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HRWorksYour Human Capital SolutionHRWorksYour Human Capital Solution

Charles Saliba CEO, HR Works s.a.l.

Colloquium on Corporate Governance across Ethics, Culture & Citizenship

HR GovernanceThe Real Gatekeeper

USEK, April 14 & 15, 2014

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Time of the UGLY Truth

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2008

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The Guilty

Richard FuldFormer Chairman &

CEO of Lehman Brother

Kathleen CorbetAAA Sealing

Bernard Madoff Stockbroker, Investment Advisor, and Financier

Angelo MoziloCo-founder of Country Wide

1. Angelo Mozilo2. Phil Gramm3. Alan Greenspan4. Chris Cox5. American

Consumers6. Hank Paulson7. Job Cassano8. Ian McCarthy9. Frank Raines10. Lathleen Corbet11. Dick Fuld12. Marion & Herb

Sandler13. Bill Clinton

14. Georges W. Bush15. Stan O’Neal16. Wen Jiabao17. David Lereah18. John Devaney19. Bernie MADOFF20. Lew Ranieri21. Burton Jablin22. Fred Goodwin23. Sandy Weill24. David Oddosson25. Jimmy Cayne

25 People to blame for the Financial CrisisThe good intentions, bad managers and greed behind the meltdown

And many others... HRWorksYour Human Capital SolutionHRWorksYour Human Capital Solution

sample

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The Guilt

greed

misjudgment

incompetenceHRWorksYour Human Capital SolutionHRWorksYour Human Capital Solution

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The Consequence

CrisisFinancial

Economic

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Decrease in Trust Levels Financial Institutions

What were the Repercussions of the Crisis?The word CREDIT is derived from the Latin word CREDERE, which means to HAVE TRUST IN‘ ,

MarketPsych: “TRUST”/Top 50 Global Financials

Source: TRNA/MarketPsych/ Sentiment Indicators – Thomson Reuters.

Trust in the Top 50 Global Financials expressed through Media Sentiment

Indicator drawn from news and social media sources to illustrate the level of trust in Global financial institutions, which decreased considerably from 2008 until the first quarter of 2013

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Decrease in Trust Levels in Economic System

What were the Repercussions of the Crisis?

Source: FT – Harris Poll (2008)

Anti Capitalist Tendencies among G8 Countries

The graph shows the effect of the financial crisis on citizens’ confidence in the market economy.Citizens from these countries were asked whether the current financial crisis had been caused more by “abuses of capitalism” or by the “failure of capitalism itself”, an astonishing 30% of German respondents selected the latter explanation. This value is four times higher than the 7% obtained in the US and nearly twice as high as that obtained in France, at 17%.

Results show that German economy has been hit the hardest among the world’s largest economies by the financial crisis

USA Italy Great Britain

Spain France Germany

30%

17%15%

13%11%

7%

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What were the Repercussions of the Crisis?

Increase in Regulatory Activity (documents changes, announcements, enforcements by regulators)

Source:Data drawn from Governance, Risk & Compliance business and Thomson Reuters Accelus™.

Proliferation of regulatory activity leading to increased compliance burden for the financial sector

Tota

l Ale

rts

Year

-on

-Yea

rGreatest volume of regulatory alerts are tracked in North America, followed by Asia, and UK/Europe. Today, there are 85 regulatory alerts per day

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Great Financial Losses (especially in US Banks)

What were the Repercussions of the Crisis?

Average Quarterly Net Income per 100$ of Bank Assets (Pre-crisis, Last 5 years, Last 4 quarters)

Source: FDIC Bank Data & Statistics Quanta Analytics

The graph shows the overall quarterly income to asset level as reported by each of the Big Four banks and for the rest of the U.S. banking community for (1) the eleven-quarter pre-crisis period; (2) the five-year crisis period; and (3) the last four quarters of the crisis.

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The Consequence

CrisisFinancial

EconomicSocial

Existential

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real

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Reading it Differently

=25 People

25Human

Resources(HR)

Socio- Existential

Crisis=

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Will it happen again?

