Kim AbildgaardDenmark

GLOBAL HUMAN CAPITAL TRENDSA MERCER PERSPECTIVE21 OCTOBER 2014

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The success of any national or businessmodel for competitiveness in the future willbe placed less on capital and much moreon talent. We could say that the world is

moving from capitalism to talentism.

KLAUS SCHWAB, FOUNDER AND EXECUTIVE CHAIRMAN, WORLD ECONOMIC FORUM

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Talent: A top priority and challenge

of organization expanding outside homemarket to meet growth objectives

Sr. HR Leaders Surveyed

85%

CanadaUSA

APACLATAM

AsiaChinaEMEA

Europe

58%experienced a shortage of available

talent to meet your growth objectivesIn the last 12 months

AfricaIndia

Russia

Project ManagementMobile Commerce

Science

EngineersTechnical

Sales

300

Top Regions/Countries

Skills Gap

Human Capital is a

#1CHALLENGE

faced by CEOs globally

Human capital riskranked first among 10risks identified by theConference Board’s

CEO Challenge –ahead of operational

excellence, innovation,customer relationships,

and globalpolitical/economic risk

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• Positing for (profitable) growth

• Effectively executing global strategieson a country-by-country basis.

• Innovating new products, services,and value propositions to meet unique

customer needs.

• Operational excellence

• Global social, political, and regulationshifts are changing the focus of

business

BUSINESS TRENDS & ISSUES

FAST CHANGING HUMAN CAPITAL ENVIRONMENT

Source: Mercer experience and synthesis of Corporate Leadership Council, Oliver Wyman Group, and own research.

Macro Business Trends and Issues Across Industries& The Human Capital Environment

Many employers will face a significantchallenge attracting and retaining keytalent, increasing costs and protection

Competition for talent isincreasing

The nature of work is changing

Skills liifetime is shortening (2.5-5years), jobs no longer long-term

commitments but experiences, hot jobs

Technology is bringingflexibility, mobility to work

Technology is changing how wework and the skills we need

Big data is here

Working population ischanging

Increasd diversity: Multi-generation(older and younger), gender, etc.,

declining levels of trust

The HR function is becomingmore strategic

The prevalence of evidence-basedtools will help make strategic human

capital decisions

Supply and demand ismismatched across the world

There is a clear mismatch betweenWhat’s in demand and what’s available in

the global talent pool

GAP

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What talent issues are standing in the way of yourbusiness performance?ASSESSMENT OF TALENT?How are you evaluating the performance, readiness, potential, and job fit of your key talent and the flow oftalent into, through, and out of the organization?

ENGAGED EMPLOYEES?How well do your employees embrace change and understand their role in fulfilling the organization’sstrategic business drivers?

MOBILIZED WORKFORCE?How is your organization proactively managing the relocation, up-skilling, and retooling of key talent toensure you are able to fulfill strategic business requirements?

REWARDING FOR PERFORMANCE?How are executive and workforce rewards programs helping you to secure key talent, enhance businessperformance, and withstand external scrutiny?

DEVELOPING SKILLS?To what degree do your leaders and managers have the skills to motivate employees, influence careerdecisions, champion talent management, and shape your organization’s culture?

WORKFORCE PLANNING: FORECASTING TALENT NEEDS?How confident are you that your organization has the right people in the right jobs, at the right location, atthe right price, at the right time?

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The Human Capital Challenges vs. Readiness

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Hot topic focus: Workforce planning(leadership gap, talent acquisition andretention)

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Workforce analytics and planning is becomingincreasingly important as talent challenges increasethe need for robust workforce information and insight

The biggestgrowth area in HR

technologies isworkforce

analytics, from 14%to 46% in the next 3

yearsSource: CedarCrestone's 2013-

2014 Outlook Report

Hottest Jobs for 2014:Head of HR Analytics,

second only to theCHRO position

Source: CT Partners 19thannual executive jobs

forecast

CEOs are not fullyembracing the potential

of Human CapitalAnalytics and Strategic

Workforce Planning

Source: The ConferenceBoard, CEO Challenge®

2014

MERCER 8October 28, 2014

Workforce SegmentationUnderstand Varied Employee Perspective on Rewards

Source: Mercer HR, Mercer interviews with clients

§ Expect to change jobs tobuild their skills§ Mobility

§ Opportunities togrow/learn/innovate

§ Social aspects of work§ Meritocracy§ Recognition§ Feedback§ Flexibility

§ Clear criteria for success§ Regular pay increases to

recognize value

§ Less hierarchy/ seniorityfocused

§ Independent§ Self-reliant

§ Patient for opportunitiesand recognition

§ Rewards to match risks§ “Show me the money”

§ Loyal§ Life-long careers§ Deal face to face§ Get hierarchy

§ Expect to earn pay overtime

§ Focus on benefits

MillennialsGen X

Boomers

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Key objectives of Strategic Workforce Planning

§ How many people are needed to operate – and grow – thebusiness effectively? And, how do these people requirements

break down by business line, function or level?§ To what extent does the current workforce profile meet

these requirements? How will these profiles be affected byfuture workforce flows including hiring, promotions,

transfers, turnover, and retirement?

Workforce Quantity

Workforce Quality

Workforce Location

§ What skills and capabilities are most at risk? Where arethere critical gaps, and how deep are they?

§ What new skills and capabilities are needed to supportexisting and new business products or services? Are there

performance or productivity thresholds?§ How can we avoid knowledge losses and make sure

knowledge is disseminated across the organization?

§ In what geographies will these people be located?§ How do geographic choices impact product or service

delivery and cost efficiency?§ What are the best future locations to find and locate talent?

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Workforce Plan(Solutions)

Workforce Analysis(Demand, Supply & Gap)Strategic Setting

§ What is the currentworkforce

architecture?§ Which job-groups /

jobs exist?

WorkforceStructure

§ What are thepremises of key

stakeholder?§ What are thepriorities of the

business? What arecritical roles?

StrategicContext

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§ What is the externalmarket situation for

specific roles indefined

geographies?

ExternalEmployeeMarkets

§ How will theworkforce develop?§ What potentialstructural risks will

emerge (e.g.demography)?

WorkforceProjection

§ What are potentialgaps (scenarios)?

§ What are the risksimposed by

identified gaps?

GAPAnalysis

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§ What are potentialsolutions to closethe gaps and tomitigate risks?

§ Which solutionshave the highest

priority?

PrioritizedSolutions

§ What is thebusiness case fordefined solutions?§ How is feasibility,benefits, cost, timingand risks of defined

solutions?

Benefits ofDefined

Solutions

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§ Which strategicsolutions should betaken in the long-

term?

WorkforcePlan

101099

SUPPLY

SUPPLY

§ What are theworkforce demands

in the future?§ What are the drivers

of workforcedemand (especiallyfor critical roles)?

WorkforceDemand

33 DEMAND

OngoingWorkforce Planning

§ How does thestrategic workforceplanning process

look like?§ Which roles are

involved in theprocess, and how?

WorkforcePlanningPlaybook

AA

§ What are thetechnical

requirements for anIT support?

§ What needs to becovered the HR

system?

TechnicalBlueprint

CC

§ What is a realisticimplementation time

plan?Rollout

Plan

DD

§ What tools andtemplates (e.g.

interview guides,communication

decks) should beused?

ToolSupport

BB

Overall Process

MERCER 1128 October 2014

Workforce Planning Maturity StagesLevel 1

Headcount PlanningLevel 2

Workforce analytics

Level 3Strategic workforce

planning

Level 4Human Capital

PlanningValue forthebusiness

Validated figures:authorized headcount,vacancies and hiring,staffing plan, locationof and competition forlabour

Workforce informationand analysis: hires,terminations, mobility,employeeengagement,performance, salarydistribution

Forecasting andpartnering withbusiness lines to makestrategic workforcedecisions: feasibility ofentering new markets,critical skills requiredfor the future, where tosource and how tocompete for theseskills

Real-time decisionsabout talent relateddemand by leveraginganalytics to improve:attraction and retentionmethods, link betweenemployee data andbusiness performance,differentiation fromcompetition

HR andbusinessroles

• Driven by finance• Executed bymanagement as partof annual businesscycle

• Owned by HR• Provided on-demandto management or byreportingrequirements

• Supported by HRIS

• Owned andsponsored bybusiness leaders

• Driven and facilitatedby HR

• Leveraged by HR tobetter support andchallenge thebusiness

• Championed by CEOand executives

• Managed by a HCanalytics andplanning center ofexcellence

• Leveraged bystrategic HR businesspartners at corporatelevel and in allbusiness units

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Rise of HR “Big Data” and Analytics

Measurement Continuum

ReactiveChecks

Predictive/Causal

Modeling

Correlations

Benchmarks

On-GoingReports

Simulationsand

Forecasting

Anecdotes

MERCER 1328 October 2014

Gapanalysis

Gapanalysis

PossiblemeasuresPossiblemeasures

Ranking ofmeasuresRanking ofmeasures

Near- / Offshore

Apprentice /Traineeships

Training /development

Co-sourcing(external contracting)

Recruitment

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2

3

4

5

Near- / Offshore

Co-sourcing(external contracting)

