Efficient and
Effective
People practices
of
high-performance
organizations that
deliver
Kevin Martin 1
“First, we changed our hiring
model.”
- Eric Schmidt,
Executive Chairman, Google
2
The Important Balancing Act
3
Who we are:
i4cp focuses on revealing
the people practices that
drive market performance
4
People Practices
Through a Business Lens
Four Dependent Variables:




Revenue growth
Market share
Profitability
Customer satisfaction
High-Performance Organizations
(top 25%) vs.
Low-Performance Organizations
(bottom 25%)
5
Example: Leadership Competencies
13
We Studied
46
predictive of leadership
success
5
predictive of market
performance
Sales, Role Models Org Values,
Negotiation Skills, Business Writing Skills
Hiring Talent
6
i4cp research has shown that high-performance
companies excel in five core areas:
Market
Strong focus on the customer
Strategy
Cohesiveness & Consistency
Culture
Aligned to the strategy
Leadership
Passionate leaders that walk the talk
Talent
Right people, right skills, doing the
right things
7
i4cp Network
(sample of member organizations)
2011 & 2012
2007
2008
2009
2010
2011
2012
8
Trends and Takeaways
 Effective people practices have organizational impact
(efficiencies + effectiveness).
 Organizational agility and innovation; the new business
imperatives.
 It’s more about managing talent and less about talent
management.
 Hold line managers accountable for the development
and engagement of their workers.
 Always remember the People-Profit Chain.
9
The Service Profit Chain
Source: Harvard University, 1994 (James L. Heskett, Thomas Jones,
Gary Loveman, W. Earl Sasser, and Leonard Schlesinger)
10
i4cp's People-Profit Chain™
Talent
Market
Culture
Leadership
Strategy
11
Engagement Makes a Measurable Impact
Having a engaged workforce has an extremely
high correlation with Market Performance
Source: i4cp
12
Keys to Building
Engagement
Management
of Talent
Leadership
Actions
Engaged
Employees
Loyal
Customers
Strategy
Execution
Growth
1. Hire engaged (passionate) employees.
2. Make engagement a leadership priority
at all levels – especially for supervisors
3. Actively promote engagement
4. Recognize and reward engagement
5. Build it into other people practices
6. Build a learning culture
13
Strategy
Execution
Management
of Talent
Leadership
Actions
Engaged
Employees
Loyal
Customers
Strategy
Execution
Growth
“Execution is a wide-ranging
discipline that connects business
strategy to internal and external
realities by linking together three key
business processes:
people, strategy, and operations.”
~ Larry Bossidy
(former CEO, Honeywell)
14
The Critical Human Capital
Issues of 2013
15
i4cp’s Critical Issues Study
70
Workforce-Related Issues
Critical Issues Index =
Importance/Effectiveness Ratio
Conducted in Dec ‘12.
334 Participants.
Information is from
organizations with
1,000 or more
employees.
16
Top 10 Issues
Overall
1. Managing / coping with
change
2. Managing organizational
change
3. Knowledge Retention
Three on the top
10 are related to
“Change”
4. Workforce analytics
5. Strategy execution / alignment
6. Embracing change in the
current culture
7. Measuring human capital
8. Performance management
9. Succession planning
10.Leadership development
17
Top 10 Issues
Overall
1. Managing / coping with
change
2. Managing organizational
change
3. Knowledge Retention
4. Workforce analytics
5. Strategy execution / alignment
Two on the top
10 are related to
“Metrics and
Analytics” and
were on the list
before
6. Embracing change in the
current culture
7. Measuring human capital
8. Performance management
9. Succession planning
10.Leadership development
18
Top 10 Issues
Overall
1. Managing / coping with
change
2. Managing organizational
change
3. Knowledge Retention
4. Workforce analytics
Six on the top 10
have been on
this list for the
past four years
5. Strategy execution / alignment
6. Embracing change in the
current culture
7. Measuring human capital
8. Performance management
9. Succession planning
10.Leadership development
19
Top 10 Issues: HPOs vs. LPOs
High Performers
Low Performers
1. Managing organizational change
1. Strategy execution/alignment
2. Workforce analytics
2. Managing / coping with change
3. Workforce planning
3. Managing organizational change
4. Performance management
5. Measuring human capital
6. Succession planning
Only
three are
on both
lists
4. Measuring/rewarding results
5. Embracing change in the current
culture
7. Succession planning – non
executives
6. Innovation and creativity
8. Leadership development
9. Managing / coping with change
8. Communication of company
vision
10. Coaching
9. Knowledge retention
7. Leadership development
10. Internal communications
Source: i4cp
20
Change?
