1–1
MPO699 MANAGING PEOPLE IN ORGANIZATION
TOPIC 06 – RETAINING & ENGAGING YOUR TALENT
Agenda
Global Talent Challenges (GTCs)
Ups and Downs of GTCs
Global Talent Management
Talent: Degree of Inclusiveness
HR Actions for GTM Removing Roadblocks to
GTM Role of HR Implications/Results/
Issues Conclusions References
Global Talent Challenges (GTCs)
GTCs are significant human resource issues GTCs are significant human resource issues that focus on managing a firm to ensure just that focus on managing a firm to ensure just the right amount of the right talent and the right amount of the right talent and motivation, at the right place, and at the right motivation, at the right place, and at the right price, during all economic and financial ups price, during all economic and financial ups and downs in a very competitive worldand downs in a very competitive world
GLOBAL TALENT GLOBAL TALENT CHALLENGES CHALLENGES (cont’d)(cont’d)
for the purposes of for the purposes of balancingbalancing the the workforce with the needs of the firm workforce with the needs of the firm
in the short term, and in the short term, and positioningpositioning the firm to have the workforce the firm to have the workforce
needed in the longer term.needed in the longer term.
MAJOR CONTEXTUAL FORCES MAJOR CONTEXTUAL FORCES AND SHAPERS OF A FIRM’S GTCs AND SHAPERS OF A FIRM’S GTCs
GLOBALIZATION: TRADE, FDI, POLITICAL & ECONOMIC CONDITIONS, COMPETITION, CUSTOMERS, WORKERS
COMPETITIVE DYNAMICS: CONSOLIDATION, MERGERS, ACQUISITIONS, JOINT VENTURES, EXPANSION, RELOCATION
DEMOGRAPHICS: AGE, GENERATIONS, REGIONS
GLOBAL, REGIONAL AND LOCAL WORKFORCE CHARACTERISTICS: COMPETENCIES, MOTIVATION, COMPENSATION REQUIREMENTS, PRODUCTIVITY LEVELS, LEGAL CONDITIONS
CHANGING NATURE OF WORK: MORE KNOWLEDGE AND ENGAGEMENT REQUIRED/USEFUL AT ALL LEVELS
MAJOR FORCES AND SHAPERS MAJOR FORCES AND SHAPERS OF GTCs (cont’d) OF GTCs (cont’d)
AS A CONSEQUENCE OF THESE MAJOR FORCES AND SHAPERS, STARTING IN THE LATE 1990s, THERE WAS A GREAT INCREASE IN GLOBAL ECONOMIC ACTIVITY, THAT CAUSED FIRMS AROUND THE WORLD TO THINK ABOUT…WAR FOR TALENTS!!
PROMPTING FIRMS TO ASK PROMPTING FIRMS TO ASK QUESTIONS LIKEQUESTIONS LIKE::
WHERE ARE ALL THE WORKERS? APPROXIMATELY 40% OF 37,000 COMPANIES ACROSS 27
COUNTRIES FACE CHALLENGING TIMES IN HIRING THE PEOPLE THEY NEED (MANPOWER, 2008)
FOR CEOs SEARCHING FOR INDUSTRY, TECHNICAL AND PARTICULARLY MANAGEMENT SKILLS TO SUPPORT GEOGRAPHIC EXPANSION, THEY RATED “INSUFFICIENT TALENT” AS THE TOP BARRIER TO GLOBAL INTEGRATION EVEN HIGHER THAN REGULATORY AND BUDGETARY HURDLES (IBM, 2008).
ESPECIALLY IN CHINAESPECIALLY IN CHINA
ACCORDING TO A RECENT SURVEY IN CHINA, “88% OF THE CHINESE EXECUTIVES SAID THEIR GLOBALIZATION EFFORTS WERE HINDERED BY THE SCARITY OF PEOPLE WITH REAL CROSS-CULTURAL KNOWLEDGE MANAGING FOREIGN TALENT.
