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Study: What
is the current
status of HR of
in Romania?
WhatEnsight
is the
current
status
HR in Romania?
Second edition, 2012
Second edition, 2012
© 2012 Ensight Management Consulting. All rights reserved.
1
Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
ACKNOWLEDGEMENTS
The Ensight Management Consulting team would like to thank all companies and
their representatives for participating in the second edition of “What is the current
status of HR in Romania?”.
We hope that the time invested by you in responding to this initiative released by
the Ensight team will be rewarded by the results contained in this report. Of
course, we remain at your disposal for any further questions on this topic.
Thank you for being with us for this second research and we look forward to your
collaboration on the future editions of the Ensight HR Study.
Kind regards,
Manfred Schmauch
Sandra Jitianu
Principal
Manager
November 2012
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Table of Contents
1.
Introduction ...............................................................................................4
1.1.
Objectives of the study ........................................................................4
1.2.
Data collection ....................................................................................5
Profile of the respondents ..................................................................................... 5
2.
A snapshot: the main results of the HR survey .............................................7
3.
Detailed description of the HR survey results ...............................................9
3.1.
Impact of the economic crisis ...............................................................9
Current situation .................................................................................................. 9
Outlook .............................................................................................................. 15
3.2.
Company objectives and directions ..................................................... 16
HR mission ......................................................................................................... 16
HR and the company strategy .............................................................................. 17
3.3.
Modern HR........................................................................................ 18
Stage of development of HR areas ....................................................................... 18
Management involvement in HR-related activities .................................................. 19
Compensation & Benefits ..................................................................................... 22
Performance management ................................................................................... 25
Competency models ............................................................................................ 27
3.4.
Talent management .......................................................................... 28
3.5.
24-Months Focus ............................................................................... 33
ABOUT THE AUTHORS ........................................................................................ 34
ABOUT ENSIGHT ............................................................................................... 34
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
1.
Introduction
1.1. Objectives of the study
The current study was carried out by Ensight Management Consulting with the
purpose of discovering the current “hot topics” of Human Resources in companies
across Romania and to follow evolving HR trends.
The consultants surveyed 37 companies from different industries – mainly
manufacturing, food & beverage, financial services, IT & telecom, professional
services, energy & utilities and retail. 85% of our respondents are HR managers,
conveying high relevance to the opinions expressed.
The 2011 research offered a first overview on the role of the Human Resources
function and of its influence on establishing and implementing the company
strategy. It also provided information on the development stage of various HR
areas and the degree of penetration of modern HR and management approaches in
companies around Romania. We further offered insight into HR-related decisions
and measures that companies took in order to improve their results during the
economic downturn.
In this second edition we kept the same topics for our analysis in order to be able
to follow the dynamics of the aspects mentioned above. Thus, you will be able to
find our conclusions related to the persisting effects of the economic downturn on
HR activities, to HR and company strategy, top priorities for HR in 2012, HR
perception of management responsibilities and performance management.
As last year Talent Management ranked as top priority for the HR function, we
decided to dedicate a separate chapter to this topic in 2012.
We hope that the HR Study 2012 will be used as a valuable source of information
on the current status of HR and that it will serve as a starting point for discussions
in the Romanian HR community.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
1.2. Data collection
The data was collected between November 2011 and February 2012. We made a
series of qualitative interviews between April and May 2012 in order to refine the
findings. The results were analyzed and interpreted in June 2012.
The invitation for participating in the research was addressed to human resources
managers of 275 medium and large companies in Romania.
Respondents: 37 companies with a total turnover of 21 bn RON and 40,000
employees.
FIGURE 1 – RESPONDENTS’ TURNOVER
FIGURE 2 – RESPONDENTS’ EMPLOYEE NUMBER
Profile of the respondents
The respondents are mainly manufacturing and food & beverage companies, but
other industries are also represented: financial services, IT & telecom, professional
services, retail, energy & utilities, oil & gas, medical services, pharmaceuticals,
logistics, recycling services and public administration.
FIGURE 3 – RESPONDENTS’ DISTRIBUTION BY INDUSTRY
The relevance of the expressed opinions is high for the HR field: almost 85% of the
respondents are heading HR departments and are reporting directly to the CEO.
Each company is represented by one respondent.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE
4 – RESPONDENTS’
PROFILE
ACCORDING TO THEIR POSITION
© 2012 Ensight Management Consulting. All rights reserved.
FIGURE 5 – RESPONDENTS BY DIRECT
REPORTING LINE
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
2.
