people management association of the philippines (towers watson)

© 2013 Towers Watson. All rights reserved.

New Realities, New Opportunities, New CompetenciesThe Future of Work

Ravin Jesuthasan

September 2013

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Headlines: challenges and opportunities

Talent 2021GWS

Transformative HR

Generation Gap? Not when it comes to pay…it isthe #1 attraction driver for all ages in the U.S.

Generation Gap? Not when it comes to pay…it isthe #1 attraction driver for all ages in the U.S.

Structurally Unsound. Businesses are attempting to reach 21stC heights on 20thC talent and reward platforms

Structurally Unsound. Businesses are attempting to reach 21stC heights on 20thC talent and reward platforms

Friction Points. By 2021, a new map of talent surplus and deficits will emerge

Friction Points. By 2021, a new map of talent surplus and deficits will emerge

Security Minded. Whether it is attraction or retention, financial security is top of mind

Security Minded. Whether it is attraction or retention, financial security is top of mind

Engagement at Risk. Only 35% are highly engaged, stress is increasing and energy is flagging

Engagement at Risk. Only 35% are highly engaged, stress is increasing and energy is flagging


Human Capital Research


The major themes of Global Talent 2021

Business transformation demands new skills

Mobility from industrialized to emerging markets

Global talent mismatches

Changes in talent management strategies


What is driving the talent agenda?

0 10 20 30 40 50

Generational, social and cultural driversGeopolitical trends

Increasing focus on diversityRegulatory changes

Sustainability and the environmentShift of market momentum to emerging markets

Industry consolidation and transformationIncreasing competition

Changes in customer needs and behaviorLabor markets shifts

Globalization of marketsTechnological and digital change

% of respondents

Market shifts that will have the biggest impact on futuretalent requirements

Source: Global Talent 2021 Study conducted by Oxford Economics and Towers Watson, 2012.


What strategies will most impact talent needs?

0 10 20 30 40 50

OtherOutsourcing and offshoringOrganizational realignment

Mergers, acquisitions and alliancesDownsizing and restructuring

Speeding time to marketSupply chain management

Emerging market focusPenetrating new customer segments

Process improvementsExtending product and service portfolio

Developing digital channelsReinventing business models

Driving innovationGlobal expansion

Improving quality and customer serviceCost reduction and efficiencies

% of respondents

Organizational strategies that will have the biggestimpact on future talent requirements



Demand for talent will rise strongly over next decade

4.0

1.8

4.4 4.54.7

4.5

1.2

5.05.3 5.3

-0.5 0.6 -0.5 -0.8 -0.7

-2

-1

0

1

2

3

4

5

6

Global NA &Europe

Americas AsiaPacific

MEA

Market for talent: Global

Demand Supply Talent gap

% p.a.



But supply to expand evenfaster in emerging countries

4.5

5.24.6

5.3 7.3

4.6

-0.8 -2.1 0.0

-4

-2

0

2

4

6

8

Asia Pacific India China

Market for talent: Asia Pacific% p.a.




0.5

Talent challenge greatest in developed economies

1.8 1.6 1.62.2

1.2

0.9 0.7

1.4

0.6 0.7 0.6 0.9

0.8

-1

0

1

1

2

2

3

NA &Europe

France Germany UK U.S.

Market for talent: North America and Europe % p.a.




Talent friction points in ten years:Where are your future talent needs?

Deficit countries

Surplus countriesAt equilibrium

Norway 0.5

Sweden 0.5

UK 0.9

France 0.7

Spain 0.2

Canada 0.9

USA 0.8

Mexico 0.1

Columbia -1.1

Argentina 0.1

Brazil -0.1

Morocco -0.8

Chile 1.0

Peru -0.6

Russia 0.1

South Korea 0.9

Japan 1.4

Philippines -0.2

Thailand 0.6

Malaysia -0.1

Indonesia -1.5

Netherlands 0.4

Germany 0.6

Poland 1.2

Czech Rep -0.8

Austria 0.4

Switzerland 0.5

Italy 0.8

Greece 0.7

Singapore 0.6

Turkey 0.7

Egypt -0.7

Saudi Arabia -0.2

United Arab Emirates -0.2

Qatar -0.6

China -0.0

India -2.1

South Africa -1.0

Bermuda -0.1

Australia 0.5



The Global Workforce Study 2012 helps us understandthe drivers of attraction, retention and sustainable engagement

Attraction Drivers Retention Drivers Sustainable Engagement Drivers

Base pay/salary Base pay/salary Leadership

Job security Career advancement opportunities

Stress, Balance and Workload

Career advancement opportunities

Relationship with manager/supervisor Goals and Objectives

Convenient work location Trust/confidence in senior leadership Supervision

Opportunities to learn new skills

Manage/limit work-related stress Image

Drivers linked to Total Rewards


The current status of the global workforce

35%

22%

17%

26%

Source: Towers Watson 2012 Global Workforce Study.


BY THE NUMBERSThe value of achieving high sustainable engagement

Only 15% of employees with high engagement are high retention

risks compared to 64% of disengaged employees

3xHigh sustainable engagement

companies’ operating margins are 3x higher compared to those with the lowest levels of engagement

7.3Higher presenteeism: An average of 6.2 days lost per year for employees with high engagement vs. 13.5 days lost per year for the disengaged

49%

operating margin fewer days

lower retention risk


What does this mean for the future of the workforce?


