1–1 mpo699 managing people in organization topic 06 – retaining & engaging your talent

1–1

MPO699 MANAGING PEOPLE IN ORGANIZATION

TOPIC 06 – RETAINING & ENGAGING YOUR TALENT

Agenda

Global Talent Challenges (GTCs)

Ups and Downs of GTCs

Global Talent Management

Talent: Degree of Inclusiveness

HR Actions for GTM Removing Roadblocks to

GTM Role of HR Implications/Results/

Issues Conclusions References

Global Talent Challenges (GTCs)

GTCs are significant human resource issues GTCs are significant human resource issues that focus on managing a firm to ensure just that focus on managing a firm to ensure just the right amount of the right talent and the right amount of the right talent and motivation, at the right place, and at the right motivation, at the right place, and at the right price, during all economic and financial ups price, during all economic and financial ups and downs in a very competitive worldand downs in a very competitive world

GLOBAL TALENT GLOBAL TALENT CHALLENGES CHALLENGES (cont’d)(cont’d)

for the purposes of for the purposes of balancingbalancing the the workforce with the needs of the firm workforce with the needs of the firm

in the short term, and in the short term, and positioningpositioning the firm to have the workforce the firm to have the workforce

needed in the longer term.needed in the longer term.

MAJOR CONTEXTUAL FORCES MAJOR CONTEXTUAL FORCES AND SHAPERS OF A FIRM’S GTCs AND SHAPERS OF A FIRM’S GTCs

GLOBALIZATION: TRADE, FDI, POLITICAL & ECONOMIC CONDITIONS, COMPETITION, CUSTOMERS, WORKERS

COMPETITIVE DYNAMICS: CONSOLIDATION, MERGERS, ACQUISITIONS, JOINT VENTURES, EXPANSION, RELOCATION

DEMOGRAPHICS: AGE, GENERATIONS, REGIONS

GLOBAL, REGIONAL AND LOCAL WORKFORCE CHARACTERISTICS: COMPETENCIES, MOTIVATION, COMPENSATION REQUIREMENTS, PRODUCTIVITY LEVELS, LEGAL CONDITIONS

CHANGING NATURE OF WORK: MORE KNOWLEDGE AND ENGAGEMENT REQUIRED/USEFUL AT ALL LEVELS

MAJOR FORCES AND SHAPERS MAJOR FORCES AND SHAPERS OF GTCs (cont’d) OF GTCs (cont’d)

AS A CONSEQUENCE OF THESE MAJOR FORCES AND SHAPERS, STARTING IN THE LATE 1990s, THERE WAS A GREAT INCREASE IN GLOBAL ECONOMIC ACTIVITY, THAT CAUSED FIRMS AROUND THE WORLD TO THINK ABOUT…WAR FOR TALENTS!!

PROMPTING FIRMS TO ASK PROMPTING FIRMS TO ASK QUESTIONS LIKEQUESTIONS LIKE::

WHERE ARE ALL THE WORKERS? APPROXIMATELY 40% OF 37,000 COMPANIES ACROSS 27

COUNTRIES FACE CHALLENGING TIMES IN HIRING THE PEOPLE THEY NEED (MANPOWER, 2008)

FOR CEOs SEARCHING FOR INDUSTRY, TECHNICAL AND PARTICULARLY MANAGEMENT SKILLS TO SUPPORT GEOGRAPHIC EXPANSION, THEY RATED “INSUFFICIENT TALENT” AS THE TOP BARRIER TO GLOBAL INTEGRATION EVEN HIGHER THAN REGULATORY AND BUDGETARY HURDLES (IBM, 2008).

ESPECIALLY IN CHINAESPECIALLY IN CHINA

ACCORDING TO A RECENT SURVEY IN CHINA, “88% OF THE CHINESE EXECUTIVES SAID THEIR GLOBALIZATION EFFORTS WERE HINDERED BY THE SCARITY OF PEOPLE WITH REAL CROSS-CULTURAL KNOWLEDGE MANAGING FOREIGN TALENT.

