Creating an Employer

of Choice Environment

and Transforming HR

Wally BoehmVP Human Resources

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Today’s discussion:

Organization Profile

Business Case - NAS

Employer of Choice Strategies

Human Resources Scorecard

Human Resources Transformation

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ADP: One of the largest global providers of:

Employer Services

Brokerage Services

Dealer Services

Claims Services

Information Services

4

We’re the Business Behind Business™

5

Employee Measures

Goal: Fortune Top 100 Companies

Financial Measures

Competing

Excel

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Employer Services Organization

Employer Services

Emerging Business Services

Major Account Services

National Account Services

Benefit Services

Serving

1-49 employees

Serving

50-999 employees

Serving

1000+ employees

Serving

All sizes

7

Organizational Profile - NAS/Benefit Services

4600 Associates

Unskilled

(Shipping Clerks)

Highly skilled

(Software Engineers)

16 Operating locations

Pay 7 million people

Administer Benefits for 9 million people

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Situation Analysis - Fall of 1998

Experiencing high growth

Good, but not “great” service

Higher than average ADP turnover

Lower than average ADP associate satisfaction

HR strategy not aligned with business strategy

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Future Success

$1Billion Business

Employer of Choice World Class Service

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What did we do? Embraced Service-Profit Chain business model

Aligned HR strategies with business Compensate using Balanced Scorecard framework Increase Associate Satisfaction Decrease Turnover

Productivity & Cost Savings

Results

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12

40%

20%20%

20%

Balanced Scorecard

Employer of ChoiceFinancial

Excellence

Operational Excellence

World Class Service

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Balanced Scorecard Metrics

Turnover10%

Associate Satisfaction1

0%

Profitability20%

Client Satisfaction

10%

Client Retention

10%

Various Metrics

20%

Revenue Generation

20%

* AcceleratorsDiversity 10%Training 10%

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Decrease Turnover

20.2%

15.2%13.7%

10.2%9.0%

FY'99 FY'00 FY'01 FY'02 FY'03

NAS/Benefit Services Associates YTD

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Productivity and Cost Savings

Turnover Reduction

20.2%

10.2%

Productivity Time efficiencies Better service

Direct hiring costs Advertising Interviewing time Agency expense

$24.7 million savings

= =FY’99

to

FY’02

16

Business continues to grow rapidly

0

200

400

600

800

1000

FY 98 FY 99 FY 00 FY 01 FY 02 FY03

Revenues

(Plan)

(in millions)

Do

llar

s

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HR Means Building Business Value

For ADP….

For our clients….

Associate relationships impact bottom-line profitability

EOC Best Practices are reflected in our services

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What are we doing

to build an

Employer of Choice

environment?

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HR Vision

Provide our associates

the HR best practices

we offer and enable in

our clients.

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HR Mission

Lead the delivery of HR best practices

to achieve NAS objectives through

people, processes, and technology.

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What’s the Strategy?

Finish

Start

N

S

WE

Build HR initiatives from business strategy

Fine tune initiatives from listening to associates

Establish metrics and measure progress

Communicate successes internally

Extend value to clients externally

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Listening to Associates

What makes ADP your Employer of Choice?

“opportunity and culture”

“sense of accomplishment”

“friendly and professional atmosphere”

“easily balance work and family life”

“It’s what keeps me coming back every Monday.”

The Bottom Line:

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Working in an EOC Environment

Competent LeadershipInteresting & Challenging WorkOpen CommunicationInvolvement & Empowerment

Work Environment

Training & Development

Coaching, Feedback, & Support

Career Opportunities

Learning & Growth

Values

Recognition & Appreciation

Work Life Balance

Competitive Compensation & Benefits

The BasicsEmployer of

Choice

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Associate Satisfaction

Training & Development

Win the Talent War

Reward & Recognition

Human Resource Planning

Strategic HR Transformation

Increase Associate Satisfaction

Leverage Human Capital for Growth

What’s the Strategy?

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Strategy: Drive Associate Satisfaction

Survey Semi-annual

Analyze Results By Division By Business Unit

Develop Communication Strategy Create Action Plan

By DivisionBy Business Unit

Business Unit Action Plans Develop Individual BU Action Plans Validate issues through Associate Focus Groups Initiate Teams to Work on Issues

Track Progress Against BU Plans Report Action Plan Progress

Reward Management for Improvement

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Strategy: Make Retention a Way of Life

Reward management for retention

Use competency-based selection criteria

Engage group teams for selection process

Get serious about pre-employment screening

Invest in associate learning

Expand new hire orientation & mentoring

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Strategy: Increase Associate Communications Develop Associate Communications Strategy

Move Associate Communications into HR

Dialogue w/ associates through variety of vehicles:

Newsletters

MyInfoCenter.com

Video

- Division-wide

- Localized

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Strategy: Invest in Training Institute technology-based learning

3 week requirement for technology function Use 2 outside vendors

Increase associate training to a minimum of 40 hours per year per associate

54

27% of workforce

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$2 million - Sales & Leadership Training

Institute for Service Leadership

Leading & Managing in EOC Environment

Leadership Development

Managing for Commitment & Diversity

Strategy: Improve Leadership Development

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Strategy: Win the Talent War Implement electronic careers center

