5/11/2015 A G E N D A

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1 H E A L T H W E A L T H C A R E E R H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N ( O R : W H A T I W I S H I K N E W B E F O R E W E S I G N E D T H E C O N T R A C T ) APRIL 2015 Darrell Cira, Mercer Steve Seykora, Mercer Rob Heir, Cargill Patrick Bostrom, Cargill A G E N D A Our Sources The Big Picture The Ask of Total Rewards Expected Outcomes Your Ask From the Organization 1 1

2 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N O U R S O U R C E S 2 O U R S O U R C E S Hidden Challenges: Understanding the Impact of a New HRIS on a Total Rewards Organization In-Depth Experience 3 2

3 T H E P E O P L E 4 T H E D AT A 226 Companies Surveyed Nearly half of respondents have implemented a new HRIS system in the past 5 years Implemented in the past 5 years Plan to implement in 2015 Have not implemented and do not plan to in

4 O U R S O U R C E S : T H E D AT A Median Employees 5,150 HRIS System Implemented Workday 28% 4, ,550 Oracle ADP Ultimate 12% 12% 15% 2,800 SuccessFactors 450 Ceridian 4,103 SAP SAP 6% 6% 8% 12,000 Infor Infor Lawson 3% 3,800 Other Other 10% 0% 5% 10% 15% 20% 25% 30% Others include: API, Avanti, Desjardins, EnterpriseOne, Kronos time and attendance, JD Edwards EnterpriseOne 9.1, NuViewHR, PDS Vista, PeopleSoft, and UltiPro 6 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N T H E BIG PICTURE 7 4

5 ANALYTICS 5/11/2015 W H AT I S T H E B I G P I C T U R E? SaaS CLOUD MOBILE BIG DATA SOCIAL ANALYTICS METRICS GAMIFICATION CLOUD SOCIAL GLOCAL SaaS HOSTED SaaS SOCIAL ION SaaS CLOUD MOBILE BIG DATA ION CLOUD GLOCAL ANALYTICS METRICS MOBILE GAMIFICATION MOBILE BIG SOCIAL HOSTED SaaS SaaS MOBILE METRICS DATA BIG METRICS DATA ANALYTICS METRICS GAMIFICATION SOCIAL GLOCAL GAMIFICATION HOSTED SaaS GAMIFICATION ICATION SaaS CLOUD MOBILE BIG DATA CLOUD ANALYTICS METRICS GAMIFICATION HOSTED 8 MOBILE SOCIAL GLOCAL HOSTED SaaS T H E W O R L D O F P U R C H A S I N G T E C H N O L O G Y H A S C H A N G E D Licensed On-premise Customized single tenant Transactional PC data-entry Customized Lead by IT Organizations, analyst firms, etc. Business Models Deployment Models Architectural Models User Experience Configuration Model Buyer Responsibility Buyer Influencers Subscribed Cloud Configured multi-tenant Embedded analytics and mobile Configurable Lead by HR Blogs, webinars, etc. 9 5

6 W H Y T H I S M A T T E R S T O Y O U Globalizing of talent markets requires technology intervention Access to HR information moving to mobile Companies want integrated data about their employees Business leaders want better tools to reward and assess employee performance Social, user-friendly applications facilitate engagement 10 T H E H R I S M A R K E T HR Technology market is a $10.8bil market Major HRIS providers include: Typical costs depend on the size of the organization and can range from $250k to $10mil+ Typical implementation timelines can range from 6 18 months depending on the size and scope of the engagement 11 6

7 O T H E R S A R E L I K E L Y T O B E M O R E S A T I S F I E D T H A N Y O U Extremely Satisfied, Exceeded all Expectations Satisfied Somewhat Satisfied Neither Satisfied or Dissatisfied Total Rewards Overall Org. Somewhat Dissatisfied Dissatisfied Very Dissatisfied 0% 10% 20% 30% 40% 12 O U R C O U N S E L : D O N T S E T T H E B A R T O O H I G H Satisfied Compared to legacy system, increased functionality, flexibility, and standardized processes. The solution has basic rewards functionality not elegant. System functionality meets our needs. Much better than what existed i.e., Excel spreadsheets, Word documents, etc. Not Satisfied Significant gap between the approach to compensation inherent in the system and our approach. Buggy and difficult to administer. The functions available are rudimentary and not very customizable. The compensation module is not designed to support our global processes. It houses only minimal information and provides no analytics. We have a very bare bones system until our next upgrade with little to no customization available to us. All we can really say is that it works to the minimum specifications. We had to do several workarounds. Core HRIS and Benefits = Satisfied but Compensation is Dissatisfied; Talent Management Goals = Dissatisfied. 13 7