Yes, it will

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Why?

practice of People Governance

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Shy

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Key HR related emphasis

Organization Structure Roles of the BoD Succession Planning for

BoD Members Executive Remuneration BoD Members Induction Codes of Conduct & Ethics

Examples

sample

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So, what is the Solution?

iNCLUSION ofHR Governance

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in Corporate Governance practice

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The Governance Dilemma

Governance Dilemma

Moral Crisis

Competence Crisis

Intentionally Wrong Decisions

1

2

Then again, What’s the Big Idea?

It has been proven by undoubtful fact that the Global Economic & Financial Crisis of the World was caused by people who lacked Competence and/or Morality.

Unintentionally Wrong Decisions

Economic & Financial Crisis

Integrity & professionalism of the Human Resource in rganizations

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Persistence of the

Governance Dilemma

(caused by the Human Element)

More Financial, Social & Economic Trouble will keep

coming because no serious measure

are being adopted to neutralize the

cause of the problem

The Answer

The need for an

HR Governance As a tool to Mitigate

Human Resource (HR) Risk

So What?

The Challenge The Problem

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But what is HR Governance?

HR Governance is a management concept developed by HR Works’ Research Center in 2013. It stands for the process of ensuring that the Human Element in any Organization is vigorously governed in terms of Morality and Competence.

It aims at putting in place all required enablers to govern the Value Chain of People Management inside an Organization.

Value Chain of People Management includes:- Selection of Staff - Remuneration- Behavioral Compliance & Professionalism- Employee Competence & Good Judgment- Career Development- Succession Planning, and - Performance Management

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How does HR Works apply it? (1/5)

Selected Governing

ToolsAreas for

GovernanceLegitimate Governing

Bodies

HR Governance

I II III

1. The HR Department2. The Human Capital

Structure & Composition3. The Leadership Team

1. The Board of Directors & its Committees

2. HR Committee3. Internal Audit Department4. Quality Assurance

Department

1. Due Diligence 2. Audit Reports3. Quality Assurance Reports4. Progress Reports

Pilla

r I

Pilla

r II

Pilla

r III

HR Works’ ‘HR Governance Model’

Pilla

rs

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* This Model is developed by HR Works’ Research Center

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Monitoring the Application & Compliance of: HR Policies & Procedures HR Systems HR Team and, Practices that the HR Function is

utilizing for managing the Workforce

Ensuring Business protection in terms of: Workforce numbers Employees’ education & competencies Profiles & Social Background Gender & Nationalities Capacity & Ability to grow Level of Individual Dependencies Workforce Aging and, Performance

Evaluating leaders’: Strength & Weaknesses Leadership styles Quality of decisions Extent of compliance vs. non-

compliance to rules and regulations Projection of the Company professional

image Retention & Development potential

and, Performance

Selected Governing

ToolsAreas for

GovernanceLegitimate Governing

Bodies

HR Governance

I II III

The Leadership TeamThe Human Capital Structure & CompositionThe HR Department

1 2 3

Three entry points through which lack of compliance and hence risk can penetrate any

Company

How does HR Works apply it? (2/5)G

over

nanc

e Sc

ope

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Raise the flag whenever they notice a breach or a deviation in the implementation of agreed upon

systems and policies

Selected Governing

ToolsAreas for

Governance

Legitimate Governing

Bodies

I II III

HR CommitteeInternal Audit Department

Board of Directors & its Committees

1 2 4Quality Assurance Department

3

Monitor the appropriate execution of systems and policies a priory, i.e. before a decision is made hence

mitigating any potential risks that might arise from inappropriate actions

Reactive Governance Proactive Governance

How does HR Works apply it? (3/5)

Entities in charge of implementing the Company’s HR Governance, by virtue of Law or

appointment by the Board

HR Governance

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Selected Governing

ToolsAreas for

GovernanceLegitimate Governing

Bodies

I II III

Progress ReportsAudit ReportsDue Diligence Quality Assurance Reports

How does HR Works apply it? (4/5)

Diagnostic Technical exercises usually carried out by Internal or External Human Capital Auditors

