Cross-Border Executive Mobility as a Strategic AdvantagePeople Risk Mitigation And Leadership Development Lessons from the Top Companies for Leaders

Cincinnati Chapter

European American Chamber of Commerce

27 September 2012

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AON: The Global Risk Advisor and Human Resource Solutions Provider

Aon Benfield (Reinsurance)

Aon HewittAon Risk Solutions

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and Advisory Claims Advocacy

and Administration Captive

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~3,500 Colleagues Analytics and

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Reinsurance Investment

Banking Practice Groups Client Services Treaty

Reinsurance120 Countries

500 Offices

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Agenda

People Risk What is People Risk and What is Measured?

High and Low Risk European Cities

Recruitment, Employment and Redeployment Risks

Case Study

Top Companies for LeadersAbout Our Research

Global Mobility Overview- Key Trends

Global Mobility Philosophy and Process:

-How Top Companies Develop Leaders through Cross Border Assignments

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What is People Risk and Why is it Important?

Human capital risk is seen to be the most significant threat to global business operations1.

As companies become more global, there is an increasing need for understanding location profiles for talent.

Talent pools vary across locations and thus companies have to adjust their talent strategies to address the risks associated with talent in those locations.

1 Best Practices in Risk Management: A Function Comes of Age: A report from the Economist Intelligence Unit Sponsored by ACE, IBM and KPMG

Key People Risk Issues

How Can We…

Manage the risks of relocation to lower-cost locations?

Identify the appropriate leader for a new operation?

Cope with talent and skills shortages?

Improve workforce planning for global expansion?

Source qualified and experienced talent globally?

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Measuring People Risks – The 30 Factors

Areas of People Risk People Risk Factors

Demographics1. Working age population size2. Immigration/Emigration3. Workforce productivity

4. Aging population5. Availability of future workforce

Government Support6. Future workforce planning7. Terrorism and political risk8. Violence & crime

9. Government relations10. Corruption

Education11. Literacy rate12. Capacity of education system13. Secondary school graduates

14. Tertiary education enrollment15. Spending on education

Talent Development16. Quality of entry level talent17. Quality of technical training18. Quality of management training

19. Languages spoken20. Brain drain

Employment Practices

21. Bias and favoritism22. Labor relations23. Staff turnover24. Healthcare benefits25. Retirement benefits

26. Equal opportunity27. Executive recruitment28. Occupational health & safety29. Redundancy restrictions30. Rigidity of personnel cost

https://aonpeoplerisk.com/

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People Risk Index 2012 Covers 76 Countries …

Region Americas

Countries • Argentina• Brazil

• Canada• Chile

• Colombia• Mexico

• Peru• United States

• Uruguay

Region Asia Pacific

Countries • Australia• Bangladesh• Cambodia• China

• Hong Kong• India• Indonesia• Japan

• Malaysia• Mongolia• New Zealand• Pakistan

• Philippines• Singapore• South Korea• Taiwan

• Thailand• Viet Nam

Region Europe, Middle East and Africa

Countries • Algeria• Austria• Bahrain• Belgium• Botswana• Bulgaria• Czech• Denmark• Egypt• Ethiopia

• Finland• France• Germany• Ghana• Greece• Hungary• Iran• Iraq• Ireland• Israel

• Italy• Jordan• Kazakhstan• Kenya• Libya• Morocco• Netherlands• Nigeria• Norway• Oman

• Poland• Portugal• Qatar• Romania• Russia• Saudi Arabia• Serbia• South Africa• Spain• Sri Lanka

• Sweden• Switzerland• Syria• Tunisia• Turkey• Ukraine• United Arab

Emirates• United

Kingdom• Yemen

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…and 131 Cities

AmericasCities

• Atlanta• Boston• Buenos Aires• Chicago• Dallas• Denver

• Detroit• Houston• Lima• Los Angeles• Mexico City• Miami

• Minneapolis• Montevideo• Montreal• New York• Philadelphia• Phoenix

• Rio de Janeiro• San Diego• San Francisco• Santiago• Sao Paulo• Seattle

• Toronto• Vancouver• Washington DC

Asia Pacific Cities

• Ahmedabad• Auckland• Bangalore• Bangkok• Beijing• Cebu• Changchun• Changsha• Chengdu• Chennai

• Chongqing• Colombo• Dalian• Delhi• Dhaka• Guangzhou• Hangzhou• Hanoi• Harbin• Hefei

• Hong Kong• Hyderabad• Jaipur• Jakarta• Karachi• Kolkata• Kuala Lumpur• Manila• Melbourne• Mumbai

• Nanjing• Osaka• Phnom Penh• Pune• Seoul• Shanghai• Shenyang• Shenzhen• Singapore• Suzhou