A snapshot: the main results of the HR survey
The behavior of business leaders continues to be influenced by the troubled
economic situation in Romania. Our data shows that over 50% of businesses chose
to apply restructuring measures in 2011, that half of the surveyed companies
are continuing restructuring in 2012 and an additional 14% plan to maintain it in
2013. Layoffs remain the most widely used measure for cutting HR-related costs,
followed by cutting back on training, a measure that increased significantly in
comparison to the previous year. Solutions like technical unemployment and unpaid
leave dropped substantially. Only about 10% of responding companies resorted to
cutting salaries, quite similar to the previous year.
Regarding the role and positioning of the HR department, there is good
news: year upon year HR departments feel more in charge with providing modern
HR tools to support the business, with the importance of the administrative side
declining a little. Continuing the positive trend, almost all HR managers consider
themselves to be involved in business strategy definition, alignment and
implementation, while in over half of the responding companies management coopts HR managers in all strategy stages. That signals that at least in 50% of
medium and large companies HR has earned its long awaited status of a business
partner.
On a less optimistic note, our data shows that 85% of our respondents estimate
that employees have a medium or low awareness regarding company
strategy, which points at management not communicating strategy into the depth
of their organizations.
Turning to the role of the business in HR related matters, the wide perception of
HR practitioners is that managers do not take their task of people leaders as
seriously as they should. There is a 50% gap between the importance of their role
and what is happening in reality in the areas of performance management,
employee development and compensation & benefits.
With regard to the maturity stage of HR areas, three areas are in great need of
development in the eyes of HR practitioners: competency management, career
models and compensation & benefits. One positive development – there are more
companies which adapt pay level to performance than in the previous year.
However, even if around three quarters of companies have a performance
management system in place, there still are businesses paying out bonuses without
having a proper process for monitoring employee’s results. Another interesting –
and somewhat worrying – finding related to performance management is that in
only 20% of companies low performance is communicated clearly and possible
consequences will be executed.
This year’s focus area, Talent Management, brings promising facts: around half
of our respondents have set up a talent management system and 20% plan to
create one in the near future. Virtually all companies which have a talent
management system have included team leaders in it; regular staff is present
however only in half of the cases.
Turning our eyes to the future, the biggest challenges for HR practitioners in the
next 24 months are the way employees understand HR policies and practices, the
degree to which senior management gets involved and line management delivers
HR initiatives and the way HR activities are integrated in business strategy.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
The results of our study reflect the feedback we received from 37 medium and
large companies with a combined number of 40,000 employees. The vast majority
of our respondents are HR practitioners reporting directly to the CEO or another
member of the board.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
3.
Detailed description of the HR survey results
The way a business reacts to the „economic tsunami” depends on a series of
variables ranging from available resources to the distribution of work. While
some prefer to reduce personnel, others transfer employees to the more busy
segments to maintain a balance. Wise companies chose those measures that
allow them to stay flexible and make an easy come-back as soon as the
prospects are better.
3.1. Impact of the economic crisis
Companies felt the effects of the economic downturn also during the period our
research was carried out, as shows the data below. Moreover, the economic
environment has a strong impact on the way HR people are seeing their role:
almost half of our respondents consider that the main task of the HR department is
to support the company in overcoming the crisis and achieving cost savings. Were
there any paradigm shifts? Did companies adopt solutions that were similar or
different from those applied last year? We kept our focus on this topic in order to
see how companies adapted to the reality they face on the market.
Current situation
FIGURE 6 – INCREASE / DECREASE IN COMPANY TURNOVER OF PARTICIPATING COMPANIES
Whether we like it or not, the crisis in its various forms is still felt in Romania: 40%
of the participating companies registered a decrease in turnover in 2010 in
comparison to 2009.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 7 – IMPACT OF THE CRISIS ON MAIN INDICATORS
Impact of the crisis on number of employees,
company turnover and costs
Costs
8%
Company turnover
6%
No. of employees 0%
0%
67%
38%
25%
47%
20%
14%
31%
29%
40%
60%
11%
24%
80%
100%
Significant (>20% reduction)
Medium (6-20% reduction)
Small (<5% reduction )
None
Conclusions
Even if seriously impacted by the crisis in terms of reduction of company turnover
and costs, most companies kept their staff. Having to choose between cutting the
employee number and cutting their costs, they preferred the latter.
However, the companies that suffered a significant reduction of their turnover had
to adjust their employee number in order to survive.
