Unleashing human capital

HCM Global Pty Ltd © 2003 1

Anna-Lucia Mackay & Anthony Sork

www.hcmglobal.biz

Unleashing Human Capital to Drive the Next Wave of Growth



AGENDA

• Understanding Human Capital Management (HCM) as a strategic driver of enterprise growth

• Best Practice HCM programs

• Integrating HCM infrastructure across the organisation


TRANSITIONING HR TO HCM

• “Do more with less” has pressured a change to the structure and purpose of central departments

• No longer can “administrative centres” exist without clear contribution to the bottom line

• Corporate services now required to be consultative and strategic

• In the knowledge economy, attraction and retention of talent is the key differentiator to business success

• To devise and successfully implement a Human Capital Strategy that facilitates business performance and enables business growth is the purpose of this corporate service today and into the future


MCKINSEY REPORT – WAR FOR TALENT

The survey comprised of 400 corporate officers and 6,000 executives from the “top 200” ranks in these companies.

• Only 33% of the 6,000 “top 200” executives strongly agreed that their companies attract highly talented people

• Just 10% strongly agreed that they retained their high performers

• Only a paltry 3% said their companies “actually developed their people quickly and effectively, or move low performers out quickly”


THE CEO VIEW


HOW ARE WE PERFORMING


THE SCORE CARD

• Very good on the HR basics – Administration

• Key areas to improve:– Recruitment– Retention


“The very definition of Human Capital is that it walks out the door every evening, and exits permanently with an employee who

leaves a company.”

Gary S BeckerNobel Prize winning economist


HUMAN CAPITAL

Human Capital

Ability/

Competency

Intellectual/

Knowledge

Relationships

Internal/External


HUMAN CAPITAL MANAGEMENT MODEL

Source: HCM Global 2003

EMPLOYER

OF

CHOICE

PEOPLE

PRODUCT &

PROCESS

SYSTEMS

BUSINESS STRATEGY

&

OBJECTIVES

RETENTION

DEVELOP & RECRUIT

HUMAN CAPITAL MANAGEMENT STRATEGY

Able toExecute

Unable to Execute

HCM


HUMAN CAPITAL MANAGEMENT


ATTRACT


WHERE TO START

• Who are you trying to attract?

• What talent do you know your organisation requires?– Linked to organisation strategy and key objectives

• Profiling your targeted talent

• Understand what creates Employer of Choice status for your targeted talent– Note this varies across generations and industry

• Create an Employer of Choice strategy


2003 EoC Research

John Galloway GM Classified, careeroneHuman Capital October 2003

EoC selection criteria: all industries

31%

9%11%16%

19%

14%

Career developmentopportunities

Management style andstructure

Prestige-local andinternational perception

Salary and remuneration

Working environment andcompany resources

Workplace culture


RECRUIT


“Through the influence of skill specialisation, low unemployment rates and the recognition of the value of people to the performance of

the business, the recruitment process has become as much about candidates selecting the employer as the employer

selecting the candidate.”

Debbie LoveridgeDivisional Director – Select Australasia 2003


CURRENT MARKET CONDITIONS

• Recruitment procedures and tools have become quite sophisticated

• Targeted selection has become very effective

• Our administrative strengths now threaten our ability to actually achieve the desired recruitment objective

• Thoroughness of process has directly impacted length of process

• Length of process is one of the greatest influencers on candidate decision making – The “you snooze you lose” effect

• There is a fine line between creating desire for a position and creating a barrier of entry and a perception of bureaucracy


BRAND VALUE

• The recruitment process will heavily influence your brand value and brand power

• The recruitment process for successful candidates will either facilitate or hinder the bonding process

• For unsuccessful candidates, a poor recruitment process can have far reaching effects both on consumer perceptions and on future talent attraction


RETAIN


EMPLOYEE BONDING CRITICAL TO RETENTION

ROTATION/CONTEXT

ORIENTATION

CORE/CENTRAL MESSAGES

INCREMENTAL LEARNING

90 DayCriticalPeriod

Source: HCM Global 2003


EoC FOR EXISTING STAFF

• Many organisations focus their EoC strategy on attracting talent based on current business objectives

• Many neglect the need to develop an EoC strategy that addresses both attracting and retaining talent

• Most neglect the need to do this both based on current business objectives as well as future business objectives

• Your desired Human Capital will change along with your business


EoC STATUS AND BUSINESS GROWTH

1 yr

2 yr

3 yr

4 yr

Exis

tin

g S

taff

Targeted Staff

TIME

HCM Global 2003


THE PSYCHOLOGICAL CONTRACT

“Psychological contracts are implicit, involving an individual's beliefs of reciprocal exchange between two parties pertaining to trust,

loyalty and the well-being of all involved.”

SL Rousseau


4 ELEMENTS OF THE PSYCH CONTRACT

1. Contract – Focus• Willingness to go beyond the confines of the employment

contract• Degree of focus on employer and job as source of

remunerative benefit alone2. Perceived Equity

• Degree of perceived equity in the behaviour of the company towards employees

• Inputs and outcomes3. Involvement

• Degree to which an employee remains involved in and invests in the activities of the company

4. Time-frame• Expected length of employment relationship based on

intentions and perceived long-term prospects with the employer


INVEST IN PEOPLE DEVELOPMENT

• Many elements within your businesses will influence retention of key talent – Watson Wyatt identify the following in their Human Capital Index:1. Recruiting Excellence2. Clear rewards and accountability3. Collegial and flexible workplace4. Communications integrity5. Prudent use of resources

• Key to your Employer of Choice strategy for desired, existing and future talent and influencer of the Psychological contract is your willingness to invest in people development

• Gen X and Gen Y demand it!!


ORGANISATION LEARNING PATHWAY

• One of the easiest ways to integrate a HCM infrastructure across the organisation is by leveraging your people development system

• Ensure you link people development and career progression

INDUCTION

FUNCTIONALLY SPECIFIC TRAINING

MENTOR/COACH

LEADERSHIP

EXECUTIVE

MANAGEMENT


PEOPLE DEVELOPMENT AS HCM INFRASTRUCTURE

Some of your key objectives may include:

– To provide an environment in which all staff have the opportunity to develop themselves as far as their ability and desire will allow

– To design, develop and implement a comprehensive organisation development program which enables development for all staff across all positions and divisions within the company regardless of length of service

– To develop talent from within in line with key organisation objectives


HCM AS A STRATEGIC DRIVER OF GROWTH

• Organisations that invest in their people are commonly associated with higher revenues per employee

• Measurable HCM factors such as staff retention and absence due to sick leave show a strong link to profitability

Source: Global Human Capital Survey IBM Business Consulting Services


www.hcmglobal.biz