Harry C. Osle Principal, Global HR Practice Leader The Hackett Group HR EXCELLENCE: National Association of Wholesaler-Distributors

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1 Harry C. Osle Principal, Global HR Practice Leader The Hackett Group HR EXCELLENCE: National Association of Wholesaler-Distributors

2 Agenda Introductions and Overview HR Trends and Insights World-Class HR Service Delivery Model Innovation and HR How Does HR Become a Strategic Enabler of Innovation? Q&A

3 Who is The Hackett Group? Global leader in full transformation lifecycle assistance: Operations improvement strategies Service delivery model assessment and design Solution implementation Hackett Value Grid We address both efficiency and effectiveness improvements to enable strategic business objectives Our insights are fact based, from over 5,000 benchmark studies and consulting engagements Our Best Practices Intelligence Center is a significant differentiator and enabler. It contains: 20,000+ performance metrics updated annually 1,600+ best practices across 95 business processes 1,000+ best practice-based process maps, requirements and configuration guides 1,000+ case studies, implementation examples and research We Serve 97% of the Dow Jones Industrials and 88% of the Dow Jones Global Titans with offices in North America, Europe, India and Australia Best Practices Conference 3

4 The Journey to World-Class is Based on Facts and Best Practices - Use Big Data to learn from others Measure Performance Implement the right Improvement Initiatives Achieve and Sustain World-Class Performance Hackett provides a structure and process that allows you to reduce SG&A costs by: Assess current performance at function and process level Develop desired future state and priorities Quantify cost opportunity Define the key performance improvement opportunities Hackett defines an enterprise strategy and vision defining the changes necessary to transform the organization Determine the priorities: cost driven, effectiveness driven, or both? Understand degree of process standardization, automation, and controls to leverage Determine Service Delivery Model and organization readiness for change Balance priorities and manage risks Hackett develops a value case for change which defines short and long term opportunities / savings Measure progress over time and against World-Class performers Build a culture of continuous improvement Understand emerging best practices Build peer to peer network Best Practices Conference 4

5 Hackett Uses a Process Framework to Define HR Process Category Process Group Process Transactional Employee Life Cycle Planning and Strategy Total Rewards Administration Health & Welfare Administration Pension & Savings Administration Compensation Administration Payroll Services Payroll Administration Time & Attendance Data Management, Reporting & Compliance Employee Data Management and HR Reporting Compliance Management Staffing Services Recruiting and Staffing Exit Process Workforce Development Services Transferable Skills Non-transferable Skills* Career Planning & Performance Management Organizational Effectiveness Services Organization Design and Development Employee Relations Labor Relations Total Rewards Planning Benefits Planning Compensation Planning Strategic Workforce Planning Workforce Gap Assessment Leadership Gap Assessment = Talent Management Management and Administration Function Management Best Practices Conference 5

6 Human Resources Impact Why Does it Matter to be World-Class in HR? EFFECTIVENESS Transactional Processes: 69% fewer Data Management, HR Reporting & Compliance errors 61% fewer Payroll administration errors 50% fewer Health and Welfare administration errors 75% fewer Time and Attendance errors Talent-related Processes: 10% more time of HR generalists focused on organizational and leadership development, 20% more on developing HR plans and 27% less on routine HR administration 68% more positions filled with internal placements 99% more use of competency profiles to guide the hiring of new employees 33% fewer voluntary terminations per 1,000 employees 225% higher emphasis on "organizational strategy" skills and 90% higher emphasis on "Strategic thinking and analysis" skills among HR managers Hackett Value Grid - HR EFFICIENCY Cost: 28% less expensive overall 34% lower process cost 41% less cost for transaction processing 59% less recruiting & staffing process cost per total hires/placements 35% less Payroll Administration process cost per paycheck Productivity: Use 25% fewer FTEs to support 33% more employees 21% fewer days to fill Manager positions (from position opening to job offer extended) 13% fewer days to fill Professional positions (from position opening to job offer extended) 10% higher Paychecks per Payroll administration FTE 72% higher total placements/hires per recruiting and staffing FTE Best Practices Conference 6

