What is Strategy Execution? - Ohio University College of Business
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Managing Human Capital in Changing Times Edward B. Yost Ph.D., SPHR August, 2013 Ohio University Ohio University College of Business Executive Education BEM VINDO A OHIO UNIVERSITY Ohio University College of Business Executive Education Our Task Today – Three Levels of Analysis and Human Capital #1 MACRO: Sustainability, Strategy, and the Business Model – Competent managers understand how value is created #2 MESO: Talent Management, maximizing returns through human capital architectures – Talent pools, pivotal positions, differentiated human capital architecture that adds value #3 MICRO: Employee Engagement – Crafting and leading for individual performance Ohio University College of Business Executive Education Level 1 MACRO: Sustainability, Strategy, and the Business Model Ohio University College of Business Executive Education What is Strategic Success? Delivering high value results to significant stakeholders Financial Success Operational Success Customer Success Workforce (People) Success Ohio University College of Business Executive Education Strategic Success Hierarchy Industry Firm/Company Business Unit/Function Position Person Ohio University College of Business Executive Education Strategic Success Chain Strategy Execution Competitive Advantage Sustainability Executive Education College of Business Ohio Universaity Defining the Business Strategy Strategy is: The central, integrated, externally oriented concept of how we will achieve our objectives. (Hambrick & Fredrickson) Ohio University College of Business Executive Education Sharing our Experiences What is your organization’s “STRATEGY”? Ohio University College of Business Executive Education Strategic Success Hierarchy Pharmaceuticals Firm/Business Business Unit/Function Position Person Ohio University College of Business Executive Education Strategic Success Hierarchy Pharmaceuticals Ach’e Business Unit/Function Position Person Ohio University College of Business Executive Education Strategic Success Chain Strategy Execution Competitive Advantage Sustainability Executive Education College of Business Ohio Universaity What is “Strategic Competitive Advantage?” Enacted or Utilized Distinctive Competency that: 1. Allows the organization to differentiate itself from competitors 2. Cannot be readily duplicated or imitated 3. Provides a positive economic benefit(s) – KPIs Executive Education College of Business Ohio Universaity 3 Roads to Strategy Execution & Competitive Advantage Managers can select a path to follow 1. Betting on the incompetence of competitors – blind ambition 2. Acquiring and utilizing the competencies of others – merger, acquisition 3. Using existing resources & competencies efficiently, effectively and differently – resource based Ohio University College of Business Executive Education The Secret Revealed! What is the SECRET of obtaining a Strategic Competitive Advantage? Not just having a strategy and competencies but executing the strategy. Ohio University College of Business Executive Education Strategic Success Chain Competitive Advantage Sustainability Executive Education College of Business Ohio Universaity Sustainability Pursuit of LONG TERM business success focusing on a triple bottom line: 1. Economics - Profits 2. Social - People 3. Environmental - Planet Ohio University College of Business Executive Education Sustainability Defined “The commitment by an organization to balance financial performance with contributions to the quality of life of their employees, the society at large and environmentally sensitive initiatives” SHRM Ohio University College of Business Executive Education Top 5 positive ($) outcomes from sustainability initiatives for stakeholders 1) Improved employee morale, 2) More efficient business processes, 3) Stronger public image, 4) Increased employee loyalty, 5) Increased brand recognition. Source: Advancing Sustainability: HR’s Role (SHRM, 2011) Ohio University College of Business Executive Education Developing Human Capital in Changing Times WHAT IS HUMAN CAPITAL? Ohio University College of Business Executive Education Human Capital Defined The collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that people choose to invest in their work. Weatherly 2003 Ohio University College of Business Executive Education Attributes of Human Capital Markets Various levels of value Appreciates and depreciates Traded in markets and regulated Individually owned but collectively realized Ohio University College of Business Executive Education Human Capital: The Invisible Resource • It is vested in the human resources often in the form of intellectual and social capital. • It is acquired, developed, utilized, and sustained through the management practices. • Being invisible it is harder to duplicate. Ohio