Now let us look which are the measures that are considered as most appropriate
for overcoming the crisis. While asking us this question we also wondered if HR
practitioners would have the same point of view as business representatives in this
respect.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 8 – KEY MEASURES FOR OVERCOMING THE CRISIS
100%
33%
28%
25%
33%
22%
19%
20%
20%
Business / Board point of view
HR point of view
80%
60%
40%
20%
0%
Improve sales / implement sales improvement measures
Improve operations (processes, etc.)
Reduce cost other than personnel (cancel events, stop investments, etc.)
Reduce cost of personnel
* The Business / Board point of view is obtained from the respondents, not from separate interviews
with the Board.
Conclusions
Things look pretty similar to last year. HR managers consider that the company
Board’s opinion regarding reduction of personnel-related and non-personnel related
costs is similar to theirs. Each of these choices gathered 20% of the votes.
The differences between the opinions of HR practitioners and believed point of
view of the Board arise when evaluating the effectiveness of improving operations
and improving sales / sales-related measures:
While most HR managers consider that improving operations is the most effective
measure for surviving the crisis, the Board sees sales as the key.
Looking at percentages, over half of the respondents believe that constructive
business-oriented measures are more effective than cutting costs.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 9 - PERCENTAGE OF COMPANIES WHO PERFORMED RESTRUCTURING MEASURES
Did your company perform
restructuring measures in 2011?
Yes,
54%
No,
46%
Conclusions
In 2010 around 71% of participating companies implemented restructuring
measures, and 30% estimated to continue them in 2011. The data from 2011
shows that after all many more companies resorted to restructuring measures last
year: 54%. However, the 17% difference might be taken as a positive signal
regarding a possible stabilization of the economic situation. A stabilization, but not
complete recovery, as shows the large number of companies that plan to continue
restructuring in 2012 and 2013.
8% of the respondents said no cost-cutting measures were taken in their
companies.
For the 92% of the respondents who did perform restructuring measures we
discuss the actions in more detail below:
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 10 – COST REDUCTION MEASURES (HR-RELATED)
* This was a multiple-choice question, the total does not add up to 100%.
** No data available for 2010
Conclusions
Companies reacted to the crisis in similar ways in 2010 and 2011: their first options
were reducing jobs, cutting back on employee events and on recruitment; there
were also no major differences regarding the application of measures like changing
the contract type or reducing bonuses and employee benefits.
Layoffs remain the most widely used measure for cutting HR-related costs (53% of
our respondents applied it in 2011). However, the more flexible approach to cost
cutting is also represented by reversible measures like cutting back on events
(44% of surveyed companies), bonuses (35%), and benefits (26%).
The second-most applied solution was cutting back on training (47%). This is a
significant increase compared to the previous year, when only 30% of respondents
cut the training budget. Looking at the popularity of this measure we can conclude
training is mostly being perceived as having little importance and being “optional” –
or that companies chose to focus on internal training or co-finance courses with
the participating employees. While training may be easy to cut, this is not
necessarily a wise thing to do, especially that it is not a mere cost item but it has
direct impact on future performance.
Only about 10% of companies resorted to salary cutting both last year and two
years ago. It may be because this is one measure that employees are surely going
to take badly: beyond all the rest, it affects the bank loans they took – and as we
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
know1 1 of 4 of Romanians have a loan. Salary cuts rank low also because a
company needs the consent of the employee in order to change the salary level.
We have a major difference between last year and two years ago in the case of
measures like using technical unemployment and encouraging unpaid leave in
order to lower HR costs. These actions are much more seldom applied now, several
years into the crisis, because they are short-term measures which can solve an
overcapacity or cash problem only for a limited period of time. Companies that did
not manage to overcome these problems in several months will have resorted to
more radical measures by now – like cutting part of the jobs.
FIGURE 11 – OTHER RESTRUCTURING MEASURES
Reorganization
Job enrichment / enlargement
New systems implementations
(enhancements)
Externalization (outsourcing)
Process redesign
Centralization of functions
0%
10%
20%
30%
40%
50%
Appropriate for overcoming the crisis
To be applied in 2012
Conclusions
Reorganization and job enrichment are among the most popular restructuring
measures. An interesting finding is that even if HR practitioners don’t consider
them suitable, they will still apply it. Job enlargement is a logical consequence of
layoffs and cutting back on recruiting and, if overdone, it will lead to demotivation
on the long term.
Reversely, there are measures of which HR people know they are viable and
appropriate for overcoming the crisis, but they will still not apply them – like the
centralization of functions, outsourcing of non-core activities and process redesign.
