Cross-Border Executive Mobility as a
Strategic Advantage
People Risk Mitigation And Leadership Development Lessons
from the Top Companies for Leaders
Cincinnati Chapter
European American Chamber of Commerce
27 September 2012
AON: The Global Risk Advisor and Human Resource Solutions Provider
Aon
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120 Countries
500 Offices
1
Agenda
People Risk
What is People Risk and What is Measured?
High and Low Risk European Cities
Recruitment, Employment and Redeployment Risks
Case Study
 Top Companies for Leaders
About Our Research
Global Mobility Overview- Key Trends
Global Mobility Philosophy and Process:
-How Top Companies Develop Leaders through Cross Border Assignments
2
What is People Risk and Why is it Important?
Human capital risk is seen to be the most significant threat to global business
operations1.
 As companies become more global,
there is an increasing need for
understanding location profiles for
talent.
 Talent pools vary across locations and
thus companies have to adjust their
talent strategies to address the risks
associated with talent in those
locations.
1 Best Practices in Risk Management: A Function Comes of Age: A report
from the Economist Intelligence Unit Sponsored by ACE, IBM and KPMG
3
Key People Risk Issues
Manage the risks of relocation to lower-cost
locations?
Identify the appropriate leader for a new
operation?
How Can We…
Cope with talent and skills shortages?
Improve workforce planning for global
expansion?
Source qualified and experienced talent
globally?
Measuring People Risks – The 30 Factors
Areas of People Risk
People Risk Factors
Demographics
1.
2.
3.
Working age population size
Immigration/Emigration
Workforce productivity
4.
5.
Government Support
6.
7.
8.
Future workforce planning
Terrorism and political risk
Violence & crime
9. Government relations
10. Corruption
Education
11. Literacy rate
12. Capacity of education system
13. Secondary school graduates
14. Tertiary education enrollment
15. Spending on education
Talent Development
16. Quality of entry level talent
17. Quality of technical training
18. Quality of management training
19. Languages spoken
20. Brain drain
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Employment
Practices
Bias and favoritism
Labor relations
Staff turnover
Healthcare benefits
Retirement benefits
https://aonpeoplerisk.com/
Aging population
Availability of future workforce
Equal opportunity
Executive recruitment
Occupational health & safety
Redundancy restrictions
Rigidity of personnel cost
5
People Risk Index 2012 Covers 76 Countries …
Region
Americas
Countries
• Argentina
• Brazil
Region
Asia Pacific
Countries
•
•
•
•
Region
Europe, Middle East and Africa
Countries
•
•
•
•
•
•
•
•
•
•
Australia
Bangladesh
Cambodia
China
Algeria
Austria
Bahrain
Belgium
Botswana
Bulgaria
Czech
Denmark
Egypt
Ethiopia
• Canada
• Chile
• Colombia
• Mexico
• Peru
• United States
• Uruguay
•
•
•
•
•
•
•
•
Malaysia
Mongolia
New Zealand
Pakistan
•
•
•
•
Philippines
Singapore
South Korea
Taiwan
• Thailand
• Viet Nam
•
•
•
•
•
•
•
•
•
•
Italy
Jordan
Kazakhstan
Kenya
Libya
Morocco
Netherlands
Nigeria
Norway
Oman
•
•
•
•
•
•
•
•
•
•
Poland
Portugal
Qatar
Romania
Russia
Saudi Arabia
Serbia
South Africa
Spain
Sri Lanka
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Hong Kong
India
Indonesia
Japan
Finland
France
Germany
Ghana
Greece
Hungary
Iran
Iraq
Ireland
Israel
6
Sweden
Switzerland
Syria
Tunisia
Turkey
Ukraine
United Arab
Emirates
• United
Kingdom
• Yemen
…and 131 Cities
Americas
Cities
•
•
•
•
•
•
Atlanta
Boston
Buenos Aires
Chicago
Dallas
Denver
•
•
•
•
•
•
Detroit
Houston
Lima
Los Angeles
Mexico City
Miami
•
•
•
•
•
•
Minneapolis
Montevideo
Montreal
New York
Philadelphia
Phoenix
•
•
•
•
•
•
Rio de Janeiro
San Diego
San Francisco
Santiago
Sao Paulo
Seattle
• Toronto
• Vancouver
• Washington DC
