working beyond borders

8/12/2019 Working Beyond Borders

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Working beyond Borders

Insights from theGlobal Chief Human

Resource Ofcer Study


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This study is based on conversations with more than 700 Chief Human Resource Ofcers worldwide.


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J. Randall MacDonaldSenior Vice President, Human ResourcesIBM Corporation


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Letter from IBMs Senior Vice President, Human Resources

A note to fellow CHROsSince IBMs last Chief Human Resource Of cer Study nearly two yearsago, the business world has been rocked by unprecedented challengesacross nearly all markets and industries. Despite the tumult, the globalHR leaders whose perspectives shaped our study this time displayed anunfailingly optimistic yet sharply practical outlook that is both insightfuland aspirational.

I am pleased to provide you with this study, which re ects insight from

more than 700 organizations across 61 countries. As part of this work,nearly 600 senior global HR leaders contributed in-depth interviews,further elevating our understanding of the issues that my fellow CHROssee ahead.

Consistently, these forward-looking HR leaders expect their businessesto remain focused on two equally important goals during the next threeyears the need to drive growth yet, at the same time, maintain operationalef ciency. My CHRO colleagues anticipate, though, that achieving thesegoals in the future will mean working quite differently than many businessesdo today engaging much more seamlessly across a wide range ofgeographic, functional and generational boundaries and borders.

Amid that backdrop, the study found three key workforce gaps CHROscite as the biggest opportunities for HR:

Cultivating creative leaders who can more nimbly lead in complex,global environments

Mobilizing for greater speed and exibility producing signi cantly greatercapability to adjust underlying costs and faster ways to allocate talent

Capitalizing on collective intelligence through much more effectivecollaboration across increasingly global teams.


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At IBM, we, too, have wrestled with these same challenges. Just this year,we launched an entirely new approach to leadership based on our ownunderstanding of what it will take to lead business in the new global era.Similarly, we have for some time now focused on creating more exible laborstrategies and variable-cost programs, to help our own business succeed.

And as our world becomes increasingly instrumented and interconnected,we have invested heavily in new collaboration technologies, so IBMers

can work differently with each other and with our clients. For example,I just nished hosting a highly interactive, three-day summit with IBM HRprofessionals from 170 countries, and no one left their desks to participate.We joined together via interactive technology to share ideas, debateconcepts and chart a course for future change.

As a result, the ndings from this study resonate strongly with me. I believethe successful HR leaders in the future will be those professionals who bestdrive and sustain real change in these high-opportunity areas.

You can get started on that journey yourself, with the perspectives sharedhere. I want to thank my peers who gave their time and input to providethese insights into the future.

J. Randall MacDonaldSenior Vice President, Human ResourcesIBM Corporation


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Table of contents

Executive summary 6

Introduction Unleashing creativity, exibility and speed 11Chapter One Cultivating creative leaders 23Chapter Two Mobilizing for speed and exibility 33Chapter Three Capitalizing on collective intelligence 43Conclusion Becoming borderless 53

How our research was conducted 60

For further information 65


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Executive summaryWe live in an increasingly borderless world. The broad penetration ofhigh-speed Internet has peeled away the barriers of time, distance andeven language to create a global forum for the exchange of ideas andinformation. Instrumented, interconnected, intelligent systems seamlesslylink organizations from every part of the world. Today, work can be

easily performed across various cultures, geographies and time zones.

Yet, despite the steady falling away of many boundaries in society, govern-ment and commerce, the global workforce still nds itself encumbered bynumerous impediments that inhibit the ability of organizations to quicklyrespond to emerging opportunity.

To better understand the boundaries that con ne the workforce and how to move beyond them we conducted nearly 600 face-to-face

interviews with human resource executives and workforce strategistsin diverse industries and institutions around the world. Additionally, wereceived input via survey from more than 100 executives.

Among our ndings is that, while organizations continue to develop anddeploy talent in diverse areas around the globe at an accelerated rate,the rationale behind workforce investment is changing. Unlike the tradi-tional pattern of movement in which companies in mature markets seek


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Executive summary

operational ef ciency through headcount growth in emerging economies we are now seeing workforce investment moving both ways. Many CHROsin growth markets, such as China and India, told us their companies areplanning to increase their workforce presence in North America, WesternEurope and other mature markets.*

Opportunities to penetrate new markets and develop new offerings willdrive future workforce investment, regardless of region. However, while

businesses have traditionally managed their workforces with an eye towardoperational ef ciency, they have not necessarily done so with the creativity,exibility and speed to capitalize on the growth opportunities that springfrom an ever-more dynamic global marketplace. Nurturing these capabilitieswill require organizations to focus on cultivating creative leaders, mobilizingtheir workforces for speed and exibility, and capitalizing on collectiveintelligence things they admittedly have not done well in the past.

*Growth markets include Latin America, Asia Paci c (excluding Japan), Central and

Eastern Europe, Middle East and Africa.


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Cultivatingcreativeleaders

Mobilizing forspeed andexibility

Capitalizingon collectiveintelligence

Cultivating creative leadersCHROs need to focus on facilitating the development of energized leaderswith a air for thinking about opportunities and challenges in completelydifferent ways. These leaders must be able to provide direction to, as wellas motivate, reward and drive results from an increasingly dispersed anddiverse employee base.

Mobilizing for speed and flexibility

Companies must be willing to simplify processes and provide fast, adaptiveworkforce solutions to meet the requirements of a quickly changing market-place. A responsive human capital supply chain and the ability to uidlyallocate resources are essential for competitive differentiation in todaystumultuous environment.

Capitalizing on collective intelligence Tapping into a broad base of institutional knowledge is critical to developingand maintaining an innovative culture. Enterprises must adapt innovations,apply them across their organizations and nd new ways to connectpeople to each other and to information, both internally and externally.


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Workingbeyondbordersrequires ...


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Coming out of the global downturn, organizations areturning their attention to growth. Yet, numerousboundaries constrain the ability of CHROs to optimallydeploy their workforces. How can organizationsmove beyond these borders to align resources withopportunities and improve business performance?