The reason might be that they have already carried it out it in the past – or that
the decision does not lie with the HR department.
The survey also shows that one quarter of respondents are planning to implement
new systems or to enhance the existing ones. However, most companies are
reluctant to implement new systems during the economic downturn, maybe with
the exception of payroll solutions, as one respondent told us. In any case, HR
systems are expected to have a lower priority during these times.
1
GfK Financial Market Data System Study 2010
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Now let us see what HR practitioners expect for the future.
Outlook
FIGURE 12 – RESTRUCTURING DURING THE FOLLOWING PERIOD
Conclusions
Half of all surveyed companies continue restructuring measures in 2012, and an
additional 14% plan to maintain them in 2013, too.
Only one third of participants stopped restructuring altogether.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
3.2. Company objectives and directions
In this chapter we will deal with the position of the HR department within the
company: what are its roles and how strong is it involved in business strategy?
HR mission
FIGURE 13 – THE PRIMARY ROLES OF HR WITHIN THE COMPANY
Provide modern HR tools and systems
in order to support / improve business
processes
61%
63%
46%
43%
Handle personnel administration
Offer support for surviving the crisis /
cutting costs / downsizing
40%
Offer support for increasing company
turnover
41%
34%
Other
57%
2010
2011
4%
3%
* This was a multiple-choice question; the total does not add up to 100%.
Conclusions:
Year upon year, the HR department’s role of providing modern HR tools and
systems to the company strengthens to the detriment of its traditional
administrative function: 63% of HR departments see themselves as providers of
solutions for the business while only 43% name personnel administration as
primary task, which is a slight decrease in comparison to the year before.
40% of the respondents still feel the strain of the financial crisis and have an active
role in supporting cost cutting or downsizing measures. Last year however this
number was 30% higher, showing that the effects of the economic downturn,
while still quite strong, have begun to fade.
With regard to what we called “modern HR tools” some interesting findings from
the qualitative interviews with our respondents are that HR practitioners are keen
on developing a way to measure return on investment on training, aligning the
company culture with the business objectives and outsourcing the administrative
part of HR. Of course, there is also the money issue, which is never an easy one especially during the economic downturn.
Other projects of our respondents include increasing the motivation level and
retention of employees by improving the "Leadership" dimension; conducting
Employee opinion surveys and following up on them.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
HR and the company strategy
FIGURE 14 – THE INFLUENCE OF THE HR FUNCTION IN DEVELOPING AND IMPLEMENTING
BUSINESS STRATEGY
Developing / data
gathering
9%
Discussion / alignment 6%
Implementation 3%
0%
37%
54%
40%
54%
43%
20%
54%
40%
Low
60%
80%
Medium
100%
High
Conclusions
Good news for HR practitioners: around 90% of HR managers consider themselves
to be involved in strategy definition, alignment and implementation.
In over one half of the companies the management values the input from the HR
managers and co-opts them in all strategy stages. This is a clear sign that in those
companies HR has earned the long-desired business partner status.
FIGURE 15 – LEVEL OF AWARENESS REGARDING THE COMPANY STRATEGY / DIRECTION
Top Management (Board)
17%
HR department 3%
Middle management 6%
Staff (all employees)
83%
31%
66%
37%
57%
11%
74%
0%
20%
Low
Medium
40%
14%
60%
80%
100%
High
Conclusions
Most respondents consider that the HR department is privileged regarding access
to company strategy compared to colleagues in the middle management.
85% of responding HR experts perceive that staff as having medium or low
awareness of the company strategy. This shows that many top managers either
don’t want to or don’t know how to communicate their vision across the company.
Either way this is unfortunate, because, to name just one advantage, people who
know and appreciate what they are working for have a higher productivity.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
3.3. Modern HR
Out with the old, in with the new! Surviving and succeeding in the world of
business is a tricky thing; not everybody has business awareness, and
maintaining a growing company means having the right people put to action.
The development of modern HR brings into discussion new standards and
ideas, like talent and competency management, as well as a continuous
partnership among leaders and employees. The HR function is emerging as a
facilitator for goals and targets; in contemporary organizations business
strategy is strongly correlated with human capital management.
Stage of development of HR areas
After seeing how HR practitioners see their mission we wanted to analyze how well
they consider that the various HR areas are developed and which of the areas are
in strongest need for development in the following years.
FIGURE 16 – THE MOST DEVELOPED HR AREAS / PRIORITIZATION FOR FUTURE DEVELOPMENT
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Conclusions
Personnel administration continues to be perceived as the best-developed area of
human resources.