University College of Business Executive Education Human Capital Value inherent in the form of individuals collectively interacting in the context of formal and informal systems Individuals are the repository for human capital Systems, process, culture and context extract the value of individuals Ohio University College of Business Executive Education Human Capital Has Value “People are our most valuable asset” PROVE IT! Must be demonstrated by management practices and actions that compose the Human Capital Architecture Ohio University College of Business Executive Education Sharing our Experiences What do organizations you know value? Ohio University College of Business Executive Education Expectativas de Todos que Possuem Interesse Direto ou Indireto na Organização • Acionistas(proprietários) desejam um retorno que consideram justo no investimento feito. • Clientes desejam um alto valor agregado ao produto ou serviço que consomem, e uma manutenção(garantia) que mantenha seu valor. • Empregados desejam uma relação de emprego que forneça compensações intrínsicas e extrínsicas em contrapartida às contribuiçoes que fazem. • Publico espera que a organização tenha responsabilidade social e se preocupe também com o bem estar dos cidadãos (cidadania corporative) Ohio University College of Business Executive Education Escolher as partes interessadas em cada par que a sua organização iria considerar como a mais importante em termos de tempo e outras atribuições de recursos. 1. Cliente ___ Proprietário(acionista) ____ 2. Empregado ___ Cliente ___ 3. Empregado ___ Publico ___ 4. Proprietário(Acionista) ___ Empregado___ 5. Cliente ___ Publico ___ 6. Proprietário(Acionista) ___ Publico ___ Ohio University College of Business Executive Education Instruções para o preenchimento das questões Pense em uma organização com a qual você está familiarizado. Talvez a organização que você trabalha agora. Para cada par de partes interessadas selecionar o que você sente é mais importante para a organização que você escolheu. Pense sobre os recursos dedicados ou as políticas que afetam o grupo de partes interessadas. Quando você completar você irá gravar o número de vezes que você selecionou o grupo de partes interessadas e escrever o número no espaço fornecido. Ohio University College of Business Executive Education Stakeholder Importance Vamos Compartilhar - Qual dos 4 stakeholders (clientes, proprietários, público e empregados) a sua organização seria mais provável em atender: Em primeiro lugar? Última? Ohio University College of Business Executive Education Importância das partes interessadas Stakeholder Pesquisa Em primeiro lugar Última proprietários clientes público empregados Ohio University College of Business Executive Education Perception – Reality Gap Closing the Engagement Gap “Only 1 in 10 of the 88,000 respondents in our Global Workforce Study agreed that their organization’s senior leaders treat employees as vital corporate assets. A larger percentage reported that their leaders act as if employee don’t matter.” Gebauer ad Lowman, 2008 Ohio University College of Business Executive Education Developing Human Capital in Changing Times STRATEGY EXECUTION AND HUMAN CAPITAL Ohio University College of Business Executive Education The Challenge for Managers Human Capital and the Triple Bottom Line To create value through Human Capital requires a fundamental change in how it is recognized and managed in most organizations. Ohio University College of Business Executive Education What is Strategy Execution? • Value Creation – Enables the Value Proposition for all stakeholders • The aggregated combination of the firm’s resources applied by the strategic business units • Results from managerial decisions for resource allocations and tradeoffs Ohio University College of Business Executive Education Application: Focus on a Strategic Business Unit -Primary Pharmaceutical Industry Enables the Value Proposition for Stakeholders Strategy Execution Production Research & Development Marketing Human Resources Ohio University College of Business Executive Education Strategic Success Hierarchy Pharmaceuticals Ach’e Research/Development Position Person Ohio University College of Business Executive Education Critical Outcomes for Strategy Execution Research & Development Group in Primary Pharmaceuticals 1. New Product Applications 2. Reduce Time to Market Ohio University College of Business Executive Education Level 2 #2 MESO: Talent management, maximizing returns through human capital architectures Ohio University College of Business Executive Education Developing Human Capital in Changing Times MANAGING TALENT FOR STRATEGIC SUCCESS Ohio University College of Business Executive Education Talent Management • Talentship requires a redefinition of the traditional service role of HR managers in organizations. • This involves a managerial focus on the