hr contributions (ver.10)

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1 Corporate Human Resources

So Paulo,

December 5th, 2005

HR on the MoveHR contributions to the 4 pillar strategy


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Corporate Human Resources

Content

Objectives

HR Contribution

Methodology

Conceptual approach

Contribution to the strategy

Next Steps

Attachments


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Objectives


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Objectives

The major objective of this work is to develop a set of key HR metrics which will not

only help the management of the HR functions but also add value to theorganization. As it was presented, the HR Dashboard will contain indicators that allows

measurement in 4 (four) dimensions.

HR Efficiency efficiency of HR in terms of structure, costs, time &

headcount

HR Strategy the level of contribution of HR practices to the

implementation of the business goals

HR

Effectiveness internal customer satisfaction level and meeting of

expectations

Metrics that assess

HR

Compliance compliance with regulatory rules (internal and external)

and existing controls


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Objectives

Define HR contributions to the strategy

Ensure that the contributions are aligned with:

Corporate strategy

Leadership framework

The visioning of a flat and flexible organization

Breakdown this contributions describing: Why these are the core contributions?

How these contributions are going to support the corporate strategy?

How do we measure these contributions?

The focus of this part of the workshop will be placed on metrics that allows to measure HR

STRATEGY, exploring the following aspects:


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HR Contributions


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HR ContributionMethodology

Shareholder

Value

Improved Business

Performance

Superior People

Performance

Drivers of People

Performance

Mgt of People & People

Programs

Values and

sustainability Increase productivity Increase competitively Costumer Satisfaction New Business Model

Performance Competences

Philosophy Politics

HR Systems HR processes

This methodology support a relationship between corporate and human resources strategy. Moreover, it

represents the stages and steps to improve performance at: business, people and operation dimensions.


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HR ContributionConceptual Approach

Corporate and

Business strategy

Human Resources

Strategy

Human Resources

Operations

From Strategy to operation

From Strategy to operationNestl

Innovation

& RenovationAvailability

Consumer

Communication

Low Cost

Operations

Empower

Leadership

Facilitate

Knowledge

Management

Improve Retention

& Talent

Management

Enhance

Brand

Alignment

Efficiency Effectiveness Compliance

HR Flexible Organisation1

HRC

ontributio (1) Will be detailed forward in relation to KPIs of efficiency, effectiveness and compliance.



Innovation& Renovation

Availability

Consumer

Communication

Low Cost

Operations

Empower

Leadership

Enhance Brand

Alignment

Facilitate Knowledge

Management

Improve Retention

& Talent Management

HR ContributionSummary Strategy Highlights

Developing team

skills focused on

results

Stimulating a innovate

and renovate

environment

Developing synergies

between leaders and

teams, increasing

processes agility

Crossing leaders and

teams information to

identify best

communication

strategies

Reducing turn over costs

(recruitment, training, etc.)

Decreasing lost of key

knowledge and people.

Increasing labor quality on

R&D by focus on

management competences

Assuring knowledge

availability decreasing

search time

Centralizing information

facilitating informationsearch fostering

innovation and

renovation

Assuring technical

training and knowledge

transfer contributing to

processes improvement

Leveraging companys

knowledge to assure

consumer needs

Working on

competences and skills

to assure costumers

loyalty increasing

productions scale

Developing

communications

programs increasing

innovations aligned to

the brand

Enhancing the target

Availability Wherever,

whenever and However

as a culture of the brand

more closer to the target

well be

Assuring consistent

information is given to

consumers through

information alignment

among companys

areas

Developing key people

communication skills and

generating a strong

Consumer Insight

involvement

Creating challenging

environments to increase

productivity and agility on

distribution and delivery,

supported by a flat and

flexible organization

How HRis going to

contribute with

corporate strategy



HR ContributionDescription

HR should assist leaders with the effective management of human capital, enhancing management competencies and

aligning them in common practices, so they can:

Promote an attractive and challenging work environment that:

Fosters innovation, renovation and open communication;

Ensures corporate commitment and satisfaction stimulating people performance;

Develop team skills and competencies focused on results, ensuring:

The required competencies for each position are identified and aligned to corporate strategy;

Preparation of new leaders and succession;

Identify and implement best practices in operation and strategy:

Creating internal and external network to seek for information to improve results;

Identifying trends and opportunities for the area in the external environment and strategy building;

Perform role-modeling assuming responsibilities and developing competences and skills like:

Strategic and operational management Analysis, Risk Management, Image management and Innovation,

Process and quality management, Health, Security and Environment Management, Social Responsibility,

Resources management, Focus on client;

Integrated action Knowledge sharing, Create a team working culture, initiative, Network development,

communication;

People management Climate management, Recognition, Team building;

Empower

Leadership

Facilitate

Knowledge

Management

Improve Retention

& Talent

Management

Enhance Brand

Alignment



HR ContributionMetrics

Name: 1) Leaders impacts on team performance

Description: Measure the relation between leaders actions and staff performance, mapping the employees perceptions of

the leadership.

Formula: Average of answers assuring leaders performance (% - average score). Example of questions included:

Does your leader establish a clear communication?

Is your leader easy to reach?

Does your leader practice what he preaches?

Does your leader ask your opinion and suggestions before making decisions on your work/team?

Is your leader concerned about the learning and development of his team?

Do you have the necessary support from your leader when you need it?

Does your leader have a structured plan of the activities of your area?

Do you always exchange information with your leader?

Do you receive feedback on your performance on time?

Source Data: Employee Satisfaction Survey

External Benchmarking: No.




Name: 3) Leadership Development

Description: Measure the level of development of leadership competences. It is necessary to define a required level (target)

on average or for each competence, in order to identify gaps between required and mapped levels of competences. Also,

this metric can be analyzed by different management level.

Formula:

a) Average of score obtained in performance appraisals leadership competences

b) % of leaders that have a score higher than xx.

c) Gap between individual competence ratio and required one. Evolution of the gap evaluated

Source Data: Performance appraisal process Nestl Leadership Framework (identify if all or some competences will be

include in this metric)


Name: 2) Challenge work environment

Description: Measure the employees perception of the environments challenging and motivating levelFormula:Average of answers assuring a challenge environment (% - average score). Example of questions included:

Do you feel challenged at your work environment?

Do you have clearly defined directions and expectations set for your work?

Do you have clearly defined targets to perform the role?

Do you have the company support to reach your objective?

Does your leader takes the initiative to make changes?

Does your leader promote innovations and renovations?Source Data: Employee Satisfaction Survey

External Benchmarking: No




Focusing on this practice HR would help to:

Retain key people:

Benefits in retaining people:

Decreases lost of key knowledge

Reduces turn over costs (recruiting, training e etc.) Avoid project/products launching delays;

Enhance culture and values;

Retention systems:

Developing the anchors of the retention

Compensation (Salary, short-term benefits, long terms bonus, fringe benefits)

Challenge and change management (environment and career)

Recognize and Reward

Learn opportunity

Improve talent management:

Training the human capital with future competences required;

Aligning competency management to best practices;

Allowing progress in compensation dissociated from promotion;

Developing capability to identify and better evaluate talents and potentials;

Empower

Leadership

Facilitate

Knowledge

Management

Improve Retention

& Talent Management

Enhance Brand

Alignment




Name: 1) Non desired Hi potentials Separations*

Description: Measure the percentage of Hi potentials that leave voluntary the organization. High potential is the individualthat has the competencies to assume a Key position on the organization.

Formula: Voluntary Hi Potentials resignations / total Hi Potentials

Source Data: Personal administration - Payroll

External Benchmarking: Yes, Saratoga

This KPI could be extended to High performers (Individuals that have outstanding performance on his particular position)

and, specifically to High Performers of certain business areas positions only out-of-collective agreement people.

Reasons for leaving This metric will be complemented by reasons why employees leave the company (exit surveys), to

understand the main reasons that generates the dissociation of employees from the corporation.

Reasons need to be collected through exit surveys. For example, exit surveys ask about:

Remuneration: Were you satisfied with the compensation? (salary, benefits and etc.)

Training and development: Were you satisfied with your training participation?, How often do you participate on training?

Training helps you to develop your job? Do you think the company has a good training program? Do you have professional

growth opportunity?

Relations: How was you relation with the leadership, pairs and others areas? What do you think about the companysenvironment?

Internal communications: Does the company communicates its Results, actions, indicators, strategy, mission, vision, values,

etc.?

What are the reasons for leaving the company? (better salary, new objective, etc.)?

What you like and dislike the most in company?




Name: 3) Hi Potentials occupying key positions *

Description: % of Key Positions occupied with Hi potentials. Assess the effectiveness of the depth of career managementprocess.

Formula: N Key positions occupied with Hi potentials / Key positions

Source Data: Hi potential map structure appraisal


Name: 4) Internal Hire Rate for Key positions *

Description: % of Key positions occupied with internal person. It looks at internal opportunities and talent development.

Formula: N Key positions occupied with Internal person / Key positions



Name: 2) Succession Planning Ratio

Description: % of Key Positions with at least one fully and unique qualified candidate ready for succession. Provides high level

insights into the depth of and organizations succession planning program for key roles.*

Formula: N Potential successors / Key positions



* The succession plan need to have a unique qualified person by position, it could not have repeated successors.

