Align talent with business strategy Design world-class talent programs...

Achieving Competitive TalentAdvantage Strategies

• Align talent with business strategy– acquire, retain and manage talent

• Design world-class talent programs– assessment and selection, performance management,

outlining career path, pay and benefits and competency

modeling

• Implement effectively– employment branding, HR service excellence, utilize

technology and change management

• Measure effectiveness over time– establishing business metrics, price of implementation failure,

track and monitor ongoing effectivenessSource: Mercer Human Resource Consulting

Successful Talent Management Evidence

• Managing performance to deliver results– identifying and creating goals for employees to evaluate financial,

strategic and personal objectives

– linking individual incentives to measures of company-wide success

• Motivating talented people– linking career paths, job levels, roles, responsibilities, and

competencies across all functions

• Staffing operations in a new overseas market– creation of employment brand

• Identifying business risks using human capitalstrategies– identification of elements that create too frequent lateral movements

Source: Mercer Human Resource Consulting

Talent Management – a Risky Business Ensuring Management Commitment

• Stakeholder buy in is required

• Value and impact of the strategy needs to becommunicated and reinforced regularly

• Link talent strategy to the bottom line anddemonstrate its financial value

• Clear objectives about the expectation of theorganization

• Continuous evaluation, revisiting and realigning

Source: Aon Risk Bulletin

Future of Talent Management

• At present, recruiting and keeping talentedemployees is a priority

• In the long-run, performance of the entireworkforce will differentiate an organization

• Companies which tap into the talent in all their staffwill excel in the long-run

Source: Aon Risk Bulletin

Best Performing Industriesin the U.S.

Top Five, 2006

Financial Services

Manufacturing

Health Care

Professional & Business Services

Leisure & Hospitality

Source: Training Magazine

Employee Turnover in the U.S.

By Industry, 1990-2003

Source: US Department of Labor

56%

52%

35%

22%

20%

20%

19%

17%

16%

14%

23%

Accommodation & Food Services

Leisure & Hospitality

Retail Trade

Information

Real Estate, Rental, Leasing

Health Care & Social Assistance

Education & Health Services

Manufacturing

Financial Activities

Educational Services

Total U.S.

Top Five Companies

By Workforce Training, 2006

Rank Firms

1 Ritz Carlton Hotel Company2 Pricewaterhouse Coopers

3 EMC Corporation4 Verizon wireles

5 General Mills

Source: Training Magazine

Gross Domestic Expenditure on R&D 1981-2006

Sources: OECD, Main Science and Technology Indicators

200520021999199619931990198719841981

350

300

250

200

150

100

50

0

Billions Current PPP $

ChinaEU-15GermanyJapanUnited States

Level of Education in the U.S.

By Degree Type, 2002

17% Bacheloronly

Non-High School,

16%

High School, 33%

Some College,

17%

Associate Degree,

8%

Bachelor and

Beyond, 26%

Source: BLS

Company Spending on R&D

(1 = Do not Spend Money on R&D, 7 = Spend Heavily on R&D)

Source: The Global Competitiveness Report ‘06-’07

MexicoRussian Fed.

ChinaIndia

CanadaU.K.

Korea, Rep.Germany

U.S.Japan

6.5

6.0

5.5

5.0

4.5

4.0

3.5

3.0

Score

Mean = 3.4

University Collaboration

(1 = Minimal or Nonexistent, 7 = Intensive and Ongoing)

Source: The Global Competitiveness Report ‘06-’07

Russian Fed.Mexico

IndiaChina

Korea, Rep.Canada

U.K.Japan

GermanyU.S.

5.5

5.0

4.5

4.0

3.5

3.0

Score

Mean = 3.3

Researchers Per Thousand Employed

Source: OECD

IndiaMexico

ChinaKorea, Rep

GermanyRussian Fed.

CanadaFrance

U.S.Japan

12

10

8

6

4

2

0

Per Thousand Employed

Hot Issues

• Location, location,location

• Talent gaps: theworld is your oyster

• Acquiring andretaining talent inemerging markets

• Building leadership

• HR governance: tocentralize ordecentralize?

• Global assignments:the devil’s in the details

• Country work rules:what you don’t knowwill hurt you

• Global HCM toolkit• Oversight: no “next

best thing to beingthere”

The Strategic – Planning aGlobal Workforce

The Tactical –Managing aGlobal Workforce


Developing A Global WorkforceStrategy

• Global talent factbase

- Internal (capabilities,succession candidates,performance, other)

- External (compensationtrends, skills, risks,other)

• Human capitalstrategy linked tobusiness strategy– Talent segmentation

– Optimizing locations

– Productivityrequirements

– Mission criticalcapabilities

– Global rewardsstrategy

– Global trainingstrategy

• Business design lens– Profit models (how profit happens)

– Sources of strategic control (howprofit is sustained)

WorkforceStrategy


• Talent segmentation: cultivate stronggeneral management and developer talent

• For GMs:

– Build (vs. buy)

– Emphasis on long service

– Opportunity for international assignments

• For developers:

– Build or buy local talent

– Centralized financial oversight and audits

– Local assignments and retention plans

• Relationship between company and employee brand

• Global rewards philosophy, policies, positioning, andincentive plans; higher pay positioning for GMs andDevelopers relative to markets

• Local salary and benefits benchmarks, except for globalemployees

Example: People Strategy

Growththrough:

• Strong globalbrand

• Distributedmulti-sitemanagement

• Consistentglobaloperatingnorms

• Operating aswell as assetappreciationprofit

Business Strategy People Strategy


Mercer Human Resource Consulting’s Decision Support Framework

Information gathering andanalysis

Current and futurebusiness models

Market/product/customer

Identification of value drivers

Enterprise roadmap

Location Analysis

Location-sensitivevalue drivers

Impact of location on value drivers

Criteria and importance of criteria

for evaluation geographies

Customer, competitive, labor,

supplier, and country data

Optimalgeographic

strategy

Strategyformulation

Relative geographic

attractiveness

Strategyimplementation

Strategyexecution

Action plan

Risk mitigation plan

Organizational

development

Location-specific internaland external data

Managing A Global Workforce Greater Need For

• Centralization of key HR processes for strategic impact

– (e.g., leadership profiles, succession, training, performance management

and measurement)

• Global internal data capture regarding workforce capabilities,performance, and rewards using software tools

• Reliable external labor market data

– (e.g., pay trends, skill availability, economic conditions, risk factors (e.g.,

IP), regulatory environment (e.g., flexibility), cultural norms)

• More even execution

– (e.g., management systems, international assignment policies)

• Using local partners and resources, particularly in emergingmarkets

• Management by flying about


Example: Compensation SoftwareTool


“Engaged” Employees

Source: Globoforce Inc.

A world of difference between “willing” and“engaged” employees.

“Willing” employees get the job done as required. They do

what’s necessary but often no more.

“Engaged” employees look to redefine the job to improve

efficiency, effectiveness and results. They seek out

opportunities to go beyond, try new approaches, test

boundaries, achieve personal or team bests – because

they find it stimulating, challenging and satisfying.

European Engagement Scores

Source: © Watson Wyatt – WorkEurope™ 2005.

Worldwide Engagement Scores

Source: Gallup, Q12 Survey

Higher Engagement = Higher Profit

Gallup Studies Proved Higher Engagement Levels

•27% higher profits•50% higher sales•50% higher customer loyalty•38% above average productivity

Source: Atlas Venture

Impact on ROI

•The 2006/7 WorkUSA survey shows that financial performance oforganisations is strongly related to employee engagement. For thetypical S&P 500 organisation a significant improvement in employeeengagement is associated with a $95 million increase in revenue.Towers Perrin WorkUSA Survey, 2006/07

•15% improvement in levels of engagement correlates with a 2%improvement in operating margin. If you take all the evidence, there's acompelling case that an organisation with engaged people [will] dofinancially better than one with disengaged people." Towers Perrin2004

•Companies that utilized an effective employee recognition programenjoyed a 109% three-year median return to shareholders vs. a 52%return for the same period for those companies that did not. WatsonWyatt Study of 3 million employees, as quoted in Forbes magazine(2004)


Impact on Employee Retention &Satisfaction

•Engaged staff are far more likely to stick with theiremployer. Worldwide, six-out-of-ten (59%) of highly-engaged employees said they planned to stay with theiremployer, compared with 24% of disengaged staff. TowersPerrin's Worldwide Employee engagement survey 2005

•88% of employees cited a lack of acknowledgement astheir top work issue. 79% of employees cite a lack ofrecognition as the key reason for leaving a job. LynnLearning Labs, Society for Human Resource ManagementStudy 2004


FORTUNE’s “100 BestCompanies To Work For ®”

2007 Best Companies – Top Ten

1. Google2. Genentech3. Wegmans Food Markets4. Container Store5. Whole Foods Market6. Network Appliance7. S.C. Johnson & Son8. Boston Consulting Group9. Methodist Hospital Systems10.W.L. Gore & Associates

Source: http://money.cnn.com/magazines/fortune/bestcompanies/2007/index.html

Gradation of Succession

Proactive Talent

Development

• Assess talentstrength and

assigndevelopmentactions to ensurereadiness

SuccessionManagement

Risk Management

• Informally namesingle successorsfor highestpositions

• Minimizeimmediate risk ofvacancies

Replacement Planning

Talent Assessment

• Formalizedprocess to assesstalent strength

• Minimize risk bypreventingimmediate jobvacancies andpipelineshortages

SuccessionPlanning

Source: Boston CEO Roundtable

© 2007~ Proprietary and Confidential/ Jeff Cohn

Why This is Relevant

MILPITAS, Calif.--February 14,2007—

Solectron Corporation(NYSE:SLR), a leading providerof electronics manufacturingand integrated supply chainservices, today announced thateffective immediately, Presidentand CEO Michael R. Cannon hasresigned to join Dell in the newlycreated position of President,Global Operations. Solectron'sChief Financial Officer PaulTufano has been named interim

CEO while a global search isconducted.

Round Rock, Texas, February14, 2007

Dell today announced theappointment of Michael R.Cannon to serve as President,Global Operations, effectiveFebruary 26, 2007. Mr. Cannon,who was most recentlyPresident and Chief ExecutiveOfficer of SolectronCorporation, will report toMichael Dell, Chairman and CEOof Dell Inc.



Where We Stand

• Succession planning broken in most companies

• 1/2 of $500M+ companies have no meaningful executivesuccession plans

• A 2005 CLC survey found only 20% satisfied withsuccession process

• Too dependent on outside talent for key positions

• 55% of outside CEOs who departed were forced to depart bytheir boards vs. 34% of insiders

• Only 24% of companies believe their leadershipdevelopment activities are aligned with strategic goals.Even worse, goals are a moving target.

• HR is at mercy of executive search firms

• Insiders can have problems too!



Holistic Approach to TalentManagement

• Cross-organizationaltalent sharing

• Define key positiondescriptions

• Leadership successionplanning

• Outplacement

• High potential leadership identification• Leadership proficiency model definition• Internal and external recruiting processes• Evaluation and feedback system• Performance calibration• Formal leadership assessment

• Mentoring Programs• Individual Development

Planning• Diversity Initiatives• Cross-Functional Training and

Action Learning Programs

Identify Talent

Deploy Talent Develop Talent



Issues Facing CEO/owner of a LargeFamily-owned Business

SuccessionPlanning

Learning &

Development

Performance

Management

Departure/Retirement

Recruitment

Business Strategy

Staffing/ Career

Planning

“What are theright metrics?”

“How can Icreate the right

process?”

“When should I bring inoutside talent”

“What’s the bestway to groom

future leaders?”

“How do Ihandle poorperformers?”

“How do I handlekey vacancies?”



Their Guiding Principles—Relevant for All

• Develop practical approach

• Ensure alignment of developmental activities

• Focus on key developmental activities

• Leverage best practices

• Ensure Line leadership

• Deliver a measurable approach

• Build HR capability and capacity



The Result: TAO

Create a process that ensures the RIGHT PERSON is in the RIGHT

POSITION at the RIGHT TIME for the RIGHT REASON

Project Vision

Project Approach

IdentifyTalent

Key A

cti

vit

ies:

• Calibrate PerformanceRatings

• Create Descriptions for KeyPositions

• Develop IndividualDevelopment PlanningProcess

• Design and Launch

Executive LeadershipDevelopment Conference

• Develop Cross-FunctionalTraining Program

• Create Mentoring Model

• Develop High-PotentialEmployee ProficiencyModel andDevelopment Program

• Develop Talent Bank

DevelopTalent

Deploy Talent



Getting Started: Assessing Organization

• Progress developing leaders given the amountof time has focused on leadershipdevelopment

5. Are they on schedule?

• Robust, consistent, complete and cutting-edge

1. Are they world-class?

• Complementary to and enables each other’sleadership development initiative

2. Are they aligned?

• Distributed, communicated and deployedthroughout organization

3. Are they cascaded?

• Enables people to better perform their job,execute corporate strategy and developpotential as a leader

4. Are they making a

positive impact?

• Aggregation of all criteriaOverall Assessment

DefinitionKey Criteria

* However, best practice trap can occur when off-the-shelf initiatives are adopted with little regard forensuring complementarity of initiatives (see alignment)



Getting Started: Assessing the Talent

• Assess and benchmarkthe currentperformance andsuccession readiness ofexecutives compared tointernal and externaltalent

• Identify developmentalneeds for eachexecutive

SuccessionPlanning

CEOTransition

Mergers &Acquisitions

StrategyImplementation/Reorgani-zation

• Review the strengthand weaknesses ofthe inheritedleadership team

• Ensure individuals are inthe appropriate roles

• Highlight potentialretention issues

• Select, retain andintegrate the besttalent for keyleadership roles

• Evaluate the strengths andweaknesses of theexecutive team relative tothe new strategicrequirements

• Identify the needto modify roles orhire new talent tomaximizeperformance

Executive assessment and evaluations help organizations make criticaldecisions about their talent at any stage in a company’s lifecycle



Lessons Learned

• Make key decisions about your talent strategy

– Focus on a few vs. many initiatives

– Establish consistent communications

– Evaluate your organizational bandwidth

– Create a roll-out timeline

– Identify skills required for future

– Consider external vs internal recruiting

• Institutionalizing an ATM system takes3-5 years

• Program design must align with existing and future culture

• Do an honest assessment--of the organization and of keytalent



Corporate Executive Board Research2006

• Poll of international senior HR managersshowed:– 75% said “attracting and retaining talent” was the No.1 priority

– 62% worried about company-wide talent shortages

• Survey of 4,000 hiring managers showed:– Average time to fill a vacancy had increased from 37 to 51

days

– > one-third hired below average candidates “just to fill a

position quickly”

– One in three employees had recently been approached by

another firm

Source: Watson Wyatt Worldwide

A World of Poachers ……

0 10 20 30 40 50 60

Britain

United States

Canada

Australia

China

India

Source: Corporate Executive Board, Recruiting Roundtable, 2006

Employees contacted by anotherorganisation, %

Talent Shortage Around the Region

• China – all industry turnover at 15%

• Hong Kong - all industry turnover at 16.5%

• India - turnover in BPO 45%, IT/ITES 25%

• Indonesia - critical shortages in Oil & Gas, Banking,FMCG

• Japan - retiring ‘boomers’ shrink skill base

• Philippines - booming BPO draining other sectors

• Singapore - critical shortage of senior management skills

• Vietnam - limited talent pool to worsen with WTOaccession


What are we doing to address thetalent shortage?

Paying more!


Salary increases in Asia Pacific

4.00%

7.80%

3.00%

13.75%

2.75%

5.10%

3.90%

7.10%

4.30%

10.67%

3.80%

12.00%

6.10%

11.20%

9.17%

6.22%

4.00%

8.15%

11.49%

2.90%

5.50%

9.21%

4.00%

7.20%

4.30%

8.66%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

Australia China Hong Kong India Indonesia Japan Malaysia Philippines Singapore South

Korea

Taiwan Thailand Vietnam

2006 Actual Salary Increase %2007 Anticipated Salary Incrrease %


Reward Tools Cited as Highly Effectivefor Attracting & Retaining Talent

• Paying within or above market

• Short-term incentives and bonuses

• Creative rewards or recognition programs for topperformers, key talent, “hot skills”

• Accelerated salary reviews

• Pay for competencies and/or skills

• Signing bonuses (for critical positions)

• Retention bonuses (stay for pay)

So what works in your market?


Difficulties Cited by Employers inAttracting Talent

8%

8%

8%

11%

17%

49%

Non-Competitive Long-Term Incentives

Lack of Job Flexibility

Lack of Development Opportunities

Non-Competitive Variable Bonus &

Incentives

Unattractive Benefits

Non-Competitive Basic Salaries & Fixed

Bonus / Allowances

Source: Watson Wyatt Survey of Strategic Rewards & Pay Practices

Difficulties Cited by Employers inRetaining Talent

4%

8%

13%

17%

28%

32%

Unattractive Benefits

Non-Competitive Variable Bonus &

Incentives

Lack of Job Flexibility

Non-Competitive Long-Term

Incentives

Non-Competitive Basic Salaries &

Fixed Bonus / Allowances

Lack of Development Opportunities

Source: Watson Wyatt Survey of Strategic Rewards & Pay Practices

Top performers want more…and we’re not talking about just $$

Employers ’ OpinionsTop Performing Employees ’ Opinions

Source: Strategic Rewards ™2004/5, Survey of Top -Performing Employees

79%

69%

56%

57%

50%

23%

53%

56%

20%

29%

23%

16%

12%

38%

36%30%

18%

65%

30%

26%

36%28%

29%26%

“ ”


Different talent issues facing MNCs,SOEs and private companies in China

Multi-National Corporations

Localization

Higher turnover

Increasing labor costs

Lack of experienced managersand senior professionals inbooming sectors

Large Private Companies

CEO succession planning

Cultural conflicts as a result ofintroducing professionalmanagers

Higher turnover

Size proliferation andeagerness for talents

Globalization requires newskills and new talents

State-Owned Enterprises

SOE transformation –laid-offs,HR changes

Government appointment of topmanagement

Non-attractive compensationfor senior executives

Talent flow barrier for middle totop management within SOEs

Globalization requires newskills and new talents

Aging workforce and resistanceto change

Heated Talent War


Potential Leadership Crisis in China?

Sources: CEO Succession 2003 “The Perils of Good Governance ”, Booz Allen Hamiltons and “China Leadership Style Survey ”, 2005,

Kornferry

50

49

37

USA

Europe

China

Average CEO age

A Young Management Cadre

China’s education systems focus on technical skills, rather thanthe “softer” management competencies.

Technical

Financial

Quantitative

Operational

Learning bymemory

Practical

People management

Qualitative

Problem-solving

Innovative

A recent Chinese government survey suggests that only40% of Chinese CEO’s had attended college, and of theseonly 20% had management degrees

The concept of an MBA program in China is relatively new.In 1991 there were only 9 MBA programs. In 2005 thereare 95.

Lack of Well-trained Graduates

Leadership Challenges in China

Source: Newsweek

Old Chinese Saying

“If the master teaches the apprenticeeverything, the master is afraid that his jobis no longer needed.”


Key Questions on Talent Management

• How do our people affect the valueof the business?

• What is our philosophy forattracting and retaining talent?– Business case for talent programs?

– Develop our own talent internally orbring in talent from outside?

– How do we define talent in ourorganisation?

• How should we manage our talent?– Trade-off between investment in

people versus new products orservices?

– Build a ‘talent-brand’ to attract thebest people?


An integrated approach to TalentManagement

StrategyPrinciples

CommitmentCompetencies

Where do most organisations go wrong?


54

52

51

50

47

45

39

38

0 10 20 30 40 50 60

Senior managers don't spend enough high-quality time on talent

management

Line managers are not sufficiently committed to people

development

Organization is 'siloed' and does not encourage constructive

collaboration, sharing of resources

Line managers are unwilling to differentiate their people as top.

average, and underperformers

Senior leaders in organization do not align talent-management

strategy with business strategy

Line managers do not address chronic underperformance effectively

Succession planning and/or resource allocation processes are not

rigorous enough to match right people to roles

CEO and/or senior team don't have shared view of most pivotal

roles

Ob

sta

cle

s

% of Responses

8 most critical obstacles preventing talent management from deliveringbusiness value

Source: McKinsey Quarterly

Align talent with business strategy Design world-class talent programs...

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