美世-ANewApproachtoHumanC

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1、CONFIDENTIAL This presentation contains proprietary methodologies and tools which are only for review and remain the property of Mercer Human Resource Consulting.These methodologies and tools cannot be used or disclosed without written consent by Mercer Human Resource Consulting.2004,Mercer Human Re

2、source Consulting LLCA New Approach to Human Capital Strategy:Helping Human Resources Become a Strategic PartnerWorkforce Planning and Development ConferenceAgendanLess ART,more SCIENCE:A New Approach to Human Capital StrategynUnderstanding the dynamics of your Internal Labor MarketnCase StudiesnQ&A

3、Less ART,more SCIENCE:A New Approach to Human Capital StrategyHuman Capital is one of the largest expenses that organizations understand the least aboutAs a result,even modest gains in the efficacy of HR management can deliver sizeable gains to the bottom line.36%of revenueThe quest to find the Holy

4、 Grail has led to a proliferation of ideas and approachesThe question is no longer whether to measure but.which measures most directly impact your business performance?.which measures are most relevant to your organization?A framework for HR TransformationHR Strategy(Strategy,structure,processes of

5、the function)Human Capital Strategy(The“people”complement to business strategy management of the workforce)Value creationCost managementOrganizations must continually balance the need for prudent cost management with the requirement to create/sustain productivity and business value Where is your org

6、anization currently focused?HR Strategy(Strategy,structure,processes of the function)Human Capital Strategy(The“people”complement to business strategy management of the workforce)Value creationCost managementWorkforce impact of HC programs/policiesCo-Sourcing andOutsourcing of HR functionsImproved H

7、R service deliveryStreamline HR processesMeasuring business impact of HC programs/policiesOverall labor cost management strategyOutsourcing/Off-shoringHR Talent ManagementRewards linkage to Strategic ObjectivesCultural TransformationStrategy dependent vs.strategy neutral costsDemand ManagementLevera

8、ging technology investmentsLeverage workforce dataA framework for examining Human Capital StrategyComponents of BlueprintCapabilitiesWorkforce capabilities reflected in experience,attained skills,and competencies,etc.BehaviorsWorkforce behaviors reflected in work intensity,individual/group performan

9、ce,teamwork/cooperation,etc.AttitudesWorkforce beliefs and values about risk-taking,innovation,commitment,flexibility,etc.Talent acquisition and development,performance management,and rewardsSpecific practicesDetermined through:nQualitative analysis of senior management perspectivesnExternal benchma

10、rking of selected companies nAcademic researchnStatistical modeling of links between workforce attributes/people practices and business outcomes“Desired State”Human capital strategy is a blueprintblueprint that helps an organization secure,motivate,and manage its workforce to accomplish business goa

11、lsDetermined through:nInventory of existing practicesnQualitative analysis of senior management perspectives and workforce attitudesnQuantitative analysis of dynamic patterns of talent movement and rewardsnQuantitative analysis of performance risk“Current State”The key resides in being able to causa

12、lly link human capital tactics and practices to workforce and business outcomes Balanced Scorecards people componentMONITORING&ACCOUNTABILITYCustomer valueFinancial performanceProductivityQualityBUSINESSOUTCOMESHUMAN CAPITALMANAGEMENTPRACTICESCapabilitiesBehaviorsAttitudesEngagementSatisfactionWORKF

13、ORCEOUTCOMESAnecdotesReactivechecksSimulationsand fore-castingCorrelationsBenchmarksOn-goingreportsCausationMost powerfulDataInformationInsightsPredictionsStoriesThe“Art of HR”is slowly being replaced by the Science of Human Capital ManagementAdvances in information technologyand analytic methods ar

14、e making itpossible for organizations to manage investments in human capital in a way that canhave a measurable impact on business performance.The most powerful approaches move beyond benchmarking&correlation to cause and effect1.Correlation HC factor and business performance must be relatedChangein

15、SpansProductivity per FTEThe key is to analyze multiple variables,then isolate only those that directly impact the bottom line.2.Time(directionality)HC factor should precede business performanceTime 1Time 2ChangeinSpansProductivity per FTE1.Correlation HC factor and business performance must be rela

16、tedChangeinSpansProductivity per FTEEconomicconditions3.Isolation Other factors that could have influenced productivity are identified and ruled out Prior periodproductivityChangeinSpansProductivity per FTECapitalSpendingSource:330 HR interventions that impacted productivity 1975-1985,Richard A.Guzz