93% SAID THAT CHINESE COMPANIES WOULD NOT ACHIEVE THEIR GLOBAL ASPIRATIONS UNLESS THEY DEVELOPED SUITABLE LEADERS MORE AGGRESSIVELY.
(http://www.mckinseyquarterly.com/How_Chinese_companies_can_succeed_abroad_2131)
BUT VIRTUALLY ALL OVER:BUT VIRTUALLY ALL OVER:
“IF YOU TAKE INTO CONSIDERATION THE 70 MILLION BABY BOOMERS EXPECTED TO RETIRE OVER THE NEXT 15 YEARS (IN THE U.S.), AND ONLY 40 MILLION WORKERS EXPECTED TO ENTER THE WORKFORCE IN THE SAME PERIOD, YOU CAN PLAINLY SEE THAT A SHORTAGE OF WORKERS IS IMMINENT”(ADECCO, 2008). SAME IN EUROPE:
(http://institute.adecco.com/FeatureArticles/Articles/Pages/2008_02_Europes_Looming.aspx)
AND THEN COMBINE THIS WITH THE LEVEL OF MOTIVATION THAT WAS BEING REPORTED:
A MAJORITY OF EMPLOYEES REPORTED TO
BE ONLY MODESTLY ENGAGED:
SO THE GLOBAL TALENT SHORTAGE SEEMED RATHER SIGNIFICANT, BUT
http://www.mckinseyquarterly.com/Leaders_in_the_Crisis_Mckinsey_Global_Survey_Results_2422
BUT TODAY,
IN 2009 MORE THAN 50 MILLION JOBS WORLDWIDE WERE LOST, AND IN 2010…?
VIRTUALLY EVERY INDUSTRY AND SERVICE HAS ELIMINATED JOBS
U.S. AND EU UNEMPLOYMENT WILL AVERAGE 10% OR MORE, AND
WORLD GDP WILL GROW 0%, AT BEST, ALTHOUGH ASIA IS LIKELY TO SEE SIGNIFICANT GROWTH
So Now Different Conditions Today
There was a period of economic and financial boom from the late 1990s until late 2008
Economic and employment conditions have moderated
As a result, global talent challenges today are different
There is a growing concern for location, motivation, and cost
And a talent surplus is as much a reality as a talent shortage
Giving an opportunity to rebalance the workforce: but also pressure and opportunity to do more with less
http://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092
Thus There Are Many GTCs Including:
There is too much talent (or not the right talent) (www.mckinseyquarterly.com/Leaders_in_the_Crisis_Mckinsey_Global_Survey_Results_2422)
There is too little talent
The talent is not motivated (engaged) enough
The talent is in the wrong place (country location)
The talent is at the wrong price, Sohttp://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092
the question today is: What can the question today is: What can be to solve these several GTCs be to solve these several GTCs
(Today and Tomorrow)?(Today and Tomorrow)?The answer is: A systematic use The answer is: A systematic use of HR polices and practices aka of HR polices and practices aka
Global talent managementGlobal talent management
Global Talent Management (GTM)
Defining GTM(cont’d)
Global Talent Management is about systematically utilizing IHRM activities (complementary HRM policies and practices) to effectively manage an MNE’s global talent challenges consistent with the strategic directions of the multinational enterprise in a dynamic, highly competitive, and global environment (Tarique and Schuler, 2010)
More specifically, GTM is about…
Defining GTM (cont’d)
“Planning for, obtaining, selecting, motivating, developing, retaining, reducing and removing individuals based on competencies and motivation levels consistent with strategic directions and degree of inclusiveness of the multinational enterprise in a dynamic highly competitive global environment.”
(Schuler, Jackson and Tarique, 2011)
Does GTM Apply to Everyone?
Some Say:
Companies, Line Managers, and HR should focus their efforts on “A” Players in “A” positions.
“B” Players with “A” potential should also be considered for development assignments.
Companies should focus only on “knowledge workers.”
