Evidence Based Management in HR at Danske Bank

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Evidence Based Management
in HR at Danske Bank
2006
Lars Mørch, Head of HR, Member of the
Executive Committee, Danske Bank
”One platform – exceptional brands”
- a common, exportable strategy
Common infrastructure:
• HR
• IT
• Communication
• Finance
• Credit
• Call Centre
• Shared Services Centre
Same retail strategy:
• Products and concepts
• Product development
• Retail structure and
processes
Geographical operations
- cautious, value-adding expansion
•
Predominantly
represented in
Northern Europe
within retail banking
•
Directly or indirectly
represented in many
financial centres
FokusBank
boughtin 1999
HelsinkiBranch
estab. in 1997
OsloBranch
estab. in 1997
StockholmBranch
estab. in 1995
Northern Bank
bought in 2004
National Irish Bank
bought in 2004
Östgöta Enskilda
bought in 1997
Danske Bank
estab. in 1871
LondonBranch
estab. in 1983
.
.
Danske Bank Intl Lux
estab. in 1976
Hamburg Branch
estab. in 1985
Danske BankPolska
bought in 2000
Performance highlights
- keeping up the momentum
Net profit  5% to DKr 3.1bn
• Strong activity in most business units and
support from higher short-term
interest rates
• Income up 13% on volume growth and
heavy customer-driven trading activity
• Costs up 23% due to integration
expenses and bonuses
• Migration of NB and NIB completed
DKr bn (end-period)
- Corporate loans
- Retail loans
Bank loans ex repos
Repo loans
Mortgage loans
Trading portfolio
Deposits
Shareholders' equity
Total assets
Risk-weighted assets
Q1 2005 Q1 2006
338
393
204
251
542
643
197
217
531
567
468
357
569
618
65
70
2,271
2,392
884
972
Index
116
123
119
110
107
76
109
109
105
110
DKr m
Income
Expenses
Profit bef. credit loss exp.
Credit loss expenses
Profit before tax
Tax
Net profit for the year
Q1 2005 Q1 2006
8,039
9,123
3,958
4,871
4,081
4,252
-126
-129
4,207
4,381
1,223
1,250
2,984
3,131
Index
113
123
104
104
102
105
Breakdown of profit growth
DKr m
4,500
3,250
3,131
2,984
2,000
Q1 2005 Income, ex Income,
NB&NIB NB&NIB
Expenses, Expenses,
ex
NB&NIB
NB&NIB
Credit
losses
Tax
Q1 2006
Danske Bank – HR History
- increased focus on development
•
’Old school’ Personnel Department
until 2002
•
Strategic refocusing of HR
•
Corporate Centre of Excellence
•
Part of strategic Group platform
Shared ambitions – sufficient flexibility
- as local as possible
HR vision
The Danske Bank Group will attract
and retain people with the best
competencies and the highest
performance.
HR mission
The management of the Danske Bank Group
employs best-in-class HR solutions
HR is a mutual responsibility …
- among equal stakeholders
Business units
Execute HR and assure
- committed employees
- a high level of competencies
- a high level of performance
through HR tools
HR Development
Owns the HR strategy
- responsibility for concepts,
follow-up and support
HR Services
Delivers efficient,
flawless administration
…that leaders execute
Group vision, mission
and focus areas,
Models/solutions
Local adaptations
and requirements
Execution
ExCo
HR Dev.
Business Unit HR
and Management
Top management
Reporting/analysis
Local management
reporting
Local Management and HR
Employees
Enters
Own data
HR Data and Surveys
HR Policies
- and report on
Robust HR Leadership Practices
- tools, assessment, support
Centres of
excellence
A wide range of HR tools
Leadership
training
Succession/
talent
Performance
management
Recruitment
and attraction
Strategic Focus Areas
Training/
competencies
• Competency profiles
• Learning methodology
• e-Learning
• Management foundation
• Leadership programme
Assessment
Support
Yearly circle
• Projects
• Coaching
• Sparring
Dec.-Jan.: Performanceagreements
Dec.-Jan.:HR action plans 2 0 0 6
Dec.