HR practitioners are content with the maturity level of recruitment, training
management, management and leadership
development, performance
management and HR reporting.
The three areas that are in greatest need for development are competency
management, career models and comp & ben.
Management involvement in HR-related activities
HR does a lot in order to support the business, but by definition it cannot be a lone
player. It needs backing and sometimes even operational support from the
management. In this section we will see how HR practitioners in Romania perceive
the degree to which management should get involved and if it does so in reality.
FIGURE 17 – IN WHICH HR-RELATED ACTIVITIES SHOULD MANAGEMENT PLAY AN ACTIVE ROLE?
Conclusions
Between 60% and 80% of HR managers agree that management should play an
active role in activities directly related to their employees, like recruitment, training
or performance evaluations. This is a slight decrease in comparison with the values
of last year.
Performance management counts, again, as the process where management
should be most involved.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Surprisingly, 30% of HR managers do not think that leading employees is a
manager’s job. This is the more unexpected, especially as the answers are coming
from HR professionals.
FIGURE 18 – TO WHAT EXTENT DO MANAGERS ASSUME THEIR HR-RELATED ROLE?
Conclusions
There is only one company where HR believes that managers take their role of
people leaders really seriously.
Over one half of the responding HR practitioners consider that management should
assume a more active role in employee development, compensation & benefits and
in dealing with performance management. However, an interesting finding during
the qualitative interviews is that managers start taking performance appraisals
more seriously and that they give more meaningful feedback than several years
before.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 19 – MANAGEMENT INVOLVEMENT
Conclusions
To sum it up: there are serious differences between the perceived importance of
line managers’ roles in several HR areas and the actual degree to which managers
get involved in these activities.
In case of training, compensation & benefits and the performance management
process there is a ~50% gap between the importance of the role and what is
happening in reality. Managers do not take these topics seriously enough – they
might think that these topics are rather the responsibility of HR – or could it be
because they underrate their relevance in the first place?
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Compensation & Benefits
C& B has always been a complex area of utmost importance to all parties involved:
business, where the money is coming from, HR, who tries to find the best way to
split this scarce resource, and employees, who are the final beneficiaries. Let us
see which policies companies apply with regard to this sensitive area.
FIGURE 20 – CRITERIA INFLUENCING COMPENSATION LEVELS AND BENEFITS
Conclusions
Half of the participating companies base their decisions regarding salary level on
job evaluation and performance management. Top management decision still plays
and important role for 50% of the companies surveyed.
27% of companies buy salary surveys in order to decide salary levels. They only
serve as a guideline and companies make their own decisions taking into
consideration how they want to position themselves on the job market. The most
largely used surveys are Mercer and Hay.
In state-owned companies salaries are provided by law and management cannot
influence them at all.
Only 27% have defined clear salary ranges for their employees.
Our qualitative interviews show that unfortunately in most companies the
Compensation & Benefits system is not communicated clearly and that the
principles that stay behind it are not transparent.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 21 – SATISFACTION WITH COMPENSATION & BENEFITS SYSTEM
Conclusions
The vast majority of respondents (70%) are of the opinion that their compensation
and benefits system should be improved, which corroborates with our findings
shown in Figure 16. Some of the respondents wish to adapt it in terms of equity
(internal/external), others plan to first reintroduce the benefits that were cut and
only then analyze the need of redesigning it.
FIGURE 22 – PERCENTAGE OF COMPANIES PAYING FOR PERFORMANCE
Does your company apply
performance-based pay?
No
17%
Yes
83%
Conclusions
The percentage of companies paying for performance has increased from 77% in
2010 to 83% in 2011. More and more companies have seen that rewarding people
in accordance with their results is the only way to keep them motivated on the long
term. The impossibility to adapt compensation to people’s efforts and performance
is a serious demotivating factor in many state-owned institutions and government
organizations.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 23 –TARGET GROUPS FOR THE PERFORMANCE-BASED PAY
Conclusions
Not surprisingly, sales staff is the category that qualifies most for performance
bonuses. However, only 57% of participating companies pay their sales persons
depending on their performance.
Top and middle management in half of the companies receive a performance
bonus.
Experts are less rewarded for performance than blue collar workers or support
staff.
With regard to the criteria used for a bonus payment our study shows that, like last
year, it is individual performance (80% of companies) and company results (73%
of companies) which matter most when paying out a bonus.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Performance management
As we have seen, the vast majority of respondents adapt pay level to performance.