7 Agenda Introductions and Overview HR Trends and Insights World-Class HR Service Delivery Model Innovation and HR How Does HR Become a Strategic Enabler of Innovation? Q&A

8 HR Organizations Will Continue to Evolve The HR Function Needs to Re-invent Itself to Add More Value Talent Agent Change Agent Business Value Creator GBS ESS/ MSS Eliminate Talent provider Efficiency focus without sacrificing effectiveness Change agent for the business Talent provider Efficiency focus without sacrificing effectiveness Business Value Creation Thinner HR Talent provider Focused on driving operational innovation Best Practices Conference 8

9 World-class HR drives greater operational agility Total HR cost per employee, Recession Globalization Anemic job creation Uneven growth? Accelerated globalization? Renewed spending on talent management? $2,500 $2,000 $1,500 +8% -8% $1,000 $500 $ Peer World-Class Best Practices Conference 9

10 2014 Key Issues Study: Actual vs Forecast Business Services Functions Revenue growth Number of staff (FTEs) Operating Budget 6.7% 4.9% Productivity Gap 7.4% Efficiency Gap 6.2% 0.5% -1.3% -0.7% -0.2% projected actual projected Best Practices Conference 10

11 Complexity/cost structure The World-Class Advantage for Human Resources World-Class Playbook Complex matrix management of business unit, region and function Mergers, acquisitions and joint ventures 4thquartile performance 1. Drive Enterprise Process Standards 2. Accelerate Global Business Services 3. Develop Global Talent Management Product and customer diversification Multinational geographic expansion G&A Complexity Lifecycle 4. Expand HRIT Impact 5. Improve Information Value 5. Develop Global 6. Optimize Human Capital Talent Management Single business unit World Class Performance Entrepreneurial development Rapid growth/ increasing complexity Effective Service Delivery Model Process and Technology Rationalization Formation Time and Corporate Maturity Mature organization World-Class HR Organizations focus on better managing complexity, driving operational excellence, and enabling organizational innovation Best Practices Conference 11

12 External Business Drivers that Impact Enterprise Strategy in 2014 are Rooted in Volatility and Risk Demand-side volatility 38% 44% 82% Volatility-related Threat of competition 29% 52% 81% Risk-related Supply volatility incl. commodities prices 36% 34% 70% Volatility-related Talent risk (i.e., lack of access to critical skills) 29% 40% 69% Regulatory risk 23% 40% 63% Risk-related Remaining risk from global economic crisis 20% 42% 62% Financial volatility incl. interest rates, exchange rates 18% 41% 59% Volatility-related Supply chain risk Geopolitical risks 11% 8% 28% 36% 36% 47% Risk-related Critical Moderate Source: 2014 Key Issues Study, The Hackett Group Best Practices Conference 12

13 Organizations Will Look to Transform Service Delivery in Order to Execute Business Strategy Use of tactic to execute business strategy Investing in technology/automation Enhancing data management, BI and analytics 23% 33% 51% 56% 74% 89% Retool business services functions Reducing SG&A cost 22% 49% 71% Manage cost Upgrading talent 22% 48% 70% Realign talent Optimizing vendor base 18% 44% 62% Re-architect service delivery Changing organizational structure 17% 40% 57% Reorganize business services Reducing cost of goods sold 19% 34% 53% Manage cost Establishing end-to-end process ownership 15% 36% 51% Re-architect service delivery Creating a more variable cost structure 12% 35% 47% Manage cost Redesigning global supply chain 9% 33% 42% Re-architect service delivery Critical Moderate Source: 2014 Key Issues Study, The Hackett Group Best Practices Conference 13

14 Top HR Issues for 2014 Will Focus on Three Dimensions Business Partnership Talent Management Technology & Information Enhancing HR business partnership Participating in strategy formation for the business 77% 71% Defining a forwardlooking workforce strategy Improving talent management capabilities Adapting talent management strategy and process to deal with change 77% 77% 68% Improving the quality of HR data analysis and reporting Leveraging technology to improve cost effectiveness and performance 64% 64% Improving executive development 64% Retaining staff in key positions and with critical skills 62% Structuring HR to deliver more efficiently/effectively 73% Source: 2014 Key Issues Study, The Hackett Group Best Practices Conference 14

15 Changes Anticipated in Talent Management Employee performance evaluation policies and practices 40% 40% 80% Strategic workofrce planning (analytical, forecasting and planning activities to project 30% 45% 75% Recruiting and staffing 20% 45% 65% Rewards programs (compensation, benefits, etc.) 5% 60% 65% Training and development programs 20% 40% 60% Job profiles and competencies 15% 45% 60% Succession planning for the entire company 30% 25% 55% Career pathing and progression 16% 32% 48% Comprehensive Moderate Source: 2014 Key Issues Study, The Hackett Group Best Practices Conference 15

16 HR Technology and Information Initiatives for % 35% 40% 50% 30% 35% 5% 5% 5% Improve information and KPIs needed to manage HR function performance Improve integration of planning processes/data between HR and operational areas Improve capabilities (systems and skills) to analyze and interpret HR performance information Top Priority Major Initiative Planned Source: 2014 Key Issues Study, The Hackett Group Best Practices Conference 16

17 Planned Increases in Measurement of HR Performance ROI of Learning & Development HR Cost per Process (e.g., cost per hire) ROI of HR 5x 56% 3.6x 61% 3x 50% 11% 17% 17% Impact of Retention Programs Performance Management TMO Achievements Workforce Productivity Impact of Employee Engagement Activities 2.6x 17% 44% 2.5x 22% 56% 2.2x 28% 61% 2x 33% 67% Best Practices Conference 17

18 Agenda Introductions and Overview Human Resources Trends World-Class HR Service Delivery Model Innovation and HR How Does HR Become a Strategic Enabler of Innovation? Q&A

19 Designing and implementing a holistic Service Delivery Model is a critical step in an enterprise optimization strategy Enterprise Service Delivery Strategy Strategic Alignment Service Delivery Model Service Delivery Transformation Organizational Capabilities Governance & Organization Information Service Placement Organizational Acceptance Performance Goals Skills & Talent Service Delivery Process Sourcing Execution Capabilities Design & Operating Principles Enabling Technology Process Design Implementation Roadmap Source: The Hackett Group SDM v1.1 A strategy for what work is executed where, by whom, and its business benefit Best Practices Conference 19

20 World-Class HR Service Delivery Composite Model Business Unit Business Unit Business Unit Business Unit Business Unit HR Relationship Teams (Strategic Business Partners, Service Brokers, Field ER/LR) Vendor Vendor HR Centers of Excellence Design, Planning, Specialist Services Organizational Development Learning and Development Performance Management Organizational Effectiveness & Change Total Rewards/Incentives Compensation Planning Benefits Planning/Equity Workforce and Talent Planning Sourcing, Recruiting, Selection Design Succession & Workforce Planning Employer of Choice Diversity, Wellness, Family, Worksite Communications Recognition Programs Labor Relations HR Operations HR Workforce Applications Core Admin Reporting/ Analytics ESS / MSS Customer Contact HRMS Contact Services Employee, Manager, Vendor, Internal Function Service Representatives HR Shared Services /GBS Transaction Services Total Rewards Administration Report Administration Time/Payroll/Leave Admin COE/Event Administration Data entry and verification Employee On-boarding HR Information Maintenance Exit Management Regulatory Reporting Candidate intake and requisition management Vendor Vendor HR Portfolio/Program Management Project service request management IT / Project prioritization Vendor Management Corporate HR Governance Process Standards, Enterprise Policies and Procedures Strategic Services Executive Services and Development Best Practices Conference 20

