appraisal includes information other than that based on the judgment of managers 6. The performance management process is consistent across the organization 7. Employees expect feedback on their performance more often than once a year 8. 360°or multirater feedback is used to support the performance management process 9. The performance management process includes an ongoing goal review and feedback from managers

57

Talent Management Should Begin With Strategic Workforce Planning 58

Processes that SWP Feeds or Impacts Overall

High Performers

WFP Success

Both

91%

98%

94%

93%

Financial planning and budgeting

71

75

78

79

Talent management

68

67

82

79

Succession planning

67

70

82

79

Learning and development

67

72

86

79

Leadership development

61

61

82

79

HR business planning

53

63

59

64

Outsourcing / in sourcing

36

33

39

57

Organizational branding / employee value proposition

34

44

57

71

College recruiting

34

37

41

50

Business development teams

32

33

45

57

Real estate planning

26

32

33

43

High or Very High Extent Staffing

59

The Levels of Workforce Planning Workforce Planning The Institute for Corporate Hierarchy

Productivity (i4cp) is the fastest growing and largest corporate network focused on the practices of highperformance organizations.

Lead the business to create a competitive advantage.

Staffing plans.

Headcount forecasting.

60

According to the

Workforce Planning Study… 61

70% of the 558 Respondents Do Some Form of Workforce Planning Highly correlated (.24) with workforce planning effectiveness

66% have been doing workforce planning for more than 3 years But only 19% said they were “Highly Effective” or “Very Highly Effective” at WFP

Highly correlated (.30) with workforce planning effectiveness

(only 20 respondents were both “Highly” or “very Highly” effective and high market performers)

57% do Operational WFP to a “high” or “very high” extent Highly correlated (.36) with workforce planning effectiveness

Highly correlated (.45) with workforce planning effectiveness

Includes headcount forecasting, and staffing requisitions (looks out weeks, or at most, months)

46% do Tactical WFP to a “high” or “very high” extent Includes staffing planning, budgeting, and training scheduling (typically looks out no more than one year)

29% do Strategic WFP to a “high” or “very high” extent Includes business planning, needs assessment and scenarios (typically looks out 3 to 5 years and beyond)

62

Strategic Workforce Analysis

63

SWP and Business Decision Making

64

SWP and Business Decision Making

65

According to the

Engagement Study… 66

Engagement is Seen as a Key Component Yet, most workers are not highly engaged

Highly Engaged 34%

Disengaged 23%

Moderately Engaged 43%

67

High Market Performers Have More Highly Engagement Employees - Why? Low Market Performers



Highly Engaged 22%


Disengaged or Minimally Engaged 36%

Highly Engaged 42%

Disengaged or Minimally Engaged 16%

68

Engagement Starts With Recruitment What do you look for in new recruits? Organizations with Highly Engaged Employees 1.

Has passion for work

2.

Has positive attitudes toward peers and customers Has desire to set and achieve goals

3.

Organizations with Disengaged Employees 1.

Intelligent

2.

Confident in work abilities

3.

Has excellent job skills

4.

Has positive attitudes toward peers and customers

4.

Adaptable

5.

Intelligent

5.

Emotionally mature

6.

Confident in work abilities

6.

Has passion for work

7.

Has excellent job skills

7.

Has desire to set and achieve goals

69

Five Keys to Building Engagement 1. Make engagement a leadership priority at all levels – especially for supervisors 2. Actively promote engagement 3. Recognize and reward engagement 4. Build it into other talent management practices 5. Build a learning culture

70

Conclusion Stubborn traditionalism is alive and well. More sophisticated HR associates with greater performance, but less than 1/3 of organizations report achieving high levels of sophistication. The payoff to enhanced metrics and analytics is greatest when integrated with change management HR’s constituents don’t always reward what actually leads to market performance. HR needs to be a strategic player. It is good for organizations and for HR! 71

Jay Jamrog [email protected] 727.345.2226

Corporate 411 First Avenue South • Suite 403 • Seattle, WA, U.S.A. 98104 Telephone 866-375-i4cp (4427) • Fax 206-624-6951 Research 5959 Central Avenue • Suite 201 • St. Petersburg, FL, U.S.A. 33710 Telephone 727-345-2226 • Fax 727-345-1254 www.i4cp.com

© 2010 Institute for Corporate Productivity, Inc. Member companies may reproduce and distribute this file on an unlimited basis to their employees for internal management purposes only. Nonemployees may not be given copies of or access to i4cp’s reports, online services or conference materials.

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State-of-the-Art HR in High Performing Organization

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