Unleashingcreativity,flexibility andspeed


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To better support the next generation of products, we wantto develop a workforce that isagile, able to quickly pick up ontrends, gets leadership supportand is disciplined in its executionof business strategy.

Anne-Marie Leslie, Senior VicePresident, Human Resources,Cochlear Limited

A workforce designed to seize opportunity

The agility to match critical talent with strategic opportunities is critical tooutperforming in todays dynamic and hypercompetitive global market-place. Unharnessing this potential will require organizations to overcomethe restricting boundaries that limit workforce dexterity and infuse theiroperations with creativity, exibility and speed.

Lessons in workforce and organizational agility can be learned fromobserving those organizations whose missions depend on the ability toassess, deploy and adapt quickly. Take, for example, Doctors WithoutBorders/Mdecins Sans Frontires (MSF), the international humanitarianmedical organization that must rapidly analyze developing situations, tapinto a vast bank of institutional knowledge and promptly deploy teams ofhighly skilled, diversely talented individuals.1 These international teamsof doctors and support personnel, each with varied but specialized skills,must creatively adapt to quickly changing and often deteriorating conditions.In January 2010, for example, faced with a devastating natural disaster,a failing communications infrastructure and a nation in chaos, MSF wasstill able to coordinate the efforts of 700 physicians and support staff torender aid to many of the hundreds of thousands of Haitians injured in amagnitude 7.3 earthquake. 2

Few businesses must contend with the same life or death decisions thatMSF faces. However, the same capabilities are fundamental componentsof companies that differentiate themselves in an ever-more competitiveglobal economy.

Embedding creativity, agility and speed, however, wont be easy. A numberof boundaries functional, cultural, geographical, generational andinformational constrain workforce productivity and prevent enterprisesfrom realizing their full potential. Organizations must overcome theseborders to address emerging opportunities, whenever, wherever andhowever they arise.


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Introduction

The new target: growth

For many companies, particularly in mature markets, the last two years haverequired a keen focus on stability and managing costs. Not surprisingly,operational ef ciency tops the list of business issues facing todaysorganizations, with 64 percent of CHROs identifying this as their overridingbusiness challenge (see Figure 1).

However, emerging from varying degrees of economic shock, we are nowseeing organizations turn their attention toward expansion, both in themarkets they are entering and the products and services they are offering.Forty-eight percent of those interviewed said new product and serviceintroductions will be a primary focus for their organizations over the nextthree years, while 44 percent cited expansion into new markets andgeographies. Our current stance is defensive to protect our pro ts underdif cult economic circumstances, a U.K. director of operations told us.However, over the medium and long term, our agenda is geared towardglobal growth.

Planning for growth Although operating efciency is still a top business priority, HR leaders aredenitely preparing for expansion over the next three years.

Figure

64%

44%

Improving operationalefciency

31%

44%

Expanding into newmarkets/geographies

35%48%

Developing newproduc t/ service offerings

Toda y Three years


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This shift toward growth-driven strategies has profound implications for theworkforce. Companies will need to redirect their workforce investments toareas that provide the greatest opportunities, not just the lowest costs. Theywill have to tap into new sources of talent and expertise, as well as movecloser to emerging-market customers with increasing purchasing power.

Workforce investments follow opportunity around the world

Not surprisingly, China and India will continue to be the largest bene ciariesof increased workforce investment over the next three years (see Figure 2).Forty percent of CHROs told us they anticipate headcount growth inChina and 29 percent in India. Other regions where CHROs expect tosee signi cant growth include Latin America (26 percent), Asia Paci c,excluding Japan (25 percent) and Russia/Eastern Europe (23 percent).

But this is not just a one-way migration. Not only will enterprises in matureeconomies be investing headcount in growing economies, but companies

in emerging markets will continue aggressively moving beyond their ownborders and become erce competitors on the world stage. For example,34 percent of CHROs in growth markets say they anticipate increasingheadcount in North America over the next three years, while 37 percentplan additional investment in Western Europe. This includes companiesfrom India, where 45 percent of respondents indicated they plan to increaseheadcount in North America and 44 percent in Western Europe. In China,33 percent of CHROs we interviewed said they plan to increase headcountin North America and 14 percent in Western Europe.

This worldwide focus on growth will require companies to fundamentallyrethink how they manage the workforce and overcome borders. They willhave to consider differences in how they attract and retain key talent (seesidebar, Understanding and acting on geographic differences, page 16).

Its about globalizing ratherthan offshoring: about beingunconstrained by location; abouttaking the right candidatewithout insisting that they livein this country.

Fiona Michel, Head of Group HR,Insurance Australia Group (IAG)


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Introduction

Headcount investment mirroring growth Over the next three years, companies are increasing headcount most dramaticallyin growth markets.

Figure

Organizations will need to identify new partnerships and relationships thatwill allow them to gain access to needed skills and capabilities. They willbe forced to gather information and share insights from a diverse group ofemployees around the globe.

Percentage of respondents expecting

to increase headcount in this area

Latin America/Mexico26%

Australia/ New Zealand 11%

Sub-Saharan Africa7%

MiddleEast 16%

Other AsiaPacic

25%

North America 17%

WesternEurope 13%

North Africa9%

Japan8%

Korea9%

India29%

Russia/EasternEurope23%

GreaterChina40%


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Understanding and acting ongeographic differences

As organizations expand their workforce investmentsinto new geographies, they need to be cognizant of

differences in attracting and retaining desired talent inthese areas. Our study clearly highlights contrasts inattraction and retention drivers that, while perhapsunderstood by companies already operating in theseregions, may represent a challenge for new entrants.

In different parts of the world, senior HR leadersexpressed clear variances in the importance ofsourcing and recruiting talent. While most CHROs

are generally con dent in their ability to go out andnd the right employees (overall only 16 percent oforganizations saw this as a top workforce challenge),those based in growth markets are almost twice aslikely to identify sourcing and recruiting individualsoutside their organizations as a critical issue.

Given the demand for talent in many growth markets,its not surprising that CHROs from those regions citecompensation and bene ts as the most importantfactor for attracting talent. In mature markets,however, where employee movement is lesspronounced, creating challenging opportunities,balancing work and life demands, and aligningcorporate and personal values are most important(see Figure 3).