93% SAID THAT CHINESE COMPANIES WOULD NOT ACHIEVE THEIR GLOBAL ASPIRATIONS UNLESS THEY DEVELOPED SUITABLE LEADERS MORE AGGRESSIVELY.

(http://www.mckinseyquarterly.com/How_Chinese_companies_can_succeed_abroad_2131)

BUT VIRTUALLY ALL OVER:BUT VIRTUALLY ALL OVER:

“IF YOU TAKE INTO CONSIDERATION THE 70 MILLION BABY BOOMERS EXPECTED TO RETIRE OVER THE NEXT 15 YEARS (IN THE U.S.), AND ONLY 40 MILLION WORKERS EXPECTED TO ENTER THE WORKFORCE IN THE SAME PERIOD, YOU CAN PLAINLY SEE THAT A SHORTAGE OF WORKERS IS IMMINENT”(ADECCO, 2008). SAME IN EUROPE:

(http://institute.adecco.com/FeatureArticles/Articles/Pages/2008_02_Europes_Looming.aspx)

AND THEN COMBINE THIS WITH THE LEVEL OF MOTIVATION THAT WAS BEING REPORTED:

A MAJORITY OF EMPLOYEES REPORTED TO

BE ONLY MODESTLY ENGAGED:

SO THE GLOBAL TALENT SHORTAGE SEEMED RATHER SIGNIFICANT, BUT

http://www.mckinseyquarterly.com/Leaders_in_the_Crisis_Mckinsey_Global_Survey_Results_2422

BUT TODAY,

IN 2009 MORE THAN 50 MILLION JOBS WORLDWIDE WERE LOST, AND IN 2010…?

VIRTUALLY EVERY INDUSTRY AND SERVICE HAS ELIMINATED JOBS

U.S. AND EU UNEMPLOYMENT WILL AVERAGE 10% OR MORE, AND

WORLD GDP WILL GROW 0%, AT BEST, ALTHOUGH ASIA IS LIKELY TO SEE SIGNIFICANT GROWTH

So Now Different Conditions Today

There was a period of economic and financial boom from the late 1990s until late 2008

Economic and employment conditions have moderated

As a result, global talent challenges today are different

There is a growing concern for location, motivation, and cost

And a talent surplus is as much a reality as a talent shortage

Giving an opportunity to rebalance the workforce: but also pressure and opportunity to do more with less

http://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092

Thus There Are Many GTCs Including:

There is too much talent (or not the right talent) (www.mckinseyquarterly.com/Leaders_in_the_Crisis_Mckinsey_Global_Survey_Results_2422)

There is too little talent

The talent is not motivated (engaged) enough

The talent is in the wrong place (country location)

The talent is at the wrong price, Sohttp://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092

the question today is: What can the question today is: What can be to solve these several GTCs be to solve these several GTCs

(Today and Tomorrow)?(Today and Tomorrow)?The answer is: A systematic use The answer is: A systematic use of HR polices and practices aka of HR polices and practices aka

Global talent managementGlobal talent management

Global Talent Management (GTM)

Defining GTM(cont’d)

Global Talent Management is about systematically utilizing IHRM activities (complementary HRM policies and practices) to effectively manage an MNE’s global talent challenges consistent with the strategic directions of the multinational enterprise in a dynamic, highly competitive, and global environment (Tarique and Schuler, 2010)

More specifically, GTM is about…

Defining GTM (cont’d)

“Planning for, obtaining, selecting, motivating, developing, retaining, reducing and removing individuals based on competencies and motivation levels consistent with strategic directions and degree of inclusiveness of the multinational enterprise in a dynamic highly competitive global environment.”

(Schuler, Jackson and Tarique, 2011)

Does GTM Apply to Everyone?

Some Say:

Companies, Line Managers, and HR should focus their efforts on “A” Players in “A” positions.

“B” Players with “A” potential should also be considered for development assignments.

Companies should focus only on “knowledge workers.”

“Today’s competitive environment requires a shift from treating everyone the same to treating everyone according to his or her contribution.” And some others say that:

All Inclusive Approach to Talent

Workforce is composed of multiple layers of talent each contributing to company’s strategic goals and objectives.

Talent Management initiatives should not be limited to only “top management” (“A” positions) or “top” talent (“A” players).

All employees should manage their career path and take advantage of opportunities to advance themselves.

Talent is at all layers of an organization and thus multiple initiatives should be crafted for the entire workforce...

Multiple Layers of Talenthttp://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092

HR Actions (Polices and Practices) for GTM

HR Planning and Forecasting

Location Planning

Job Analysis/Job Redesign

Attraction & Selection

Training & Development

Performance Management

Compensation

Retention

Reduction/Removal

Shortage of Talent

Surplus of Talent

Talent is at Wrong Place

Talent is at Wrong Price


Location Planning

Job Design/Redesign

Attraction/Selection



Compensation

Retention

Reduction/Removal

Linking HR Actions to GTC’s

IMPLICATIONS FOR FIRMSIMPLICATIONS FOR FIRMS

Identify the current global talent challenges: e.g. excess, shortage, inappropriate location or price

Forecast and scenario plan for the near term and intermediate term

Evaluate potential new location choices

Evaluate strategies, such as IM&As, to obtain needed talent

Construct needed HR actions (policies and practices) systematically

Build management and HR capabilities for GTM


IMPLICATIONS FOR FIRMS IMPLICATIONS FOR FIRMS (cont’d)(cont’d)

Remove the obstacles to GTM by:

-Building top management commitment to GTM

-Obtain commitment to HR actions from front line

managers

-Improve HR’s impact and

-Realize an effective HR Triad: managers, employees (and

representatives) and HR in and for all HR actions


http://findarticles.com/p/articles/mi_qu5427/is_200707/ai_n21286591

RESULTSRESULTS

GAIN/SUSTAIN GLOBAL COMPETITIVE ADVANTAGE

DEVELOP MANAGEMENT LEADERSHIP

DEVELOP HR LEADERSHIP

HAVE THE RIGHT PEOPLE AT THE RIGHT PLACE AT THE RIGHT TIME WITH MOTIVATION (Balance)

GAIN BENCH STRENGTH FOR FUTURE NEEDS AND UNCERTAINTIES (Positioning)

ACHIEVE OPTIMAL STAFFING LEVELS. SHORT TERM, MEDIUM TERM AND LONG TERM

MAJOR ISSUES MAJOR ISSUES

Should GTM apply to all employees? How inclusive should you be or do you need to be?

Can you have multiple sets of HR actions for different groups of talent?

Will it cost too much?

What happens if we don’t do it?

Can managers and HR work together?

Do we have the desire to reduce barriers?

Is there an end to GTCs and need for GTM?

Conclusions

GTCs are significant human capital issues that focus on GTCs are significant human capital issues that focus on managing a firm to ensure just the right amount of the right managing a firm to ensure just the right amount of the right talent and motivation, at the right place, at the right price, talent and motivation, at the right place, at the right price, when at times there may be shortages and other time when at times there may be shortages and other time surpluses.surpluses.

Talent is defined as the competencies and motivations of current and future employees in relation to the firm’s current and future strategic business goals.

GTM is about using HR policies and practices to systematically manage a MNE’s GTCs.

Conclusions (cont’d)

But still concern for talent, motivation, location and priceBut still concern for talent, motivation, location and price

There are several HR Actions in response to managing the There are several HR Actions in response to managing the GTCGTC

HR must determine and prioritize which HR Actions to HR must determine and prioritize which HR Actions to take depending on the current state of the GTCtake depending on the current state of the GTC

HR must determine if the company should include all HR must determine if the company should include all layers of talent in HR Actions or differentiate based on layers of talent in HR Actions or differentiate based on position/performance position/performance

TALENT DEFINEDTalent is defined as the competencies of current and

future employees in relation to the firm’s current and future strategic business goals. Having

“talent” thus means that a firm has the employees who possess the desired position characteristics and requirements needed to

achieve the business goals.

TALENT DEFINED (cont’d)

Talent is thus different from performance, and is related to the person and not the position. The

terms “A” and “B” players refer to the performance of persons, who might perform

better if they have more “talent.” In turn these terms are separate from “A” and “B” positions.

Part II: HR Policies and Practices Part II: HR Policies and Practices for GTMfor GTM

The following slides offer specific examples of HR policies and practices for GTM that can be used by firm to manage their GTCs for short term balancing and long term positioning.

These are left for perusing when time permits.


During a recession, McKinsey found that 55% of companies surveyed are less able to make satisfactory forecasts about their sales due to an economic recession.

If sales are not accurately forecasted, this makes forecasting talent much more difficult.

http://www.mckinseyquarterly.com/the_crisis_Mobilizing_boards_for_change_2300


Hugh Courtney suggested that managers today face more uncertainty in their decision making than ever before. Past trends can no longer be used to forecast the future. Information from a few sources is no longer enough.

Consequently decision making today is much more challenging.

Companies need to use scenario-planning: making descriptions of possible future scenarios, the conditions under which each is likely to occur, and what companies need to do to confront these conditions. Need to do for HRP/F.

http://www.mckinseyquarterly.com/Strategic_planning_Three_tips_for_2009_2340

htthttp://www.nytimes.com/2009/04/28/books/28kaku.html?_r=1&pagewanted=printhttp://www.mckinseyquarterly.com/fresh_look_at_strategy_under_uncertainty_2256http://knowledge.wharton.upenn.edu/article.cfm?articleid=2298http://www.nytimes.com/2009/07/29/technology/companies/29ibm.html?_r=1&pagewanted=print

Location Planning

Business Strategy

LocationChoices

Location Planning

COUNTRY CHOICE ASSESSMENTS: GENERAL FACTS OF THE COUNTRY (www.economist.com/countries)

ATTRACTIVENESS OF COUNTRY TO BUSINESS (www.doingbusiness.org)

COMPETITIVENESS FACTORS (www.imd.ch/research/centers/wcc/index.cfm)

FLOWS/LEVELS (www.census.gov/foreign-trade/balance/)

LABOUR MARKET CHARACTERISTICS (www.doingbusiness.org)

HR POLICIES AND PRACTICES (ACTUAL/LIKELY) www.ilo.org; www.bcg.com; www.ddiworld.com/pdf/ddi_theglobalizationofhrpractices_es.pdf)

)

Location Planning

Company Example: IBM

IBM’s American employment has been on a steady decline

US employment now makes up 29% of its worldwide payroll

Yet, IBM reported that it’s workforce in Brazil, Russia, India & China have risen significantly These countries have faster growth markets and less

expensive skilled labor than the UShttp://www.nytimes.com/2009/03/06/business/06layoffs.html?pagewanted=2&_r=1&sq=IBM%20and%20layoffs&st=cse&scp=1

http://www.ibm.com/us/http://www.ibm.com/us/

Location Planning

Company Example: Hanes

“Hanesbrands Relocates Manufacturing to Asia”

http://www.pbs.org/newshour/bb/business/jan-june09/hanes_02-19.html

Job Design/Redesign

Research indicates when trying to increase efficiency by simplifying jobs it may actually lead to turnover and lower productivity

Autonomy in the job often leads to better performance

Cross-functional work leads to greater overall satisfaction

http://moss07.shrm.org/Publications/HRNews/Pages/CMS_023204.aspx

Job Design/RedesignCompany Example: Cisco SystemsCompany Example: Cisco Systems

In the 2001 recession, Cisco took a unique approach to downsizingIn the 2001 recession, Cisco took a unique approach to downsizing

The company was forced to eliminate 8,500 jobsThe company was forced to eliminate 8,500 jobs

Cisco redesigned roles and responsibilities to increase cross-functional Cisco redesigned roles and responsibilities to increase cross-functional alignment and reduce duplicate rolesalignment and reduce duplicate roles

A more collaborative environment increased employee satisfaction during A more collaborative environment increased employee satisfaction during turbulent timesturbulent times

Those employees who were laid off received severance packages, Those employees who were laid off received severance packages, outplacement and were paid 1/3 of their salary if they opted to work for a outplacement and were paid 1/3 of their salary if they opted to work for a local charitylocal charity

http://www.mckinseyquarterly.com/Upgrading_talent_2260

Job Design/Redesign

OVERALL FINDINGS: EMPLOYEE ENGAGEMENT, RETENTION, AND PRODUCTIVITY (& OVERALL FINDINGS: EMPLOYEE ENGAGEMENT, RETENTION, AND PRODUCTIVITY (& LOWER COSTS) IMPACTED BY:LOWER COSTS) IMPACTED BY:

LEVEL OF RESPONSIBILITYLEVEL OF RESPONSIBILITY

DEGREE OF AUTONOMYDEGREE OF AUTONOMY

SPAN OF CONTROLSPAN OF CONTROL

CROSS-FUNCTIONAL RELATIONSCROSS-FUNCTIONAL RELATIONS

TEAM DIVERSITY AND TRAININGTEAM DIVERSITY AND TRAINING

Design/Redesign and Global Teams

Global Corporations must function as a transnational Decisions and responsibilities should come from all of the

locations

One method for accomplishing this need is through Global Teams (that are well trained) Global Teams, work through time zones, geographical locations,

and cultural affiliations, that is, they are diverse“Diverse teams are superior to mono-cultural ones in terms of

business performance”- Martina Schwinger, Diversity Management & Mediation, Novartis

www.culturalnavigator.com

Attraction & Generationshttp://www.strategy-business.com/li/leadingideas/li00113

http://www.fastcompany.com/magazine/16/mckinsey.html?page=0%2C1http://institute.adecco.com/FeatureArticles/Articles/Pages/2008_02_Europes_Looming.aspx

Generation Motivators

Veterans Value Respect, part-time hours, temporary employment

Baby Boomers Feel needed, be part of a team, training, flexible retirement options

Generation X Immediate feedback, flexible work environments, results focused

Generation Y Mentors, work with bright people, learning opportunities, work/life balance

Attraction and Generationshttp://www.fastcompany.com/magazine/16/mckinsey.html?page=0%2C1

Developing Value Propositions to Increase Attraction Defining and explaining why talented workers might opt to work

at Company X as opposed to Company Y Having only one Value Proposition may not be enough anymore Successful companies target varying generations using different

methods and unique value propositions For example, Tesco, breaks out its recruiting website based on

stages in career- and tailors recruiting materials depending on the audience

http://www.tesco-careers.com/home


Selection

Selection is a key activity to find the most appropriate candidate for the job/position. Without effective selection systems in place global talent management is impossible to do as effectively as required in today’s globally competitive environment. Once done, an effective process of on-boarding must begin.

http://www.fastcompany.com/magazine/84/playbook.html

http://www.nytimes.com/2009/07/19/business/19corner.html?_r=1&pagewanted=print

Selection


Company Example: Novartis

As a global company, Novartis’ goal is to enhance sensitivity

Offer a program called “Leading Global Teams” that Provides a generalization of national culture, and organizational

culture of different business units Utilizes a tool called Cultural Orientations Indicator (COI)

Includes 10 dimensions- each contain a cultural continuum measuring preferential styles of behavior and allows comparisions across country cultures

www.culturalnavigator.com


Key In The Success Of Novartis’ Pay For Performance Management System and Talent Management Is Training Line Managers In:

Setting Objectives

Coaching Skills And Process

Managing For Performance Improvement

http://www.novartis.com


Companies such as Novartis, view Performance Management as central to their Global Talent Management Activities