The question is – do they measure performance in a structured way? If so – how
mature is their performance management process?
FIGURE 24 – PERCENTAGE OF COMPANIES WITH A PERFORMANCE MANAGEMENT PROCESS IN PLACE
Is there a performance management
process in your company?
No
23%
Yes
77%
Conclusions
77% of our respondents have a performance management process in place.
Correlating this number with the percentage of companies that reward their
employees for performance we notice that some organizations pay out bonuses
without having a proper process for monitoring results of their employees.
FIGURE 25 – MATURITY LEVEL OF THE PERFORMANCE MANAGEMENT PROCESS
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Conclusions
Three quarters of participating companies have a structured process for managing
performance. However, only 57% of them hold regular check-ups with employees.
Good performance is twice as easy to talk about and reward as weak performance
– as our study reflects as well. Poor results are tackled openly only in 22% of
responding companies. As one of our respondents put it, “Managers need to
improve the way they communicate negative feedback, they are too nice". This
“niceness” is not necessarily the result of fear of confrontation or false diplomacy.
Very often it is the mere lack of preparation that makes managers avoid giving the
negative feedback. It takes either long memory or a high discipline to make notes
about the good and bad facts one wants to discuss during the performance review.
Beside feedback, performance reviews have another function, at least as
important: allowing the company to make adjusting measures like changes in
salary level, promotions or demotions, development plans, etc. Performance
reviews which have no consequences – be they good or bad – will slowly lose
legitimacy in the eyes of both assessors and reviewed employees and will become
“another time-consuming useless HR practice”. There are many companies which
started regular check-ups with employees in good faith and then slowly gave them
up. This is why it is important for HR professionals to make sure that 1. everybody
understands the rationale behind performance reviews and 2. actions are being
decided as a result and they are followed through.
Performance reviews are both avoided, and embraced. Leaving aside the
reluctance of communicating negative feedback, the conversed information
should offer answers to the “why”, “how” and “where” questions the employees
are going to ask when confronted with these reviews. This way the feared and
hated performance reviews can become the start of a self-improvement program
for the employee.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Competency models
Competency models are a handy tool for HR practitioners. They are an inventory of
capabilities (hard and soft skills) that are needed for each job family. The
necessary skill level is usually indicated for each job level. They are mostly used in
recruiting, in order to define job specifications, and in training, to be able to track
development needs. However, they can be helpful in many more HR areas.
90% of participating companies use competency models in one way or another. Let
us see below which purposes they serve.
FIGURE 26 – USES FOR COMPETENCY MODELS
Conclusions
As last year, three quarters of companies that participated in the Ensight research
use competency models for recruitment purposes and around 60% for training.
Only one third or below use them for planning workforce and reviewing talent.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
3.4. Talent management
Talent management is a term intensely used since the 90’s, surprisingly finding
itself again in the spotlight. Why surprisingly? Considering the path many
businesses have chosen to fight the crisis, this re-vamped paradigm managed to
attract the attention of managers (not only HR managers) who found within
their teams the answer to the company’s problems. Attracting new talents,
keeping them and motivating them could bring the consolidation of the
foundation any company was built on.
FIGURE 27 – PERCENTAGE OF COMPANIES WITH A TALENT MANAGEMENT SYSTEM
Conclusions
This specific part of the study has a very optimistic and promising finding: 53% of
the respondents have set up a talent management system, and 21% will create
one in the near future. Companies are aware of the potential of such a system.
Nurturing and “upgrading” staff is not a 3-step program, but a strategic and
methodical approach - which brings us to our next point.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
FIGURE 28 – USES OF THE TALENT MANAGEMENT SYSTEM
Conclusions
Our study reveals that the uses of talent management are in an intertwined
relationship, and the elements with the biggest percentage (73-82 %) make a lot
of sense: identification of key successors and of key positions, talent review and
development plans. Key positions require a great sense of tenacity and business
awareness, and identifying and developing these qualities asks for well-organized
career developments plans, as well as constantly reviewing staff.
Only one third of our respondents who have a talent management system in place
use it for purposes of job rotation. It could be because job rotation is not a wellspread practice in Romania yet.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
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FIGURE 29 – MOST IMPORTANT BENEFITS OF A TALENT MANAGEMENT SYSTEM
Conclusions
Undeniably, the implementation of a talent management system brings along a
wide array of benefits, both for the company’s success and the individual’s
professional development. The time spent in a work position translates into gained
experience, know-how, expertise and business open-mindedness, and the loss of
capacities like these is a minus for any company. Talented and knowledgeable
employees ensure business continuity, the perpetuation of trends and methods,
inspiration for new trainees who want to learn from the best, as well as setting
foundations for strong and lasting business partnerships. That is why most of our
respondents classify “reducing loss of talents and knowledge” and “ensuring
business continuity” as very important in the entire talent management equation.