In contrast to bringing talent in from the outside,retaining valued talent is considered to be signi cantly

more important, with over 45 percent of organizationsin growth markets and 33 percent of companiesin mature markets indicating this as an importantworkforce challenge. Clear growth opportunity is,by far, the most important factor in growth markets inemployee retention, with over 60 percent ofcompanies seeing this as a primary driver. Inmature markets, the focus is on new or challengingresponsibilities, followed by clear growth opportunities.

These differences have important implications fororganizations considering workforce investments inregions where they previously have had littleexperience. Compensation design, performancemanagement and workforce policies have toincorporate local perspectives while, at the sametime, balancing the need to adhere to global

guidelines and policies.In addition, attracting and retaining talentacross different geographies will require leaderswho appreciate and understand how to driveperformance and motivate individuals from differentcultures and backgrounds.


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Introduction

Key differences in attracting employees.

30%

47%

62%

33%

50%

47%

27%

48%

44%

Clear career growthopportunities

Compensation and benetsequal to or better than the norm

New or challengingresponsibilities

Ability to balance workand life demands

Company values arealigned with personal values

36%

Key differences in retaining employees.

16%

23%

62%

38%

27%

34%

33%Compensation and benetsequal to or better than the norm

New or challengingresponsibilities

Company values arealigned with personal values

Ability to balance workand life demands

12%

Growth markets Mature markets

Know what matters to whom Compared to their counterparts in mature markets, HR leaders in growth markets wrestle with a substantially different prioritization of employee attraction and retention drivers.

Figure


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Three workforce shortfalls

As we examined the capabilities CHROs said are most important to theirorganizations future success and how effectively they are implementingthem, three key workforce gaps emerged (see Figure 4).

CHROs say they are adept enough at certain aspects of assembling,managing and deploying the workforce, such as sourcing and recruitingoutside the organization, managing labor costs and evaluating workforceperformance. They also rate themselves as relatively effective in thestrategically important areas of enhancing workforce productivity andretaining valued talent.

Relative future importance

R e

l a t i v e e

f f e c

t i v e n e s s

1

2

3

4

5

6

7

8

9

1 2 3 4 5 6 7 8 9

Sourcing andrecruiting fromoutside theorganizationManaginglabor costs

Evaluating workforceperformance

Enhancing workforceproductivity

Retaining valued talentwithin the organization

Efciently allocatingthe workforce

Fosteringcollaborationand knowledgesharing

Rapidly developingworkforce skillsand capabilities

Developingfuture leaders

Exposing the gapsBased on respondents relative ranking of importance and effectiveness, their organizationsfall short in three key capabilities.

Figure


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Introduction

However, CHROs are less con dent in their ability to ef ciently allocate theworkforce. While HR leaders dont consider this to be an essential elementof future growth (only 18 percent see this as particularly important in thenext three years), our data suggests otherwise. Examining our sample ofnancial outperformers, we found that they were 47 percent more likely thanunderperformers to rate themselves as effective in workforce allocation. 3

Most problematic are those capabilities CHROs deem highly important

but currently beyond their ability to achieve. These three gaps developingfuture leaders, rapidly developing workforce skills and capabilities, andfostering knowledge sharing and collaboration are critical areas thatCHROs must address if they are to move beyond borders and unlock thepotential of the workforce.

A shortage of creative leaders The ability to identify, develop and empower effective, agile leaders is acritical imperative for CHROs over the next three years. We have strong

managers, not leaders and we need strong leaders to achieve ourstrategic objectives, said a U.K. HR director. To instill the dexterity andexibility necessary to seize elusive opportunity, companies must movebeyond traditional leadership development methods and nd ways to injectwithin their leadership candidates not only the empirical skills necessaryfor effective management, but also the cognitive skills to drive creativesolutions. The learning initiatives that enable this objective must be at leastas creative as the leaders they seek to foster.


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Inability to rapidly develop workforce skills and capabilitiesCHROs told us developing workforce skills and capabilities is highlyimportant, but that they do not do a particularly good job of it. As oneU.K. CHRO said, Weve previously taken a sink or swim approachto putting talented people in new roles. We havent done a good job offront-end assessment.

Closely related to skill development is how people with the necessary

knowledge and skill sets are deployed. Despite garnering relatively littleattention from CHROs as a critical capability, we believe this directlyaligns with the creation of new growth opportunities.

Ineffective collaboration and knowledge sharing Application of collective organizational knowledge and experience isessential to building an agile and responsive workforce. Yet manyorganizations lack the structure and resources to facilitate institutionalknowledge sharing and collaboration.

Cultural and organizational silos often compromise the ability of companiesto share information across functional boundaries. As one North Americansenior vice president of HR said: We need to know our stuff and beself-reliant, to solve problems cross-functionally and to fully leverage ourtalent and our ideas.


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Introduction

Attacking the gaps

The location, structure, makeup, skill set and, critically, the agility ofthe workforce and its leadership fuel ef cient operations, energize entryinto new markets and spur development of innovative products andservices. But the gaps between organizational need and effectiveness areblocking the path to growth.

Based on insights from more than 700 senior HR leaders, we believethree essential capabilities will enable organizations to move beyond theremaining borders that constrain workforce effectiveness: cultivatingcreative leaders, mobilizing for speed and exibility, and capitalizing oncollective intelligence.


Mobilizing forspeed andexibility



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HR executives say the ability to develop futureleaders has the greatest impact on their organizationsfuture success. Yet, only one in three think theycan do this effectively. What will it take to cultivatethe kind of creative leaders demanded by todaysnew environment?

Cultivating creativeleaders


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Leaders: high demand, hard to develop

Building an organization with exibility and dexterity requires leadership withthe creativity to adapt to a constantly changing environment. These leadersmust be able to negotiate through a maze of differing cultures, complexinter-generational dynamics and varied communication styles. Creativeleadership, in fact, was identi ed in our most recent Global CEO Studyas the top organizational need over the next ve years (see Figure 5). 4

Yet, companies struggle to both nd and nurture effective future leaders.Less than one in three executives we interviewed rated their companiesas adept at leadership development a surprisingly low number given itsrelative importance.