21 HR Service Delivery Model Service Placement determines where the work gets done Corporate Performs strategy, policy and governance activities Centers of Excellence High-level skills focused on plan design, experience, can be co-located in Shared Services Center, and may also have components out at Business Units (local support) Shared Services Centers Transactional; low-cost, high-volume processing Business Unit / HR Business Partner Requires business-specific knowledge or close proximity to the business or the customer Delivers high quality TM and information End-User Automated Service Common HRMS platform Self-service with automated controls and approvals Third-Party Partners Outsourcing providers; contract service agents Global Business Services Scope Best Practices Conference 21

22 World-Class HR Service Delivery Model HR service flow is driven by a Tiered system Tiered Delivery Channels Drive Required Rigor and Discipline Tier 3 - Corporate HR Programs and Policies Develop and manage HR plans and programs Align HR programs with business needs and measure HR program effectiveness Clarify/interpret HR programs and policies Provide final decisions on escalated cases and/or grant exceptions to policy Center of Excellence Tier 2 Advice/Counseling, Execution, Feedback Direct support for business leaders and managers Deliver HR programs to clients as advisors Represent business needs and provide feedback on effectiveness of HR programs Tier 1 - Call Center/Shared Services Customer Service Representatives provide initial point of contact and perform inquiry management and transaction processing Complex requests requiring further assistance are escalated to Service Specialists Operational teams perform routine processes (e.g., payroll, interface management, standard reporting) Tier 0 - Self-Service/Automation A portal provides single point of access to initiate requests/transactions and provide information Ownership is transferred to managers and employees for appropriate data and transaction initiation/approval Requests/transactions requiring higher touch/person interaction are directed to shared services (Tier 1) HR Relations Team Business Partner GBS / SSC Customer Service Representatives Functional Specialists Operations/Processing Manager and Employee Self-Service Common HRMS Service Flow Best Practices Conference 22

23 Functional Experts that Support Clients via the Field & SSC Operational Services Organized by Process & Transaction Focused World-class HR Service Delivery Model Sustained performance is achieved by standards and process clarity Organizational Structure Process & Technology Optimization Role Clarity Service Delivery Executive Transformation Team Centers of Excellence Field Support Shared Services Service Delivery Support Benefits Planning HR Generalists On-Boarding Support IT Support Compensation Planning Talent Mgmt & Level 1 Comm. Support Contact Services Recruiting Recruiting Salary Planning & Mgmt SD Improvement Office Performance Mgmt & Career Planning SD Org.. Design Workforce Development Organizational Design Payroll Support w/ T&A Project Management Process Improvement Benefits Admin. Performance Management Support (Service Levels & SLAs) Quality Management Finance & Admin Support Learning & Development (Certification Tracking) Exit Guidance Budgeting Customer Advisory Actuals Tracking Financial Analyses Labor & Employee Relations Data Management Support Facilities & Operations Support SSC Configurations Relocations Legend: Assumed to be provided by Corporate Functions Best Practices Conference 23

24 Self-service facilitates a model to drive greater efficiency Level 0 HR Self-service Typical Functions / Descriptions Manager Self-Service Employee Portal/IVR Payroll Benefits etc Employee Job Data Change Ad Hoc Pay Rate Change Location, title, department, etc. Off-cycle promotions/raises Outsourced Vendors Employee Status Change/Transfers Initiate employee moves into/out of the dept Requisition and Applicant Tracking Create and monitor open requisitions - Globally deployed Administrative Excellence Where - Employee Desktop (in the office or on the road) - Kiosks in branches, vendor or service centers - External Applicant s PC / mobile device Data Warehouse / layer - HRMS - HR Employee Portal - HRMS (HR and EPM/Data Warehouse) - HRMS (Manager and Employee Self-Service) - Automated workflow - Strategic Vendor Relationships - Payroll, Benefits, Compensation - Accessible to employees over the Intranet and Internet Analytics, Reporting Terminations Employee Self-Service Personal Data Changes Family Status Change Dependent/Beneficiary Changes Direct Deposit Time and Attendance Online Paychecks Training Administration Online Forms Passwords Access to reporting and metrics Initiate employee terminations Name, address, benefits, etc. Married, children, etc. Benefits adjustments Set-up/change routing On-line time entry View pay stubs on-line Access on-line courses (link from portal) HR forms can be downloaded from the portal Reset and Change passwords Best Practices Conference 24