Agility
(Agility: the ability to move quickly, decisively,
and effectively in anticipating, initiating and
taking advantage of change)
21
Importance of Organizational Agility
“The ability to be agile enough is
the gut issue in leading an
organization today.”
- James McNerney,
Chairman & CEO, Boeing
22
Developing Agility
 Work simultaneously from the inside-out
and from the outside-in
 Outside-in = where is the business going
in 3-5 years? What changes in the market
do we anticipate?
 Inside-out = how prepared are we
internally to address anticipated
changes?
Source: i4cp
2323
Agility?
Preparedness
24
Agility Must be Embedded Within
“One way to think about organizational agility
is much like the way the head of a supply chain
organization thinks about quality. Quality isn’t a
matter of appointing someone to check your
products, because by then it’s too late; rather, it’s
a matter of embedding scrutiny and commitment
into every step of the process”.
s
Source: Accenture, Corporate Agility, Six Ways to Make Volatility Your Friend, Oct. 2012
25
Key Finding
High Performing Organizations
 Change is viewed with an
eye towards the future
Low Performing Organizations
 Change is viewed through the
rear-view mirror
 Better management of
talent to enable and
support the future “state”
 Lack clarity & communications
about where the biz is going
 Apply metrics & analytics
to make better decisions,
measure progress, and
identify gaps.
 Struggle with alignment , and
lack the leadership and
resources to see it through.
Source: i4cp
26
Trend
At High-Performance Organizations
Involvement by Line Managers is
Growing & Makes a Big Impact
27
"This whole game of business
revolves around one thing. You
build the best team, you win."
- Jack Welch,
Former CEO, GE
28
Involve Line Managers in the Following
1. Learning and training
2. Employee engagement
3. High-potential employee
development
4. Leadership development
5. Career/employee
development
Source: i4cp
A High
Correlation with
MPI when Line
Managers
Demonstrate
Involvement in 5
Specific
Processes
29
Way More than a Score
3 facets drive engagement:
 Org. Design / Org. Change
 Leaders
 Culture/Innovation
 Trust at the core of engagement
 an important ingredient in innovation
 Conditions for engagement
 built largely by supervisors and managers
30
Linking Engagement to the Key
Performance Indicators of the Business
31
76%
$5.00
$4.50
74%
$4.00
72%
$3.50
70%
$3.00
68%
$2.50
$2.00
66%
Earnings Per Share
Employee Engagement Score
A Leading Indicator of EPS
$1.50
64%
$1.00
62%
$0.50
60%
$0.00
2004
2005
2006
2007
Employee Engagement
2008
2009
EPS
32
78%
$5.00
76%
$4.50
74%
$4.00
72%
$3.50
70%
$3.00
68%
$2.50
66%
$2.00
64%
$1.50
62%
$1.00
60%
$0.50
58%
$0.00
2004
2005
2006
2007
2008
Employee Engagement
2009
2010
Earnings Per Share
Employee Engagement Score
Doubling Down on Engagement
2011
EPS
33
Employees become Engaged when:
 They believe their work is meaningful
 They trust and respect senior management
 They have a healthy working relationship with their
supervisor
 They are proud of their company’s brand
 They believe they are receiving the training and
development necessary for their current job and for the
future.
34
Why Engagement Scores Are Not
Enough?