“Today’s competitive environment requires a shift from treating everyone the same to treating everyone according to his or her contribution.” And some others say that:
All Inclusive Approach to Talent
Workforce is composed of multiple layers of talent each contributing to company’s strategic goals and objectives.
Talent Management initiatives should not be limited to only “top management” (“A” positions) or “top” talent (“A” players).
All employees should manage their career path and take advantage of opportunities to advance themselves.
Talent is at all layers of an organization and thus multiple initiatives should be crafted for the entire workforce...
Multiple Layers of Talenthttp://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092
HR Actions (Polices and Practices) for GTM
HR Planning and Forecasting
Location Planning
Job Analysis/Job Redesign
Attraction & Selection
Training & Development
Performance Management
Compensation
Retention
Reduction/Removal
Shortage of Talent
Surplus of Talent
Talent is at Wrong Place
Talent is at Wrong Price
HR Planning and Forecasting
Location Planning
Job Design/Redesign
Attraction/Selection
Training & Development
Performance Management
Compensation
Retention
Reduction/Removal
Linking HR Actions to GTC’s
IMPLICATIONS FOR FIRMSIMPLICATIONS FOR FIRMS
Identify the current global talent challenges: e.g. excess, shortage, inappropriate location or price
Forecast and scenario plan for the near term and intermediate term
Evaluate potential new location choices
Evaluate strategies, such as IM&As, to obtain needed talent
Construct needed HR actions (policies and practices) systematically
Build management and HR capabilities for GTM
http://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092
IMPLICATIONS FOR FIRMS IMPLICATIONS FOR FIRMS (cont’d)(cont’d)
Remove the obstacles to GTM by:
-Building top management commitment to GTM
-Obtain commitment to HR actions from front line
managers
-Improve HR’s impact and
-Realize an effective HR Triad: managers, employees (and
representatives) and HR in and for all HR actions
http://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092
http://findarticles.com/p/articles/mi_qu5427/is_200707/ai_n21286591
RESULTSRESULTS
GAIN/SUSTAIN GLOBAL COMPETITIVE ADVANTAGE
DEVELOP MANAGEMENT LEADERSHIP
DEVELOP HR LEADERSHIP
HAVE THE RIGHT PEOPLE AT THE RIGHT PLACE AT THE RIGHT TIME WITH MOTIVATION (Balance)
GAIN BENCH STRENGTH FOR FUTURE NEEDS AND UNCERTAINTIES (Positioning)
ACHIEVE OPTIMAL STAFFING LEVELS. SHORT TERM, MEDIUM TERM AND LONG TERM
MAJOR ISSUES MAJOR ISSUES
Should GTM apply to all employees? How inclusive should you be or do you need to be?
Can you have multiple sets of HR actions for different groups of talent?
Will it cost too much?
What happens if we don’t do it?
Can managers and HR work together?
Do we have the desire to reduce barriers?
Is there an end to GTCs and need for GTM?
Conclusions
GTCs are significant human capital issues that focus on GTCs are significant human capital issues that focus on managing a firm to ensure just the right amount of the right managing a firm to ensure just the right amount of the right talent and motivation, at the right place, at the right price, talent and motivation, at the right place, at the right price, when at times there may be shortages and other time when at times there may be shortages and other time surpluses.surpluses.
Talent is defined as the competencies and motivations of current and future employees in relation to the firm’s current and future strategic business goals.
GTM is about using HR policies and practices to systematically manage a MNE’s GTCs.
Conclusions (cont’d)
But still concern for talent, motivation, location and priceBut still concern for talent, motivation, location and price
There are several HR Actions in response to managing the There are several HR Actions in response to managing the GTCGTC
HR must determine and prioritize which HR Actions to HR must determine and prioritize which HR Actions to take depending on the current state of the GTCtake depending on the current state of the GTC
HR must determine if the company should include all HR must determine if the company should include all layers of talent in HR Actions or differentiate based on layers of talent in HR Actions or differentiate based on position/performance position/performance
TALENT DEFINEDTalent is defined as the competencies of current and
future employees in relation to the firm’s current and future strategic business goals. Having
“talent” thus means that a firm has the employees who possess the desired position characteristics and requirements needed to
achieve the business goals.
TALENT DEFINED (cont’d)
Talent is thus different from performance, and is related to the person and not the position. The
terms “A” and “B” players refer to the performance of persons, who might perform
better if they have more “talent.” In turn these terms are separate from “A” and “B” positions.
Part II: HR Policies and Practices Part II: HR Policies and Practices for GTMfor GTM
The following slides offer specific examples of HR policies and practices for GTM that can be used by firm to manage their GTCs for short term balancing and long term positioning.
These are left for perusing when time permits.
HR Planning and Forecasting
During a recession, McKinsey found that 55% of companies surveyed are less able to make satisfactory forecasts about their sales due to an economic recession.
If sales are not accurately forecasted, this makes forecasting talent much more difficult.
http://www.mckinseyquarterly.com/the_crisis_Mobilizing_boards_for_change_2300
HR Planning and Forecasting
Hugh Courtney suggested that managers today face more uncertainty in their decision making than ever before. Past trends can no longer be used to forecast the future. Information from a few sources is no longer enough.
Consequently decision making today is much more challenging.
Companies need to use scenario-planning: making descriptions of possible future scenarios, the conditions under which each is likely to occur, and what companies need to do to confront these conditions. Need to do for HRP/F.
http://www.mckinseyquarterly.com/Strategic_planning_Three_tips_for_2009_2340
htthttp://www.nytimes.com/2009/04/28/books/28kaku.html?_r=1&pagewanted=printhttp://www.mckinseyquarterly.com/fresh_look_at_strategy_under_uncertainty_2256http://knowledge.wharton.upenn.edu/article.cfm?articleid=2298http://www.nytimes.com/2009/07/29/technology/companies/29ibm.html?_r=1&pagewanted=print
Location Planning
Business Strategy
LocationChoices
Location Planning
COUNTRY CHOICE ASSESSMENTS: GENERAL FACTS OF THE COUNTRY (www.economist.com/countries)
ATTRACTIVENESS OF COUNTRY TO BUSINESS (www.doingbusiness.org)
COMPETITIVENESS FACTORS (www.imd.ch/research/centers/wcc/index.cfm)
FLOWS/LEVELS (www.census.gov/foreign-trade/balance/)
LABOUR MARKET CHARACTERISTICS (www.doingbusiness.org)
HR POLICIES AND PRACTICES (ACTUAL/LIKELY) www.ilo.org; www.bcg.com; www.ddiworld.com/pdf/ddi_theglobalizationofhrpractices_es.pdf)
)
Location Planning
Company Example: IBM
IBM’s American employment has been on a steady decline
US employment now makes up 29% of its worldwide payroll
Yet, IBM reported that it’s workforce in Brazil, Russia, India & China have risen significantly These countries have faster growth markets and less
expensive skilled labor than the UShttp://www.nytimes.com/2009/03/06/business/06layoffs.html?pagewanted=2&_r=1&sq=IBM%20and%20layoffs&st=cse&scp=1
http://www.ibm.com/us/http://www.ibm.com/us/
Location Planning
Company Example: Hanes
“Hanesbrands Relocates Manufacturing to Asia”
http://www.pbs.org/newshour/bb/business/jan-june09/hanes_02-19.html
Job Design/Redesign
Research indicates when trying to increase efficiency by simplifying jobs it may actually lead to turnover and lower productivity
Autonomy in the job often leads to better performance
Cross-functional work leads to greater overall satisfaction
http://moss07.shrm.org/Publications/HRNews/Pages/CMS_023204.aspx
Job Design/RedesignCompany Example: Cisco SystemsCompany Example: Cisco Systems
In the 2001 recession, Cisco took a unique approach to downsizingIn the 2001 recession, Cisco took a unique approach to downsizing
The company was forced to eliminate 8,500 jobsThe company was forced to eliminate 8,500 jobs
Cisco redesigned roles and responsibilities to increase cross-functional Cisco redesigned roles and responsibilities to increase cross-functional alignment and reduce duplicate rolesalignment and reduce duplicate roles
A more collaborative environment increased employee satisfaction during A more collaborative environment increased employee satisfaction during turbulent timesturbulent times
Those employees who were laid off received severance packages, Those employees who were laid off received severance packages, outplacement and were paid 1/3 of their salary if they opted to work for a outplacement and were paid 1/3 of their salary if they opted to work for a local charitylocal charity
http://www.mckinseyquarterly.com/Upgrading_talent_2260
Job Design/Redesign
OVERALL FINDINGS: EMPLOYEE ENGAGEMENT, RETENTION, AND PRODUCTIVITY (& OVERALL FINDINGS: EMPLOYEE ENGAGEMENT, RETENTION, AND PRODUCTIVITY (& LOWER COSTS) IMPACTED BY:LOWER COSTS) IMPACTED BY:
LEVEL OF RESPONSIBILITYLEVEL OF RESPONSIBILITY
DEGREE OF AUTONOMYDEGREE OF AUTONOMY
SPAN OF CONTROLSPAN OF CONTROL
CROSS-FUNCTIONAL RELATIONSCROSS-FUNCTIONAL RELATIONS
TEAM DIVERSITY AND TRAININGTEAM DIVERSITY AND TRAINING
Design/Redesign and Global Teams
Global Corporations must function as a transnational Decisions and responsibilities should come from all of the
locations
One method for accomplishing this need is through Global Teams (that are well trained) Global Teams, work through time zones, geographical locations,
and cultural affiliations, that is, they are diverse“Diverse teams are superior to mono-cultural ones in terms of
business performance”- Martina Schwinger, Diversity Management & Mediation, Novartis
www.culturalnavigator.com
Attraction & Generationshttp://www.strategy-business.com/li/leadingideas/li00113
http://www.fastcompany.com/magazine/16/mckinsey.html?page=0%2C1http://institute.adecco.com/FeatureArticles/Articles/Pages/2008_02_Europes_Looming.aspx
Generation Motivators
Veterans Value Respect, part-time hours, temporary employment
Baby Boomers Feel needed, be part of a team, training, flexible retirement options
Generation X Immediate feedback, flexible work environments, results focused
Generation Y Mentors, work with bright people, learning opportunities, work/life balance
Attraction and Generationshttp://www.fastcompany.com/magazine/16/mckinsey.html?page=0%2C1
Developing Value Propositions to Increase Attraction Defining and explaining why talented workers might opt to work
at Company X as opposed to Company Y Having only one Value Proposition may not be enough anymore Successful companies target varying generations using different
methods and unique value propositions For example, Tesco, breaks out its recruiting website based on
stages in career- and tailors recruiting materials depending on the audience
http://www.tesco-careers.com/home
http://www.mckinseyquarterly.com/Making_talent_a_strategic_priority_2092
Selection
Selection is a key activity to find the most appropriate candidate for the job/position. Without effective selection systems in place global talent management is impossible to do as effectively as required in today’s globally competitive environment. Once done, an effective process of on-boarding must begin.
http://www.fastcompany.com/magazine/84/playbook.html
http://www.nytimes.com/2009/07/19/business/19corner.html?_r=1&pagewanted=print
Selection
Training & Development
Company Example: Novartis
As a global company, Novartis’ goal is to enhance sensitivity
Offer a program called “Leading Global Teams” that Provides a generalization of national culture, and organizational
culture of different business units Utilizes a tool called Cultural Orientations Indicator (COI)
Includes 10 dimensions- each contain a cultural continuum measuring preferential styles of behavior and allows comparisions across country cultures
www.culturalnavigator.com
Training & Development
Training & Development
Key In The Success Of Novartis’ Pay For Performance Management System and Talent Management Is Training Line Managers In:
Setting Objectives
Coaching Skills And Process
Managing For Performance Improvement
http://www.novartis.com
Performance Management
Companies such as Novartis, view Performance Management as central to their Global Talent Management Activities
At the heart of their Performance Management is a system that: Grades Employees and Matches their compensation
to:1. Business Results (“The What”)2. Values & Behaviors (“The How”)
Performance Management
Each of the two performance dimensions (values & behaviors and results) are rated on a three-point scale. 1- poor performance 2- satisfactory performance 3- Superior Performance
Some of the Values & Behaviors consist of: Results Driven Exercising Leadership Demonstrating Empowerment and Accountability
Performance Management
Employees/Managers urged to solicit “multi-rater” feedback
Performance Calibration Meetings are held annually Ensure cross-functional equality Review, Measure and differentiate performance of associates in
a structured, thorough and consistent way Foster trust in the organization by being open about employee’s
performance
SUPERIOR RESULTS , UNSATISFACTORY BEHAVIOUR
SUPERIOR RESULTS EXCEPTIONAL PERFORMER E
XC
EE
DE
D E
XP
EC
TA
TIO
NS
Associate consistently contributes at a superior level of performance on all job objectives, however, performance falls be low expectations on Novartis values/behaviours.
Associate consistently contributes at a superior level of performance on all job objectives and also demonstrates the Novartis values/behaviours.
Associate consistently contributes at an exceptional level of performance on all job objectives and the Novartis values/behaviors Recognized as a role model bothWithin their group and in a widerpopulation.Few associates achieve this level of performance.
GOOD RESULTS , UNSATISFACTORY BEHAVIOUR
STRONG PERFORMER SUPERIOR BEHAVIOUR
FU
LL
Y M
ET
EX
PE
CT
AT
ION
S
Associate fully meets expectations on all job objectives, however, performance falls below expectations on Novartis values/behaviours.
Associate fully meets expectations on all job objectives and the Novartis values/behaviours. This is a positive and fully acceptable level of performance.
Associate consistently demonstrates superior behavior and fully meets expectations on all job objectives.
UNSATISFACTORY PERFORMER GOOD BEHAVIOUR ,
UNSATISFACTORY RESULTS SUPERIOR BEHAVIOUR ,
UNSATISFACTORY RESULTS
O
BJE
CT
IVE
S
PA
RT
IAL
LY
ME
T
EX
PE
CT
AT
ION
S
Associate performance falls considerably short in relation to job objectives and the Novartis values/behaviours despite repeated explanations /coaching.
Associate fully meets expectationson Novartis values/behaviors, however, performance on job objectives falls below expectations.
Associate consistently demonstrates superior behaviour, however, performance on job objectives falls below expectations.
PARTIALLY MET EXPECTATIONS FULLY MET EXPECTATIONS EXCEEDED EXPECTATIONS
NOVARTIS VALUES /BEHAVIOURS
1.1
3.3
2.3
1.3
3.2
2.2
1.2
2.1
3.1
Associate fully meets on all
objectives, over-achieves on key objectives, out-
spoken role model on values and
behaviors.
Associate fully meets on all
objectives, over-achieves on key
objectives, demonstrates the
majority of values and behaviors
Associate fully meets on a
majority of key objectives,
demonstrates the majority of values
and behaviors.
Associate fully meets on all objectives,
over-achieves on key objectives, does not demonstrate values
and behaviors
Associate fully meets on a majority of key job objectives, does
not demonstrate values and behaviors
Associate does not meet on a majority of key objectives,
does not demonstrate values
and behaviors
Associate does not meet on a majority of key objectives, out-spoken role model on values and behaviors.
Associate does not meet on a majority of key
objectives, demonstrates the majority of values
and behaviors.
Associate fully meets on a majority of key objectives, out-spoken role model on values and behaviors.
Novartis Case- Nine- Box Grid
Performance/Potential (OTR)High Professional/ Master
ContributorConsistently produces exceptional
results and high performance ratings. Knows current job extremely well. May not effectively adapt to new situations.