17、o et al,University of Maryland(updated 1996 by Mercer).Types of interventionsImpact on productivityHIGHLOWMEDIUMTrainingGoalsettingTeams,etc.FinancialincentivesWorkredesignFeedbackWorkresched.An example of why context is so important:The impact of certain HR interventions on business performance can

18、 vary significantly across environments such variability dispels the sole reliance on benchmarks.Why benchmarking human capital practices often misses the marknResearch has shown wide differences in the average effects of specific HR interventions.nAverage effects are not a sufficient basis to guide

19、 the development of a Human Capital Strategy for a particular organization due to the overriding importance of business context.nContext reveals the dynamics unique to each organization.nIt varies even among direct competitors and across business/functional units within the same organization.Human C

20、apital Tracking MetricsHC ScorecardExternal Market DatabaseHRISand PayrollOther Internal Sources(e.g.Applicant Files;Training Inventory)EmployeeSensingHC Management DatabaseLabor Market DataMarket and Industry dataPerformance DatabaseCompany or business unit financialsData on quality and operational

21、 performanceCustomer DataCOMMONDATAPLATFORMA Human Capital Data Warehouse can be constructed by integrating multiple sourcesStatistical Modeling&ForecastingnSizenEmployee heterogeneitynRisk Pay Employment Variability Prior Turnover Branch/teamnPay structure Incentive Payouts Total DispersionnSupervi

22、sion Structure/complexity Spans Chain StabilitynWorkloadnOrganization profile Experience Tenure Education NE/E Mix FT/PT MixnRecruiting sourcenPerformance(level&volatility)nTurnover ratenAgenGendernEthnic backgroundnEducationnTrainingnExperience Number and Duration of Jobs Prior Industry Prior job t

23、ype nJob/occupationnExempt/non-exempt statusnFull time/part time statusnTenure Current job OrganizationWage Level GrowthnLevel Salary gradenIncentive earningsnPromotion historynPerformance ratingsnTransfer historynLocation(work/home)nUnemployment ratesnMarket sharenCompetition(location and number)nL

24、abor pool Demographics Income Education OccupationnEmployment costEmployee attributesOrganizational practicesExternal influencesStrategynLine of business Growth ProfitabilityExternalEnvironmentHundreds of variables internal and external to the organization can be analyzedA new way of thinking about

25、human capital strategy is emerging nStop copyingnLook insidenLeverage the data youve been collectingnMeasure the ROI on your various workforce practicesnDifferentiate between high-yield tactics.and marginal investmentsnMatch human capital strategy to your business modelThree underlying principles dr

26、ive this new approachBusiness models and human capital strategies must matchINSIST ON“SYSTEMS THINKING”GET THE RIGHT FACTSFOCUS ON VALUE CREATIONTap into the running record of your company for specific insightsKnow and focus on whats important to drive valueTechCo unwittingly drove people with key i

27、nstitutional knowledge out the door.Insist on systems thinking By stabilizing supervisor turnover and giving people a sense of career opportunity,overall turnover was reduced by over 20%Get the right factsCase ExamplesHire 20%more from employee referralsTurnover driversPercentage point reduction in

28、turnover0%2%5%7%10%1-point rise in unemployment10%reduction in layoffsIncrease jobs performed(from 1 to 2)1-year decrease in current position 10%base pay growth10%market pay adjustmentIf promoted within last yearIf incentives receivedSupervisor did not leave10%20%30%40%50%60%70%80%Full-time Employee

29、s-80%-60%-40%-20%Avg.+20%+40%+60%ProductivityHigher productivityLower productivity3%of revenueAverageOptimumFocus on value creationSaved$5 millionDestroyed$30 millionUnderstanding the dynamics of your“Internal Labor Market”1172125190312116Hires174912318422786ExitsPromotions751766404963Level 81685830

30、Career level3383Lateral moves234453411868138168185134129An organizations current workforce is the result of three“labor flows”The power lies in understanding the specific practices,tactics,policies,etc.,that are the source of those talent flowsThe flows can be segmented by business unit,job family,d

31、emographics,and.ANNUAL CAREER PROGRESSION VOL EXITSTOTAL EXITS7931,54270134128233102233African American:1,200Asian:1,087Hispanic:678White:9,901 ANNUAL HIRES630371164422852594612233748713560011111000122034121345411011469512101836282401015434311281741164555210292858341430242111118851554101321411912112

32、7701477131125102059413468015551218296195521515941716141525122775411447112891510148218431553112198182514202451120121718301515 150172115 187191916 183312325 232212347911610312148142151100012392621002LevelACTIVE EMPLOYEESHigh performance ratingsUnit revenue growthAmount of trainingHighly-rated managerR

33、ecent promotionOccupationNumber of jobs held within firmTenureUnit sizeManagers span of controlEducationTechnical expertiseOutside experiencePay growthHighLowPromotion likelihood LowerHigher.through modeling,can reveal what talent youre building(and losing)over time This same type of analysis forms

34、the basis for workforce forecasting.The number of employees for 2006 are the“expected numbers”given the current workforce and existing hiring,promotion,retention and transfer practices.lossesgains20022006Level 1 2 3 4 5 6 7 8 9105639751,6591,1711,8762,6012,774801686312477658 9451,4201,5412,3693,2739

35、44 1,9351,4911098654751%49%43%57%33%67%0%100%66%34%72%55%45%12%252Level49%41%48%52%0%100%34%66%54%46%60%40%0%9%95184%3%2731148%9%3493065%12%33188612%14%2211,78816%15%2441,382New Hires%of TotalFemaleMaleAverage active employeesTotal Exits%of TotalPromotions%of Available28%51%59%.and analyzing the equ

36、ity of rewards and the resulting impact on workforce initiatives such as diversityIn this company,women face a glass ceiling at level 6Not surprisingly,turnover rates are significantly higherPromotion probability from.ManagersStaffDenotes the promotion rate holding constant legitimate factors.but th

37、e managerial promotion gap reflects differences in qualificationsAccounting for legitimate factors Raw statistics show that minorities are less likely to be promoted from two of three staff levels.nDo I have the right workforce?nHow do I change the composition of my workforce?nWhat are the fastest,m

38、ost cost effective ways of ensuring adequate staffing at critical levels or in critical jobs within the organization?nIs the reward system effective?Am I paying and promoting the right people?nAre our pay practices putting us at risk?Are we on track to meet our diversity goals?nWhat is the value of

39、internal job movement?Can profitable career transitions be managed more aggressively?nHow can I use HR tools compensation,benefits,selection,career development programs,etc.to build and motivate the workforce I need?nAnd,when combined with financial performance data:How can I manage my workforce to

40、maximize business performance?By focusing on these internal dynamics,we can answer questions such as:Case StudiesSolutionPremier global brand is threatened by product design issues,flawed launches,and manufacturing quality problems.CEO pegs financial impact at$1+billion.Company thinks leadership dev

41、elopment program is at heart of problem.Fast-track managers move from function to function without mastering their jobs creating too many generalistsCompany cant see how to keep cross-functional experiences without having the system“gamed”.Clients Perceptions/ActionsBusiness ChallengeAnalysis shows

42、how elements of the talent system selection,performance management,pay and career incentives “conspire”to create too frequent lateral movements.Business Results:Global initiatives are launched to calibrate effects of interactive human capital practices:Pay and incentives talent development career de

43、velopment hiring assuring the right mix of generalists and specialists.Identifying business risks using human capital strategy Case Examples for New Era-ViewBecause of mounting quality problems,this company felt a pressing need to strengthen its technical career path.Disguised case example Likelihoo

44、d over next 2 yearsNeitherpromotionnor lateralLateral butnopromotionTechnicalpromotionGeneralpromotionNeither promotion or lateral83%6%4%7%Lateral but no promotion56%20%8%16%Technical promotion62%19%1%18%Receivedover past 2yearsGeneral promotion50%21%6%23%Lateral moves opened doors for promotionsTim

45、e in position(years)0.80.91.01.1123456Relative promotion likelihooddrop in promotion likelihood led to frequent job changesAnalysis showed that career rewards discouraged technical specializationTalent AcquisitionReduce insularity of your internal labor market:Increase emphasis on outside experience

46、(or lessen dependence on internal“feeds”to job openings)Be more open to hiring from the outside at middle and senior levels Address myths concerning superior productivity of home-grown talent Accept higher rates of turnover among entrenched“lifers”in selected business units and job categories Focus

47、hiring on those with depth of technical skills Give managers more autonomy and ownership for hiringTalent DevelopmentDefine and value multiple career development paths:Define career paths,nature of movement and developmental actions for Corporate Leader,Functional Leader and Technical Specialist Enh

48、ance training investments focused on building technical depth,culminating in“Master”status Establish new process for talent identification and integrate talent development planning with business and compensation planning Consider introducing accounting“charges”to business units that precipitate prem

49、ature lateral movementPerformance ManagementAlign and integrate performance management with other talent management processes:Clarify role and methods of determining performance,performance trend,growth and mastery potential At beginning of job assignments,establish agreements between employee and m

50、anager on development goals,expected employee contributions and knowledge transfer expectations Enhance processes to align business,team and individual objectives Improve accuracy of forced rankingRewardsShift from a“tournament”to a pay-for-performance reward structure:Lessen impact of hierarchical

51、level on total reward opportunity Address extreme career choke point at lowest level of leadership hierarchy Expand use of variable pay,increasing reward opportunity for meeting quality goals and successfully completing projects Expand access to equity for those in technical track Address existing i

52、ncentives for lateral movementHuman capital priorities were then be set based on impactSolutionGlobal brand faces declining market for traditional business lines,but is unable to build new products demanded by consumers due to workforce capability limitations.Companys market value drops by over 90%.

53、Company has used RIFs(reductions-in-force)to“retool”workforce.Company cant see how to“buy”the needed skills without another RIF.With precipitous declines in stock price,there are minimal funds available to pay for another workforce transition.Clients Perceptions/ActionsBusiness ChallengeAnalysis rev

54、eals how excess cash is spent on compensation programs significantly subsidizing sub-par performance of individual contributors.Annual price-tag of incentive subsidies exceed$50 million.Business Results:Instead of having another RIF,company applies individual performance gates to reduce waste in spe

55、nding opening up funds to hire people with critical competencies and encouraging turnover of sub-par workers.Quantifying the ROI of your pay practices can be very revealingBut the variable pay system impedes timely adjustment of workforce to new business requirements.A changing technological platfor

56、m and business design require different workforce capabilitiesBalancing employment costs with productivity gainsSolutionLarge US distributor concerned with high workers compensation claims costs.Company service was believed to enhance customer relationships but the physical demands of the job increa

57、sed risk of injury over time.The company didnt have a clear sense if initiatives under consideration would ultimately improve claims experience and retain the value associated with customer relationships.Clients Perceptions/ActionsBusiness ChallengeFinds that productivity outpaces employment costs u

58、ntil productivity peaks,at around 10 years of service.Changes are designed to encourage people to stay for the“optimal”length of time creating over$20 million in value per year.Business Results:Company initiated programs to:reduce quick turnover of new hires through step-rate pay increases during th

59、e first year of employment and encourage retirement and/or job changes for longer-service workers to improve organizational productivity and lower workers compensation claims.This company was experiencing rising employment costs among certain key job groups.with uncertain gainsEmployee costsProducti

60、vityYears of serviceProductivity and employee costs($per hour)Employment costs exceed productivity gainsHere,significant improvement opportunities were found at both ends of the tenure spectrum.Statistically modeling business impact revealed the business outcomes of specific workforce practicesDisgu

61、ised example Decreases productivityIncreases productivityDrivers of business results can be examined at the unit level or at the employee level,if such measures of productivity are availableSolutionBusiness design heavily relied on selling additional business to existing customers.This company had d

62、evoted significant resources to understanding customer needs and expectations.Little research had been done on the employee side of the equation effectively,this organization didnt know what motivated its employees.Clients Perceptions/ActionsBusiness ChallengeShows the company rewarding newcomers wh

63、o did not have strong relationships with existing customers over incumbents.This practice was costing the firm$40 million in potential revenue gains per year.BUSINESS RESULTSThe company shifted human capital practices to develop firm-specific expertise and build on existing customer relationships.Ac

64、tions included realignment of pay between new hires and high-performing incumbents,broadbanding to build career milestones and hiring at lower levels to grow from within.Knowing your workforce as well as you know your customers.How much does tenure contribute to the bottom line?Conditions in the ext

65、ernal labor market should also be consideredRecruitingfocus areaExpected staffing growthMarket supply growthTherapistsTechniciansNursesProjected annual growth rates:2002-20050%5%10%15%20%25%In response to larger,competing health systems,HealthSys needed a dramatic infusion of medical talent to suppo

66、rt its expansion into selected clinical programs.+Recruiting favorablenessClear recruiting opportunitiesBy examining local labor markets where they compete for talent,HealthSys was able to identify larger pools of potential new hires and learn how best to compete for their talent.HR RESPONSIBILITY AREASHIRING EMPLOYEE DEVELOPMENTPERFORMANCE MANAGEMENTMetricDirection/Magnitude of Desired ChangeMetricDirection/Magnitude of Desired ChangeMetricDirection/Magnitude of Desired ChangeCost per hireQuick