Developing future leaders is alwaysa priority. One of the challengeswith growth is to remain nimble.This is something that werecognize and continuously focus onwith leadership.

Marcelo Modica, Senior Vice Presidentof Human Resources, DiscoverFinancial Services

Top executives priorities The IBM Global CEO Study highlighted creative leadership as a criticalcapability for success.

Figure

Most important organizational capabilities over the next ve years.

33%

34%

37%Leadership

Execution speed

Client connectivity

Innovation 31%

Most important leadership qualities over the next ve years.

35%

52%

60%Creativity

Integrity

Global thinking


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Cultivating creative leaders

We are starting to measureleadership quality and connect itdirectly to the bonus system: youget the behavior you pay for.

Axel Tripkewitz, Senior DirectorHR and Business Support,Fujitsu Semiconductor Europe GmbH

The availability of leadership talent is an issue for many companies throughout the world. As competition increases, attracting, developing andretaining the employees with the potential to be molded into effective anddynamic leaders becomes more dif cult. We have leadership developmentprograms in place, said a U.S. senior vice president, but in some cases,there is not enough talent to fuel them. A CHRO in Venezuela told us,We must focus on the development of future leaders, especially in light ofdeteriorating educational quality. New hires are less prepared today thanthey used to be several years ago.

As companies embark on growth strategies, the leadership challengebecomes even more pronounced. A senior vice president in Japan said,Our leaders do not have the skills required as the business expands intovarious areas. We need to develop leaders who can perform globally towin against global competition. And a U.K. HR director said, Our leaderscurrently rise to the top by chance, not design. We need to foster talent.

What it takes to be a creative leader

Creative leaders share a set of common characteristics that help theminnovatively lead their organizations. They challenge every element of thebusiness model to realize untapped opportunities and improve opera-tional ef ciency. Leaders grow their businesses through the exploration,selection and execution of diverse, even unconventional, ideas about thepotential of new markets. They leverage new communication styles tomotivate talent and reinvent relationships, both internally and across thesupply chain, to create collaborative productivity. They focus on the biggerpicture the global marketplace and how to lithely optimize the collectiveskills of their organizations.


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RecommendationsEnabling the workforce to work beyond borders requires leaders to beeffective champions of the corporate growth and transformation agenda.Leaders must be exible and adaptable and be imbued with the power,knowledge and skills to deal with an increasingly complex world. Traditionaltraining and osmosis are not enough. Companies must equip leaders tobuild the skills necessary to prosper in todays virtual and distributed world.

They must:

Look beyond headquartersIdentify and cultivate rising stars regardless of location. As organizationsincrease their global presence, rising stars can emerge from anywhere.Proactively select opportunities that allow them to gain needed experiencesas well as provide mentors who can give them the right guidance andglobal perspective.

Use global issues facing the organization as the basis for real-life learningexperiences. Charter teams to solve real-world problems, such asevaluating new market opportunities and responding to changing customer/ employee demographics, to bring together future leaders and generateunique insights from different parts of the business.

Offer short-term, focused opportunities for individuals to work in new markets/geographies. Identify assignments and projects of short durationthat can help individuals gain exposure to new markets and experienceswithout the expense and commitment associated with long-termexpatriate programs.


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Nurture creative leadersProvide opportunities for creative leaders to move beyond traditional

leadership styles. Develop new ways of inviting, persuading and in uencingemployee participation in decision making through social media and otheremerging communication channels.

Incorporate external perspectives (e.g., suppliers, customers) into leadership development efforts. Create assignments that require leaders

to garner insights and develop relationships with others outside of theirdirect sphere of in uence, such as key customers, suppliers, academicsand trade associations.

Create rigor around leadership investments Analyze future business trends to determine leadership requirements foremerging business opportunities/locations. Make sure that leadershiproles re ect the geographical mix of future business locations, employeesand customers.

Create company-speci c models, processes and assessment tools for leadership roles. Identify those competencies that differentiate thebusiness in the marketplace and build them into hiring, development andperformance management processes.

Monitor job progression of potential future leaders from around the globe.

Identify the types of roles that build necessary skills and continuouslymonitor the progress of employees with leadership potential.


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Case StudyLAN AirlinesSpreading its wings with strong leaders

When Chilean agship carrier LAN Airlines established an Argentiniansubsidiary in 2005, it already had thriving operations in Ecuador and Peru.But moving into Argentina was to prove a much bigger challenge.

The Argentinian airline industry was underdeveloped because of high tariffs,heavy regulation and a history of bankruptcies. LAN Argentina also neededto integrate 650 employees from Argentinas state carrier, LAFSA, which ithad agreed to acquire from the government. And the executive team,though enthusiastic, was relatively inexperienced. Even so, LAN Argentinaset itself an ambitious goal: to capture 30 percent of the domestic marketwithin 18 months.

However, it soon began to struggle and, in May 2007, LAN decided tolaunch a leadership development program. It began by asking all its

Argentinian executives to de ne what they meant by leadership, giventheir personal beliefs and values, and identify role models within theorganization. Then it clari ed what it wanted from everyone, including whatthey were to do, and when and how they were to do it right down to alist of weekly tasks.

This process ultimately produced a model of the competencies required

of a LAN leader. He or she must possess integrity; aptitude (i.e., technicalpro ciency and emotional intelligence); a results-oriented perspective,with the ability to set demanding targets and take the initiative; strongcommunication skills; and the expertise to spearhead change.

Cultivating a new generation of leaders has paid off. Today, LAN is theworlds eighth largest airline, with a market capitalization of US$6.2 billion.It has also transformed the state culture it inherited from LAFSA into aservice culture, and tripled employee satisfaction levels.

k b d d


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Case StudyMaxis CommunicationsConnecting for creativity

Maxis Communications is Malaysias leading mobile communicationsservice provider. It has attracted over 12 million customers, thanks to acorporate ethos that combines simplicity, trustworthiness and creativity

in everything we do and everything we say. 5 But with the need to stepup the game in the telecommunications industry, Maxis wanted to refreshits pioneering spirit.