Low PerformerNot delivering on results as
expected. Does not adapt to change well and may be a blocked
personal learner.
Inconsistent PerformerDelivers results inconsistently. Knows the job, and may be a passive learner.
May adapt to new situations if necessary.
Adaptable Key PerformerConsistently meets expectations. Knows
current job well and enhances skills as appropriate. Can adapt to new situations
as necessary.
Adaptable High Performer/ High Professional
Consistently produces exceptional results and high performance ratings. Knows the job well and continuously enhances skills.
Adapts to new situations if necessary.
Strategic StarOutstanding, clearest example of superior performance and potential. Has the ability
to take on major stretch assignments in new areas. Will challenge the
organization to provide growth opportunities fast enough.
Rising StarConsistently meets expectations.
Knows the job well and enhances skills as appropriate. Has the ability to take on new and different challenges on a
consistent basis.
Diamond in the RoughDelivers results erratically. Has
demonstrated potential but is not living up to it.
POTENTIAL
PERFORMANCE
Less learning agilityLess learning agility More learning agilityMore learning agility
Less than Less than effectiveeffective
Highly Highly effectiveeffective
Key Performer/Solid Professional
Consistently meets expectations. Knows current job well. May not
effectively adapt to new situations.
0Not
Classified
Performance ratings (not OTR) have a large impact on associates’ compensation.
Initially employees’ base salary and target incentive are driven by market data
High performers (3,3) may be eligible for almost double their base salary in their annual bonus
Conversely, low performers do not receive a salary increase or a bonus
Compensation- Pay for Performance
Compensation- Pay for Performance
Annual Salary
XTarget
Bonus %
Indiv.Perf.
Modifier1
GlobalBU
Modifier2
= PayoutX X
Annual Base Salary $50,000Target bonus 10%
Individual rating 3.2Individual Factor 120%
Business Factor 110%
Performance related:Job related:
BONUS PAYOUT = $6,600
Company Example: Novartis Incentive Program
Strategic Plan
Individual
Objective
SettingYear – endPerformance
Review
Development
Planning
Mid-year
Review
Self-Assessment/
Initial Discussion
BU OGSM
OTR
“Talking
Talent”
Business Performance Cycle
Calibration
“Talking
Performance”
“Talking
Reward” Reward &
Motivate to
“Raise the bar”
Career Discussion
BU Objectives
BU team set objectives for
BU mgt team member
BU
Quarterly
Review
BU
Quarterly
Review
BU
Year end
Review
BU
Quarterly
Review
Retention Retention remains important, but more difficult:
During recessions companies show decreased earnings and dropping stock prices which reduce the value of employees annual incentive and long-term incentive plans
As a result companies struggle to find alternate retention strategies to keep employees feeling valued and motivated
Deloitte survey revealed that companies are using alternate retention strategies to “improve employees’ financial picture and work experience” 59% implementing flexible work-arrangements 22% to create a stand-alone bonus pool for the plan year 34% to introduce compressed work weeks 14% adopted/changed severance package in response to recession
http://www.deloitte.com/dtt/press_release/0,1014,sid%253D2283%2526cid%253D229269,00.htmlhttp://www.managesmarter.com/msg/content_display/incentive/e3iab3b217aa919c5ef2876a9be96859c60?imw=y
Retention
Company Example: Novartis’ Challenge with Retention in China
Situation: Novartis was typically hiring talented young professionals in China who then started with low productivity
These employees underwent 12-18 months of training and ended with high productivity
But with the training and multinational experience they moved to another company for salary/career advancement
Novartis’ solution: to offer stock grant programs with multi-year vesting periods. Also to offer long-term educational support and flex-time for employees who remained with the company.