25 World-class has automated a significantly greater portion of HR transactions Technology Cost per Employee Percentage of transactions automated 8% more $192 Total Rewards Administration 32% 75% $177 49% Payroll Administration 73% Staffing Services 25% 70% Time & attendance 50% 60% Peer Group World-Class Training Administration 16% 51% Peer World-Class Source: 2014 HR Benchmark, The Hackett Group Best Practices Conference 25

26 World-class provide significantly more self-service functionality to managers and employees Percentage of companies with high degree of manager self service usage (>75% usage) Percentage of companies with high degree of employee self service usage (>75% usage) Performance appraisal data capture Job/Grade changes 17% 38% 71% 71% Personal/Life event data changes 33% 71% Incentive bonus awards Merit pay changes Employee pay status change 26% 43% 38% 57% 24% 57% Course selection and scheduling Development plan data capture 22% 32% 86% 86% Interview results/data capture Job requisition submission 12% 31% 57% 57% Employee competency/skill inventory 24% 57% Peer World-Class Peer World-Class Source: 2014 HR Benchmark, The Hackett Group Best Practices Conference 26

27 Global Business Services / Shared Services provide great leverage Level 1 - HR Shared Services Typical Functions/Descriptions Core HR Processes Workforce Administration / Employee Inquiry Take questions/process for non-tech enabled; Contact Center focus Global Delivery with Local Execution Administrative Excellence - Global discipline with local execution - High-quality, cost effective service - Core HR customer service, regardless of business - Focus on customer satisfaction levels, particularly with lay employee groups - Redirect inquiries to technology/enablers to reinforce the importance of self-service New Hire Comp Admin Payroll/Benefits Policy interpretation Transaction Assistance New hire possessing once approved Mass pay rate changes, comp plan maintenance Take questions/process for non-tech enabled. Payroll processing. Take policy questions from employees Provide help in processing transactions - Region 1 (Asia/Pac) - Region 2 (EMEA) - Region 3 (US / Americas) Where Limited employee relations Recruiting Take and answer simple questions: make referrals to specialist Post requisition, Initial screening, create offer letter Best Practices Conference 27

28 World-Class Accelerate Global Business Services (GBS) Stage 3 Value- Centric Value Service Oriented Standalone GBS Entity Service Catalog Centric End-To-End Process Orientation Non-Traditional Knowledge Centers of Excellence Commercial Performance Profile Innovation Unit Cost Reduction + Service Value + Business Value Focus 8% GBS as Strategic Pillar Enterprise Value Enablement Stage 2 Process/Service Centric Multiple Functions inside GBS Org Service Management Implementation Enterprise Standards Performance Technology Improvement Knowledge Centers of Excellence BPO & Managed Services Outsourcing Unit Cost Reduction + Service Value Focus 33% Global Business Services Business Service Excellence Stage 1 Function- Centric Functionally Focused & Owned Platform Transactional Standardization Regional Shared Services Consolidation Transactional Automation Unit Cost Reduction Focus Functional Shared Services 59% Function Transaction Excellence Focus Best Practices Conference 28