process of "talent segmentation" and the need to focus managerial attention on "pivotal talent pools". Ohio University College of Business Executive Education Human Capital (Pivotal Talent Pools) Strategy Execution Competitive Advantage Sustainability Ohio University College of Business Executive Education Talent Segmentation • Talent segmentation is as vital to strategic success as customer segmentation. • Talent segmentation involves identifying pivotal talent pools where human capital makes the biggest difference to strategy execution Ohio University College of Business Executive Education Sharing our Experiences How do organizations you know use segmentation? Ohio University College of Business Executive Education Customer Segmentation 1. Does your organization segment customers? 2. What are these customer segments? 3. How are they treated differently? Ohio University College of Business Executive Education Talent Segmentation 1. Does your organization identify specific talent pools? 2. What are these talent pools? 3. How are the management practices different for these talent pools? Ohio University College of Business Executive Education Drilling Down in Human Capital Pivotal Talent Pools Pivotal Positions Determine the Pivotal Positions to Deliver Strategy Execution Executive Education College of Business Ohio Universaity What is a Pivotal Position? • Not necessarily the highest paid/ranked position • Not necessarily most critical • Not necessarily the most common/number • Not necessarily the most visible • Not necessarily the most obvious • Not ever a person Ohio University College of Business Executive Education Cast Members at Disney Ohio University College of Business Executive Education Sharing our Experiences Which position, Characters or Sweepers are most pivotal? Ohio University College of Business Executive Education Finding the Pivotal Position Yield Curve - understanding where differences in quality or quantity of talent and organization have the greatest impact on strategy execution (steepness, elasticity, D, slope) Ohio University College of Business Executive Education Yield Curves = Pivotal Positions Ohio University College of Business Executive Education Being The Happiest Place on Earth! Providing a Delightful Guest Experience Ohio University College of Business Executive Education Pivotal Positions in the R & D Talent Pool of Primary Pharmaceuticals • What is the Pivotal Position for executing strategy? • Provides the most significant (relative to others in the pivotal talent pool – R&D) improvement in strategy execution • Research Scientist Ohio University College of Business Executive Education Strategic Success Hierarchy Pharmaceuticals Ach’e Research/Development Research Scientist Person Ohio University College of Business Executive Education Strategy Execution Yield Curve Primary Pharmaceuticals Best Sales Rep Worst Sales Rep Best RS Worst RS Investment in Human Capital Ohio University College of Business Executive Education Yield Curve Primary Pharmaceuticals Best Sales Rep Strategy Execution Worst Sales Rep Best RS 20% Worst RS Investment in Human Capital Ohio University College of Business Executive Education Yield Curve Primary Pharmaceuticals Best Sales Rep Strategy Execution Worst Sales Rep Best RS 20% Worst RS Investment in Human Capital Ohio University College of Business Executive Education Same Industry - Different Business Model • • • • Primary High Margins Sell to Physicians Time to Market New Applications • • • • Generic Low Margins Sell in Bulk Low Cost Manage Distribution Channels Ohio University College of Business Executive Education Yield Curve Generic Pharmaceuticals Best RS Strategy Execution Worst RS Best Sales Rep Worst Sales Rep 20% Investment in Human Capital Ohio University College of Business Executive Education Developing Human Capital in Changing Times FINDING PERFORMANCE DRIVERS Ohio University College of Business Executive Education Performance Drivers Support Strategy Execution Performance Drivers identify the most critical capabilities, the required behaviors and define the culture necessary for support of strategy execution by pivotal positions Vertical Alignment; Congruence Ohio University College of Business Executive Education Performance Drivers Behavior Capability Culture Strategy Execution Ohio University College of Business Executive Education Definitions of Performance Drivers Capability = knowledge, skill, ability or competency inherent in a unit of human capital Behavior = Actions, reactions, interactions exhibited by a unit of human capital Culture = a system of shared values, understandings and affect that distinguishes the unit that contains human capital Ohio University College of Business Executive Education Human Capital Capabilities Strategy Execution Human Capital Behaviors Workforce Culture (Performance Drivers) Competitive Advantage