COMPANY
61
EAST
CENTRAL
WEST
53
51
76
UNIT 1
UNIT 3
UNIT 1
53
63
54
UNIT 3
76
UNIT 1
UNIT 3
69
83
UNIT 2
UNIT 2
UNIT 2
45
40
80
35
© Metrus Group, Inc., 2012
CENTRAL
WEST
51
76
UNIT 3
UNIT 3
76
83
Central
West
Financial
Operations
Customer
Turnover
-40%
-40%
20%
-20%
-20%
0%GOAL 20%
© Metrus Group, Inc., 2012
36
A More Informed View:
TM
People Equity ACE Scorecard
ALIGNMENT
CAPABILITIES
ENGAGEMENT
COMPANY
EAST
A
C
E
48
52
61
CENTRAL
WEST
A
C
E
A
C
E
A
C
E
49
53
53
44
27
51
61
84
76
UNIT 1
UNIT 3
UNIT 1
UNIT 3
UNIT 1
UNIT 3
A
C
E
A
C
E
A
C
E
A
C
E
A
C
E
A
C
E
29
56
53
56
52
63
54
26
54
43
28
76
49
61
69
66
84
83
UNIT 2
UNIT 2
UNIT 2
A
C
E
A
C
E
37
51
45
34
25
40
© Metrus Group, Inc., 2012
A
C
E
58
87
80
37
Trend
At High-Performance Organizations
Less about Talent Management
More about Managing Talent
38
4 Key Ingredients
for Line Managers:
Management
of Talent
Leadership
Actions
Engaged
Employees
Loyal
Customers
Strategy
Execution
Growth
• Begins with Strategic Workforce
Planning and Talent Segmentation
• They invest time and energy in Talent
Development
• They anchor it with Performance
Management that focuses on Individual
Development Plans
• And, they use metrics and analytics to
make evidence-based talent decisions
Source: i4cp
39
Criticality of Workforce Planning
Importance
Effectiveness
75% vs. 59% 23% vs. 13%
No
Change
+10
Legend: HPO
+19
-8
Right people
Right skills
Right time
Right place
LPO
40
Spending on Workforce Planning
41
Three Levels of Workforce Planning
Highly correlated w/ WFP
effectiveness = .45
32% - high performers
17% - low performers
Highly correlated = .36
38% - high performers
30% - low performers
Highly correlated = .30
62% - high performers
48% - low performers
Strategic
Tactical
Operational
Lead the business:
Create a competitive
advantage (business
planning, needs assessment)
Manage the business:
Staffing plans.
Run the
business:
Headcount
forecasting.
Source: i4cp
42
Focus on Strategic Workforce Planning
Source: i4cp
43
SWP is about gaining a deeper
understanding of the Talent Segments
 Segmenting the workforce is not
about identifying Hi-Potentials
or Leadership Development or
Succession Planning.
 The goal is to understand the
“critical” and “pivotal” talent
segments that are core to
business success.
 Identify segments first, then
skills, then individuals
Source: i4cp
44
Key Finding
Talent Management
Managing Talent
 Business-centric
 HR-centric
 Outside-in view of the
capabilities needed to
maximize workforce
performance
 Inside-out view of the policies,
procedures & processes
associated with managing the
employee life cycle
 Engagement is about
alignment and capabilities
 Engagement is more about
‘satisfaction’
 Results and outcomes
oriented.
 Activities based.
45
Trends and
Takeaways
Management
of Talent
Leadership
Actions
Engaged
Employees
Loyal
Customers
Strategy
Execution
Growth
 Effective people practices have organizational impact
(efficiencies + effectiveness).
 Organizational agility and innovation; the new business
imperatives.
 It’s more about managing talent and less about talent
management.
 Hold line managers accountable for the development
and engagement of their workers.
 Always remember the People-Profit Chain.
46
Kevin Martin
Kevin.martin@i4cp.com
www.i4cp.com
© 2012 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.
47