Asia Pacific
Cities
•
•
•
•
•
•
•
•
•
•
Ahmedabad
Auckland
Bangalore
Bangkok
Beijing
Cebu
Changchun
Changsha
Chengdu
Chennai
•
•
•
•
•
•
•
•
•
•
Chongqing
Colombo
Dalian
Delhi
Dhaka
Guangzhou
Hangzhou
Hanoi
Harbin
Hefei
•
•
•
•
•
•
•
•
•
•
Hong Kong
Hyderabad
Jaipur
Jakarta
Karachi
Kolkata
Kuala Lumpur
Manila
Melbourne
Mumbai
•
•
•
•
•
•
•
•
•
•
Nanjing
Osaka
Phnom Penh
Pune
Seoul
Shanghai
Shenyang
Shenzhen
Singapore
Suzhou
•
•
•
•
•
•
•
•
•
Sydney
Taipei
Tianjin
Tokyo
Ulaanbaatar
Wuhan
Wuxi
Xiamen
Xian
Europe, Middle
East and Africa
Cities
•
•
•
•
•
•
•
•
•
•
•
Accra
Addis Ababa
Algiers
Almaty
Amman
Amsterdam
Athens
Baghdad
Bahrain
Barcelona
Belgrade
•
•
•
•
•
•
•
•
•
•
•
Berlin
Bogota
Brussels
Bucharest
Budapest
Cairo
Copenhagen
Damascus
Doha
Dubai
Dublin
•
•
•
•
•
•
•
•
•
•
•
Frankfurt
Gaborone
Helsinki
Istanbul
Johannesburg
Kiev
Krakow
Lagos
Lisbon
London
Madrid
•
•
•
•
•
•
•
•
•
•
•
Manchester
Milan
Moscow
Muscat
Nairobi
Oslo
Paris
Prague
Rabat
Riyadh
Rome
•
•
•
•
•
•
•
•
•
•
•
Sana'a
Sofia
St. Petersburg
Stockholm
Tehran
Tel Aviv
Tripoli
Tunis
Vienna
Warsaw
Zurich
7
Overall People Risk: European Cities
10 Lowest Risk Cities
Ranking1
1
City
10 Highest Risk Cities
Rating2
Ranking1
City
Rating2
4
London
73
116
Kiev
168
9
Copenhagen
78
112
Belgrade
165
14
Zurich
82
107
Athens
160
16
Stockholm
83
106
Sofia
158
19
Amsterdam
84
104
St. Petersburg
155
19
Oslo
84
102
Bucharest
154
32
Helsinki
91
90
Moscow
150
33
Dublin
92
88
Istanbul
149
34
Manchester
93
68
Rome
138
37
Paris
95
67
Budapest
134
Out of 131 cities worldwide in People Risk Index 2012
on a rating of 30 factors across 5 categories of risk
2 Based
8
Symptoms of People Risks
Recruitment
• Low qualifications due to lack of practical training and limited
education availability
• Inability to staff critical positions due to shortage of
experienced candidates
• Small talent pool due to brain drain, bias and discrimination
Employment
• Labor costs rise faster than productivity improvements
• Staff turnover increases training costs and significantly
reduces efficiency
• Increased costs and questionable employee ethics due to
prevalence of corruption in the business environment
Redeployment,
Retirement and
Restructuring
• Difficult to retrain and redeploy employees as availability and
quality of training facilities is low
• Risks related to restructuring operations and redeploying
staff due to limited or uneven enforcement of labor
regulation
• Increase in people reaching retirement age leads to losses
of most highly qualified and experienced staff
9
Comparative Risk Associated with Recruitment

Shrinking workforce due to ageing population across Europe

Decrease supply of future talent as the cities are projected to have negative growth in working age
population in the next 10 years

Insufficient education spending further increases risk as it reduced the capacity of education
system to keep up with market demands for talent
10
Comparative Risk Associated with Employment

Lower employment risk for cities in Western Europe
Greater availability of good quality management training institutes (e.g. MBAs) compared to high risk
cities

Lower workforce productivity impacts the ability of high risk cities to invest and develop its workforce
Further affected by the insufficient good quality technical and managerial training facilities which
increases employment risk.
11
Comparative Risk Associated with Redeployment

Lower redeployment risk due to more positive labor relations environment

Transparent government, positive government relations, clarity in employment regulations
reduces the risk

Onerous redundancy restrictions and rigidity in reducing personnel costs for organizations facing
downsizing or restructuring situations increase the risk of redeployment
12
People Risk Case Study
 Global (European HQ’d) Transportation Company with 20,000 employees.
 Respond to global economic downturn with reductions in overall headcount,
shifting work to lower cost locations and reducing number of mid and senior level
managers.
 Staff costs drop but operational efficiency nose-dives. Low-cost sourcing
strategy results in higher overall costs.
 Hire Aon Hewitt to redesign talent sourcing strategy to increase talent quality,
sustain low cost structure and mitigate location risks.
 Incorporate client’s quality and performance measures with industry
comparatives and the Aon Hewitt People Risk Index.
Location Analysis
Strategy
Shift from its low-cost
sourcing strategy to a
“balanced sourcing” strategy
Outcome
Increase in talent quality by
more than 15%
Talent cost did increase
slightly
Quality & Risk
Overall savings to the
company’s operations were
estimated to be more than
USD $5 million over the next
five years
Aon Hewitt’s Top Companies for Leaders Research
 Most comprehensive, global research on leadership in the market,
examining the link between leadership practices and financial results
– Explores how organizations set strategies, assess, select,
develop, and reward leaders
– Examines the execution of leadership practices, as well as the
strategy that guides it
– Thousands of data points and 900 executive interviews in 2011
 Research has been conducted in 2002, 2003, 2005, 2007, 2009, and
2011 marks the 6th iteration
– Study results published in the November edition of FORTUNE
Magazine
– Regional studies in North America, Europe, Asia-Pacific, and
Latin America, using a consistent methodology and global rollup
 2011 Partners: Fortune Magazine and The RBL Group
15
2011 Top Companies for Leaders Selection Process
478 Global
Participants
182 Global
Finalists
 43 countries
 In-depth interviews
with HR leaders
 Participants
completed detailed
questionnaire
 Aon Hewitt analyzed
responses for strong
leadership practices
 Senior executives
interviewed
57 Top Companies
Panel of judges gathered in
each region to select and rank
Top Companies
Global (Top 25)
 Aon Hewitt scored
data by assigning
points to questions
and responses
North America (Top 25)
 Companies screened
for financial
performance relative
to industry
Europe (Top 7)
 18-month bad press
scan
Asia-Pacific (Top 20)
Latin America (Top 5)
2011 Global Top Companies for Leaders
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
IBM Corporation
General Mills, Inc.
The Procter & Gamble Company
Aditya Birla Management Group
Colgate-Palmolive Company
Hindustan Unilever Limited
ICICI Bank Limited
McDonald’s Corporation
Whirlpool Corporation
PepsiCo, Inc.
General Electric Company
Banco Bilbao Vizcaya Argentaria (BBVA)
13. Natura Cosméticos S.A.
14. Deere & Company
15. 3M Company
16. Eli Lilly and Company
17. McKinsey & Company
18. L’Oréal
19. Unilever plc
20. Siemens AG
21. Intel Corporation
22. China Vanke Co., Ltd.
23. Wipro Limited
24. Bharti Airtel Limited
25. Novartis AG
Europe Top Companies
Banco Bilbao Vizcaya Argentaria (BBVA)
L’Oréal
Unilever plc
ArcelorMittal
Siemens AG
Raiffeisen Bank International AG
Novartis AG
17
What Differentiates The Top Company for Leaders—
The Four Disciplines
Leaders
Lead the Way
Practical and Aligned
Programs and
Practices
Senior leaders
have a passionate
and visible
commitment to
developing leaders
Leadership
strategy clearly
reflects the overall
business strategy
An intense focus
on talent
permeates every
level of the
organization
The development
of leaders is an
institutionalized
practice and
mind-set
Unrelenting
Focus on Talent
When Leadership
Becomes a
Way of Life
1 3
2 4
18
Top Companies Understand the Linkage Between Investing in Leaders
and Financial Results
100%
100%
92%
81%
80%
92%
84%
78%
66%
60%
54%
40%
20%
0%
Articulates a clear business
Stakeholders understand how Leadership investments are not
Leaders can explain how
case for investing in leadership our leadership strategy creates
impacted by financial
leadership investments affect
as a strategic imperative
value
performance
financial performance (e.g., ROI)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Top Companies
All Others
Top Companies’ Portfolio Approach to Accelerating Leadership
Development
Assessment
A
Stretch Role/Mobility
M
Feedback
F
Wisdom Transfer
Learning Labs™
(Theory/Case
Practice)
Business Simulation
WT
LL
SIM
Customized, scalable, relevant assessment techniques for
different levels of leaders
Expanding scope of work or location to broaden horizons
Structured ongoing well timed developmental feedback
Transfer of experiences from an internal or external expert
in the area
Structured classroom theory, best practices and story
telling on competency gaps
Simulation of real world business simulations for