Nov. :Follow-upHR action
plan 2 0 0 5
Nov.:Executiveconference
Nov. :Recommendationsfor
promotions
Jan.-Feb.: Promotions/pay/
bonus distribution
Jan.
Nov.
Feb.
Feb.-M arch: Annualreview
manager/ employee
- Input from talent pools
Sept.-Nov.:Employeesurvey
and internalcustomersurvey
Sept.-Oct.: Bonus pool/ model
Okt.
M ar.
Sept.
Apr.
Aug.
• Succession Management
• Talent management
• Incentive programme
• Performance agreements
• HR Key Figures
• HR System
• Recruitment/employer branding
M aj
Juli
-
Juni
HR-vision
HR-mission
Danske Bank-koncernen vil tiltrække og engagere de mest
Lederne i Danske Bank-koncernen
kompetente og bedst præsterende medarbejdere, der med en
praktiserer ’best in class’-løsninger
høj grad af integritet giver vores kunder de bedste løsninger
inden for HR
Beginningof April:
Recommendationsfor
executiveeducation
M ay: Succession
management (Executive
Committee)
HR-handlingsplan 2 0 0 5
Fokusområde
Indsatsområde
Performance management
M ål/ delmål – hvad skal
vi opnå?
M idler – hvordan gør vi?
Deadlines
Ansvar
1. Målet er en øget variabilitet i
bonus til kontaktansatte. Under
50% af cheferne bør for 2005
falde inden for +/ - 20% af det tidligere års bonus.
Ved gennemgang af bonus for kontraktansatte for år
2004 var det klart, at der i mange områder er for lille
variabilitet i chefbonusserne, hvorved bonus mister
sin betydning som incitament og overgår til at blive
en mere fast lønkomponent.
Start 1 . kvartal 2 0 0 5
– ultimo 2 0 0 5
HRAM / HKRI
2. Bonusfordeling optimeres til
fordel for de højest præsterende
med størst potentiale
På baggrund af medarbejdersamtalens A-F oversigt
opstilles bonusoversigt, der drøftes i HR-komiteen.
Bonus til E- og F-performere burde ikke fremstå.
Ultimo april 2 0 0 5
SRN/ HRkomite
(målbart)
HR Consultants
• Coaching, sparring and support
• Employee Engagement surveys
• Projects
All HR activities are monitored
Process owned by HR
• Conclusions owned by
business units
•
R
E
S
U
L
T
S
Prioritising
targets and A
activities C
T
I
V
I
T
Evaluation of I
results and
new target E
setting S
1.Management
Management
1.
Comments
The employee survey:
- On level with the Group on
Immediate superior and top
manager – above the sector
- Same level as in 2004
- A step back on immediate superior’s
Managerial skills and correlation
between personal goals and
the goals of the unit
- Very high satisfaction & motivation
along with loyalty in the
management (81and 91)
2006:
Individually development of branch
managers and FC managers
Distribution of men and women
among the managers
Realised Group
Men
74.2%
73.7%
Women
25.8%
26.3%
Source: Managers assessed in
Employee Survey 2005
Overall management indices
Index for immediate superior
Index for top manager
In general
Your overall perception of immediate superior
The managerial skills of immediate superior
Strategic Leadership
Immediate superior has the right professional focus on the unit's
development potential
People Leadership
Immediate superior ensures correlation between my personal goals
and the goals of the unit
Immediate superior gives constructive feedback on my work
Immediate superior delegates adequate responsibility and authority
so I can solve my assignments
Immediate superior is able to handle conflicts in the unit
Immediate superior contributes actively to help me develop
Professional Leadership
Immediate superior has the right focus on the scope for developing
Immediate superior shares knowledge through sparring and coaching
Operations Management
Immediate superior is efficient and goal-oriented
Immediate superior makes it possible for the unit to deliver high
quality on time
Personal Ressources
The ability of immediate superior to keep calm in difficult situations
The profesional skills of immediate superior
Immediate superior is open to constructive criticism