However, a lot of people still do not consider managing talent as a critical thing to
do. Around 25% of our respondents do not see the link between fostering talented
employees in their companies and business continuity.
FIGURE 30 – ORGANIZATION LEVELS FOR WHICH TALENT IS MANAGED
Team Leaders
93%
Department Managers
93%
One level below Board Members
(Regional Directors, etc)
80%
Staff
53%
Corporate Support Functions
47%
Board Members
47%
0%
© 2012 Ensight Management Consulting. All rights reserved.
20%
40%
60%
80%
100%
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
Conclusions
Virtually all responding companies which have a talent management system in
place have included team leaders and department managers in it. Senior staff is
also fairly present in the companies’ endeavor to single out and foster talent (in
80% of responding companies). However, only half of our respondents include
regular staff in this system – even if logic would tell us that here you find the
largest pool for potential.
Interestingly enough, half of our respondents keep their proven talents, C-level
employees, on their “watch list”, by including them in their talent management
system. This comes somewhat as a surprise, especially considering that in Romania
there still is this wide-spread mentality that those who have achieved a high
position have no need to learn anymore; moreover, it might be seen as a weakness
to attend any development program at all.
Including senior staff in a company’s talent management system is a wise
approach; it allows organizations to make sure the necessary skills in the critical
top positions are available and constantly updated, thus reducing risk in the highly
sensitive area of management succession (cf. “business continuity” in Figure 29).
FIGURE 31 – PERCENTAGE OF EMPLOYEES INCLUDED IN TALENT MANAGEMENT SYSTEM
Team Leaders / First Line Managers
74%
Board Level
68%
Department Managers
53%
Regional Directors
45%
Staff
35%
Corporate Support Functions
33%
0%
20%
40%
60%
80%
Conclusions
Business leaders expect the full 100% from their staff in terms of focus on
revenue, customer attention and adapting to change; effective personnel planning
and talent management pave the way for meeting those business goals. Knowing
which staff is ready and which of the staff needs the extra training finally boils
down to making business targets easier to reach.
With a percentage of 74%, team leaders and first line managers are the first
category of employees taken into consideration for talent management programs,
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
since they are most in contact with new projects and clients and set the basis for
significant business partnerships. Board members take the second spot with 68%,
partly because of the extensive networking advantage and the existing leadership
skills and knowledge. Since many companies have regional branches across the
country, regional directors are given more and more attention due to the nature of
their job: more employees to supervise and pressure to meet monthly targets.
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
3.5. 24-Months Focus
After assessing the current status of a series of major HR topics we wanted to see
where the focus of the HR practitioners would be during the next couple of years.
FIGURE 32 – AREAS OF MAJOR STRENGTH OR REQUIRING IMPROVEMENT IN THE FOLLOWING 24
MONTHS
Employee understanding of HR policies
and practices
13% 17%
Delivery of HR initiatives by the line
10%
management
Integration of HR activities in business
strategy
40%
23%
37%
13% 17%
37%
Increased board/senior management
7%
involvement
23%
Efficiency of HR administration 3% 17%
0%
5 - requires big improvement
4
23%
20%
3
2
40%
3%
23%
33%
Correlation of HR activities with each
10% 13%
other
23%
27%
23%
7%
13%
33%
37%
40%
60%
7%
10%
17%
80%
100%
1 - no improvement necessary
Conclusions
We asked our respondents to assess a series of HR areas in terms of necessary
improvement during the following 2 years. Predictably, HR administration came out
as doing fairly well. The remarkable insights lie elsewhere:
70% of responding HR professionals considers that there is the need for significant
development in the way employees understand HR practices and the way the line
management carries them out. Tellingly, these are big frustrations because they
have to do with the very core of HR activity. People who understand the company’s
HR practices are sure to accept them more readily. People who don’t may even
come to question the HR department’s legitimacy. And if we are talking about line
managers, there is no surprise that they won’t deliver HR initiatives to the full
contentment of HR experts if they don’t understand them in the first place.
More PR for HR!