(*) The company may choose to select one of this 2 metrics as they measure the same from a different perspective




Focusing on this practice HR would assure:

Knowledge availability:

Foster innovation and renovation;

Decrease costs due to synergies among markets / business;

Facilitate self-study

Individual and organizational learning

Relationship between different areas of the company and different companies and environments;

Development of individual and organizational competences

Connectivity between people;

Measurement of companys intellectual capital

All the knowledge is shared and transferred Knowledge management benefits

Best practices adoption through Nestl markets / businesses;

Change of companys behavior with Not sharing is not acceptable culture;

Equalization of knowledge, minimizing risk of loosing key knowledge people;

Leverage individual and companys knowledge

Empower

Leadership

Facilitate Knowledge

Management

Improve Retention

& Talent

Management

Enhance Brand

Alignment




Name: 1) Knowledge management

Description: This KPI measure the employees perception of the knowledge management in company

Formula:Average of answers assuring the employees perception (% or average). Example of questions included:

Is it easy to find knowledge when you need?

Do you participate in knowledge sharing activities (affinity groups, technical chats, etc.)

Do you have ways to contribute with the knowledge sharing?

Do you or your team have critical knowledge documented and formalized?

Do you receive newsletters or white-papers on special subjects?

Do the company value the knowledge as an asset?

Source Data: Internal survey


Name: 2) Employees global database contribution

Description: This KPI measure the level of employees contribution to the base and indicates the level of knowledge

sharing practices adoption.Formula: N of database contribution

Source Data: IT controls ??





Name: 3) E-learning penetration

Description: Measures how much e-learning is deployed in comparison to the total learning hours.

Formula: E-learning hours / Total learning hours (including e-learning hours)

Source Data: e-learning local applications softwares Learning Database where hours of training are registered


Name: 4) Training Headcount Investment Factor

Description: It is the average amount spent on training per employee. Reflects the organizations investment in

training and allows equal variables comparison of their training investment.

Formula:

1) Total Training Costs / Regular Headcount

2) Total Training Costs / Total Costs + Operational expenses

Source Data: Balance sheet Learning BudgetExternal Benchmarking: Yes, Saratoga




Focusing on this practice HR would help the alignment between:

Polices and Practices to the Brand

Safety and Health

Peoples quality of life

Products knowledge

Commitment

Corporate Values

Empower

Leadership

Facilitate

Knowledge

Management

Improve Retention

& Talent

Management

Enhance Brand

Alignment




Name: 1) Satisfaction and commitment Index

Description: This KPI measure the employees satisfaction and commitment

Formula:Average of answers assuring employees satisfaction and commitment. Examples of questions included:

Are you pride to work on Nestl?

Are you optimistic of your future at the company?

Are you satisfied with your job?

Is the company offering good conditions to work?

Does the company have a formal recognition program?

Would you recommend the company as a good place to work?

Source Data: Internal Survey


Name: 2) Values adoptions

Description: This KPI measure the level of corporate values adoption by employees.

Formula:Average of Answers assuring values adoption by employees. Examples of question included: Do you know the values of the company? Do you understand these corporate values?

Do you agree with these corporate values?

Do you live these corporate values?

Is the company acting according to its corporate values?

Source Data: Internal survey





Name: 3) Risk index

Description: Measure the occupational accidents and their impacts on revenue, costs increases and human and social lost

Formula: (Total work accidents / HC x Worked hours) x 1.000.000

Source Data: HR data


Name: 5) Extra Hours

Description: Measure % of extra hours and their impact on organizational equilibrium, restructuring costs and satisfaction

Formula: (Total extra hours / Nominal Salary) x 100

Source Data: Personal administration - Payroll


Name: 4) Absenteeism

Description: Shows an absence rate due to accidents, unjustified absences, permissions, etc which is a predictable index

of turnover to come. This metric is an indicator of employee engagement and a high absence rate may be an indicator of anunder-performing workforce.

Formula:

1) (Absences / Total employees x 242*) x 100 (SARATOGA)

2) Worker days lost / (Average employee populations * Number of work days available per employee per month)

Source Data: Time Management - Personal administration


* 22 working days in 11 months



Next Steps



Next Steps

In order to implement this Strategic HR Dashboard and be able to obtain theproposed metrics, the following action must be taken :

Develop a global internal survey aligned to what we want to measure

Develop a standard HR internal customer survey

Unify performance appraisals criteria (ex.: evaluated concepts) and method

(ex.: score that can be obtained)

Define the required competences for each leader position (level), so we can

measure the gaps (target vs real)

Develop an standard exit survey

Map knowledge that the company consider strategic and/or critical for business

Develop a global knowledge database (ex. Intranet) and establish a global

procedure to centralize / manage critical information in order to improve

knowledge management



Attachments


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