Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Retooling HR:
Creating Evidence-Based Change
Our Own TM at USC
University of Southern California
September 26, 2012
Professor John W. Boudreau, Ph.D.
Center for Effective Organizations
Marshall School of Business
University of Southern California
john.boudreau@usc.edu
213-740-9814
www.ceo.usc.edu
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
April 2011: U.S. Masters
Rory McIlroy
65, 69, 70, … 80
Tied for 15th place
June 2011: U.S Open
— 72-hole record at 268
— 54-hole record at 199
— 36-hole record at 131
Winner at 16 under par
Golf is a game that is played on a five-inch course - the
distance between your ears. ~Bobby Jones
Strategic HR is achieved “Beyond HR” NOT in the HR function, NOT in the HR systems ‐‐
between the ears of those who make hundreds of decisions about their own human capital, and the human capital under their stewardship. © 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
1
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Managing the Right Asset?


Manufacturing or technology
company
High-growth potential in the long
term


Strong market demand
Constrained resource:

Project engineers to customize the
products to the needs of the clients
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
Typical Budgeting Objectives
Goals:


Complete certain projects
Add six new project
engineers
Actual:


Completed projects
Only added three new engineers
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
2
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Typical Performance Evaluation
Completed all objectives
 Expenses under budget

Most systems would reward budget goal
But, the expenses saved are minimal They are in a weaker position –
compared with if they had staffed as planned
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
What HR Professionals Believe
(Lawler & Boudreau, “Achieving Strategic Excellence” 2012)
5–7
Years Ago
Current
Maintaining Records
Collect, track, and maintain data on
employees
23.2
13.6
Auditing/Controlling
Ensure compliance to internal operations,
regulations, and legal and union
requirements
15.2
12.5
Human Resources Service Provider
Assist with implementation and
administration of HR practices
33.0
30.4
Development of HR Systems and
Practices
Develop new HR systems and practices
13.5
16.7
Strategic Business Partner
Member of the management team.
Involved with strategic HR planning,
organizational design, and strategic change
12.1
26.8
Means
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
3
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
HR’s Actual Progress Since 1995
(Lawler & Boudreau, “Achieving Strategic Excellence” 2012)
Percentage of Time
Spent in the Role
1995
2001
2007
2010
Maintaining Employee Records
15.4
14.9
15.8
13.6
Auditing and Controlling,
Ensuring Compliance
12.2
11.4
11.6
12.5
Providing HR Services and
Implementing Programs
31.3
31.3
27.8
30.4
Developing HR Systems and
Practices
18.6
19.3
19.2
16.7
Strategic Business Partner
21.9
23.2
25.6
26.8
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
Time Spent Matters!
(Lawler & Boudreau, “Effective HR Management” 2012)
Correlation with
HR Role in
Strategy
Correlation
with HR
Effectiveness
Correlation with
Reported
Organization
Performance
Maintaining Records
Collect, track, and maintain data on
employees
-.18*
-.42***
-.12
Auditing/Controlling
Ensure compliance to internal operations,
regulations, and legal and union
requirements
-.17*
-0.30***
-.13
Human Resources Service Provider
Assist with implementation and
administration of HR practices
-.18*
-0.24**
-.23*
.05
.12
.16
.31***
.54***
.27**
Development of HR Systems and
Practices
Develop new HR systems and practices
Strategic Business Partner
Member of the management team.
Involved with strategic HR planning,
organizational design, and strategic change
© 2012 John W. Boudreau. All rights reserved. john.boudreau@sbcglobal.net
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
4
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Evidence-Based Organizations …
Not the Quiet Ones

Received Wisdom


Clinical Evidence


Good leader and co-worker relationships lead to better organizational
outcomes
Amy Edmonson and colleagues studied nursing units and found that the units
with the “best” leadership and co-worker relationships reported making 10
times more errors than the worst.
Explanation

High-performing nurses adjusted to errors without complaining, silently
corrected others mistakes without confronting the error-makers, did not
question flawed practices