One way to bring about these necessary improvements is for HR professionals to
focus on explaining to the staff the how’s and why’s of HR practices. This way what
may have been perceived so far as meaningless, arbitrary and tiring will be
accepted as the logical thing to do.
Two further points on the wish-list of 60% of responding HR people are correlating
HR activities with each other and integrating them into the business strategy. The
best way to do this is to start the other way round, namely by deriving the
necessary HR activities from the business strategy. One consequence would be
increased management buy-in for HR initiatives, to be sure!
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
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ABOUT THE AUTHORS
Manfred Schmauch is
a Principal with Ensight
Management Consulting,
with an experience of 15
years in HR and Change
Management. He has
worked as program and
project manager for
various
international
large
scale
transformation projects. His focus is on
restructuring,
career
development,
recruiting, set up of shared-service
centers, HR organization and business
process reengineering, communication
& mobilization, cultural transformation,
enabling/competency management and
change management.
You can contact him by email at
[email protected].
Sandra Jitianu
is a Manager with
Ensight
Management
Consulting. She has 9
years of experience in
HR and 5 years in
management consulting.
Her consulting missions
include HR function analysis and
design, business process redesign,
restructuring
and
reorganization,
performance
management,
compensation
systems,
change
management
and
transformation,
assessment centers and training.
You can contact her by email at
[email protected].
ABOUT ENSIGHT
Ensight Management Consulting is a management consulting company evolving
since 2000. In terms of turnover and number of employees, Ensight is the most
important local management consulting company.
Our “People” Practice area supports businesses during phases of development,
post-merger integration, restructuring or outsourcing.
Our belief is that employees – your people – are more than anonymous resources
or simple production factors, they represent the core and heart of a business. The
same logic counts for the management of employees: it’s about setting up
structures that enable people to drive performance and achieve results.
Our People Capabilities:

Reorganization & transformation

HR processes, procedures, roles & responsibilities

Performance management models

Competency modeling & assessment

Capability development

Talent management framework – design & implementation

Change management strategy and implementation

Implementation of HR information systems

Analysis and optimization of personnel cost

Audit for payroll and conformity of personnel files
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
Second edition, 2012
LIST OF FIGURES
Figure 1 – Respondents’ turnover ..................................................................................... 5
Figure 2 – Respondents’ employee number....................................................................... 5
Figure 3 – Respondents’ distribution by industry ............................................................... 5
Figure 4 – Respondents’ profile according to their position ................................................ 6
Figure 5 – respondents by direct reporting line ................................................................. 6
Figure 6 – Increase / decrease in company turnover of participating companies ................. 9
Figure 7 – Impact of the crisis on main indicators ........................................................... 10
Figure 8 – Key measures for overcoming the crisis .......................................................... 11
Figure 9 - Percentage of companies who performed restructuring measures ..................... 12
Figure 10 – Cost reduction measures (HR-related) .......................................................... 13
Figure 11 – Other restructuring measures ....................................................................... 14
Figure 12 – Restructuring during the following period ...................................................... 15
Figure 13 – The primary roles of HR within the company ................................................. 16
Figure 14 – The influence of the HR function in developing and implementing business
strategy ........................................................................................................................ 17
Figure 15 – Level of awareness regarding the company strategy / direction ...................... 17
Figure 16 – The most developed HR areas / prioritization for future development ............. 18
Figure 17 – In which HR-related activities should Management play an active role? .......... 19
Figure 18 – To what extent do managers assume their HR-related role?........................... 20
Figure 19 – Management involvement ............................................................................ 21
Figure 20 – Criteria influencing compensation levels and benefits..................................... 22
Figure 21 – Satisfaction with compensation & benefits system ......................................... 23
Figure 22 – Percentage of companies paying for performance ......................................... 23
Figure 24 – Percentage of companies with a performance management process in place .. 25
Figure 25 – Maturity level of the performance management process ................................ 25
Figure 26 – Uses for competency models ........................................................................ 27
Figure 27 – Percentage of companies with a Talent Management System ......................... 28
Figure 28 – Uses of the Talent Management System ....................................................... 29
Figure 29 – Most important benefits of a Talent Management System .............................. 30
Figure 30 – Organization levels for which talent is managed ............................................ 30
Figure 31 – Percentage of employees included in Talent Management System .................. 31
Figure 32 – Areas of major strength or requiring improvement in the following 24 months 33
© 2012 Ensight Management Consulting. All rights reserved.
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Ensight Study: What is the current status of HR in Romania?
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© 2012 Ensight Management Consulting. All rights reserved.
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