8 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N T H E AS K OF TOTAL R E W AR D S 14 N O W T H A T W E V E D E C I D E D I M P L E M E N T 66% Post- Implementation 42% Select Implementer 49% Establish 59% Select Supplemental Tools Timing 75% 61% Prioritize Modules 55% Select Platform 55% Define Implementation Strategy Implementation 15 8

9 C O U L D I T B E : T O O L I T T L E T O O L A T E? More involvement in prioritization of functionality would have been desirable. it would have saved a lot of communication achieved greater ownership of the solution." Key areas were brought to the table late in the process which caused a delay "They should have involved Total Rewards more in the decision making, configuration and functionality." "We relied very heavily on outside consultants or new hires who didn't fully understand our current processes." "The Compensation team, Recruitment team and Performance management teams were handed the tool." "It would have been better to weigh in on the shortcomings that Total Rewards would face to better help manage the implementation timeline more accurately." 16 T O T A L R E W A R D S M O D U L E S W I L L B E A P R I O R I T Y HRM Core 94% Compensation and Rewards Workforce Management Talent Management Recruitment and Hiring 46% 38% 29% 25% Learning and Development 6% 0% 20% 40% 60% 80% 100% Percent of Organizations 17 9

10 E X P E C T S I G N I F I C A N T D E L AY S A N D R E S O U R C E L I M I T AT I O N S Contracts/vendor/consultant Lack of business buy-in, readiness, or coordination Insufficient staffing/resources 21% 3% 4% 22% Scope was underestimated Difficulting with defining scope of project Difficulty integrating with previous system Deliberately slow roll-out Other Lack of understanding of the complexity of moving from a highly customized version platform to 11% 21% Poor implementation partner 19% Scoping and blueprinting taking longer than expected. We are evaluating current processes to fully take advantage of efficiencies and best practice going forward. 18 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N E X P E C T E D O U T C O M E S 19 10

11 Respective Job Family 5/11/2015 T H E H R I S W I L L O N L Y B E Y O U R F I R S T A N D M AY B E N O T Y O U R B I G G E S T C H A N G E After During Before 20 E X P E C T E D O U T C O M E S : N E W J O B C AT A L O G M AY N E E D T O B E D E V E L O P E D JOB CATALOG JOB FUNCTION JOB FAMILY CAREER STREAM CAREER JOB LEVEL Human Resources Accounting Hardware Admin P6 Legal Legal Design Audit Chemical Credit Professional P5 P4 Firmware FPA General Software Finance Management Management P3 P2 Tax & Treasury P1 Engineering Finance JOB CATALOG The organization-wide scheme according to which jobs are categorized. Includes Function, Family, Career Stream, and Career Levels. Clearly defined job functions, job families, career levels and job levels set the foundation for establishing a coherent and integrated HR infrastructure JOB: The The connection connection of of job job function, function, job job family, family, career career stream, stream, and andareer job level JOB FUNCTION: Function JOB FAMILY JOB FAMILY: CAREER CAREER STREAM: CAREER LEVEL: STREAM: JOB LEVEL: Generally recognized major Professional discipline Career type within Represents the hierarchical position professional area often within a specific job the organization of a job within a career stream and requiring a unique set of function similar with characterized by is used to differentiate career steps technical competencies and respect to nature of unique based on predefined criteria. The within which most career work and knowledge responsibilities. definitions for each of the job levels development will occur. requirements. is consistent across job families

12 W H Y S H O U L D Y O U C O N S I D E R A C O M M O N J O B C AT A L O G Key to securing full functionality from HRIS Little value to Total Rewards without it You don t get two bites at the apple 22 M O S T P E O P L E S E X P E C T AT I O N S A R E P R A G M AT I C Get Most from HRIS Harmonize Titles Reduce Titles Career Development Harmonize Levels Support Business Align with Market

13 G E T T I N G I T R I G H T M AT T E R S MORE GRANULAR JOB FAMILY ABC Company JOB FAMILY ABC Company R&D R&D Business Unit 1 Business Unit 2 Business Unit 1 Business Unit 2 SUB-FAMILY SUB-FAMILY SCIENTISTS Asia Pacific United States CHEMISTS Asia Pacific United States Level within Level within Sub-Function Scientist II Location #1 Location #2 Location #3 Sub-Function Location #1 Location #2 Location #3 JOB POSITION Product A POSITION Research POSITION Product B JOB Product POSITION Product A POSITION Product B JOB Biologist II POSITION Product A Biologist II POSITION Research Biologist II POSITION Product B Biologist II JOB Research POSITION Research 24 E X P E C T E D O U T C O M E S : A M O R E A L I G N E D H A R M O N I Z E D J O B C AT A L O G 25 13