29 Global Business Services organizations handle a significant amount of transactional and knowledge-centric HR activities Median Service Placement HR processes Payroll Administration Employee Data Management and HR Reporting Exit Process Time & Attendance Recruiting and Staffing Health & Welfare Administration Pension & Savings Administration Compensation Administration Employee Relations Compliance Management Labor Relations Workforce Development Strategic Workforce Planning Total Rewards Planning Organization Design and Development 0% 20% 40% 60% 80% 100% GBS Corporate Center BU Source: Global Business Services Performance Study, The Hackett Group Best Practices Conference 29

30 HR Business Partners can provide great operational value Level 2 - HR Relationship Teams Business Unit A Cluster Cluster (North America) Business Unit A Cluster Cluster Cluster Cluster (Latin America) Business Unit B (Asia/Pacific) Business Unit C (Western Europe/CEEMEA) Cluster Cluster Cluster Cluster Cluster Cluster Cluster Cluster Cluster Human Resources Consulting - Provide high-touch HR consulting support (level 2) with Managers and Employees - Local, personal, and confidential relationship between HR generalist and Employees - Value-added advice regarding employee relations, career development - Offer feedback to Center of Excellence on process improvements, QA Location - Varies by region, however support is business specific - North America business specific because of size of employee population - Latin America primarily support by cluster of countries - Asia/Pacific support by cluster by business - Western Europe/CEEMEA support by cluster by business Typical Functions/Descriptions Recruiting and Staffing Leadership Planning Compensation Planning Exit Management Employee Relations Business Partner Policy Implementation Productivity Improvements Interview and make recommendations Facilitate performance review, find next leaders and skill gaps Facilitate the compensation planning cycle Ensure exit interviews are conducted, documentation of key exits, counsel involuntary terminations Review/improve employee focused programs Provide guidance to key stakeholder from business unit plan to workforce plan Implement policies created by the Center of Excellence Incentives and rewards, determine effectiveness of new policies Best Practices Conference 30

31 World Class has grown its business partnering capabilities to enable innovation 78% World-Class HR acting as a partner to the business More than 50% the rate of Peers (51%) 1X World-Class regularly using a competency profile in employee selection Nearly 1/4 of Peers using infrequently or not at all (24%) 80% World-Class HR executives routinely involved in tying people strategy to business strategy True for only 1/2 of Peers 67% World-Class L&D strategy aligned to the strategic plan True for only 1/5 of Peers Source: Hackett Group HR Benchmark, 2014 Best Practices Conference 31

32 Successful HR Business Partners.. Highly effective in performance management 83% highly effective in training & development 83% highly effective in employee relations Think strategically 78% more time spent on strategy and planning 3X more effective in competency modeling 83% highly effective in succession management Deliver HR expertise that the business can apply to achieve and exceed their goals Know and talk like the business 43% more effective in Business Acumen 177% more effective in Negotiation 138% more effective in Persuasion Highly effective in relationship management Build deep and trusting relationships Have a point of view and the courage to express it Highly effective in one on one communication 67% highly effective in written communication Source: HR Business Partner Performance Study, The Hackett Group Best Practices Conference 32

33 Centers of Excellence (COE) drive plan design and support for HR Business Partners Level 3 HR Centers of Excellence Functions/Descriptions HR HR Centers Centers of of Excellence Learning and Development elearning implementation HR Functional Expertise HR Functional Expertise HR Functional Expertise HR Functional Expertise Talent Management Succession Planning SWP Design, Competency development/management, workforce modeling, workforce management Best HR Practice Development - Establish global standards and enforcing internal compliance - Create new programs and procedures by business - Provide standard tools and methodologies to integrate workforce as a result of an acquisition - Assess the talent of the corporate organization against the strategic objectives of each business - Continuous improvement and QA of HR delivery Location - Primarily at the global level (headquarters) - Regional representation to ensure tight communication link - Local liaisons with HR Partner Network Compensation Planning Benefits Plan Design Retirement Modeling and Planning Corporate Communications Organization Design and Global Change Management University recruiting Incentives, new comp models Market relevant benefits for business/regions Work with employee base on retirement timelines and planning Provide specialized communications services to departments or programs within the organization Measure organization-wide impacts of major change initiatives. Provide guidance and support Develop annual goals (headcount planning) Best Practices Conference 33