Assess the current status of an Organization In terms of its compliance with HR practice (policies and regulations, key financial, legal, & organizational benchmarks)

1 2 43

Review work previously executed by the HR Department or any other entity involved in people management inside the Company

Result in documented findings and recommendations report presented to the Board of Directors for discussion and appropriate Action

Give concerned entities, like the HR Department and the CEO, a comprehensively detailed perspective on points of improvement to sustain HR Governance

Emphasize the continuous improvement dimension brought about by HR Governance

Ensure that the Audit & Quality Assurance Recommendations are being acted upon, and that the Organization is rectifying its track to be or become compliant again

Valid & reliable Tools that sustain a concrete &

defendable outcome of HR Governance Exercises

HR Governance

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Selected Governing

ToolsAreas for

GovernanceLegitimate Governing

Bodies

I II III

Competencies of GovernanceThe Professionalism Code

How does HR Works apply it? (5/5)

A Global formal Code that sets and defines the Pillars of Professionalism for the modern World inclusive of Code of Ethics, Collegial Relations, Good Judgment, Integrity of Decisions, Collective Good, etc.

This Code would be delivered to all Employees in companies through Awareness & Training Sessions

The Professionalism Code should also be a serious candidate to become a Core University Course for all specializations, specifically for Business related majors.

5 6

This tool comprises of ensuring that all employees in a Business are in their right place, i.e. in a position for which they have the required competencies to work in.

The tool is based on ensuring that every employee has a Job Description based on a formally promulgated Organization Structure; it also counts on having a clear Competency Assessment tool that measure the gap between Employee’s current level of competence versus the level of competence required by the Job he is in

The Moral Dimension of HR Governance

The Competence Dimension of HR Governance

HR Governance

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CEO

HR Department

Progress Reports

Directives & Recommendations

Directives

Findings & Recommendations

Board of Directors &

its Committees

RecommendationsHR Committee

Monitoring of Implementation

HR Audit & ReviewCompliance

Input

Feedback

Coordination

Feedback Request

Input & Directives

Quality AssuranceDepartment

Internal Audit

Department

Recommendations & QA Reports

How does the HR Governance Model Operate?

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Now let The Guilty try again

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About HR Works s.a.l.

HR Works is a Consulting Firm that specializes in Organizational Transformation and Human Capital Strategies development and implementation. Through its extensive service offering HR Works aims at providing high-end professional, comprehensive, and mostly pan Arab expertise in the field of Human Capital & Organizational Consulting, Talent Management, and Capacity Building.

Established in 2008, HR Works has offered its services to a mosaic of esteemed Regional and International Clients in industries like Transport, Telecom, Banking, Architecture & Engineering, Food & Beverage, Hospitalization, Investment, Manufacturing, Retail, Shipping, Energy and others. The outreach of our Clients’ business activity is of global presence including Asia, Africa, America, and Europe.

In addition, HR Works have a solid experience in the Public sectors of various Arab Countries including Kuwait, KSA, UAE, and Lebanon. Its expertise in this regards include Organizational Restructuring, Manpower Planning, HR Systems Development, Compensation Strategies, and others.

HR Works is a company of The HR Group Holding s.a.l., based in Beirut and serving the Middle East, GCC, and Levant Regions.

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HRWorksYour Human Capital SolutionHRWorksYour Human Capital Solution Our Service Offering

1.Organizational Re-engineering2.Total Human Capital Strategies3.Talent Attraction Strategies4.Talent Retention Strategies5.Performance Management Strategies6.Workforce Aging Strategies7.Leadership Pipeline Strategies8.Leadership Development Programs9.Talent DNA Assessments10.Succession Planning11. Change Management12.Employer Branding

Services

13. HR Functions Set Up14. Compensation Strategies15. Manpower Planning16. Human Resources Bylaws17. Employees Handbooks18. Human Capital Due Diligence19. HR Audit20. Human Capital Dashboards21. Benchmark Studies22. Executive Human Capital Advisors23. HR Functions Advisory Support24. On-call HR advice

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