A need for new skills in the future

Digital Skills

Agile Thinking

0%

10%

20%

30%

40%

50%

60%

70%

Total Americas APAC MEA Europe

Ability to consider and prepare formultiple scenariosInnovation

Dealing with complexity and ambiguity

Managing paradoxes, balancingopposing viewsAbility to see the “big picture”

0%

10%

20%

30%

40%

50%

60%

70%

Total Americas APAC MEA Europe

Digital business skills

Ability to work virtually

Understanding of corporate IT

Digital design skills

Ability to use social media and web 2.0

Source: Talent 2021.


A need for new skills in the future

Interpersonal and Communication Skills

Global Skills

0%

10%

20%

30%

40%

50%

60%

TOTAL Americas APAC MEA Europe

Co-creativity and brainstorming

Relationship building (with customers,partners, government, etc.)Teaming (including virtual teaming)

Collaboration

Oral and written communication

0%

10%

20%

30%

40%

50%

60%

TOTAL Americas APAC MEA Europe

Ability to manage diverse employees

Understanding international markets

Ability to work in multiple overseaslocationsForeign language skills

Cultural sensitivity

Source: Talent 2021.


Ready for What’s Next...

Shape workEnvironment

thatengages,

enables andenergizesover time

Think more broadly and

creativelyabout where

talent is sourced

Embrace the virtual

workplace andmaximize mobility

and flexibility

Invest more heavily

in retraining and

reskilling (security in opportunity)

Rethink andrestructure

howcertain work

isaccomplished

Engaging environment

Talent sourcing

Virtual workplace Re-skilling Rethinking

work


What does this mean for the Future of HR?


A shift from delivering services toeducating, enabling and equipping business leaders

Evidence Based Change . . . A Mindset and Approach

Segmentation Integrationand Synergy OptimizationLogic-Driven

Analytics Risk Leverage

Strategically categorize workforce segments

Understand pivotal segments to advance business priorities

Manage unique segments holistically

Understand how to leverage the unique capabilities of different BUs and other organizations

Focus on “collaborative production”

Prioritize investment where returns are greatest

Enable the business to seamlessly manage the entire “continuum of work”

Identify the pivotal issues associated with getting work done and the revenue, cost and risk implications

Robust analytics to bring focus to issues and root cause

Identify and analyze risk associated with alternative talent pools

Identify the tradeoffs and the “risks worth taking”

Superior business outcomes are achieved when these principles are evident

1 2 3 4 5


Bring the same level of rigor tohuman capital planning as you do to business planning

Are you measuring the impact of your talent decisions relative to business objectives and results?

Do you measure in single dimension or focus on the few critical linkage points?

Do you measure success through traditional metrics or the desired business outcome?

Getting the numbers right is just the beginning. The “magic” happens when measures and analysis are combined with the logic of knowing where to look for the important connections and the savvy of knowing when a story is better than a number (for example, framing a talent problem using the metaphor of a supply chain would likely motivate managers to think about it more critically)

Ensure common frameworks and mental models for analyzing issues and defining success


The evolution of segmentation:

Granularity and sophistication have greatly evolved, allowing us to address key questions such as: What employee behaviors does the business model require, and how

can we effectively elicit those behaviors from different segments? Where does exceptional talent really make a difference versus where

does good enough suffice? What behaviors do we need to change (e.g., healthier lifestyles,

increased retirement savings) to improve program effectiveness and ROI?

Organization: Key drivers and performance expectations Pivotal versus proficiency rolesPotential

Life stagesAttitudinal

DemographicsPerformanceJob roles

Rank and File vs. Executives Employee:

Preferences, values, behaviors Lifestyles and life choices

Limited Traditional Microsegmentation: Two perspectivesEmerging


Microsegmentation enables us to identifythe organization requirements for talent in various roles

Example: Airline Industry

Pivotal role analysis, a key element of segmentation, helps organizations determine how talent in different roles contributes to business value and where having “great” talent versus “good” talent can make a difference

Employee Performance

CustomerLoyalty

Airline Pilots

Having more higher performing airline pilots will not yield additional business value (defined as customer loyalty) to the organization

Flight Attendants

Employee Performance

CustomerLoyalty

Because airlines maintain competitive advantage by differentiating the customer experience, flight attendants are a pivotal employee segment. Higher levels of performance yield significantly greater customer loyalty


Create integration and synergy

How to we meet our talent needs without building up cost and infrastructure How do we tap into a unique ecosystem that ensures an optimal

supply at the right cost

Transcend the typical organization construct to create integration and synergy through “collaborative production” across: Organizations Functions and Business Units


Be prepared to deal with risk in a very different way

What’s known today and what’s is

unknown

Plan for different scenarios


Optimize the sources of work

How to we seamlessly move work across multiple delivery platforms and employment relationships to optimize Capacity and Capability Cost Risk (and control)

How does HR exercise governance and control across these multiple relationships

Full time, onsite

Independent contractor / free agent

Full time, virtual

JV/Partner entity

Outsourced/Offshored


Optimization

Transforming

Differentiated treatment for different areas of HR in annual budget reviews

Frequent review of HR priorities and shifting of resources and budget to them

Investments in select areas can go up and down over time with changing business priorities

Portfolio management concepts combined with workforce segment understanding

Tools and process in place to facilitate collaborative decision-making to achieve optimization beyond just buy-in

0

Increase in Indicated Results from Current Level(Percentage)

Increase in investmentfrom current level

Decrease in investmentfrom current level

Same investment with improved

resultsLower

investment, same results

10%

20%

30%

40%

Current levels of investment and

results

Increased investment and

improved results

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