34 COE s help drive the HR Performance Message World-class HR takes an evidence-based approach 85% Measurement of the business impact of HR projects World-class organizations have organizational metrics built into success criteria for HR-managed projects 47% 60% World-class are frequent & regular communicators of HR performance More regular in their frequent communication of HR performance (quarterly or monthly) 34% Data and analysis take the blindfold off of decision-makers Source: Hackett Group HR Benchmark, 2014 Best Practices Conference 34

35 HR Services COE s focus on designing and delivering great HR programs Median Service Placement HR processes Payroll Administration Employee Data Management and HR Reporting Exit Process Time & Attendance Recruiting and Staffing Health & Welfare Administration Pension & Savings Administration Compensation Administration Employee Relations Compliance Management Labor Relations Workforce Development Strategic Workforce Planning Total Rewards Planning Organization Design and Development 0% 20% 40% 60% 80% 100% GBS Corporate Center BU Source: Global Business Services Performance Study, The Hackett Group Best Practices Conference 35

36 Top performers have more sophisticated SWP capability Percent mostly effective/highly effective at Strategic Workforce Planning activities Translate business strategy into talent implications Analyze talent dynamics Define talent demand and assesses talent supply 4x 63% 4x 63% 5x 75% 15% 15% 15% Peer Top Performers Source: Hackett Group Strategic Workforce Planning Study, 2013 Best Practices Conference 36

37 Agenda Introductions and Overview Human Resources Trends World-Class HR Service Delivery Model Innovation and HR How Does HR Become a Strategic Enabler of Innovation? Q&A

38 Business strategies for 2014: innovation tops the list Strategic Business Priorities* Growth Strategy = Innovation + Market Expansion Innovate product and/or service offerings 46% Growth + Margin Innovate business model and go-to-market strategy Expand customer base 33% 33% Increase market share 32% Retain existing customer base Reduce exposure to risk in business portfolio 17% 15% * Combined percentage of companies ranking strategy as #1 or #2 priority Source: Hackett 2014 Key Issues Study Best Practices Conference 38

39 The business services functional view of innovation They want to be a key player but may not be ready Business Services Functions are integral to innovation agree/strongly agree Business Services Functions are integral to our company s innovative capability But many are NOT prepared they must fundamentally transform agree/strongly agree Business Services Functions need structural transformation to adequately support the innovation goals of the business Source: HR Innovation Quick Poll, Hackett Group, 2014 Best Practices Conference 39

40 HR plays a very important role in driving innovation HR practices feed the human capital enablers of innovation Talent Acquisition Workforce Development Collaboration & Knowledge Sharing Leadership Development Employee Engagement & Performance Human Capital Analytics Work Environment Skills Culture Leadership Innovation Product Process Business Model Competitive & Market Strategies Best Practices Conference 40

41 HR has high aspirations for its role in innovation today and in the future HR HR HR HR 3 out of 4 HR organizations agree/strongly agree the HR function is integral to our company s innovative capability and want to do more to help the enterprise 77% aspire to greatly expand HR s role in supporting the enterprise innovation agenda in the next 5 years. Source: HR Innovation Quick Poll, Hackett Group, 2014 Best Practices Conference 41

42 50% What HR practices are the most effective at enabling enterprise innovation? 30% Innovation and creativity training 40% Include innovation skills in leadership development Promote organizational values related to innovation 50% Most Effective 40% Develop innovation related skills in relevant HR roles Offer innovation incentives to HR staff in relevant roles Use technology tools to enable innovation Assist business to define, recruit and develop innovation skills Incorporate innovation talent needs into SWP Effectiveness (% high/very high) 30% Define innovation goals for HR units Create discrete HR innovation roles/programs Low Enabling HR Innovation Adoption Enabling Business Innovation High Least Effective Source: HR Innovation Quick Poll, Hackett Group, 2014 Best Practices Conference 42