At the heart of their Performance Management is a system that: Grades Employees and Matches their compensation

to:1. Business Results (“The What”)2. Values & Behaviors (“The How”)


Each of the two performance dimensions (values & behaviors and results) are rated on a three-point scale. 1- poor performance 2- satisfactory performance 3- Superior Performance

Some of the Values & Behaviors consist of: Results Driven Exercising Leadership Demonstrating Empowerment and Accountability


Employees/Managers urged to solicit “multi-rater” feedback

Performance Calibration Meetings are held annually Ensure cross-functional equality Review, Measure and differentiate performance of associates in

a structured, thorough and consistent way Foster trust in the organization by being open about employee’s

performance

SUPERIOR RESULTS , UNSATISFACTORY BEHAVIOUR

SUPERIOR RESULTS EXCEPTIONAL PERFORMER E

XC

EE

DE

D E

XP

EC

TA

TIO

NS

Associate consistently contributes at a superior level of performance on all job objectives, however, performance falls be low expectations on Novartis values/behaviours.

Associate consistently contributes at a superior level of performance on all job objectives and also demonstrates the Novartis values/behaviours.

Associate consistently contributes at an exceptional level of performance on all job objectives and the Novartis values/behaviors Recognized as a role model bothWithin their group and in a widerpopulation.Few associates achieve this level of performance.

GOOD RESULTS , UNSATISFACTORY BEHAVIOUR

STRONG PERFORMER SUPERIOR BEHAVIOUR

FU

LL

Y M

ET

EX

PE

CT

AT

ION

S

Associate fully meets expectations on all job objectives, however, performance falls below expectations on Novartis values/behaviours.

Associate fully meets expectations on all job objectives and the Novartis values/behaviours. This is a positive and fully acceptable level of performance.

Associate consistently demonstrates superior behavior and fully meets expectations on all job objectives.

UNSATISFACTORY PERFORMER GOOD BEHAVIOUR ,

UNSATISFACTORY RESULTS SUPERIOR BEHAVIOUR ,

UNSATISFACTORY RESULTS

O

BJE

CT

IVE

S

PA

RT

IAL

LY

ME

T

EX

PE

CT

AT

ION

S

Associate performance falls considerably short in relation to job objectives and the Novartis values/behaviours despite repeated explanations /coaching.

Associate fully meets expectationson Novartis values/behaviors, however, performance on job objectives falls below expectations.

Associate consistently demonstrates superior behaviour, however, performance on job objectives falls below expectations.

PARTIALLY MET EXPECTATIONS FULLY MET EXPECTATIONS EXCEEDED EXPECTATIONS

NOVARTIS VALUES /BEHAVIOURS

1.1

3.3

2.3

1.3

3.2

2.2

1.2

2.1

3.1

Associate fully meets on all

objectives, over-achieves on key objectives, out-

spoken role model on values and

behaviors.

Associate fully meets on all

objectives, over-achieves on key

objectives, demonstrates the

majority of values and behaviors

Associate fully meets on a

majority of key objectives,

demonstrates the majority of values

and behaviors.

Associate fully meets on all objectives,

over-achieves on key objectives, does not demonstrate values

and behaviors

Associate fully meets on a majority of key job objectives, does

not demonstrate values and behaviors

Associate does not meet on a majority of key objectives,

does not demonstrate values

and behaviors

Associate does not meet on a majority of key objectives, out-spoken role model on values and behaviors.

Associate does not meet on a majority of key

objectives, demonstrates the majority of values

and behaviors.

Associate fully meets on a majority of key objectives, out-spoken role model on values and behaviors.

Novartis Case- Nine- Box Grid

Performance/Potential (OTR)High Professional/ Master

ContributorConsistently produces exceptional

results and high performance ratings. Knows current job extremely well. May not effectively adapt to new situations.

Low PerformerNot delivering on results as

expected. Does not adapt to change well and may be a blocked

personal learner.