In December 2009, Maxis sent 18 of its senior personnel on a businesstrip to San Francisco, Silicon Valley and Los Angeles. The team interactedwith entrepreneurs to obtain in-depth clarity on the culture of start-ups,visited Paramount for rst-hand exposure to the latest technologies fordistributing multimedia content a major interest for Maxis, which isalready the top music distributor in Malaysia and attended lectures bymanagement gurus like Michael Tushman, author of the classic Winningthrough Innovation .

Maxis had another smart idea up its sleeve. To further broaden theteams horizons on technological creativity, all 18 members used Twitterand Foursquare on their iPhones to share real-time experiences with their8,300 colleagues in Malaysia and India. Employees could tweet back withquestions, which the team then raised to the people they were meeting.

The result? At the end of the tour, the 18 personnel had not only bonded,but they were also brimming with ideas for reinvigorating the corporateculture and their enthusiasm was shared by those who had participatedvirtually throughout their entire journey.

For Maxis, innovation has enabled collaboration and that, in turn, hastriggered a new surge of creativity. The companys innovative approach tonurturing human talent has now earned it wider recognition, with a goldaward at the 2010 Malaysia Human Resource Awards.

C lti ti g ti l d


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Key questions for cultivatingcreative leaders

How are you fostering creativityand borderless thinking among yourleadership team?

Are you radically rethinking leadershipdevelopment to rapidly close theeffectiveness gap?

Do you integrate leadership developmentwith emerging business opportunities to better prepare leaders for the future?


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CHROs rank rapidly developing workforcecapabilities as one of their most importantimperatives, but their effectiveness in this areasits among the bottom three. How can companiesbetter match resources with opportunities?

Mobilizingfor speedand flexibility


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Mobilize for speed and exibility


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Where flexibility falters

Increasing organizational exibility mandates a number of important

capabilities. Organizations need to be able to predict uctuations in demandfor products and services and allocate resources to support those changes.

They must establish strong relationships with suppliers and partners thatallow them to manage non-core activities and supplement their existingworkforce to handle peak loads and demands. They need to invest limitedlearning resources to quickly get individuals up to speed on new processesand technologies.

Unfortunately, companies are challenged across many of these dimensions.For example, only 35 percent believe they are able to allocate peopleef ciently and 31 percent think their company is effective at rapidlydeveloping new skills.

From our study, we see that many organizations lack the infrastructure tomake fact-based decisions regarding workforce allocation (see Figure 8).With a lack of insight into what skills and capabilities the organization hasat its disposal at any given time, models that help to evaluate potential

7% 37% 56%

4% 40% 56%

4% 43% 53%

10% 40% 50%

9% 59% 32%

Decrease No change Increase

Outsourcing (moving workto another company)

Offshoring (moving work outside yourcountry but within your company)

Hiring part-time workers

Using temporary/contingentworkers

Bringing back retired workers

Labor models undergoing radical changeOver the next three years, more than half of CHROs worldwide plan to inject a higherdose of exibility into the composition of their workforces.

Figure

Knowing what skills and capability you have in your workforceand employing a common skillstaxonomy allows you to move people around and create exibilityand agility.

Christian Archambeau,Principal Director Human Resources,European Patent Of ce



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talent shortages, and resources that can monitor talent supply anddemand, many organizations are placing themselves at risk for makingpoor decisions and reacting to market changes after their competition.

Rapid skills development demands new ways of learning

In addition to allocating resources more effectively, companies must bemore innovative in how they reduce the learning curve and develop newcapabilities. Our ndings indicate that companies most effective at rapidlydeveloping skills are more likely to use collaborative tools (43 percentversus 34 percent) and immersive learning techniques such as virtualworlds (19 percent versus 9 percent). They provide business simulationsthat re ect real-world issues and encourage creative adaptation, calculatedrisk taking and iterative improvement. Immersive learning allows peopleto practice new roles and rapidly develop new skills, as well as learn how

to collaborate effectively across distance and make decisions quickly.6

Common skills taxonomy

Analytics that highlight the quantityand availability of specic skills

Analysts that evaluate talent supply/ demand issues on an ongoing basis

Forecasting models that link demand forproducts/services to labor requirements

69%

73%

87%Move people across business

units and divisions

Move people across geographies

Internal labor markets that increasethe visibility of job opportunities

Reskilling individuals basedon business priorities

68%

Activities related to talent supply/demand

43%

50%

51%

39%

Infrastructure

Whats missing in managing the talent supply chainCHROs are struggling to establish the infrastructure they need to balancetalent supply and demand.

Figure


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Accelerate response to opportunity Provide internal marketplaces where individuals and managers can gainvisibility and access to new opportunities and needed skills. This allowsmanagers and employees to take more control of their staf ng and careermanagement decisions, to enable more rapid decision making andprovide access to candidates that might otherwise not be considered.

Develop more exible organizational structures that can address rapidlyemerging situations. Units such as centers of competence and rapidresponse teams can help to quickly size up situations, identify and mobilizekey resources, and quickly respond to customer needs while limitingdisruption to the core business.

Dramatically lower time to competence Allocate learning resources toward focal positions and roles. Scarce

resources need to be directed to improve the performance of thosefunctions that truly differentiate the organization in the marketplace (or in

the public sector, that are critical to achieving the mission).Build social media features into learning platforms, events and activities.

Tools that allow learners to more easily share insights with others and linkto internal and external information sources can help increase knowledgeretention and enable employees to more rapidly and effectively apply newskills to their jobs.

Position virtual worlds, gaming and business simulation as techniquesto augment face-to-face learning. The next generation entering theworkforce is already immersed in interactive, virtual experiences as part oftheir learning environment. Organizations can help motivate learners andreinforce desired behaviors through greater use of these techniques.



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Case StudyCLP HoldingsEngineering its future

CLP Holdings (CLPH) is one of Asia Paci cs leading energy providers. Although it operates internationally, it has to accommodate local variations,and the investments it makes must last up to 25 years. So CLPHs

perspective is different from that of many other companies; it must benimble and exible, while taking the long view.

This isnt the only challenge CLPH faces. Generating and distributing powerrequires highly quali ed engineers, but CLPH has an aging workforce and good young engineers are in short supply. Add the fact that anyone whoworks in the eld must be able to speak the local language, and its easyto see why strategic workforce planning is critical to CLPH.