Result: Turnover decreased from 20.1% in 2006 to 17.6% in 2007
Reduction/Removal
Alternatives To Removals (redundancies):Alternatives To Removals (redundancies):
1.1. Reduce Workweek- Reduce Workweek- Can Can Reduce Payroll Costs By 20%.Reduce Payroll Costs By 20%.
2.2. Extend Time Off/Defer Hiring/Work for Free Extend Time Off/Defer Hiring/Work for Free Have Workers Take 3 Weeks Unpaid Vacation.Have Workers Take 3 Weeks Unpaid Vacation.
3.3. Mergers and acquisitions-Mergers and acquisitions- e.g., Merck/SP reduced workforce by 15% of 100k: savings of $3.5be.g., Merck/SP reduced workforce by 15% of 100k: savings of $3.5b
4.4. Shut down the business for a short period of time: Honda Shut down the business for a short period of time: Honda
http://moss07.shrm.org/hrdisciplines/businessleadership/articles/Pages/AlternativestoLayoffs.aspxhttp://newsvote.bb.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/business/8102862.stm?ad=1
Reduction/Removal
Company Example: Honda UK Honda plant stops production for four months
Response to downturn in the UK car market- profits dropped 89%
Workers at the plant will receive 100% pay for the first two months
After that, workers will receive approximately 65% of their pay for the next two months
Workers will owe the time back when the plant re-opens
This affects 2,500 out of 3,700 employees at the plant
Competitors are also announcing production cuts
Reduction/Removal
Unite Union officer Reactions
http://news.bbc.co.uk/2/hi/business/7833280.stm
Workers Reactions
http://news.bbc.co.uk/2/hi/business/7859863.stm
http://news.bbc.co.uk/2/hi/uk_news/england/wiltshire/8076430.stm
Reactions to Honda Plant Closing
Reduction/Removal
Additional Alternatives to Removal5. Hiring Freeze6. Don’t renew contracts with Contingent workers7. Two-tier flexibility: raises for some, but not others8. Offer Early Retirement; reduce savings contributions9. Offer Job Sharing10. Reduce or Eliminate Overtime11. Reduce/Freeze Salaries/Obtain government support (http://www.nytimes.com/2009/06/16/business/global/16labor.html?_r=1&pagewanted=print)
12. Retrain employees for new positions; change business model (http://www.nytimes.com/2009/07/12/business/global/12german.html?_r=1&pagewanted=print)
13. Repatriate sooner than planned14. Use global sourcing (http://whatmatters.mckinseydigital.com/globalization/global-sourcing-in-a-world-less-
flat)
MAJOR ISSUESMAJOR ISSUES
GLOBAL ECONOMIC SLOWDOWN: FOR HOW LONG?
HOW LONG?HOW LONG?
“The world GDP gap (between the possible and the actual) will continue to grow for the next 2-3 years.”
Stephen Roach, Chairman
Morgan Stanley Asia
Before the Chinese American Committee on Economic and Security, 02.17.09
Also see, The Economist, July 4, 2009: 74: “Uncertainty over the size of the output gap complicates the task of central banks.”
“A” Players and “A” Positions
“A” Positions
Have Strategic Impact
Variability of Performance
Critical impact on the formation of one or more of the strategic capabilities needed to execute the firms strategy
Can vary from call center to software engineer jobs depending on firm’s strategy
“A” Players
Make disproportionate contribution to success of company strategy
Top performers in the company
Provide significant value to the company
Not easily replaceable
Knowledge Workers Increasing amount of “knowledge work” requires increasing number
of “knowledge workers”
Require special skills gained via extensive schooling and training and have a heavy impact on the success of the company
Responsible for “tacit interactions” Rely on judgment, knowledge and context
60% of US labor force engaged in tacit interactions
But increasingly more jobs (positions) will require judgment and knowledge (“talent”), thus
http://www.mckinsey.com/aboutus/mckinseynews/knowledge_economy.asp
Organizational Linkages
Company Example: Nokia
Nokia relocated from Germany to Cluj, Romania
“Labor Costs are ten times less in Cluj, Romania”
Romanian labor force is both competent and knowledgeable; from local technical university for engineers
http://www.eetimes.eu/205800046