Lower errors when nurses were “complainers,” “confronters,” “confessors,”
and “disruptive questioners”
Source: Jeffrey Pfeffer and Robert Sutton. Stanford Social Innovation Review. Spring, 2006
© 2011 John W. Boudreau. All rights reserved.
Transformative HR Through Evidence-Based Change
Logic driven Analytics
Segmentation
Risk Leverage
Do you have information overload or persuasive analytics?
Where are your pivotal talent segments?
.
Is Human Capital R-I-S-K a four-letter word?
Integration and synergy
Is your HR Portfolio Less than the Sum of Its Parts?
Optimization
Spreading 'Peanut Butter' or Making Investments?
.
© 2011 John W. Boudreau. All rights reserved.
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
5
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Principle #1: Logic-Driven
Analytics
Do you have information overload or persuasive
analytics?
Does HR data just ‘sit there’ or is it sought out by the
business?
Is HR information used to convincingly drive better
decisions?
© 2011 John W. Boudreau. All rights reserved.
ReTooling HR

Applying Proven Business Tools to Talent

Using Logical Frameworks that
Stakeholders Already Trust and
Understand

Knowing The Business MODELS, Not Just
Knowing the Business
© 2011 John W. Boudreau. All rights reserved.
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
6
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Talent Sourcing and “Supply Chain”
• What do HR stakeholders consider the “right” amount of time to fill open requisitions for talent?
• What is the “right” level of employee surpluses?
• What is the “right” level of employee shortages?
What do HR stakeholders consider the “right” amount of time to fill open orders for products or materials?
What is the “right” level of raw materials or unfinished goods or work‐in‐process surpluses?
What is the “right” level of raw materials or unfinished
goods or work-in-process shortages?
© 2011 John Boudreau
13
IBM’s Global Talent Supply Chain
• IBM’s Global Workforce Initiative
– Demand signals must be clear through the chain
– Get the language of the work down to 100 roles. HR “owns” the work dictionary
– Make the project demand signals transparent to managers, employees, contractors, recruiters and vendors
– Headed by a Global Supply Chain Leader
– Distilled the “Work” into 331 Roles Defining Core Capabilities
– Common language connecting: Contractors, Employees, Managers, Projects, Clients
Source: John W. Boudreau (2010). IBM’s Global Workforce Initiative. Washington, D.C.: Society for Human Resource Management.
© 2011 John Boudreau
14
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
7
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Principle #2: Segmentation
Where are your pivotal talent segments?
Are you confident you know where your pivotal segments
are?
Do you know what investments will attract and engage
them?
Do you know what aspects of their performance provide
the highest return?
© 2011 John W. Boudreau. All rights reserved.
Boeing’s 787 … Strategic Shift
Boeing bets US$12B on building a new
commercial jetliner primarily using composite
technology rather than aluminum.
Where is the pivotal Talent?
© 2011 John Boudreau
16
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
8
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Boeing Aircraft Engineers: Strategic Shift
Boeing Engineers Pre-787
Boeing Engineers Post-787
• Aluminum
• Set Specifications
• Hold Vendors to Standards
• Composites
• Parameters not specifications
• Facilitate Vendor
Collaboration
Collaboration
Technical Engineering
© 2011 John Boudreau
17
Principle #3: Risk Leverage
Is R-I-S-K a four-letter word?
Does your HR department have processes to assess risk?
Does HR have the confidence to distinguish between “good” risks
and “bad” ones?
It is reckless to ignore this issue when it is so much on the minds of
boards and CEOs.
© 2011 John W. Boudreau. All rights reserved.
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
9
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Portfolio Risk and Leadership Planning
• How do your strategy scenarios connect to your strategic workforce planning?
• Faced with multiple possible futures, how do you prepare your talent portfolio?
• How do strategy scenarios connect to planning for manufacturing facilities, R&D, product development, etc.?
• Faced with multiple possible futures, how do you prepare your financial portfolio?
© 2011 John Boudreau
20
Risk Leverage and The Executive Team
Derek Yach
Previously he has headed global health at the Rockefeller
Foundation, been Professor of Public Health and head of the
Division of Global Health at Yale University. He is also a former
executive director of the World Health Organization (WHO). Dr.
Yach has spearheaded several major efforts to improve global
health. At the WHO he served as cabinet director under DirectorGeneral Gro Harlem Brundtland. Dr. Yach helped place tobacco
control, nutrition and chronic diseases such as diabetes and
heart disease prominently on the agenda of governments, nongovernmental organizations and the private sector. He led
development of WHO’s first treaty, the Framework Convention
on Tobacco Control, and the development of the Global Strategy
on Diet and Physical Activity.
© 2011 John Boudreau
21
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
10
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Risk Leverage and The Executive Team
What Organization Does David Yach
Work For?
World Economic Forum
Coke
Pepsico
Harvard University
Bill and Melinda Gates
Foundation
a.
b.
c.
d.
e.
© 2011 John Boudreau
22
Risk Leverage and Pepsico “Good For You”
Derek Yach
Dr. Derek Yach is Senior Vice President of Global
Health and Agriculture Policy at PepsiCo where he
leads the internal Global Human Sustainability Task
Force and engagement with major international
policy, research and scientific groups.
Indra Krishnamurthy Nooyi is the Chairman
and Chief Executive Officer of PepsiCo
© 2011 John Boudreau
23
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
11
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Principle #4: Synergy
Is your HR Portfolio Less than the Sum of Its Parts?
If your individual HR programs are good, but the function
as a whole feels underpowered then it probably reveals a
lack of integration and synergy.
Synergy means finding ways to make 1+1=3. Too often
programs, practices and organizational units are in silos
(1+1=2) or actually in conflict (1+1=0)
© 2011 John W. Boudreau. All rights reserved.
© 2011 John W. Boudreau. All rights reserved.
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
12
Retooling HR,
John W. Boudreau
USC TM Conference,
September 26, 2012
Integration and Synergy at Shanda