The company started by analyzing all its employees and subdividing theminto two categories: those with core skills and those with non-core skills.It de ned core skills as a combination of the skills required to managecritical business or operational processes and activities in the generation,transmission and distribution of electricity, and company-speci c expertisethat could only be developed in-house over a substantial period oftime. Examining the demographic pro les of these two groups of peopleshowed where the most important shortfalls would arise, and CLPHlaunched various initiatives to ll the gaps e.g., fast-tracking high- iersand optimizing the ratio of engineers to technicians on each team. It alsoestablished scholarships and internships to attract the best engineeringgraduates, and apprenticeship schemes for the less academically inclined.

CLPH routinely monitors internal statistics such as staff turnover, but itnow looks at the big picture, too. It tracks population changes and degreepatterns in each of its markets the sort of trends that count when acompanys in business for the long haul.



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Case Study American AirlinesCarrying exibility to new heights

American Airlines is a leading global passenger carrier, serving 250 citiesin over 40 countries with more than 3,400 daily ights. It takes a largeworkforce to perform such a task and American employs almost 82,000

people worldwide.7

For many years, the company managed the HR functions required tosupport these employees internally. However, although Americans HRservices center and technology were outstanding, the technology wasbecoming increasingly dated and expensive to maintain and upgrade.More importantly, doing everything in-house gave American little exibilityto scale up and down in line with the economy, with minimal disruption.

Therefore, in 2007 the company decided to outsource many of its HRfunctions, while retaining the more strategic elements in-house. Workingclosely with its HR outsourcing partner, American identi ed the functionsit wanted to outsource, the areas where it could realize bene ts and thebest applications for its needs. It also re ned many of its HR processesand developed a roadmap for managing the transition.

American is now realizing its goals and utilizing a robust suite of services,standards and technologies for administering processes such as Learning,

Talent Management and Bene ts. In addition to meeting its functionalrequirements, Americans new HR business model has positioned the airlineto respond dynamically to changing economic conditions, with a variablepricing structure that lets it scale up or down and a technology base thatcan be expanded or modi ed as business needs dictate. American nowhas the exibility to deal with all eventualities. 8



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Key questions for mobilizingfor speed and exibility

Which alternative work structures providegreater opportunity for ef cient and moreexible deployment?

How do you break down the organizationalsilos that prevent the best use of your talent?

How can you reduce time to competencein your most critical jobs?


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Across the workforce capabilities CHROsevaluated as part of this study, they rated theirorganizations as least effective in fostering collab-oration and knowledge sharing. Can companies

work and innovate effectively as diverse,dispersed teams without addressing this issue?




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Collaboration impacts the bottom line

Innovation is the lifeblood of any enterprise, driving ef ciency and facili-tating new product and service development. But innovation is more thanthe creative application of acquired skills; it is the sum of an enterprisescapabilities, experiences and institutional knowledge. And maintaining theinnovative edge requires capitalizing on this collective intelligence.

Collective intelligence allows companies to gain ef ciency by sharing and

applying relevant practices across the organization. It enables companiesto build on experience and avoid reinventing processes and procedures.Intelligence creates the ability to adapt and apply innovations across newmarkets and opportunities. And it facilitates the discovery of new avenuesof improvement through communicating with customers and otherexternal sources, evaluating feedback and leveraging what they learn.

While collaboration may be regarded by many as a soft skill, our datasuggests it can have bottom-line consequences. In our sample, nancial

outperformers are 57 percent more likely than underperformers to usecollaborative and social networking tools to enable global teams to workmore effectively together.

The HR function should be takinga leadership role in identifyingtools for collaboration. It should also

set up and facilitate communitiesof practice.

Kevin Mahoney, Chief HumanCapital Of cer, U.S. Small Business

Administration

Capitalizing on collective intelligence


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Three-quarters are poor collaborators

Despite the emerging importance of connecting and tapping into insightsaround the globe, the majority of executives struggle to effectivelyconnect their workforce. For example, 78 percent of the HR leaders weinterviewed do not think their organizations are effective at fosteringcollaboration and social networking. Yet only 21 percent have recentlyincreased the amount they invest in the tools required to promote collabo-ration and networking. Even further, less than 20 percent are activelyapplying analytics to understand the impact of their efforts.

HR should play a greater role in encouraging innovation through ndingand looking after the tools for collaboration and also by providing theincentive mechanisms to support collaboration, said a senior vice presidentfrom Australia. An HR manager in Japan clearly feels the same way,Collaboration and knowledge sharing are handled separately within eachregion, and there are silos between different regions and countries.We need to remove those silos, and promote global collaboration andknowledge sharing.

Aiming too low with collaborative capabilities

Not only are companies not investing heavily in new collaboration andcommunication tools, many organizations fail to fully utilize the knowledge-sharing resources they already possess. Our respondents said they mostfrequently employ collaborative tactics to enhance the effectiveness ofcorporate communications and learning programs and to target and recruitexternal candidates. They are less commonly used for strategic purposesor to raise the visibility of ideas.

We are not as good at innovationas efciency. The HR function should help to build an innovativeculture, create forums, developleaders and nd ways to measureand reward innovation.

Veronica Rrsgrd, Senior VicePresident, Human Resources, Skanska



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Only 19 percent of our respondents regularly use collaborative technologiesto identify individuals with relevant knowledge and skills, 23 percent topreserve critical knowledge and 27 percent to spread innovation morewidely (see Figure 9). As an HR manager of a Japanese industrial productscompany said, We dont share intellectual assets fully, even though wehave the IT infrastructure to do so.

Are companies making the right connections?

Less than one-third of companies are regularly applying collaborative tools and techniquesto drive knowledge sharing and innovation.