Apprentice /Traineeships

Training /development

Recruitment

Downsizing /Redeployment

Downsizing /Redeployment6

Shortfall

< -80 % < -60 %> -80 %

< -40 %> -60 %

< -20 %> -40 %

< -5 %> -20 %

< 5 %> -5 %

> 5 %< 20 %

> 20 %< 40 %

> 40 %< 60 %

> 60 %< 80 % > 80 %

Surplus

2010 2011 2012 2013 2014 2015 2016 2017IT-RolleCapacity Manager 0 -1 -1 -1 -2 -2 -2 -3Change Manager 0 0 0 0 0 0 0 0Enterprise Architect -2 -2 -2 -3 -4 -4 -5 -6Incident Manager -1 -2 2 6 8 12 15 18IT Architect 0 -1 -2 -2 -3 -4 -4 -5IT Asset Manager -1 -1 -1 -2 -2 -2 -3 -3IT Partner Manager -3 -5 -7 -9 -10 -11 -12 -13IT Portfolio Manager -1 -2 -2 -2 -3 -3 -4 -4IT Security Manager -2 -2 -3 -3 -3 -3 -3 -3IT Strategy Manager -5 -5 -5 -5 -5 -5 -5 -5Problem Manager -2 -4 -3 -4 -4 -3 -3 -2Process & Quality Manager -3 -5 -6 -7 -7 -8 -8 -9Project Manager -13 -19 -29 -38 -48 -57 -65 -74Release Manager 0 -2 -1 -1 0 1 2 3Service Level Manager -3 -6 -7 -7 -7 -7 -8 -8Service Manager 0 -4 -4 -4 -4 -4 -4 -4Solution Designer -32 -37 -46 -56 -65 -72 -79 -86System Analyst 20 16 16 15 14 14 14 13System Engineer 0 -2 -1 -1 0 1 2 3System Manager 0 -2 -5 -8 -10 -13 -16 -18Test Manager -2 -3 -4 -5 -7 -8 -9 -10Vendor Manager -5 -8 -9 -11 -13 -14 -15 -17Leiter -3 -9 -9 -8 -9 -8 -7 -6Internal Support 0 -5 -1 2 5 8 11 11Keine IT-Rolle 0 0 0 0 0 0 0 0

Überhänge (gesamt) 21 16 18 23 28 36 43 49Unterdeckung (gesamt) -78 -126 -149 -178 -204 -229 -253 -276Surplus (total)Shortfall (total)

Non-IT Roles

Manager

IT Roles20172016201520142013201220112010 20172016201520142013201220112010

Prioritized SolutionsBased on understanding of gap patterns differentsolutions can be evaluated

Workforce Plan(Solutions)

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The four pillars of Human Capital Index

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World Economic Forum and Mercer’s Human CapitalIndex: A barometer to country’s talent competitiveness

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Source: World economic Forum/Mercer Human Capital Report 2013

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World Economic Forum and Mercer’s Human CapitalIndex: A barometer to country’s talent competitiveness

(10) (16) (51) (1) (24)

(62) (58) (111) (114) (86)

Source: World economic Forum/Mercer Human Capital Report 2013Numbers in bracket denote world ranking

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Pillar 1: Education 28

Pillar 2: Health and wellness 10

Pillar 3: Workforce and employment 11

Pillar 4: Enabling environment 13

Total population (1,000s) 127,352.8

Median age of population 45

GDP per capita PPP (constant 2005, international $) 31,425

GDP growth (annual %) 1.9

Aged dependency: 36.0%

Youth dependency: 20.9%

Male labour force participation, age 65+: 2.9%

Female labour force participation, age 65+: 1.8%

Human Capital Index Rank: 15 (n=122)

Education and Workforce Distribution Key:

Additional Indicators

Example:Human capital in Japan

JAPAN

Source: The Human Capital Report/WEF 2013

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What would happen if these countries had universaleducation at primary and secondary?

Ethiopia 87% - 115 110

Ghana 83% 46% 91 67

Kenya 84% 50% 90 72

Nigeria 58% - 116 93SouthAfrica 90% 70% 92 87

Primaryenrolment

Secondaryenrolment

EducationRank

‘Potential’Education

Rank

Current measures

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The Talent Market GapChallenge of Employability

Sources: Egon Zehnder International

Surplus

RegionalLeadership

CountryLeadership

MiddleManagement

EntryLevel

Demand

Supply

Deficit

India China

MERCER 2028 October 2014

The Talent Market GapChallenge of Employability

MERCER 21October 28, 2014 21

www.mercer.com/talentbarometer

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Organizations need to invest in assessing and developing theirpeople managers to ensure a strong pipeline of leaders

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59% of organizations in Asia Pacific say thattheir people managers have little or no

accountability for developing talent

Top-5 priorities for leaders in Asia

Creates strategy 37%

Drives innovation 31%

Develops market insights and business intelligence 30%

Drives results 22%

Optimizes talent 21%

Source: Mercer 2012 Leadership Practices Study

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Generally, how skilled are your company’smanagers at doing the following?

If your organization could improve the overallcapability of your managers, what one skill areawould have the biggest impact on theorganization’s overall performance?

Manager Skill Building: Performance Management

Mercer 2013 Global Performance Management Survey Report

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Mentoring

Global region assignment

Executive education

Strategic global projects

Second international assignment

Assessments

Multi-cultural teams

Special projects

Short term assignments

GlobalExecutivePassage Passa

ge fivePassage four Passa

gethree

Passage one

Passage two

Fullpackage

Fullpackage

Source: Charan, Drotter and Noel, 2000

BaselineAttributes

GlobalMindset

GlobalMindset

GlobalSkills

Accelerating Global Leadership skills:Career-Stage Development

360 degree feedback

Mentoring

First international assignment

MERCER 2528/10/2014

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Day in the Life Simulations

Senior Petroleum Engineer

Plant Operator

Realistic Job Preview

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SUMMARY

27October 28, 2014

“Robots could kill us out of kindness”--

“The most important work for our lifetime isto ensure that machines are capable of

understanding human values”

Nell Watson, Futurist

& a thought for the longer-term

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Q & A

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