Inconsistent PerformerDelivers results inconsistently. Knows the job, and may be a passive learner.

May adapt to new situations if necessary.

Adaptable Key PerformerConsistently meets expectations. Knows

current job well and enhances skills as appropriate. Can adapt to new situations

as necessary.

Adaptable High Performer/ High Professional

Consistently produces exceptional results and high performance ratings. Knows the job well and continuously enhances skills.

Adapts to new situations if necessary.

Strategic StarOutstanding, clearest example of superior performance and potential. Has the ability

to take on major stretch assignments in new areas. Will challenge the

organization to provide growth opportunities fast enough.

Rising StarConsistently meets expectations.

Knows the job well and enhances skills as appropriate. Has the ability to take on new and different challenges on a

consistent basis.

Diamond in the RoughDelivers results erratically. Has

demonstrated potential but is not living up to it.

POTENTIAL

PERFORMANCE

Less learning agilityLess learning agility More learning agilityMore learning agility

Less than Less than effectiveeffective

Highly Highly effectiveeffective

Key Performer/Solid Professional

Consistently meets expectations. Knows current job well. May not

effectively adapt to new situations.

0Not

Classified

Performance ratings (not OTR) have a large impact on associates’ compensation.

Initially employees’ base salary and target incentive are driven by market data

High performers (3,3) may be eligible for almost double their base salary in their annual bonus

Conversely, low performers do not receive a salary increase or a bonus

Compensation- Pay for Performance

Compensation- Pay for Performance

Annual Salary

XTarget

Bonus %

Indiv.Perf.

Modifier1

GlobalBU

Modifier2

= PayoutX X

Annual Base Salary $50,000Target bonus 10%

Individual rating 3.2Individual Factor 120%

Business Factor 110%

Performance related:Job related:

BONUS PAYOUT = $6,600

Company Example: Novartis Incentive Program

Strategic Plan

Individual

Objective

SettingYear – endPerformance

Review

Development

Planning

Mid-year

Review

Self-Assessment/

Initial Discussion

BU OGSM

OTR

“Talking

Talent”

Business Performance Cycle

Calibration

“Talking

Performance”

“Talking

Reward” Reward &

Motivate to

“Raise the bar”

Career Discussion

BU Objectives

BU team set objectives for

BU mgt team member

BU

Quarterly

Review

BU

Quarterly

Review

BU

Year end

Review

BU

Quarterly

Review

Retention Retention remains important, but more difficult:

During recessions companies show decreased earnings and dropping stock prices which reduce the value of employees annual incentive and long-term incentive plans

As a result companies struggle to find alternate retention strategies to keep employees feeling valued and motivated

Deloitte survey revealed that companies are using alternate retention strategies to “improve employees’ financial picture and work experience” 59% implementing flexible work-arrangements 22% to create a stand-alone bonus pool for the plan year 34% to introduce compressed work weeks 14% adopted/changed severance package in response to recession

http://www.deloitte.com/dtt/press_release/0,1014,sid%253D2283%2526cid%253D229269,00.htmlhttp://www.managesmarter.com/msg/content_display/incentive/e3iab3b217aa919c5ef2876a9be96859c60?imw=y

Retention

Company Example: Novartis’ Challenge with Retention in China

Situation: Novartis was typically hiring talented young professionals in China who then started with low productivity

These employees underwent 12-18 months of training and ended with high productivity

But with the training and multinational experience they moved to another company for salary/career advancement

Novartis’ solution: to offer stock grant programs with multi-year vesting periods. Also to offer long-term educational support and flex-time for employees who remained with the company.

Result: Turnover decreased from 20.1% in 2006 to 17.6% in 2007

Reduction/Removal

Alternatives To Removals (redundancies):Alternatives To Removals (redundancies):

1.1. Reduce Workweek- Reduce Workweek- Can Can Reduce Payroll Costs By 20%.Reduce Payroll Costs By 20%.

2.2. Extend Time Off/Defer Hiring/Work for Free Extend Time Off/Defer Hiring/Work for Free Have Workers Take 3 Weeks Unpaid Vacation.Have Workers Take 3 Weeks Unpaid Vacation.

3.3. Mergers and acquisitions-Mergers and acquisitions- e.g., Merck/SP reduced workforce by 15% of 100k: savings of $3.5be.g., Merck/SP reduced workforce by 15% of 100k: savings of $3.5b

4.4. Shut down the business for a short period of time: Honda Shut down the business for a short period of time: Honda

http://moss07.shrm.org/hrdisciplines/businessleadership/articles/Pages/AlternativestoLayoffs.aspxhttp://newsvote.bb.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/business/8102862.stm?ad=1

Reduction/Removal

Company Example: Honda UK Honda plant stops production for four months

Response to downturn in the UK car market- profits dropped 89%

Workers at the plant will receive 100% pay for the first two months

After that, workers will receive approximately 65% of their pay for the next two months

Workers will owe the time back when the plant re-opens

This affects 2,500 out of 3,700 employees at the plant

Competitors are also announcing production cuts

Reduction/Removal

Unite Union officer Reactions

http://news.bbc.co.uk/2/hi/business/7833280.stm

Workers Reactions

http://news.bbc.co.uk/2/hi/business/7859863.stm

http://news.bbc.co.uk/2/hi/uk_news/england/wiltshire/8076430.stm

Reactions to Honda Plant Closing

Reduction/Removal

Additional Alternatives to Removal5. Hiring Freeze6. Don’t renew contracts with Contingent workers7. Two-tier flexibility: raises for some, but not others8. Offer Early Retirement; reduce savings contributions9. Offer Job Sharing10. Reduce or Eliminate Overtime11. Reduce/Freeze Salaries/Obtain government support (http://www.nytimes.com/2009/06/16/business/global/16labor.html?_r=1&pagewanted=print)

12. Retrain employees for new positions; change business model (http://www.nytimes.com/2009/07/12/business/global/12german.html?_r=1&pagewanted=print)

13. Repatriate sooner than planned14. Use global sourcing (http://whatmatters.mckinseydigital.com/globalization/global-sourcing-in-a-world-less-

flat)

MAJOR ISSUESMAJOR ISSUES

GLOBAL ECONOMIC SLOWDOWN: FOR HOW LONG?

HOW LONG?HOW LONG?

“The world GDP gap (between the possible and the actual) will continue to grow for the next 2-3 years.”

Stephen Roach, Chairman

Morgan Stanley Asia

Before the Chinese American Committee on Economic and Security, 02.17.09

Also see, The Economist, July 4, 2009: 74: “Uncertainty over the size of the output gap complicates the task of central banks.”

“A” Players and “A” Positions

“A” Positions

Have Strategic Impact

Variability of Performance

Critical impact on the formation of one or more of the strategic capabilities needed to execute the firms strategy

Can vary from call center to software engineer jobs depending on firm’s strategy

“A” Players

Make disproportionate contribution to success of company strategy

Top performers in the company

Provide significant value to the company

Not easily replaceable

Knowledge Workers Increasing amount of “knowledge work” requires increasing number

of “knowledge workers”

Require special skills gained via extensive schooling and training and have a heavy impact on the success of the company

Responsible for “tacit interactions” Rely on judgment, knowledge and context

60% of US labor force engaged in tacit interactions

But increasingly more jobs (positions) will require judgment and knowledge (“talent”), thus

http://www.mckinsey.com/aboutus/mckinseynews/knowledge_economy.asp

Organizational Linkages

Company Example: Nokia

Nokia relocated from Germany to Cluj, Romania

“Labor Costs are ten times less in Cluj, Romania”

Romanian labor force is both competent and knowledgeable; from local technical university for engineers

http://www.eetimes.eu/205800046

1–1 mpo699 managing people in organization topic 06 – retaining & engaging your talent

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