What immediate superior says is consistent with what he/she does
Benchmark
BG Bank
Areas
Realised
2004
80
77
82
82
82
78
82
76
80
75
83
82
81
78
86
83
84
83
79
74
77
77
81
79
80
78
84
73
78
85
75
77
88
77
80
88
75
74
81
73
78
75
83
77
0
0
82
80
82
83
77
79
81
77
77
80
78
76
80
82
78
79
81
85
81
83
0
84
78
79
Realised
2005
Group
82
75
Source: Employee Survey 2005; 0 indicates new question
Percentage distribution of managers' A-F perfomance ratings
Total number of managers
497
Rating
A+B
C
D
10%
42%
47%
Percentage distribution
E+F
1%
Source: Managers assessed in Employee Survey 2005 in relation to reporting of staff resources 2005
Top manager:
- Strengths:
Ethics and respect
- Improvement points:
Information and
communication in a
strategic direction
Immediate superior:
- Strengths:
Technical skill / receive
constructive criticism /
influence on work
assignments
- Improvement points:
Development of
superiors in the senior
management group /
feedback / sparring /
appraisal interviews
2. Succession management
2. Succession management and talent development
and talent development
Update at appraisal interviews 2006
- Small group of talents – less than in
2004 (149 in branches and finance
centres)
- 8 talents developed to other areas
(5.4%); 7 out of the group (4.8%) 
overall 10.2% of the talents
- Relatively large part of senior aged
management (12% above 55 year)
Percentage distribution of A-F
performers
Realised
2005
A performers
B performers
C performers
D performers
E performers
F performers
Percentage of staff registered
1.5%
2.4%
33.5%
59.4%
0.6%
2.6%
85%
Matrix of performance,
potential and flexibility
Benchmark
NormalBG Bank
distribution
Areas
1.2%
2.0%
2.7%
8.0%
36.4%
40.0%
56.8%
40.0%
0.5%
8.0%
2.4%
2.0%
80%
4
Source: Reporting of staff resources 2005 as of 31/12-05
Above
average
3
2
D
C
B
A
77
82
5
38
D
C
B
B
990
612
2
81
D
C
C
C
1025
337
7
25
F
E
E
E
79
27
1
0
F
E
E
E
6
3
0
2
Very
good
5
Performance
Comments
Good
Below
average
A-F distribution of men and w omen
2006:
70%
Develop talents/core employees
60%
67%
1
52%
Not so
good
50%
Succession aimed at high superiors,
region managers, parent branch
managers, FC managers and others.
40%
30%
Women
Potential
realised
Further
potential
1
2
20%
10%
- Bring along succession slides
Men
35%
27%
5%
3% 1%
2%
1% 1%
4% 3%
B
C
Rating
D
E
High
potential
flexible
4
Potential & Flexibility
Source: Reporting of staff resources 2005
as of 31/12-05
0%
A
High
potential
not
flexible
3
F
Source: Reporting of staff resources 2005 as of 31/12-05
Portion of talents (A+B) broken down by job levels - total of 127
Management - age distribution
50%
42%
40%
28%
30%
10%
5%
Danske Bank
Regions
35%
27%
20%
20%
10%
32%
29% 28%
23%
6%
Management
labourforce
4%
7%
4%
0%
<30
30-39
40-49
50-59
60++
Age
Source: Managers assessed in ES 2006 in relation to age
Management labour force and management sector are from Statistics Denmark 2005
Management
Sector
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
39%
20%
20%
14%
12%
8%
8%
5%
0% 0%
Contract
10
20%
11%
4% 3%
9
8
7
6
Job level
Source: Reporting of staff resources 2005 as of 31/12-05 Notice
that some talents can be below job level 5
5
Danske Bank
Regions
"Ideal
distribution"
3.Engagement
Commitment
3.
Comments
Employee survey:
- Above level of group
- Same level as in 2004
- Talents generally most satisfied
– close to ”ideal” distribution
Benchmark
Realised
BG Bank
2004
Areas
Realised
2005
Group
78
84
75
84
80
85
77
85
89
0.93%
1.26%
2.19%
86
1.09%
1.21%
2.30%
86
87
Index of Satisfaction & Motivation
Index of Loyalty
I would like to be working for the Danske
Bank Group in two year's time
Absence due to illness 0-14 days
Absence due to illness 15+ days
Absence due to illness overall 2005
Source: Employee Survey 2005, absence due to illness via PLAS.
”Ideal” distribution
80
78
76
74
Indeks X
Medarbejdernes vurdering
Overall indices for A+B, C, D and E+F performers
78
77
75
81
80
79
78 78 78
77
75 75
82
82
81
78
79
78
78
76
74
74
73
77
77
74
A+B
75
C
71
D
E+F
Image
Top Management
Immediate superior
Co-operation
Your daily w ork
Source: Employee Survey 2005 and reporting of staff resources 2005 as of 31/12-05
Remuneration
Professional and
personal
development
4. Recruitment and
4. Recruitment I
attraction I
Comments
Net inflow of employees (+60):
3 (NEITHER
5
DON'T Number
4
/NOR)
(HIGH) KNOW of replies
Welcome and introduction. How do you rate the introduction to...
- your job assignments?
9%
0%
11%
51% 28%
0%
226
- the units in your department/branch?
1%
6%
12%
53% 27%
0%
226
- your new collegues?
0%
4%
4%
37% 54%
0%
226
Expectations for the job and your work
Questions to new employees
- Financial economist 2006: Hired 26
(budget 32-35 – Fyn, Sjælland Nord
and Jylland Midt below budget)
- Apprentices 2006: Adjusted budget
from 42-46 to 60 – at present 41
hired – København, Storkøbenhavn,
Sjælland Nord/Syd not at target)
- Financial trainees 2006: Expected
to hire 10-12 with BSC background
- Growth in number of applications
from 2004 until mid Nov. 2005:
Increase of 19.2%
2006:
Project with analysis and optimizing
of the attraction of relevant profiles
carried out
Continued recruitment of younger
employees – preferred with
experience
Level of education new hires
Number Percentage
Fundamental education
Grammer school
Vocational education
Short higher education
Undergraduate education
Graduate education
Other
Overall
6
26
70
76
35
9
4
226
3%
12%
31%
34%
15%
4%
2%
100%
Source: Questionnaire for new
employees 1 month after start. 1/1-05 31/12-05 (Recruitment analysis).
1 (LOW)
2
1%
4%
6%
35%
54%
0%
226
1%
2%
10%
56%
25%
6%
226
3%
1%
3%
3%
5%
8%
45%
43%
44%
45%
0%
0%
226
226
Have your expectations been met so far?
Do you think you add value at the
present time?
Overall, how would you rate the
employment process you have been
through?
How do you rate working in the Group?
Source: Questionnaire for new employees 1 month after start. 1/1-05 - 31/12-05
(Recruitment analysis).
Titles - new hires
Top 9 + other
Apprentice (1. year bank)
67 (62)
16%
Service advisor
53 (38)
13%
Advisor without portfolio
43 (31)
10%
Advisor (private)
33 (15)
8%
Adviser
21 (10)
5%
Finance trainee
18 (16)
4%
Private advisor trainee
17 (8)
4%
Business advisor
15 (4)
4%
Advisor - branch
Other
Overall
Age difference - age outflow – age inflow: 13 years
Number Percentage
14 (3)
136 (33)
417 (263)
96% of new employees maintained during 2005
Age distribution - inflow, status, outflow
Procent
- Generally good introduction and job
satisfaction among the new
employees
100%
0%
10%
80%
19%
60%
21%
33%
100%
20%
10%
35%
19%
24%
21%
50%
0%
Inflow (number=413)
Status (number=3028)
50-59
30-39
< 30
17%
13%
60++
40-49
30%
40%
3%
6%
26%
Outflow (number=332)
Source: New employees in the period 1/1-0531/12-05 (PLAS). In parenthesis are the
Source: Inflow, status and outflow 1/1-05 - 31/12-05 (PLAS); Inflow = New
numbers of new employees, who are externally employees and internal transfers to the area from other parts of the group. Outflow =
recruited
internal transfers, severance schemes and other external resignations
4. Recruitment and
4. Recruitment II
attraction II
Comments
Reasons for resignation
Outflow of employees:
Satisfied with this job
- resignation is due to practical reasons
(distance, time of transportation etc.)
Satisfied with this job, but has wants new
challenges
Not satisfied with work assignments
Not enough challenges / career opportunities
Not enough opportunities for personal /
professional development
Unfulfilled redeployment wishes
Uncertainty in job
Too much time- / work pressure
Unsatisfied salary level / salary conditions
Lack of cooperation /
bad atmosphere in my department/unit
Not satisfied with immediate superior
Other
Overall
- Losing private advisors,
business advisors and
investment advisors.
- Challenges, work pressure,
career opportunities and
work assignments are still primary
reason of resignation
- 43% resigned goes to competitors
- 9% salary decrease – 66% salary
increase
- External resignation 2005: 6.6%
(group: 7.0%)
2006:
Continued focus on engagement
and development of the most
competent employees
Primary
Other reasons*
Number Percentage Number Percentage
0
0%
0
0%
12
3
4
24%
6%
8%
14
11
9
19%
15%
12%
0
0
1
9
1
0%
0%
2%
18%
2%
6
1
0
6
0
8%
1%
0%
8%
0%
2
0
17
49
4%
0%
35%
100%
3
1
22
73
4%
1%
30%
100%
Source: Resignation analysis 1/1-05 - 31/12-05
*Possible to give more than one answer
Resignations 2005
External - excl. resignation
agreements
Resignation agreements
Internal redeployments
Overall know n
resignations
Number Percentage Number Percentage Number Percentage Number Percentage
185
5.2%
4
0.1%
131
3.7%
320
9.0%
Source: Reporting of staff resources 2005 in relation to resigned employees from 1/1-05 to
31/12-05. The percentages state the part in relation to the areas’ overall number of employees.
Resignations 2005 broken down by A-F performers
Performers
overall
A-performers
B-performers
C-performers
D-performers
E-performers
F-performers
28
64
734
1448
11
60
External excl. resign.
agreements
1
6
66
101
1
10
Resignation
agreements
0
0
1
2
0
0
Source: Reporting of staff 2005 in relation to
resigned employees from 1/1-05 to 31/12-05
Internal
redeployments
1
8
61
50
0
10
5. Performance
5. Performance management I
management I
Comments
- Awardment of salary and bonus in
high degree to high performing
employees, still awardments to low
performers
I know what is required of me to qualify for bonus
The Groups' bonus scheme motivates me to make an extra effort
Realised
2005
Group 2005
Benchmark
BG Bank
Områder
Realised
2004
71
56
68
55
73
53
73
0
Source: Employee survey 2005
2006:
Danske Bank DK to participate in a
review of incentive program
with alignment to bank
concept
Monthly salary level 2004/2005 for
A+B, C, D and E+F
Number of employees aw arded bonus
2004/2005 for A+B, C, D and E+F
Bonus level 2004/2005 for
A+B, C, D and E+F
100%
40000
40000
8
35000
35000
7
30000
6
30000
25000
5
25000
60%
20000
4
20000
50%
15000
3
15000
10000
2
10000
5000
1
5000
0
00
90%
80%
70%
40%
30%
20%
A+B
C
Per month Dec. 2004
D
E+F
Per month Dec. 2005
10%
0%
A+B
C
D
E+F
Conditional shares aw arded in 2004
Conditional shares aw arded in 2005
Bonus earned in 2003, aw arded in 2004
Bonus earned in 2004, aw arded in 2005
A+B
C
D
Bonus earned in 2003, awarded in 2004
Bonus earned in 2004, awarded in 2005
E+F
5. Performance
5. Performance management II
management II
Employees appointed on a contractual basis
Comments
- Greater variability in bonus awards
in 2005, still room for improvement,
so that bonus not becomes fixed
part of the salary
2006:
Bonus level 2004/2005 for employees appointed on
contractual basis for
A+B, C, D and E+F
Monthly salary level 2004/2005 for employees appointed
on contractual basis for
A+B, C, D and E+F
70000
140000
60000
120000
50000
100000
40000
80000
30000
60000
20000
40000
10000
20000
Number of employees appointed on a
contractual basis aw arded bonus
2004/2005 for A+B, C, D and E+F
100%
90%
80%
70%
- For employees on a contractual basis
as well as for other employees: Focus
on bonus awards and salary
development i relation to performance
60%
50%
40%
30%
20%
10%
0
0
A+B
C
Per month Dec. 2004
Salary distribution for employees appionted on a
contractual basis 2005
7%
6%
Salary
Cash bonus
Conditional
shares
87%
Source: Reporting of staff resources 2005 in
relation to salary and bonus data for the
employees appointed on a contractual basis
as of 31/12-05
D
E+F
Per month Dec. 2005
E and F performers covers one person,
who changed job and went one level down
but has maintained a higher salary level
than other employees with the same
characteristics.
0%
A+B
C
D
E+F
Conditional shares aw arded in 2004
Conditional shares aw arded in 2005
Bonus earned in 2003, aw arded in 2004
Bonus earned in 2004, aw arded in 2005
A+B
C
D
E+F
Bonus earned in 2003, awarded in 2004
Bonus earned in 2004, awarded in 2005
E and F performers covers one person with
a bonus awarded.
Variability in bonus for
contract employed
2005
2004
38.8%
61.1%
Source: Employees appointed on a
contractual basis as of 1/4-05 (PLAS);
The variability states the part, who received a
bonus within +/- 20% of the bonus from the
year before.
6. Competency
6. Competency development
development
Update
at appraisal interviews 2006
Comments
Employer Survey:
- Above level of group
- Fall in opportunities and attention
on professional and personal
development
Your opportunities for professional and personal development
The attention given to your professional and personal development
My job assignments are challenging
My appraisal interview supports my further development
Realised
2005
82
76
77
75
Group
Benchmark
BG Bank
Areas
Realised
2004
76
71
79
71
81
79
80
80
81
77
80
75
Source: Employer Survey 2005
Competencies:
- Competency evaluations in
progress, 20% done/approved
Competency evaluations - average
2006:
- Personal competencies fills too
much – increased professionalism
wanted
Competency evaluations - status
Number of
employees with a
competency profile
2835
Not done
1321
During proces
130
Forwarded to
approval
473
Approved
415
Rejected
496
Source: HR-system as of 16/2-06
46.60%
4.59%
16.68%
14.64%
17.50%
Status on approved competency evaluations
Below
Above
Area
match
Match
match
Overall
Danske Bank Regions
17%
58%
25%
100%
Source: HR-system as of 16/2-06
Kompetenc
ies
Competencies
advisor
(private)
- DB- DB
Priv
ate Cons
ultants
Responsible
Empathic
Adaptable
Business focus
General product knowledge
Holistic
Involving
Communicate directly
Contact establishing
Customer focus
Planning skills
Result-oriented
Society
Independent
Use of system
Source: HR-system as of 16/2-06




Competencies with the most employees below match - ”top 10”
Competency
Customer focus
Contact establishing
General product
General
produktknowledge
knowledge
Use of system
Result-oriented
Sparring and development of others
Business focus
Flexible
Involving
Adaptable
Source: HR-system as of 16/2-06
Below match
210
22%
174
22%
148
18%
134
20%
96
11%
89
30%
70
10%
62
23%
59
24%
59
11%
Match
525
472
506
413
543
191
474
162
183
299
55%
60%
63%
62%
62%
64%
68%
60%
73%
58%
Above match
214
23%
138
18%
154
19%
123
18%
237
27%
19
6%
158
23%
46
17%
9
4%
157
30%
Overall
949
784
808
670
876
299 Not advisors (private)
702
270 Not advisors (private)
251
515
Development in employee engagement
outperforms peers and industry
86
Cultural activities and organisations
Banking and insurance
84
Danske Bank Group 2004
Danske Bank Group 2005
82
Loyalty
Danske Bank Group 2006
Danske Bank Group 2003
Social services
Health care
Post and telecom
Education and research
Building and construction
Retail and services
80
Groceries and tobacco
Danske Bank Group 2002
IT and consulting services
Public authorities
Primary industry
Other industry
78
Transportation
76
Engineering, iron and metal working
industry
74
64
66
68
70
72
Satisfaction & Motivation
74
76
78
The “case for HR” at the branch network
Employee profit correlated with employee
satisfaction and motivation in Danske Bank
index
Employee profitability
Index
150
140
138
130
120
110
100
110
100
90
80
Bottom 1/3
Middle 1/3
Upper 1/3
Employee Satisfaction and Motivation
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