The case: Shanda, based in China, is the fastest growing online gaming
company in the world

Key issue: Engaging Shanda employees in the same way customers
were engaged by Shanda’s games and products

Principle in action: Shanda applied the same gaming principles
underlying its customer proposition to its HR architecture


The acquisition of points and a tolerance for failure

The point system drove all aspects of total rewards, from
compensation and promotions to development and skill acquisition
Outcome: An integrated and highly synergistic architecture that has
proven highly effective in attracting, engaging and retaining the best
talent
© 2011 John W. Boudreau. All rights reserved.
26
Principle #5: Optimization
Spreading 'Peanut Butter' or Optimizing
Investments?
Does HR have the courage and analytical rigor to
optimize investments in the workforce?
Do you invest more where ROIP is higher, rather than
investing in traditional areas where the ROIP may be
lower?
© 2011 John W. Boudreau. All rights reserved.
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
13
Retooling HR,
John W. Boudreau
USC TM Conference,
September 26, 2012
© 2011 John W. Boudreau. All rights reserved.
McDonald’s UK … “Inventory” of Senior Citizens
A University study found that
customer satisfaction levels
were 20% higher in outlets
that employed kitchen staff
and managers over age 60
(the oldest was and 83 year
old woman in Southampton)
McDonald’s recruits 140 people a day in the UK, but only 1 to 1.5 percent of
them are over 60. Out of 75,000 employees, only 1,000 are over 60.
Rich Floresch, CHRO of McDonald’s notes that customer satisfaction rises with
the first three older employees, but levels off after that.
© 2011 John W. Boudreau. All rights reserved.
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
14
Retooling HR,
USC TM Conference,
John W. Boudreau
September 26, 2012
Implications for “A Movement” In
Integrated Talent Management



Find “Retooled” business models that can engage organization leaders
in the talent management enterprise

Supply-Chain

Segmentation

Risk-Leverage
Find the “Pivot Points” that optimize talent management

Change the conversation from “what’s important?” or “what do you want?”

Direct the conversation toward “Where Would an Improvement Make the Largest
Difference?”
Find your leverage points to create strategic partnership

Leadership development and training

Strategic planning

Functional budgeting and resourcing

Investments in new technology
© 2011 John W. Boudreau. All rights reserved.
30
Thank you!
Dr. John Boudreau, Professor and Research Director
Center for Effective Organizations, Marshall School of Business
University of Southern California
<john.boudreau@usc.edu>
© 2011 John Boudreau
31
Copyright © 2012 – John W. Boudreau.
All rights reserved. john.boudreau@sbcglobal.net
15