43 Agenda Introductions and Overview Human Resources Trends World-Class HR Service Delivery Model Innovation and HR How Does HR Become a Strategic Enabler of Innovation? Q&A

44 VALUE Innovation is a crucial requirement of HR business partnership and strategic impact INNOVATION IMPACT + Value Proposition of HR Role of HR + Event-based predictive modelling, accelerated decision making, local HR expertise/global tools, broad value orientation for the deployment and development of human capital VALUE CREATION Business Value Enabler HR partners with business operating units to optimize human capital performance OPERATIONS EMPOWERMENT Business Partner HR processes delivered with focus on effectiveness; HR provides depth of specific expertise HR PROCESS EFFECTIVENESS HR Expert Efficient HR processes and systems minimize operating costs and deliver basic services HR FUNCTIONAL EFFICIENCY HR Operator Basic processing and transactions, management of compliance HR ADMINISTRATION AND COMPLIANCE HR Administrator Establish what value the business is expecting, and at what cost to deliver Best Practices Conference 44

45 Requirements Outcomes The World-Class Advantage HR can drive innovation through Talent Management Global Operating Model Inputs Capabilities Information Demand Drivers/ Structural Factors Governance & Organization Skills & Talent Service Delivery Service Placement Process Sourcing Global Visibility Business Strategy Enabling Technology Process Design Global Manageability Service Delivery Transformation Reduce Risk Accelerate Growth Improve Agility Reduce Cost Increase Cash Best Practices Conference 45

46 Talent Management programs need to focus in on key competencies and skills Skills for Interacting in a Global, Diverse World Skilled working in a diverse culture Technology inclined Think creatively and problem solve Skills for Operating in a Volatile Business/Market Environment Manage risk Manage change and complexity React with agility to new challenges Skills for Integrating HR into Business Strategy Develop commercial acumen Anticipate growth and its impact on human capital Integrate business and talent strategies Best Practices Conference 46

47 Example of an innovation-related competency Think creatively and problem solve COMPETENCY Diagnose and Solve Problems SKILL Thinking Creatively and Innovatively COMPETENCY DEFINITION Identifies, defines and assesses problems; develops and evaluates alternatives; formulates and promotes sound recommendations to address business needs. SKILL DEFINITION Uses imagination freely, combines ideas or information in new ways, develops new approaches and solutions to HR and business challenges. Basic Understands the value of innovation in the business environment; incorporates out of the box thinking in daily tasks. Looks beyond the traditional in identifying and implementing new and more effective ways for doing the work. Intermediate Participates in design and brainstorming sessions. Identifies and develops creative solutions which resolve obstacles and barriers. Questions and explores beyond known boundaries to challenge the status quo. Advanced Leads projects and special initiatives which assess, identify and develop creative solutions which resolve obstacles and barriers. Examines business challenges and alternatives from different angles. Studies and applies success stories including from sources outside of the industry. Expert Inspires others to explore the new and different, and look beyond the obvious barriers and solutions to drive competitive edge for the company. Drives creativity and innovation that has a valuecreating impact on the business and across company As a change agent, creates an environment that encourages innovation. Ensures company best practices and innovations are used on a local level. Best Practices Conference 47

48 Conclusion: HR must transform it capabilities to enable enterprise innovation Become a Strategic Enabler of Innovation Recommendation: Focus talent management on defining, acquiring, developing innovation skills Increase the business/ innovation focus of HR culture and skills Gain Innovative Insights through Information & Analytics Recommendation: Develop analytical capabilities to enable meaningful insights and effective decision making for the business and HR Enhance the Foundation of Service Delivery Recommendation: Build upon a foundation of Operational Excellence to drive HR strategic differentiation and innovation Best Practices Conference 48

49 Statement of Confidentiality and Usage Restrictions This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group. Best Practices Conference 49