Figure

41% 26% 33%

46% 27% 27%

49% 28% 23%

55% 26% 19%

Not much Somewhat To a large extent

Enable global teams to workmore effectively

Spread innovation throughout theorganization more effectively

Preserve critical knowledge

Identify individuals with relevantknowledge and skills

Capitalizing on collective intelligence


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Recommendations Todays CHROs can play a major role in developing the organizationalculture and infrastructure required to stimulate innovation and enhanceoperational ef ciency and effectiveness. They can help build a commoncontext, and encourage the creation of new connections and relationshipsamong employees scattered around the world. And they can look forways of making good ideas and practices more visible throughout the

organization. To accomplish these objectives, they must:

Weave collaboration into the way employees workEncourage formation and use of cross-organization communities around

strategic business topics. Find issues that tap into the passion of employeeswhile at the same time serve a critical need of the organization. Providethe groups with sponsorship, collaborative tools and other resourcesto foster knowledge sharing and trust among individuals from differentparts of the organization.

Build collaborative capabilities directly into business processes and project management activities. Use tools such as instant messaging, blogs andwikis to facilitate real-time communication and keep far- ung project teamsaware of new information and progress.

Raise the visibility of ideas and insightsSponsor online collaborative events to source and re ne ideas and putfunding and focus behind the best ideas prioritized by event participants.

Companies have found signi cant value in raising the visibility of new ideasat a global level, but at the same time, they need to be able to prioritizethose initiatives and provide resources to execute them.


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As organizations set their sights on growth,they will need a different and more dynamic set of

workforce characteristics to achieve their goals.How can they infuse their workforces with enoughcreativity, agility and speed to render bordersirrelevant and capitalize on emerging opportunitieswherever theyre found?

Becomingborderless



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Tearing down the borders Addressing ef ciency and promoting growth, the two primary challengesCHROs indicated they will be facing in the years ahead, will requireovercoming numerous internal and external borders that affect workforceproductivity. Physical and functional boundaries will need to be addressedto make the most of an increasingly dispersed and diverse workforce thatwill stretch across traditional institutional lines. Overcoming these hurdleswill not be a trivial activity; rather, it will need to be at the core of an

organizations transformation agenda.

In this new world, creative leaders will help to dissolve boundaries th r oughthe creation of innovative strategies, the development of a commonlyshared vision and the ability to motivate individuals from across the globe.Developing this next generation of leaders will necessitate identifyingcandidates from all reaches of the organization and providing them withthe real-world training and experiences to lead in an increasingly complexand dynamic global marketplace.

Mobilizing the workforce for speed and exibility will also be critical asorganizations look to match capabilities with emerging opportunities ina borderless world. Functional and institutional silos that stymie growthmust be replaced with an integrated workforce perspective that linksan organizations core and extended workforce to its business strategyand identi es, builds and deploys capabilities regardless of locationor organizational af liation.

Becoming borderless


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Successfully operating across borders will require companies to capitalizeon their collective intelligence ensuring the best ideas are identi ed anddisseminated regardless of where they originate. This sharing of cumulativeinstitutional knowledge allows best practices to be tapped and duplicativeefforts reduced. Soliciting new insights from both internal and externalsources and fostering the development of connections and relationshipswill enable the transfer of critical knowledge necessary for organizations totake full advantage of their scale and reach.

Workforce insight: A missing link?

The ability to develop effective leadership, strategically build and deploy theworkforce, and stimulate knowledge sharing and collaboration frequentlyhinges upon the information available to make evidence-based decisionsregarding the workforce. However, for many organizations, this level ofinsight continues to be elusive. Only 7 percent of respondents say they arevery effective at using analytics to make workforce decisions. As one publicsector CHRO in Australia said, We have been ineffective at using analyticsto date, as we dont have the skills or senior management buy-in.

Many companies have the capability to use analytics to look backward toidentify historical trends and practices within their organizations. Yet feware adept at using information to develop scenarios and predict futureoutcomes. Only in developing future leaders and business strategy did morethan a quarter of the CHROs we interviewed use analytics for forward-looking analysis (see Figure 10).

What do we do well? Talentmanagement and organizationdevelopment. What could we dobetter? Training delivery andworkforce analytics.

Shirley Gaufn, Chief HR Of cer,Black & Veatch Corporation



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Without workforce insight, companies place their ability to groweffectively at risk. They will have dif culty putting the right skills in theright places and will have trouble making intelligent decisions aboutlocations suitable for expansion. They will be challenged in knowingwhere their top performers are located and will struggle to justify theneed for future workforce investments.

However, some companies are stepping up the game and focusingon analytics as a core component of their workforce planning. Forexample, Shell (see page 57) has begun to add more analytic disciplineto its leadership development process to better understand the traits ofsuccessful executives and make appropriate investments in its nextgeneration of leaders.

Use of workforce analytics remains limitedLess than one-quarter of CHROs are using sophisticated analysis and modelingto make decisions about the future.

Figure

Measuring collaboration and knowledgesharing across the organization

Enhancing workforceproductivity

Evaluating workforceperformance

Retaining valued talentwithin the organization

Sourcing, recruiting and onboardingindividuals from outside the organization

14% 5%

39% 14%

40% 15%

38% 19%

40% 20%

Can identify historicaltrends and patterns

Can develop scenarios andpredict future outcomes

Developing workforce skillsand capabilities

Allocating the workforceacross the organization

Developing strategy linkedto business strategy

Developing future leaders

30% 22%

35% 23%

28% 25%

29% 26%


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Imperatives for working beyond borders As we saw in our quick look at MSF (Doctors without Borders), thoseorganizations with the capability to rapidly assess developing situations,effectively apply their collective institutional knowledge and quickly deploycreative teams of highly skilled individuals often make a big impact in a shorttime. In the case of MSF, these attributes often determine the differencebetween life and death. For other organizations, they can dictate whetheran organization becomes an outperformer in the market or an also-ran.

Instilling creativity, exibility and speed within both the organization and theworkforce will require creative leaders with the capabilities to solve oldproblems and capitalize on new possibilities. Rapid skill acquisition, on-targetdeployment of top talent and the ability to quickly scale up or down willbecome critical to mobilizing the workforce for speed and exibility.Collective intelligence, the sharing of an organizations sum of knowledgeand experience, will be necessary to take advantage of cumulativeorganizational capabilities.