• Sydney• Taipei• Tianjin• Tokyo• Ulaanbaatar• Wuhan• Wuxi• Xiamen• Xian

Europe, Middle East and AfricaCities

• Accra• Addis Ababa• Algiers• Almaty• Amman• Amsterdam• Athens• Baghdad• Bahrain• Barcelona• Belgrade

• Berlin• Bogota• Brussels• Bucharest• Budapest• Cairo• Copenhagen• Damascus• Doha• Dubai• Dublin

• Frankfurt• Gaborone• Helsinki• Istanbul• Johannesburg• Kiev• Krakow• Lagos• Lisbon• London• Madrid

• Manchester• Milan• Moscow• Muscat• Nairobi• Oslo• Paris• Prague• Rabat• Riyadh• Rome

• Sana'a• Sofia• St. Petersburg• Stockholm• Tehran• Tel Aviv• Tripoli• Tunis• Vienna• Warsaw• Zurich

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10 Highest Risk Cities10 Lowest Risk Cities

Overall People Risk: European Cities

Ranking1 City Rating2

4 London 73

9 Copenhagen 78

14 Zurich 82

16 Stockholm 83

19 Amsterdam 84

19 Oslo 84

32 Helsinki 91

33 Dublin 92

34 Manchester 93

37 Paris 95

1 Out of 131 cities worldwide in People Risk Index 20122 Based on a rating of 30 factors across 5 categories of risk

Ranking1 City Rating2

116 Kiev 168

112 Belgrade 165

107 Athens 160

106 Sofia 158

104 St. Petersburg 155

102 Bucharest 154

90 Moscow 150

88 Istanbul 149

68 Rome 138

67 Budapest 134

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Symptoms of People Risks

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Comparative Risk Associated with Recruitment

Shrinking workforce due to ageing population across Europe

Decrease supply of future talent as the cities are projected to have negative growth in working age population in the next 10 years

Insufficient education spending further increases risk as it reduced the capacity of education system to keep up with market demands for talent

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Comparative Risk Associated with Employment

Lower employment risk for cities in Western Europe

Greater availability of good quality management training institutes (e.g. MBAs) compared to high risk cities

Lower workforce productivity impacts the ability of high risk cities to invest and develop its workforce

Further affected by the insufficient good quality technical and managerial training facilities which increases employment risk.

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Comparative Risk Associated with Redeployment

Lower redeployment risk due to more positive labor relations environment

Transparent government, positive government relations, clarity in employment regulations reduces the risk

Onerous redundancy restrictions and rigidity in reducing personnel costs for organizations facing downsizing or restructuring situations increase the risk of redeployment

People Risk Case Study

Global (European HQ’d) Transportation Company with 20,000 employees.

Respond to global economic downturn with reductions in overall headcount, shifting work to lower cost locations and reducing number of mid and senior level managers.

Staff costs drop but operational efficiency nose-dives. Low-cost sourcing strategy results in higher overall costs.

Hire Aon Hewitt to redesign talent sourcing strategy to increase talent quality, sustain low cost structure and mitigate location risks.

Incorporate client’s quality and performance measures with industry comparatives and the Aon Hewitt People Risk Index.

Location Analysis

Strategy

Shift from its low-cost sourcing strategy to a “balanced sourcing” strategy

Outcome

Increase in talent quality by more than 15%

Talent cost did increase slightly

Overall savings to the company’s operations were estimated to be more than USD $5 million over the next five yearsQuality & Risk

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Aon Hewitt’s Top Companies for Leaders Research

Most comprehensive, global research on leadership in the market, examining the link between leadership practices and financial results

– Explores how organizations set strategies, assess, select, develop, and reward leaders

– Examines the execution of leadership practices, as well as the strategy that guides it

– Thousands of data points and 900 executive interviews in 2011 Research has been conducted in 2002, 2003, 2005, 2007, 2009,

and 2011 marks the 6th iteration

– Study results published in the November edition of FORTUNE Magazine

– Regional studies in North America, Europe, Asia-Pacific, and Latin America, using a consistent methodology and global rollup

2011 Partners: Fortune Magazine and The RBL Group

2011 Top Companies for Leaders Selection Process

478 Global Participants 43 countries

Participants completed detailed questionnaire

Aon Hewitt analyzed responses for strong leadership practices

182 Global Finalists In-depth interviews

with HR leaders

Senior executives interviewed

Aon Hewitt scored data by assigning points to questions and responses

Companies screened for financial performance relative to industry

18-month bad press scan

57 Top Companies

Panel of judges gathered in each region to select and rank Top Companies

Global (Top 25)

North America (Top 25)

Asia-Pacific (Top 20)

Europe (Top 7)

Latin America (Top 5)

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2011 Global Top Companies for Leaders