14 N E W G R A D E S T R U C T U R E O F T E N G O E S H A N D I N H A N D W I T H C H A N G E S T O J O B C AT A L O G Better align pay structures with needs of the business Harmonize structures across the organization (global consistency) 75% 69% Better align our pay with our pay philosophy Change the way we think about compensation in the organization Take full advantage of the functionality of the HRIS 50% 50% 50% To align the balance of the organization into our primary structure 6% 26 B A S E P AY I S O F T E N C H A N G E D, B U T O T H E R G R A D E L I N K E D P R O G R A M S A R E I G N O R E D RE-ALIGN WITH NEW GRADES NOT ALIGNED GRANDFATHER OTHER Base pay opportunity (e.g., new grade minimum, midpoint, maximum) 81% 6% 13% 0% Short-term incentives 44% 31% 25% 0% Long-term incentives 19% 44% 25% 13% Health and welfare benefits 19% 69% 13% 0% Retirement benefits 13% 63% 19% 6% Vacation 19% 56% 19% 6% Allowances 25% 63% 13% 0% Perquisites 38% 38% 19% 6% 27 14

15 C O N S I D E R C H A N G E S T O P R O C E S S, G O V E R N A N C E, A N D S T R U C T U R E Other Technology Structure Talent Process Governance H R I S W I L L N O T M E E T A L L Y O U R T E C H N O L O G Y NEEDS Career Development Performance Management Recruitment Market Pricing Job Description

16 L O O K F O R S T R E A M L I N E D P R O C E S S E S A N D S H A R E D S E R V I C E S Process change Organizational structure change 17% 5% 46% 24% 48% 38% N=24 Streamlined all Total Rewards processes Streamlined most Total Rewards processes Streamlined some Total Rewards processes 24% Implemented aspects of Shared Services Implemented aspects of Centers of Expertise Increased number of positions Decreased number of positions N=21 30 L E V E L O F S AT I S F A C T I O N W I T H C H A N G E D I R E C T L Y R E L AT E D T O R E S O U R C E S C O M M I T T E D Proactive and Planful Change 36% Some Proactive Change 27% Ad hoc Change 14% Some Formal Change 15% No Formal Change 8% 0% 20% 40% 60% 80% 100% Percent of organizations 1 - Very Dissatisfied Neutral Very Satisfied 31 16

17 T H E R E A R E S E V E R A L G O O D C H A N G E M A N A G E M E N T M O D E L S Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Stage 8 Ending Neutral Zone New Beginning Unfreeze Move Refreeze John Kotter Establish a sense of urgency Create a guiding coalition Develop a vision and a strategy Communicate the change vision Empower others to act Generate short-term wins Consolidate improvements Anchor new approaches in the culture William Bridges Acknowledge loss Manage emotions Replace what s lost Kurt Lewin Overcome resistance Design new systems and use change management techniques Stabilize and reach steady state And most agree that what people need in order to change behavior is fairly consistent A burning platform for change supported by leadership A deep understanding of the changes impacting them To believe that there s something in it for them as well as for the organization To be involved and to have a voice in decisions To have some skin in the game in terms of a personal stake in success To experience early successes and gain confidence in the organization s (and their own) ability to successfully execute To see a sustained effort and perseverance through the inevitable obstacles and setbacks However, turning theory into action has proven to be easier said than done 32 A C H I E V I N G S U C C E S S F U L C H A N G E Overcoming the potential and significant people barriers requires employers be proactive to manage the change and ensure organizational alignment is achieved. How is this done? The HR, manager and employee experience is at the heart of change strategy A successful change plan has the right mix of change solutions including leadership, engagement, communication, training and sustainability One size does not fit all. A change methodology should be consistent, but scalable, allowing for adaptability to meet the organization s environment, needs and abilities. Clarify HR staff roles and responsibility throughout the change process implementation, adoption and beyond. Provide ongoing education and training. Getting to go-live is just the beginning. Updates to the system, including the introduction of new modules and functionality require continual training

18 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N Y OUR AS K FROM THE O R G AN I Z AT I O N 34 Y O U R A S K F R O M T H E O R G A N I Z AT I O N Get Involved Early Take a macro view Get Demonstration of C&B Functionality Help set terms and conditions Secure support for concurrent Total Rewards process changes Get Relief or Get Help 35 18

19 F O R M O R E I N F O R M A T I O N Visit: talent@mercer.com LinkedIn: Facebook: