JANUARY 2014 BUILD A WINNING ORGANIZATION FROM THE GROUND UP How to implement best practices into your HR function to enable organizational growth A Guide to Developing Best-In-Class Strategies that Position HR as A Valuable Business Partner 1 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES Introduction This report has been compiled to share learnings on how “best-in-class” organizations align end-to-end HR processes to support organizational targets and growth objectives. Chazey Partners has carried out these assessments on a wide range of client organizations, to establish a baseline for HR practices. This report provides a framework for best-in-class: • Talent Acquisition • Reward strategies • Learning and Development 2 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES TALENT ACQUISITION Talent Acquisition is critical to a company’s future growth. The key components of a successful recruitment strategy are: an automated candidate screening process; accurate corporate forecasting of recruitment needs; tracking of key recruitment measures; and strategies for advancing the recruitment process. BEST-IN-CLASS TALENT ACQUISITION ORGANIZATION STRUCTURE Traditionally an integral part of the HR function, recruitment processing has, in the past, been paper based and administrative. Today’s advances in technology and the Internet have streamlined the process, and made it more cost-effective. Companies that excel in recruitment typically emphasize the critical roles of full-time recruitment staff and line management. These companies frequently employ Recruitment Business Partners to serve as consultants and to train line personnel. • Recruitment Business Partners – based within the local organization and acting as consultants to the line managers in the recruitment process. • Recruitment Centers of Excellence – create economics of scale; manage relationships with third parties; run the end-to-end process from requisition through on-boarding; and shift as much as possible of the recruitment process to the Internet. • Shared Services or Outsourcing – recruitment processes are transactional and administrative, and lend themselves well to delivery through shared services or outsourcing, freeing up corporate recruiting experts and line mangers for more valueadded work. Best-in-class organizations emphasize three distinct functions within the recruit-to-retain process: 3 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES ENABLING TECHNOLOGIES The impact of the Internet is particularly felt in three areas of the recruitment process: 1.Identification of a larger number of candidates than previously possible; 2.Automation of the screening process; and 3.Advertising to potential targets. The Internet also accelerates the capture and processing of candidate information, review of information, and standardization of applicant data. In addition, automation and self-service allow for increased visibility, transparency and compliance. BEST PRACTICE TALENT ACQUISITION PROCESS 1.Create and Develop Employee Requisitions Best practices include Workforce Planning collaborating with business units to forecast and define staffing requirements; forecasting supply/demand gaps for critical positions and taking action to fill these; and using staff turnover and other metrics to anticipate future levels of vacancies. 2.Sourcing Candidates Best practices include establishing a strong employment brand to attract potential recruits; optimizing Internetbased recruitment and social media; and leveraging internal employee referral programs. 3.Screening and Selecting Candidates Best practices include automated candidate screening tools - using document imaging and content management solutions to structure applications and electronically evaluate them using key word search; and implementing a competency-based selection program that includes pre-employment assessment. 4.Pre-Employment Verification Best practices include following standardized safe hiring procedures - conducting background and reference checks; leveraging shared services or outsourcing for background and reference checks; and requiring contractors to undergo the organization’s pre-placement verification process. 5.Managing New Hires Best practices include automating new hire processes to ensure consistency and reduce cycle time; keeping candidates informed throughout the hiring process and focusing on candidate and new hire satisfaction; and the automated issue and tracking of paperless offer letters received/outstanding. 6.Tracking Candidates Best practices include a paperless recruiting process where all candidate data is entered into an electronic candidate record; external candidates are leveraging a self-service portal to enter personal data, work history, and education; and recruiters are notified electronically of other positions for which a candidate might be qualified. 4 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES REWARD MANAGEMENT Best-in-class companies ensure that they apply a fair reward strategy based on standard policies and procedures across the board, while safeguarding transparency, equality, integrity and fairness. An effective reward or compensation program is business driven, market competitive, and performance sensitive. Business driven • Budget is set at group/corporate level reflecting the overall business environment • Review managers make recommendations within the agreed budget • Local salary budgets take into account local price and wage inflation Market competitive • The compensation review is targeted at performing employees • Budget permitting, there will be a material difference between various levels of individual performance ratings • Individuals with performance ratings below a standard rate are not normally eligible to receive a salary increase, equity or bonus Performance sensitive The challenge lies in effectively aligning employee goals with organizational objectives, automating performance management processes, and linking them with complex compensation policies or time-based incentive plans at an enterprise level. A best-in-class compensation strategy supports excellence through attracting the best staff, and rewarding high levels of performance and contribution. Reward principles should be guided by: • Fair pay rates • Pay and grading structures that support organizational needs, and meet requirements for flexibility and staff career development • Payments to staff in accordance with their grade salary as defined by job evaluation, and a fair assessment using agreed procedures • Necessary adjustments made to pay to take account of market rates in accordance with agreed procedures • Harmonized terms and conditions of service applied to recognize value (both explicit and implicit) • Communicating value of total reward package to staff Analysis of market data divides employees into three groups: • ‘Market competitive’ - employees whose salary is within range of the competitive market midpoint for their job • Above the market competitive range • Below the market competitive range BEST-IN-CLASS REWARD MANAGEMENT ORGANIZATION STRUCTURE Traditionally, the Reward function (Compensation & Benefits) has been an integral part of the HR function and was paper based (worksheets). Today, the process is part of the MSS (web-based) functionality, minimizing demands on line managers. Leading organizations generally focus on Business Partnering, leverage Centers of Excellence, and use Shared Services or Outsourcing delivery models to manage the administrative elements of the process. Best-in-class practices include a performance-driven rewards system that compensates individual contributors proportionate to their contribution to the bottom-line. 5 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES ENABLING TECHNOLOGIES Compensation planning systems automate and manage the planning, modeling, budgeting, analysis, and execution of enterprise-wide compensation plans. Benefits include: • Simplifying planning and administration • Effectively communicating policies • Managing all forms of employee compensation, including salaries, bonuses, and long-term incentives (LTI) such as stock options • Enabling pay-for-performance (P4P) by rewarding commensurate with efforts • Modeling and simulating the budget impact of salary and compensation actions • Leveraging flexible and configurable workflows to define and execute plan reviews and approvals • Analyzing all aspects of compensation via detailed reports, analytics, and interactive dashboards to drive more informed business decisions REWARD-SETTING PROCESS Setting the overall budget for compensation should take into account agreed and defined performance levels in relation to: • Annual increment • Annual bonus • LT bonus / incentive • Market trends In addition, distribution percentages for performance against peer groups should be complied with at all times. A best practice process is characterized by the following: • The overall timetable and framework is distributed to the HR representatives, who then brief local line management. • Performance assessment and reward recommendations are completed by local management. • The overall performance assessment distribution and reward recommendations are reviewed and assessed centrally and adjustments made. • Overscale/underscale staff are identified and compensation rewards adjusted to reflect the position (in overscale instances, performance is rewarded via a non-consolidated bonus, while underscale issues may be addressed over a number of reviews by an increased level of reward). • Exceptions are escalated for review and final decision/ sign off. • Final reward information is provided to line managers for sign off. • Workflow management and exception follow up tools are utilized to ensure that the overall timetable is achieved. The COE is responsible for ensuring that rewards reflect market conditions and that policies are developed to handle outside scale issues. The local HR acts as liaison between the COE/SSC and local management. 6 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES LEARNING & DEVELOPMENT Leading organizations view employee learning and development as an ongoing process, offer training to employees moving within the organization, and utilize online learning management systems. The focus is on aligning employees and organizational development needs; developing competencies; analyzing training needs; and developing, conducting, and managing employee and/or management training programs. Best practices include: • De-emphasizing training (a top-down intervention) and emphasizing learning (ongoing process initiated by the individual); • Providing readiness training for employees transitioning to different levels or areas of the organization; and • Building an online, centralized learning/training management system. The most effective training and development programs are: 1.Strategy driven: programs cascade down from the overall strategic goals and they produce results that are identified as critical to the strategy or business initiatives. 2.Positive cost/benefit ratio: training is subject to the same measurements as every other business activity. It must show a return on the investment. Timeframes are identified up front, and the programs evaluated at that point. 3.Learning aligned with, and directly supported by, organizational structures - such as lines of authority, decision making, planning, budgeting, career development, information sharing, compensation, performance management, rewards and recognition, staffing, recruiting, and succession planning. 4.Driven through many channels: such as the classroom, workplace, blended learning, eLearning, technology support tools, and co-workers. Modalities are selected to match specific learning styles, business issues, budgets, and cultures. 5.Maximizing employee ability and potential through shared accountability for example through self-directed training and development. Employees are encouraged to create individual learning plans, and seek learning opportunities. Strategies are aimed at knowledge retention and transfer to the workplace. 6.Work-related training: employees only participate in the programs that will add to their current and future work effectiveness and that contribute to organizational success. 7.Learning by doing: training by performing “real” tasks and projects in a training environment and on-the-job assignments. 8.Transferability of knowledge and skills back to the job: maintenance of the new skill or knowledge, once training has been completed, is important. Skills and knowledge that are not used constantly will quickly atrophy. 9.Linked to other people-related programs and departments: training is conducted by line managers, who also perform evaluations, set performance objectives, and draft compensation and promotion systems for the same employees. 10.Continuous learning: to drive lasting changes in behaviors and habits, best practice companies ensure that learning occurs before, during, and after scheduled learning events. CONTENT DELIVERY AND AUTOMATION The default option for delivery should be via an e-learning platform to maximize participation and outreach in a cost efficient manner, and to allow easy amendments. A user friendly and remotely accessible portal facilitates 24/7 learning, providing an equitable environment for all. Apart from language, customizations should be kept to a minimum. When it comes to booking trainings, best-in-class organizations automate the approval workflow, as well as the tracking of courses taken and missed, to ensure consistency and to reduce cycle time. Automated systems can also manage the reminder process, instigated at the point of employee record creation or IDP needs identification. 7 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES For more articles from Chazey Partners Please visit www.ChazeyPartners.com/Resources or subscribe to our newsletters www.ChazeyPartners.com/Subscribe Realizing the Value of Finance Shared Services: More Up Front Collaboration with the Business - Hybrid Model Wins for Coca-Cola Enterprise Finance Team A case study reveals Coca-Cola’s 10-year Finance Transformation Journey toward becoming a world class finance function. Read more about the case study How to Implement Multi-Functional Shared Services in a Public Sector Environment Learn from the Government of New Brunswick Internal Services Agency (Canada) on how they have implemented multifunctional Shared Services. This highly informative case study charts this project’s progress from business case through go live, and shares some of the key lessons learned. Read more about the case study The “Value-Add” Shared Services Landscape: How Do Different Industries and Functions Stack Up? This report highlights the trend in numbers of Value Add service lines according to industry, function, maturity, and private vs. public sector. Read more about the article When Is Shared Services Not Really Shared Services? Not every shared service implementation will be a success but, there are degrees of success and some examples are better than others. What is important, therefore, is understanding what characterizes a poor implementation, and what are the signs that you should look out for to prevent or diagnose a failing shared services operation? Read more about the article. Keeping a Lid on Attrition … The recruitment, development and retention of employees are core competencies in Shared Services and Business Process Outsourcing; but employees do move on, sometimes to other organizations (external attrition), but often also internally, as open positions within other functions attract them. This internal attrition is just as important as external attrition. So, given the transactional nature of much of the work, and given the risk of knowledge loss when staff leave, how do you control attrition? Read more about the article. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopy, recording or otherwise, without the prior permission of Chazey Partners. 8 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES Chazey Partners Chazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience, empowering our clients to strive for world-class excellence through Business Transformation, Shared Services & Outsourcing, Technology Enablement, Process Enhancement and Corporate Strategy Optimization. We pride ourselves in having built, operated and turned around some of the world’s most highly commended and ground breaking Shared Services Organizations, and for implementing many highly successful multi-sourced (shared services and outsourced) delivery solutions. Over the last 20 years, we have delivered numerous programs globally, in the US, Canada, UK, Continental Europe, Ireland, India, Eastern Europe, South America, Singapore, Australia, China, Middle-East and Africa. Our experience covers both Private and Public Sectors, providing expertise in a wide spectrum of business functions, including Finance, HR, IT and Procurement. Learn more about us at www.ChazeyPartners.com. Follow us on LinkedIn, Twitter, Facebook and Google+ If you would like to speak to a partner about this article, please contact: Phil Searle CEO & Founder Chazey Partners [email protected] David O’Sullivan Co-Founder & Partner Chazey Partners [email protected] Christina Exarchou Head of HR Practice EMEA Chazey Partners [email protected] Grant Farrell Managing Director United States Chazey Partners [email protected] Esteban Carril Managing Director, Latin America Chazey Partners [email protected] Chas Moore Managing Director, Canada Chazey Partners [email protected] Anirvan Sen Managing Director, Asia, Middle East and Africa Chazey Partners [email protected] Janey Jux Head of Public Sector Practice EMEA Chazey Partners [email protected] Emer O’Kelly Regional Director Europe Chazey Partners [email protected] Robert Towle Regional Director, East Coast, United States Chazey Partners [email protected] 9 | JANUARY 2014 BUILDING A WINNING ORGANIZATION FROM THE GROUND UP - HR BEST PRACTICES