application of learnt models and best practices
Action Learning
Teams
AL
Cross functional team tasked with a real business critical
issue to work together on and present recommendations to
the board/top team
Coaching
C
Ongoing individual coaching by trained coaches to create
a sustainable development journey for leaders
Top Companies Actively Work to Build Diversity and Cultural Agility Into
Their Development Strategies
Actively taking steps to increase representation of the following groups:
100%
100%
88%
80%
88%
84%
84%
73%
62%
64%
60%
54%
47%
40%
20%
0%
Increasing leadership Leaders from outside the
group diversity is a formal
organization’s
part of the leadership
headquarters country
development strategy
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Females in leadership
positions
Individuals with diverse Early career individuals in
experience and/or
leadership positions (e.g.,
perspective in leadership college graduates, next
positions
generation)
Top Companies
All Others
Global Mobility Overview
Key Trends in Global Mobility at Top Companies For Leaders 2011
Of the top 3 skills most critical for future success, global agility occupies
the center-stage for developing leaders
100%
100%
100%
100%
100%
100%
80%
67%
67%
67%
67%
58%
60%
42%
40%
36%
20%
0%
Global Business Experience
Ability to motivate diverse groups of people
Ability to manage/lead a large, complex
organization
Data reflects responses of organizations who are developing these skills well (4) to very well (5)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Global Top Companies
Global All Others
Europe Top Cos
Europe All Others
23
Global Mobility Philosophy
Recruit for Mobility
Organized for Mobility
Assess Global Mobility potential at recruitment
Structure & Processes designed to Enable Mobility
Beyond the Next Move
Global Assignment as part of Career Plan
Sustainable Practices
Conversations about Life Stage & Emotional Needs
Evolving Assignments
Start early
Glopats: Career as a series of International Moves
Mobility early-on to develop Global Perspectives
24
Global Mobility Process
Identify
Orient
On-Board
Deploy
Recruit talent
considering
mobility needs
Think global, act
local
Cultural Training
Thinking beyond the
next assignment
Identify talent pool
for global mobility
Knowledge Transfer
On-the job support
Global exposure
enabled career path
Capability
Development
Supported Learning
International HR
Mobility Set-up
Sync with life stage
Global assignments
as steps of career
development
Developing global
mobility
competencies
Time-bound
expectations and
next steps
Identify destination
jobs
25
Identify
Identify talent pool to staff on global assignments
Top Companies Identify and Strategically Deploy Global Talent Pool
Intent
Action
• Global mindset is our # 1 priority now.
Global
mobility is the
strongest
predictor of
success
Using a
Dashboard
• We will only win if we can attract and develop the very best leadership talent
and they want to come here.
• We find the best talent chose us because of global experiences and career
opportunities they will receive.
• Developing Local Leaders with Global Exposure
• Hire talent educated from another country, work in U.S., and send back to lead in
home country. Remember these local leaders also need to think of themselves as
global leaders too.
Global Top Company (Software & Services)
• Developing HR Infrastructure to support global mobility
• Labor supply chain dashboard to monitor staffing requirement and hiring
• Staffing requirements can be fulfilled by talent across the world through the
dashboard
• Asses longer term talent needs by analyzing which combination of talent sources
and skills best matches the coming business needs
Oil Refining Company based out of Texas
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
27
Orient
Develop global perspective by building on diverse experiences
28
Top Companies Nurture Future Leaders for Global Assignments
Intent
Think global,
act local
Align strategy
with
movement
Action
• Capability Programs incorporate interaction with Global Leaders
• “Leading Beyond Boundaries” helps to build the global perspective in learning
without physically moving people.
• Recent program involved 30 people, 3 weeks, 1 week at Wharton about strategy,
1 week in Shanghai about emerging markets (explaining strategy for why we
invest in this area), 1 week in NY where teams (broken into 4 groups) reported
their findings and what they would do differently if they were running the company.
Global Top Company (Food, Beverage & Tobacco)
• Big believer in “Purposeful Experiences” . Consider Several Moves beyond
just immediate next move.
• Varying type of mobility assignments going beyond just “an expat fulfilling a role”
• Senior Leadership review ‘Cascaded Moves’ monthly for blockers, high potentials
and expatriates
• “What might seem like a good immediate move might not be the right move for
this person looking 2 and 3 moves out; this is the really interesting conversation to
have, using data and modeling scenarios to support analysis.”
Global Top Company (Software & Services)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Top Companies Nurture Future Leaders for Global Assignments
Intent
Blend local
with corporate
Action
• Develop global talent at emerging markets to mingle with other global talent.
• Emerging markets have three levels of development: Local talent with affiliates,
regional talent, and corporate talent.
• In Asia, we put 24 people through General Management Development program.
The faculty coaches and observes participants while the program provides
opportunities for storytelling and observing leadership at a high level.
Global Top Company (Pharmaceuticals, Biotechnology & Life Sciences)
Cultural
exchange with
strategic
integration
• Custom-Built Exchange Programs for Senior Executives
• Global Learning Alliance is a program of exchange, challenge and development
for Senior Executives formed between six international companies aiming to
enhance their ability to meet the challenges of global business.
• Two modules – one in Developed Economy and one in Rapidly Developing
Economy
• integrates Business Strategy, Talent Management Strategy and Leadership
Development priorities.
Global Top Company (Software & Services)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
On-board
Deploy talent pool on global assignments
Align employee's individual development plans and company's strategic goals
Top Companies Support the Employees to Deliver High Performance on
Global Assignments
Intent
Action
Global
Exposure
• The top 100 leaders have, on average, experience in two and a half
continents—not countries—different continents
• That gives them more international experience, more exposure to different
languages, different cultures, different business environments.
• We believe that it is important for leaders to get experience in different countries,
different functions, and different units to help learn to deal with complexity
Global Top Company (Household & Personal Products)
Emotional
impact of
mobility
• Increasing Self-Awareness in employees to successfully navigate the
demands of Career Mobility
• CEO noted she is concerned about the younger talent as “very immobile”. She
stated “the workforce has become less mobile than they have ever been”.
• They have addressed this issue in their succession planning by doing extensive 23 hour interviews that go beyond just skills and capabilities- they ask questions
about aspirations, stage of life, family issues – anything that would impact on
career mobility and assignments.
• CEO sees mobility as the key to adaptability - training folks on the new realities of
being a global business
Global Top Company (Food, Beverage & Tobacco)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Top Companies Support the Employees to Deliver High Performance on
Global Assignments
Intent
Targeted
experiences
and
opportunities
Action
• Varied Mix of short-term and long-term assignments for identified
individuals (typically CEO/COO Unit head positions).
• Includes 3 – 12 month programs to build global working capabilities outside home
country through projects that span across vertical, horizontal, demographic,
geographic and stakeholder boundaries .
• Targeted individuals receive early exposure to international education, worldwide
transactions, business travel.
• Movement of talent creates deliberate platforms for exchange of expectations,
experiences, dialogue, feedback, peer support, coaching/ mentor support and
focus groups.
Global Top Company (Telecommunications)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Deploy
Leverage global talent pool for critical and strategic assignments
Place talent with extensive global exposure to long-term leadership roles
Top Companies Use Global Assignments to Prepare Leaders for
Destination Jobs
Intent
Move Talent
with focus on
their
individual
destination
Action
• Planned Experiences for Destination Jobs
• The clearest indicator of success is movement and the primary driver of
development is experience. Future leaders receive experiences across business
and geographies. It is the manager’s responsibility to ensure that they are ready
for their next career step.
• We look 5 or 10 years out and identify positions that are most likely to be open
due to retirement, etc. These become “destination jobs” for high potential talent
who receive “planned experiences” (i.e. running a global business, international
assignment, etc.) to help them reach the destination in a given time period. High
potentials in functions (i.e., finance) have accelerated development specifically
tailored to their individual needs.
• Global Top Company (Household and Personal Products)
Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011
Key Questions for Your Organization
 Where are you on the leadership journey?
 Have you clearly articulated a talent or leadership strategy for the organization?
 Does your current leadership strategy fully support and help drive your business strategy?
 What are the key obstacles that impede your leadership practices today? How do you mitigate these?
 Is your organization identifying the right talent for the right roles, and then providing them with the appropriate
differentiation and development?
 How is the organization accelerating the development of talent to strengthen your pipeline and retain top
talent?
 Are you measuring the impact of your leadership processes and investments to ensure successful outcomes
and continuous improvement?
Thank You
Aon Risk Services| September 2012