1. IBM Corporation

2. General Mills, Inc.

3. The Procter & Gamble Company

4. Aditya Birla Management Group

5. Colgate-Palmolive Company

6. Hindustan Unilever Limited

7. ICICI Bank Limited

8. McDonald’s Corporation

9. Whirlpool Corporation

10. PepsiCo, Inc.

11. General Electric Company

12. Banco Bilbao Vizcaya Argentaria (BBVA)

13. Natura Cosméticos S.A.

14. Deere & Company

15. 3M Company

16. Eli Lilly and Company

17. McKinsey & Company

18. L’Oréal

19. Unilever plc

20. Siemens AG

21. Intel Corporation

22. China Vanke Co., Ltd.

23. Wipro Limited

24. Bharti Airtel Limited

25. Novartis AG

Europe Top CompaniesBanco Bilbao Vizcaya Argentaria (BBVA)

L’Oréal Unilever plcArcelorMittalSiemens AG

Raiffeisen Bank International AGNovartis AG

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What Differentiates The Top Company for Leaders—The Four Disciplines

Leaders Lead the Way

Unrelenting Focus on Talent

Practical and Aligned Programs and

Practices

When Leadership Becomes a Way of Life

1 32 4

Senior leaders have a passionate

and visible commitment to

developing leaders

Leadership strategy clearly

reflects the overall business strategy

An intense focus on talent

permeates everylevel of the

organization

The development of leaders is aninstitutionalized practice and

mind-set

Top Companies Understand the Linkage Between Investing in Leaders and Financial Results

Top Companies All OthersSource: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

Top Companies’ Portfolio Approach to Accelerating Leadership Development

AssessmentCustomized, scalable, relevant assessment techniques for different levels of leaders

Stretch Role/Mobility Expanding scope of work or location to broaden horizons

Feedback Structured ongoing well timed developmental feedback

Wisdom TransferTransfer of experiences from an internal or external expert in the area

Learning Labs™ (Theory/Case Practice)

Structured classroom theory, best practices and story telling on competency gaps

Business SimulationSimulation of real world business simulations for application of learnt models and best practices

Action Learning Teams

Cross functional team tasked with a real business critical issue to work together on and present recommendations to the board/top team

CoachingOngoing individual coaching by trained coaches to create a sustainable development journey for leaders

A

M

F

WT

LL

SIM

AL

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Top Companies Actively Work to Build Diversity and Cultural Agility Into Their Development Strategies

Top Companies All OthersSource: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

Actively taking steps to increase representation of the following groups:

Global Mobility OverviewKey Trends in Global Mobility at Top Companies For Leaders 2011

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011 Europe Top Cos Europe All Others

Global Top Companies Global All Others

Of the top 3 skills most critical for future success, global agility occupies the center-stage for developing leaders

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Data reflects responses of organizations who are developing these skills well (4) to very well (5)

Global Mobility Philosophy

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Assess Global Mobility potential at recruitment

Structure & Processes designed to Enable Mobility

Global Assignment as part of Career Plan

Conversations about Life Stage & Emotional Needs

Glopats: Career as a series of International Moves

Mobility early-on to develop Global Perspectives

Global Mobility Process

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Recruit talent considering

mobility needs

Identify talent pool for global mobility

Capability Development

Global assignments as steps of career

development

Think global, act local

Knowledge Transfer

Supported Learning

Developing global mobility

competencies

Cultural Training

On-the job support

International HR Mobility Set-up

Time-bound expectations and

next steps

Thinking beyond the next assignment

Global exposure enabled career path

Sync with life stage

Identify destination jobs

IdentifyIdentify talent pool to staff on global assignments

Top Companies Identify and Strategically Deploy Global Talent Pool

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Intent Action

Global mobility is the strongest predictor of success

• Global mindset is our # 1 priority now.

• We will only win if we can attract and develop the very best leadership talent and they want to come here.

• We find the best talent chose us because of global experiences and career opportunities they will receive.

• Developing Local Leaders with Global Exposure• Hire talent educated from another country, work in U.S., and send back to lead in

home country. Remember these local leaders also need to think of themselves as global leaders too.

Global Top Company (Software & Services)

Using a Dashboard

• Developing HR Infrastructure to support global mobility• Labor supply chain dashboard to monitor staffing requirement and hiring• Staffing requirements can be fulfilled by talent across the world through the

dashboard• Asses longer term talent needs by analyzing which combination of talent sources

and skills best matches the coming business needsOil Refining Company based out of Texas

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

OrientDevelop global perspective by building on diverse experiences

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Top Companies Nurture Future Leaders for Global Assignments

Intent Action

Think global, act local

• Capability Programs incorporate interaction with Global Leaders• “Leading Beyond Boundaries” helps to build the global perspective in learning

without physically moving people. • Recent program involved 30 people, 3 weeks, 1 week at Wharton about strategy,

1 week in Shanghai about emerging markets (explaining strategy for why we invest in this area), 1 week in NY where teams (broken into 4 groups) reported their findings and what they would do differently if they were running the company.