Sustainability Human Capital (Pivotal Positions) Ohio University College of Business Executive Education Finding Performance Drivers 1. Starting with the critical talent pools focus down to pivotal positions 2. Within that position look for the pivotal role challenges 3. Identify the performance drivers; specific capabilities, behaviors and culture necessary to succeed at the pivotal role challenge. Pools Positions Challenges Drivers Ohio University College of Business Executive Education New Product Applications; Research Scientist at Primary Pharmaceuticals Capabilities: 1. Deep knowledge of specific products, 2. Creativity and Innovation Skills, Behaviors: 1. Scans multiple sources for potential applications beyond present uses, 2. Share tacit knowledge with the team Culture: 1. Innovation and risk taking, 2. Team orientation Ohio University College of Business Executive Education Reduce Time to Market; Research Scientist at Primary Pharmaceuticals Capabilities: 1. Project management skills, 2. Current on regulatory requirements Behaviors: 1. Deal with regulatory agencies effectively, 2. Design efficient processes Culture: 1. Outcome oriented, 2. Attention to detail Ohio University College of Business Executive Education Developing Human Capital in Changing Times CREATING AND MANAGING HUMAN CAPITAL ARCHITECTURE Ohio University College of Business Executive Education Human Capital Architecture • Depicted in the “Blue Print” of the combined human resource practices of the organization (portfolio of practices). • To be effective and efficient in delivering strategy execution the HCA must be designed, constructed and maintained with the environmental requirements in mind - SWOT Ohio University College of Business Executive Education Human Capital Architecture Procurement & Retention Performance Management Knowledge Management Compensation & Rewards Ohio University College of Business Executive Education Why is Human Capital Architecture Critical for Success? • Provide a basis for strategy execution and sustained competitive advantage • Things like financial structure operational processes and technology can be easily copied or purchased Ohio University College of Business Executive Education Why Support a Human Capital Oriented Strategy? Because…... The organization can leverage human capital by managing the architecture to achieve a higher return for owners Ohio University College of Business Executive Education The Power Of Human Capital Architecture Invested Resources & Capital Share Holder Returns Human Capital Architecture Ohio University College of Business Executive Education The Power Of Human Capital Architecture Share Holder Returns Invested Resources & Capital Human Capital Architecture Ohio University College of Business Executive Education Strategy Execution Human Capital Capabilities Competitive Advantage (Performance Drivers) Human Capital Behaviors Workforce Culture Sustainability Human Capital Architecture components alignment (Vertical & Horizontal) Human Capital Architecture components (Enablers) Human Capital (Pivotal Positions) Ohio University College of Business Executive Education Human Capital Architecture Level 3 #3 MICRO: Individual differentiation and Employee engagement Ohio University College of Business Executive Education Developing Human Capital in Changing Times MANAGING THE INDIVIDUAL DIFFERENTIATION AND ENGAGEMENT Ohio University College of Business Executive Education Managing Human Capital the Person While the human capital architecture is designed to support the highest level of performance for pivotal positions it must ultimately be differentiated at the level of the person Ohio University College of Business Executive Education Strategic Success Hierarchy Pharmaceuticals Ach’e Research/Development Research Scientist Richard or Mary Ohio University College of Business Executive Education Three Challenges to Leaders 1. The changing Employment Relationship (contract) 2. Individual positions in the Employment Lifecycle 3. Developing and supporting Employee Engagement Ohio University College of Business Executive Education Challenges of Managing People Shifting Employment Relationship • The employer/employee relationship is shifting to a contractual relationship that is more a partnership than economic exchange. • Larger spans of control, fewer employees delivering more output. • Decline in traditional communications increase in cyber communications. Ohio University College of Business Executive Education The Employee Lifecycle 1. Recruitment 2. Hiring 3. Onboarding 4. Training 5. Career development 6. Compensation 7. Retention 8. Promotion 9. Separation Savitz, 2013 Ohio University College of Business Executive Education Employee Engagement – 3 Challenges for Managers 1. Recognize the significance of the employment relationship. 2. Understand and adjust to the individual in their employee life cycle 3. Design & implement systems to fully engage the human capital (individuals) in the organization. Ohio University College of Business Executive Education Employee Engagement: Examples in Practice • “Engagement describes how an employee thinks and feels about, and acts toward his or her job, the work experience and the company.” Intuit • “Employee engagement is the involvement with and enthusiasm for work.” Gallup Ohio University College of Business Executive Education Employee Engagement: Examples in Practice • “Engagement is the extent of employees’ commitment, work effort, and desire to stay in an organization.” Caterpillar • “Engagement: To compete today, companies need to win over the MINDS (rational commitment) and the HEARTS (emotional commitment) of employees in ways that lead to extraordinary effort.” Dell Ohio University College of Business Executive Education Three Levels of Engagement 1. Cognitive Engagement – Employee beliefs about the company the leaders and the culture 2. Emotional Engagement – Employee affect for the organization, leaders, colleagues 3. Behavioral Engagement – the value added component of effort exerted above required minimum. Ohio University College of Business Executive Education Three Key Behaviors of Engagement 1. Say: Employees speak positively about the Company to coworkers, potential coworkers, and current and future customers. 2. Stay: Employees strongly desire to continue working for the Company. 3. Serve: Employees exert extra effort and are dedicated to doing the best job to contribute to business success. Ohio University College of Business Executive Education Impacts of Employee Engagement • The extent to which employees are committed to something or someone in the organization, how hard they work and how long they stay as a result of that commitment. • Employees with high level of engagement are 87% less likely to leave and 20% more productive. Ohio University College of Business Executive Education Levels of Employee Engagement • Engaged Employees (28%) – work with passion and exuberance, feel a profound connection to the organization can’t wait to contribute more – OCB organizational citizenship behaviors Ohio University College of Business Executive Education Levels of Employee Engagement • Not Engaged (53%) – “checked out” of the organization, effort put forth is minimal and barely acceptable, lack passion and do not identify with the organization – often the majority of employees Ohio University College of Business Executive Education Levels of Employee Engagement • Actively Disengaged (19%) – not just disconnect but unhappy, the behaviors are counterproductive and at times destructive, degenerates the culture and based on cognitive dissonance Fosters TIMJ and DGMGE Ohio University College of Business Executive Education More Bad News from a Global Survey Only 1 in 5 Workers are delivering their full potential! 41% are “enrolled” - capable and ready but not inspired 30% are disenchanted 8% are disengaged Graber & Lowman, 2008 Ohio University College of Business Executive Education What is your organization's ratio? • In world-class organizations, the ratio of engaged to actively disengaged employees is 9.57 engaged to 1 actively disengaged. • In average organizations, the ratio of engaged to actively disengaged employees is 1.83 to 1. Ohio University College of Business Executive Education A Model of Employee Engagement Organization Culture/Purpose Relationships Work Activities Quality of Work Life Say Employee Engagement Career Opportunity Organization Leadership Stay Serve Total Compensation Model used consistently over time to assess and track engagement Sharing our Experiences Is Your Job Engaging? Take the Gallup survey Ohio University College of Business Executive Education Engagement Survey Respond Yes or No 1. 2. 3. 4. 5. Do you know what is expected of you at work? At work do you have the opportunity to do what you do best every day? In the past month have you received recognition or praise for doing good work? Does your supervisor or someone in authority seem to care about you as a person? At work do your opinions seem to count? 1. 2. 3. 4. 5. Voce sabe o que é esperado de voce no trabalho? No trabalho lhe é dada a oportunidade de fazer o seu melhor todo dia? No mês passado você recebeu reconhecimento ou elogios por fazer um bom trabalho? O seu supervisor, ou alguém a quem se reporta, parece se importar com voce como pessoa? No trabalho as suas opiniões parecem contar? Ohio University College of Business Executive Education Engagement Drivers by Country Brazil USA 1. Organization rewards outstanding customer service 2. Improved my skills over last year 3. Senior management sincerely interested in employee well being 1. Senior management sincerely interested in employee well being 2. Improved my skills over last year 3. Organization’s reputation for social responsibility Ohio University College of Business Executive Education Engagement Drivers by Country Brazil USA 4. Enjoy challenging work assignments that broaden skills 5. Organization invests in innovative products and services 4. Input into decision making in my department 5. Organization quickly resolves customer concerns Ohio University College of Business Executive Education Practicing & Managing Employee Engagement Richard and Mary: The “Real” Story How Richard sees Richard How Mary sees Mary Ohio University College of Business Executive Education How Would Mary Respond? How Would Richard Respond? 1. 2. 3. 4. 5. Do you know what is expected of you at work? At work do you have the opportunity to do what you do best every day? In the past month have you received recognition or praise for doing good work? Does your supervisor or someone in authority seem to care about you as a person? At work do your opinions seem to count? 1. 2. 3. 4. 5. Voce sabe o que é esperado de voce no trabalho? No trabalho lhe é dada a oportunidade de fazer o seu melhor todo dia? No mês passado você recebeu reconhecimento ou elogios por fazer um bom trabalho? O seu supervisor, ou alguém a quem se reporta, parece se importar com voce como pessoa? No trabalho as suas opiniões parecem contar? Ohio University College of Business Executive Education Impact of Bosses on Engagement • 40% of workers in the business world think they work for bad bosses. • 39% said their managers failed to keep promises. • 37% said their bosses did not give them the credit they deserved. • 31% indicated their supervisor gave them "the silent treatment." Ohio University College of Business Executive Education Impact of Bosses on Engagement • 27 % reported negative comments from their management. • 24% claimed their bosses invaded their privacy. • 23% stated that their supervisor blamed them or other workers to cover up personal mistakes. Ohio University College of Business Executive Education 3 Most Important for Richard? For Mary? 1. Organization Culture/Purpose 2. Relationships 3. Work Activities 4. Quality of Work Life Say Employee Engagement 5. Career Opportunity 6. Organization Leadership Stay Serve 7. Total Compensation Model used consistently over time to assess and track engagement Performance Feedback Richard, What do Mary, What do you want to tell you want to tell Richard? Ohio University College of Business Mary? Executive Education Richard and Mary: Differentiators for Engagement Rated in the top 3 items ITEM 1 2 3 4 5 6 7 Richard Mary Ohio University College of Business Executive Education How Richard sees Mary How Mary sees Richard Your Team’s Creation Please Ohio University College of Business Executive Education Richard and Mary “Engaged???” Ohio University College of Business Executive Education Performance Drivers Behavior Capability Culture Strategy Execution Ohio University College of Business Executive Education Isn’t it COMMON SENSE? Managers know that they should create functional Human Capital Architectures but They have elaborate excuses why they can’t Ohio University College of Business Executive Education Its Only Common Sense! Half will never see the connection between Human Capital and Profits Half will embrace the potential of the connection between Human Capital and Profit Ohio University College of Business Executive Education Its Only Common Sense! Half will engage minimal change Half will never see the connection between Human Capital and Profits Half will engage comprehensive change Ohio University College of Business Executive Education Its Only Common Sense! Half will engage minimal change Half will never see the connection between Human Capital and Profits Half won’t stay the course Half will succeed J Ohio University College of Business Executive Education It is Difficult to Imitate Only about 1 in 8 even come close! Implementation of a viable human capital architecture requires deep change and a commitment to “stay the course”. It is often slow and paybacks are a long time coming Most of the requirements defy “Conventional Wisdom” Ohio University College of Business Executive Education Your Assignment When you return to Brazil: A. Identify at least one pivotal talent pool, and then at least one pivotal position in your immediate work environment B. Identify at least one human capital architecture component that is ineffective for required performance drivers for the position C. Suggest a change to the current process and justify it to your superiors in “REAL” terms Ohio University College of Business Executive Education Just Do It? Managers to succeed in the new normal must rely on a human capital architecture that defies traditional practices and conventional wisdom Ohio University College of Business Executive Education Obrigado pela sua atenção amável Ohio University College of Business Executive Education
