driving results

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People Issues are complex…. People Issues are complex…. Managing them doesn’t have to Managing them doesn’t have to be be Improving Business Improving Business RESULTS RESULTS through through PEOPLE PEOPLE Driving Results Driving Results with with Breakthrough Breakthrough People Strategies June, 2003 June, 2003 Ravi Virmani, Managing Director, South Asia Hewitt Associates Presented at HR Round Table organized by ISPe & UPES, Dehradun

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Page 1: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Driving Results Driving Results withwith

Breakthrough Breakthrough People Strategies

June, 2003June, 2003

Ravi Virmani, Managing Director, South AsiaHewitt Associates

Presented at HR Round Table organized by ISPe & UPES, Dehradun

Page 2: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

“The old adage ‘People are your most important asset’ is wrong.

People are not your most important asset, the right people are”

- Jim Collins in Good to Great

Page 3: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

What we know of the futureWhat we know of the future

Privatization and Deregulation of sector

Intensity of Competition

Environmental & Social Regulations

New frontiers and New technologies

Looking beyond borders

Structural Changes

Natural gas as an alternative

The unknown unknowns

Transform or Perish...Transform or Perish...

Page 4: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Business Results & Strategies

Business Capabilities

People Requirements

Talent Strategies

Employee Needs

StaffingStaffing

RewardingRewarding

PerformingPerforming

OrganizingOrganizing

LearningLearning

Driving business results through people Driving business results through people

Business Interactions

Management Practices

Balanced Measureme

nt

Page 5: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Bringing talent strategy to lifeBringing talent strategy to life

CrudeProcurement Refining Logistics Marketing

Do I have the right people doing the right

things

Am I creating the right environment for

success

How do I know

People Capability

Performance Drive

Structure

Reward Customer

Page 6: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Strategy framework - an illustration Strategy framework - an illustration

Build emerging businesses

Extend & defend core businesses

Create viable options

Profi

tabl

e Gro

wth

Seed growth

options & test

business model

Manage for

profitability

Replicate proven business

model

Key elements required to drive/ achieve

growth and profitability for your

business model Structure

Capability

Performance

Reward

Page 7: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Seed growth

Manage

Replicate

Organization structureOrganization structure

– Innovators

– Entrepreneurs

– Technical

specialists– Developers of emerging businesses

– Autonomy to run businesses

– High level interface with the Strategic

Group

– Strategic core to drive synergies

– Consolidation & Policy direction across

different Oil Industry ventures

– Highest level for Technical “Experts”also

Profi

tabl

e G

rowth

– Skill

hierarchies

– Career tracks

– Continuous

redefining of

jobs

– Provision for

“high

octane”specia

l projects

Key Elements– Scalability– Agility– Focus– Innovation & Process

Orientation

Page 8: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Capability buildingCapability building

Seed growth

Replicate

Profi

tabl

e Gro

wth

Key Elements– Effective leadership– Knowledge and capability

development– Continuous skill

enhancement

– Defined

“leadership

culture”

– Behavioral

and technical

competency

framework

– Linkage to

hiring,

training,

performance

management

etc.

– Recruitment based on

competencies

– Performance

based differentiators

– Top-line focus and sharp decision

making

– Ability to strategize & run a

business

– Technical & creative skills

– Deep functional/ industry expertise

– Strong skill inventory and assessment/

upgradation mechanisms

– “No excuses” management style

Manage

Page 9: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Leadership - the fulcrum of capability buildingLeadership - the fulcrum of capability building

Organisation Team

Individual

Self Awareness & Effectiveness

Leadership Systems Development Exercises

Complacence is a function of past success and lack of future visibility. Indian oil and gas companies will need inspired leadership in the next 3-5 years if they are to escape the complacence trap. Strategic paranoia will be the most critical lever available to the value chain integrator.

Page 10: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

•Multi-Source Feedback

•Individual development action plans

•Coaching & Feedback

•Development Curriculum - Workshops, Simulations, Team Exercises

•Performance Management

•High potential Management - Succession Planning

Self-Awareness & Effectiveness

Leadership competencies

Identifying individual Strengths & development needs

How one is perceived by others

Team Development Exercises

Team effectiveness

Integrated dynamics

Addressing collective development needs

Supporting Leadership Systems

Integrated approach to manage the Leadership Life Cycle

Organisational dynamics

Systemic model

Leadership - the fulcrum of capability buildingLeadership - the fulcrum of capability building

Page 11: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Build your talent pipelineBuild your talent pipeline

Senior LeadershipSenior Leadership

Emerging Leaders - Talent PoolEmerging Leaders - Talent Pool

Board and Board and CEOCEO

Future Leaders - Young TalentFuture Leaders - Young Talent

external sourcing

strategiesgroom from

within strategies

Get the “Right People” on the bus

Page 12: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

– Differentiated

performance

parameters/

time horizons

– Feedback and

Coaching

mechanisms

– Review

completion to

have the

intensity &

focus of a

budget process

Key Elements– Alignment to business

strategy– Right measurement– Process orientation

and transparency– Culture of discipline

Performance managementPerformance management

Seed growth

Manage

Replicate

– Entrepreneurial drive, top-line focus,sharp decision making & self motivation

– Strategize, plan & run a business aggressively & profitably

– Organisation building capability– Consolidate/leverage technical & creative

skills

– Strong leadership

– Recognition of

innovation

– Long term time

horizon– Top-line and aggressive targets

– Strong linkages to training and

development

– Medium term time horizon

– “Clear penalties” for under-performance

– KRAs and targets based on bottomline growth

– Ongoing review and feedback

Profi

tabi

lity

&

Gro

wth

Page 13: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Common Purposefocusing everyone on

the organization’s goals

Where are we headed?

Common Purposefocusing everyone on

the organization’s goals

Where are we headed?

Clear Expectationsfor individual andgroup contribution

What’s my role?

Clear Expectationsfor individual andgroup contribution

What’s my role?

Commitmentbased on meaningful

work and rewards

What’s in it for me?

Commitmentbased on meaningful

work and rewards

What’s in it for me?

Capabilitybuilt through

feedback and learning

What will it take?

Capabilitybuilt through

feedback and learning

What will it take?

Performance

Planning

PerformanceReviews

Rewardsand

CareerDevelopment

OngoingFeedback

Focus on the Key Outcomes more than the Process Steps

Develop performance systems Develop performance systems

Page 14: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Ensure alignment….Ensure alignment….

Performance Scorecard

• Map objectives to the balanced scorecard framework

• Establish metrics, baseline, and set targets

Value Driver Mapping

• Identify value levers

• List metrics in view of short- and long-term business strategy, anchored to value creation requirements

Strategy Tree

• Articulate how the business will create value, from high- level strategies to specific initiatives that will support the business objectives

Scotia Capital - Value PropositionMaximize Return on Shareholder Capital

DRAFT3-Year CAGR: 16%1,200 Employees3 Businesses3 RegionsNI (2000) = $650M

Profitable Top-Line Growth ROEE

BSC

Imp

lica

tions

Cur

rent

Initi

ativ

es a

nd M

ea

sure

men

ts

Bus

ines

s Pl

an

and

Ta

ctic

s S

trate

gic

Fo

cus

New Markets and Products Grow Existing Revenue Sources and Market Share Return on Equity Capital Risk Management

Deepen CustomerRelationships

EffectivelyCross-Sell

Broaden Product &Service Offerings

Build/OptimizeMarkets

Maximize CustomerProfitability

CanadaFocus on key customers

Build lead relationships

Shift from product P&L tocustomer P&L (ROEE based)

Become financial advisorinstead of product provider

Strengthen reputation in themarketplace

Enhance collection and useof c lient information

USAdopt industry-focused c lientcoverage model

CanadaFocus on multiproduct sales

USCross sell broader range ofScotiabank Group products

EuropeHave CRMs integrate allproducts into marketingefforts

Engage in more active crossselling

CanadaOffer full menu of financialproducts

Leverage E-distribution

USBroaden product offeringsacross the board (equity andcredit derivatives)

EuropeBuild additional productcapability (especiallyderivatives)

CanadaStrengthen middle marketpresence

USFurther develop existingbusiness lines

EuropeImprove access toContinental Europe markets(add language skills)

Expand existing business lines

Expand industry focus inselect industries

AllImplement customerprofitability model (ROEEmethodology)

USModel projected customerprofitability

Tier client base by ROEE

Exit unprofitablerelationships

Retain key customers

Top 3 in each product line

Analyst rankings(e.g., Brendan Woods)

Cater to top 350 c lients inCanada

CRM structure

Calling activity measurement

Referral system (US andCanada)

Prospector Database

• Number of sales calls made

• Products pitched

• C lient “up-tiering”

ScotiaFX

ScotiaLive

Further develop:• Derivatives business (US)• High-yield capability (US)• Acquisition/securitization business (Europe)

Track number of deals, marketshare, senior-level coverage

INEA

Wall Street (tradingback-office system)

People Initiatives

Retain and recruit top talent (MBA level)

Provide product-knowledge training (classroom, web,job rotation) and support

Benchmark compensation levels to market

Identify and develop good CRM candidates

People Measurement ToolsEmployee Satisfaction Index (Viewpoint)Diversity Index (Viewpoint)Performance Evaluation Scorecard (Business Heads) Financial Performance (50%), C lient (15%),Franchise Enhancement (15%), Developing People (10%), Risk Management (10%)360 feedbackPerformance review (360, BSC, personal objectives)

People MetricsRecruiting offer acceptance rates

Turnover/attrition rates

Time to fill

Specific individual performanceplan measures

FinancialRROE

Revenue growth

ROEE

CustomersReputation

Customer satisfaction

Cross-sell; repeat business

Product development

OperationsSystems integration

Process development

EmployeesLeadership development

People management skills

Retention

Training

IssuesLack of complete buy-in atbusiness head level for BSC

Different considerations fordifferent business lines andregions

Simple vs. complicated

Leverage Technology/Streamline Processes

AllContinue to build financialand MIS systems

Centralize administrativefunctions to Canada

Integrate necessaryenabling technology (tosupport E-distribution)

USConsider organizing byindustry specialty groups

OptimizePricing

CanadaTarget high-marginproducts

USImprove spreads throughtiered c lient base

Strengthen profit-generating product base

MinimizeLoan Losses

AllRefine credit and riskmanagement techniques

Launch dedicated loanportfolio managementunit

USSell off bad loans

Implement structuredproblem loan forecastingsystem

All-bank economic capitalmodel

People & Infrastructure

Customer profitabilitymodel

Continued focus on returns

Industry survey cost andreliability

Information may be siloed inthe business

Long-TermShareholder

Value Creation

Long-TermShareholder

Value Creation

Scotia Capital - Balanced Scorecard Framework

Competitive Advantage:

GrowthGrowth

ReturnReturn

Key Business & People StrategiesPlease note if strategies are short-term or long-term in nature

Performance Measurement

Operations

Customer

Financial

People

• NI of $800 million (2004)• ROEE 16-18%• Increase deal revenue as a

percent of total revenue(60%–3 years)

• Portfolio quality/credit risk management– Maximum loan loss of XX bp on portfolio– Maintain weighted average IG Code of 80-85

• Satisfactory regulatory and internal audit ratings• Direct/support cost ratio through centralization and

technology continuous improvements

•Cross-sell pick-upXXX bp

•Increase share of walletfor Focus clients

• Improve employee survey results (using selectedquestions)

• Cross-divisional moves of high-potential people (5)• Achieve employee-relationship plan targets• First-choice offers to acceptance• Strengthen leadership skills of leadership team through

use of 360 degree feedback

Division wide goals as expressed in theTown Hall Meeting:

Financial•Net Income stretch goal•Consolidated ROEE stretch goal•New Asset Growth stretch goal

Clients•Increase cross sell and product count•Optimize client coverage priorities andcapabilities

•Enhance product execution capabilities•Continue to be top ranked by our clients insurveys

•Rank in top 3 in all products in Canada•Maintain top tier rankings in the Gold Sheetsin the U.S.

•Co-head led pitch

Technology•Continued modernization/upgrading

MIS•Enhanced client MIS

Employees•Provide necessary infrastructure formaximum development and advancement

•Particular focus on US this year (changemanagement)

•Effective implementation of U.S.repositioning strategy

Division wide goals as expressed in theTown Hall Meeting:

Financial•Net Income stretch goal•Consolidated ROEE stretch goal•New Asset Growth stretch goal

Clients•Increase cross sell and product count•Optimize client coverage priorities andcapabilities

•Enhance product execution capabilities•Continue to be top ranked by our clients insurveys

•Rank in top 3 in all products in Canada•Maintain top tier rankings in the Gold Sheetsin the U.S.

•Co-head led pitch

Technology•Continued modernization/upgrading

MIS•Enhanced client MIS

Employees•Provide necessary infrastructure formaximum development and advancement

•Particular focus on US this year (changemanagement)

•Effective implementation of U.S.repositioning strategy

•xyz

•xyz

•xyz

•xyz

MetricsShort-Term>>>>>>>>>>>>>>Long-term

TrackingMethod

Note: Short-term metrics typically apply to “business as usual” functions, while long-term metrics may be of a more transformational nature

DRAFT

• NI of $690 million (2002)• ROEE 13%• Increase deal revenue as a

percent of total revenue(50%)

•Cross-sell pick-upXX bp

•Increase product count per client by 10%•Quarterly contact of Focus clients at CFO level orhigher as appropriate - establish baseline

The ProcessTiers of Scorecards

Financial

Customer

Processes

Human Capital

Corporate Scorecard• -• -

Narrative Metrics/GoalsDivision

Narrative Metrics/GoalsDepartment

Financial

Customer

Processes

Human Capital

Narrative Metrics/GoalsSub-department

Financial

Customer

Processes

Human Capital

Page 15: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

– Articulated

“compensation

strategy”

– Pay for person

& performance

– Differentiated

pay mix/ranges

and career

paths

– Standardized

pay delivery

Key Elements– Rewards for

continuous skill upgradation

– Flexibility and responsiveness

– Equity, fairness and transparency

RewardingRewarding

Seed growth

Manage

Replicate

– Immediate financial

rewards for “ideas”

– Open ended and broad

pay ranges

– Cash bonuses and equity

participation

– Skill acquisition adequately

rewarded

– Career paths dependent on growth

– Special incentives for

“exceptional” performance– Sharp incentives for meeting targets

– Clear penalties for under-performance

– Clearly defined and closed pay ranges

Profi

tabi

lity

& G

rowth

Page 16: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Putting the building blocks in

place

Equity Participation

Skill based Pay

RewardingCreativity and

Innovation

RecognitionIncentives/

Benefits

Differentiated Career Paths

Make work a “rewarding” experienceMake work a “rewarding” experience• Define a

common language of success

• Share more to receive more

• Communicate possible rewards effectively

• Build flexibility in pay

• Recognize dedication and drive

• “Package” career management effectively

Page 17: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

In summary… In summary…

Your agenda needs to be…

Build agility and alignment in your structure

Develop leaders and manage a steady pipeline of

talent

Drive performance down the organization

Create a common language of success

Create a culture of discipline

Page 18: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Begin with …. Begin with ….

“The absence of execution is the biggest obstacle to success” —Larry Bossidy, Execution

Execution—Turning Ideas Into ActionFocus

• Target the Vital Few Initiatives• Demonstrate Impatient

Perseverance• Communicate Purpose and

Progress

Practicality

• Ensure Lean Design• Build Real World Tools• Enable With

Technology

Accountability

• Monomaniac on a Mission

• Enlist Active Sponsorship

• Measure What Matters

Page 19: Driving Results

People Issues are complex…. People Issues are complex…. Managing them doesn’t have Managing them doesn’t have

to beto be

Improving Business Improving Business RESULTSRESULTS through through PEOPLEPEOPLE

Hewitt AssociatesHewitt Associateswww.hewitt.comwww.hewitt.com