Global Top Company (Food, Beverage & Tobacco)

Align strategy with movement

• Big believer in “Purposeful Experiences” . Consider Several Moves beyond just immediate next move.

• Varying type of mobility assignments going beyond just “an expat fulfilling a role”• Senior Leadership review ‘Cascaded Moves’ monthly for blockers, high potentials

and expatriates• “What might seem like a good immediate move might not be the right move for

this person looking 2 and 3 moves out; this is the really interesting conversation to have, using data and modeling scenarios to support analysis.”

Global Top Company (Software & Services)

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

Top Companies Nurture Future Leaders for Global Assignments

Intent Action

Blend local with corporate

• Develop global talent at emerging markets to mingle with other global talent.

• Emerging markets have three levels of development: Local talent with affiliates, regional talent, and corporate talent.

• In Asia, we put 24 people through General Management Development program. The faculty coaches and observes participants while the program provides opportunities for storytelling and observing leadership at a high level.

Global Top Company (Pharmaceuticals, Biotechnology & Life Sciences)

Cultural exchange with strategic integration

• Custom-Built Exchange Programs for Senior Executives• Global Learning Alliance is a program of exchange, challenge and development

for Senior Executives formed between six international companies aiming to enhance their ability to meet the challenges of global business.

• Two modules – one in Developed Economy and one in Rapidly Developing Economy

• integrates Business Strategy, Talent Management Strategy and Leadership Development priorities.

Global Top Company (Software & Services)

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

On-boardDeploy talent pool on global assignments

Align employee's individual development plans and company's strategic goals

Intent Action

Global Exposure

• The top 100 leaders have, on average, experience in two and a half continents—not countries—different continents

• That gives them more international experience, more exposure to different languages, different cultures, different business environments.

• We believe that it is important for leaders to get experience in different countries, different functions, and different units to help learn to deal with complexity

Global Top Company (Household & Personal Products)

Emotional impact of mobility

• Increasing Self-Awareness in employees to successfully navigate the demands of Career Mobility

• CEO noted she is concerned about the younger talent as “very immobile”. She stated “the workforce has become less mobile than they have ever been”.

• They have addressed this issue in their succession planning by doing extensive 2-3 hour interviews that go beyond just skills and capabilities- they ask questions about aspirations, stage of life, family issues – anything that would impact on career mobility and assignments.

• CEO sees mobility as the key to adaptability - training folks on the new realities of being a global business

Global Top Company (Food, Beverage & Tobacco)

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

Top Companies Support the Employees to Deliver High Performance on Global Assignments

Top Companies Support the Employees to Deliver High Performance on Global Assignments

Intent Action

Targeted experiences and opportunities

• Varied Mix of short-term and long-term assignments for identified individuals (typically CEO/COO Unit head positions).

• Includes 3 – 12 month programs to build global working capabilities outside home country through projects that span across vertical, horizontal, demographic, geographic and stakeholder boundaries .

• Targeted individuals receive early exposure to international education, worldwide transactions, business travel.

• Movement of talent creates deliberate platforms for exchange of expectations, experiences, dialogue, feedback, peer support, coaching/ mentor support and focus groups.

Global Top Company (Telecommunications)

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

DeployLeverage global talent pool for critical and strategic assignments

Place talent with extensive global exposure to long-term leadership roles

Top Companies Use Global Assignments to Prepare Leaders for Destination Jobs

Intent Action

Move Talent with focus on their individual destination

• Planned Experiences for Destination Jobs• The clearest indicator of success is movement and the primary driver of

development is experience. Future leaders receive experiences across business and geographies. It is the manager’s responsibility to ensure that they are ready for their next career step.

• We look 5 or 10 years out and identify positions that are most likely to be open due to retirement, etc. These become “destination jobs” for high potential talent who receive “planned experiences” (i.e. running a global business, international assignment, etc.) to help them reach the destination in a given time period. High potentials in functions (i.e., finance) have accelerated development specifically tailored to their individual needs.

• Global Top Company (Household and Personal Products)

Source: Aon Hewitt’s Global Top Companies for Leaders Study, 2011

Key Questions for Your Organization

Where are you on the leadership journey? Have you clearly articulated a talent or leadership strategy for the organization? Does your current leadership strategy fully support and help drive your business strategy?

What are the key obstacles that impede your leadership practices today? How do you mitigate these? Is your organization identifying the right talent for the right roles, and then providing them with the appropriate

differentiation and development? How is the organization accelerating the development of talent to strengthen your pipeline and retain top

talent? Are you measuring the impact of your leadership processes and investments to ensure successful outcomes

and continuous improvement?

Thank You

Aon Risk Services| September 2012