External access through www.adp.com

Centralize recruiting for high growth functions

Technology

Sales

Institute competency-based selection process

Respond to associate worklife needs - flexibility

Promote employment brand

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Respond to Worklife Needs Flexible Work Arrangements

In-office Services (e.g., dry-cleaning, massage)

Office Social Gatherings

ADP Preferred Childcare Discount Program (US-Wide)

ADP On-site Day Care Facilities

ADP On-site Medical Facilities

Continue asking & listening

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Strategy: Align Reward & Recognition

Balanced Scorecard What Gets Measured Gets

Done

Variable compensation plans

60% of associates

Stock options 40% of associates

Knowledge Pay Program

ACE’S

President’s Club

Stars

Quarterly Breakfast

Numerous Service Awards

Recognition Reward $$ $$

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Strategy: Systemic Human Resources Plan

Assess with 360-degree process and feedback

outside vendor

Individual development plans 6 month review discussions

Managers as coaches

Some use of executive coaches

Our Processes & Tools:

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Strategy: Systemic Human Resources Plan

Benchstrength measure

Gap identification in existing vs. future needs

Diversity of associate background, talent, abilities

Structured pipeline for talent infusion

Associate partnership of career development

Our Outcomes:

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Strategy: Delivering on Diversity

Implementation of Local Diversity Councils

Connecting through Surveys, Focus Groups

Leverage progress and work on priority issues

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What Do We Measure?Associate

Turnover

Recruitment

Productivity

Associate

Benefits

Associate

Satisfaction

Diversity

Associate

Training &

Development

Associate Satisfaction

Associate Turnover (by Segment, New Hire, Cost)

Training Hours per Associate

Competency Gaps of Workforce

Diversity Representation

Cost per Hire

Time to Fill

Compensation Competitiveness

HIPO Associates (Bench Strength, Development Plans)

Human Resources

Indicators

HR Scorecard…

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ACCOUNTABILITYStrategy: Transform HR

Develop & measure new HR Competencies

HR Process Re-engineering

Electronic self-service

HR Metrics – Digital Dashboard

Leverage HR in new product development and piloting

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Strategy: Transform HR

Source: Tomorrow’s HR Management, Dave Ulrich & Michael Losey, 1997.

Percentage of Time Spent

Strategic HR Planning

Consultative/Developmental

Execution-Oriented & Administration

Today

10%

25%

65%

Future

25%

50%

25%

Consultative and

DevelopmentalStrategic

Execution-oriented & Administration

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What Does This Strategic Transformation Look Like?

Old HR•Non-Strategic•Administrator

•Distributor•Enforcer

•Translator

New HR•Business advisor/consultant

•Workforce strategist

•HR Process Expert

•HR Measurement Analyst

D

rive

rs

•Services•Customer Service

•HR Program Admin•Operational Excellence•Technology Application

•Technology•Process Integration

•Technology roadmap•E-HR Strategy

•Measurement & Analysis

•Manager/Employee•Information Access

•Learning•Decision-making

•Action Taking

Process Reengineering

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Reengineering HR Processes

Reengineering HR Processes through The Portal

HR Administration

Recruiting Process

HR Metrics

HR Planning

Flex Benefits Enrollment

Performance Management

HR Reporting

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NAS HR Web Portal – Strategic EnablerMission Statement

Guidelines and Procedures

Benefits Related Information

Forms

Phone Book New & Events

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Conducting HR Transactions

Skills Profile and Personal Search Agent

Internal e-Recruiting Solution

Expense Management

401(k) Transactions

Benefits Enrollment

Stock Purchase/Stock Options

On-Line Pay Stubs

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Leveraging Human Capital

Digital Dashboard

High Potential Tracking

Career Development

Hot Skills Database

Human Resources Planning

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The Horizon of Practice

Business Partnership

Service Delivery

Talent Acquisition

Career Development

Management Developmentand Training

Standard Practice

Progressive Practice

At the Horizon

HR respondsto requests

HRprocesses

transactions

HR recruitsfor open jobs

Job posting;vertical paths

Stand-upclassroom

training

HR partnerson solutions

Manager & EEdirect access;

HR aligns activitieswith business strategy

HR proactively sourcestalent to fill pipeline;

managers fill openingsvia desktop technology

Job posting;vertical paths

Stand-upclassroom

training

HR anticipates strategicissue and leads effort

“My Portal” - CustomizedWeb-based / vision of

paperless administration

Precision workforceplanning / emphasis on

retention and relationshipextension

Talent managementlinks development,

career planning, talentassignment and

developing futureleaders

Real-time workplaceexperiential

learningsupported by

interactivetechnology

Source: Corporate Leadership Council

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Managing Change

Creating a Cultural Shift

Creating Systemic Processes

Measurement

Creating...

IN SUMMARY…

Creating an Employer of Choice Environment and Transforming HR is about:

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Associate Satisfaction

ASI

Training & Development

Talent War

Leverage Human Capital for Growth

Reward & Recognition

Human Resource Planning

HR Transformation

High Performance Organization

Work Environment

Learning & Growth

The Basics

EOC