Becoming borderless


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Expand intonew markets/geographies

Develop newproduct/serviceofferings

Improveoperationalefciency


Mobilizingfor speed andflexibility

Capitalizingon collective

intelligence

Be comfortable with distributedand virtual leadershipapproaches; create leaderswho leverage informal power

Accelerate the developmentof truly borderless leaders;be creative in combiningglobal and local talent

Design leadershipdevelopment programs togenerate innovative emergingbusiness opportunities

Develop online marketplacesto efciently match globaltalent supply with demand

Adapt a global approachto sourcing talent; eliminatethe policy and process barriersto cross-border movement

Leverage exible workstructures to rapidly aligntalent with critical jobs innew business areas

Improve productivity throughbest practices sharing andreducing duplicative efforts

Improve cross-functionaleffectiveness by providingan online platform for virtualteam collaboration

Establish a culture of creativityand innovation where newproduct ideas get visibility andexecutive support

We look forward to continuing the discussion atibm.com /workingbeyondborders

Key imperatives include:



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How our research was conducted The 2010 IBM Global Chief Human Resource Of cer study is the thirdedition of our Global Human Capital Study series, led jointly by theIBM Institute for Business Value and IBM Strategy & Transformation.

To understand the challenges, opportunities and goals of todays ChiefHuman Resource Of cers, we conducted the largest survey of humancapital executives ever undertaken by IBM. Between November 2009

and April 2010, we surveyed 707 executives, almost 600 of whom wemet face-to-face.

Our research was conducted with organizations of all sizes, in 61 differentcountries and was almost evenly split between executives in mature andgrowth markets.

Additionally, we compared the results of this study with our 2010 IBMGlobal CEO Study. Wherever possible, we conducted statistical analysis

of nancial outperformers to ascertain how and to what degree theydiffered from other organizations. We analyzed the performance of thosecompanies with publicly available nancial information in our sample usingthe compound annual growth rate in earnings before interest, taxes,depreciation and amortization (EBITDA) between 2003 and 2008. We alsocompared the results with the average for the industry each companyrepresented to identify the organizations that delivered more than the medianlevel of growth. Lastly, we looked for meaningful differences between theresponses of HR executives working for these nancial outperformersas we called them and those working for the underperformers thatdelivered less than the median level of growth.

How our research was conducted


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Organizations of various sizes contributed to this years study The study sample of participants includes almost face-to-face interviews with senior HR Executives.

Figure

14%

11%

16%

27%

17%

14%

32%

7%

49%

12%

15%

25%

19%

31%

10%

Sector

Geography

Enterprise size

Industry

10% Communications

31% Distribution

19% Financial services

25% Industrial

15% Public

Regions

49% Growth markets

12% North America

32% Western Europe

7% Japan

Number of employees

14% More than 50,000

17% Less than 1,000

27% 1,001 to 5,000

16% 5,001 to 10,000

14% 10,001 to 25,000

11% 25,001 to 50,000


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The right partner for a changing world


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The right partner fora changing world At IBM, we collaborate with our clients, bringing together business insight,advanced research and technology to give them a distinct advantage intodays rapidly changing environment. Through our integrated approach tobusiness design and execution, we help turn strategies into action. And withexpertise in 17 industries and global capabilities that span 170 countries,we can help clients anticipate change and pro t from new opportunities.

About IBM Global BusinessServices Strategy & TransformationIBM Global Business Services offers one of the largest Strategy &

Transformation organizations in the world. IBM Strategy & Transformation

practitioners help clients develop, align and implement their vision andbusiness strategies to drive growth and innovation.

About the IBM Institute forBusiness Value

The IBM Institute for Business Value, part of IBM Global BusinessServices, develops fact-based strategic insights for senior business

executives around critical industry-speci c and cross-industry issues. This Global Chief Human Resource Of cer Study is part of our ongoingC-Suite Study Series.



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Notes and sources1 About us. History and principles. Mdecins Sans Frontires/Doctors Without

Borders. http://www.doctorswithoutborders.org/aboutus/?ref=main-menu

2 MSF Teams Facing an Unprecedented Challenge in Haiti. Mdecins SansFrontires/Doctors Without Borders. January 19, 2010. http://www.doctorswithoutborders.org/news/article.cfm?id=4175&cat=video

3 We analyzed the performance of those companies with publicly available

nancial information in our sample, using the compound annual growth rate inearnings before interest, taxes, depreciation and amortization (EBITDA)between 2003 and 2008. We also compared the results with the average forthe industry each company represented to identify the organizations thatdelivered more than the median level of growth.

4 Capitalizing on Complexity: Insights from the Global Chief Executive Of cerStudy. IBM Institute for Business Value. May 2010. http://www-935.ibm.com/ services/us/ceo/ceostudy2010/registration-01.html?epref=search_google_kw190

5 About us. Maxis Communications. http://www.maxis.com.my/personal/ about_us/pro le/vision.asp?iStruct=0:0:0Np

6 Demarco, Michael, Eric Lesser and Tony ODriscoll. Leadership in a distributedworld: Lessons from online gaming. IBM Institute for Business Value. May 2007.

7 AMR Corporation Americans Parent Company. American Airlines.http://www.aa.com/i18n/amrcorp/corporateInformation/facts/amr.jsp

8 American Airlines: A fresh take on human resources services. IBM. August2009. ftp://ftp.software.ibm.com/software/solutions/pdfs/ODC03114-USEN-00_AA_Final_SP_Aug19-09.pdf

9 P zer at a glance. P zer. http://www.p zer.co.uk/sites/P zerCoUK/AboutUs/ Pages/P zerataglance.aspx

10 Esquel Group. http://www.esquel.com/en/index1.html

11 Yang, Marjorie. Corporate Social Responsibility: The Esquel Case. Presentationat Asia Business Council Spring Forum, Tokyo, May 16, 2008. http://www.asiabusinesscouncil.org/docs/CSR-Yang.pdf

For further information


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For further informationFor more information about this study, please contact one of theIBM leaders below. Or visit ibm.com /workingbeyondborders or sendan e-mail to the IBM Institute for Business Value at [email protected].

Americas Maria-paz Barrientos [email protected]

Asia Paci c Denis Brousseau [email protected]

Japan Kazuya Ohike [email protected]

Northern Europe Denis Brousseau [email protected]

Southern Europe Martina Pareschi [email protected]

IBM Institute for Business Value Eric Lesser [email protected]


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