Transcript Document

HR Trends in US Corporations
 Shapers
 Top Priorities
 CHRO Role
Shapers
• Technological/Finance/Social
Context
•
•
•
•
CEO Issues
Demographics
Regulatory
Stakeholders
5 Technological/Finance & Social Cycles
Shapers
• Technological/Finance/Social Context
•
CEO Issues
• Demographics
• Regulatory
• Stakeholders
Pressing CEO Needs
• Organization agility to change
•
•
•
•
•
•
Innovative employees and mindset
Short term results
Globalization – reality and backlash
Talent Pool
M&A
Global energy; health; and security issues
Shapers
• Technological/Finance/Social Context
• CEO Issues
•
Demographics
• Regulatory
• Stakeholders
Productivity Growth above Historical
Levels – Can it Last?
Average Annual Productivity Growth – 1950’s to Present
Percent
4
3
Productivity
Growth
2
1
0
59
69
79
89
99
03
50
60
70
80
90
00
9
9
9
9
9
0
1
1
1
1
1
2
Source: Employment Policy
Foundation
Labor Shortage is Looming
210
2.5
2
190
Labor
Force
Needed
Labor
Force
Available
1.5
Growth
1
170
0.5
0
1950s
1960s
1970s
1980s
1990s
2000s
2010s
Compound Growth in Workforce
3
150
Source: EPF Analysis of BLS Data
2003
2007
2011
2015
2019
2023
2027
2031
130
Skill Shortage Challenge
New Jobs will require more education
Millions
80
70
60
50
40
Total Employment
2002
Projected
Employment 2012
30
20
10
0
High
School
Only
NonDegree
Training
Any
College
Degree
Source: Employment Policy Foundation
Challenges
Managing Four Generations at Work
Identifying and Retaining Critical
Knowledge
Retaining Talent – all generations, all
levels
Shapers
• Technological/Finance/Social Context
• CEO Issues
• Demographics
•
Regulatory
• Stakeholders
Shapers
• Technological/Finance/Social Context
• CEO Issues
• Demographics
• Regulatory
•
Stakeholders
“HOW TO MAKE THE COMPANY WORK?”
Integrated System
BOD
Governance /
Strategy
C SUITE
ALIGNMENT &
LEADERSHIP
Capabilities /
Alliances
IDEATION
PEOPLE
PROCESS
TECHNOLOGY
Management
Systems &
Operations
Controls
Top CHRO Concerns
Top 5 issues from HRPA 2006 Survey:
 Attracting, developing and retaining talent
 Health care costs, strategies, and benefit
designs
 Leadership development
 Compensation strategies for motivating
and rewarding executive talent
 Managing organizational change
Top Priorities
•
Organization Rx
•
•
•
•
Talent Development
Governance
Executive Compensation
Healthcare and Retirement
The Four Building Blocks of
Organizational DNA
Decision Rights
Motivators
Information
Structure
TRANSFORMATION GOVERNANCE MODEL
Integrated System / Overview
AN INTEGRATED SYSTEM
Level 1:
Level 2:
-
Strategic Alignment
Investment Decisions
Productivity Initiatives
Delegation/Key metrics
Human Resources Alignment
Workforce Development
Talent Management
Workforce Planning
Reward System
Level 3: Execution
- Measurements to assure
short-term decisions are
aligned to goals
C Suite (BOD)
Ownership /
Strategy driver
Led by Senior
Line Leaders
On-going
Dialogue
HR Strategy Governance
Forum
Members
Frequency
Topics
Chairman’s Council
Key Staff and Line
Officers
4 Times
Annually
Strategy
Policy
Workforce Planning
Committee
Line Officers
Monthly
Workforce Transformation
Compensation & Rewards
Productivity
Employee Engagement
Leadership Development
Council
“Large Team”
Senior Officers
4 Times
Annually
Officer Succession
Development of Pipeline
Leadership Education
Diversity Council
Staff and Line Officers
4 Times
Annually
Diversity Management
Labor/Management
Operations Board
Key Line Officers
Union Leadership
Quarterly
Productivity
Sales
Service
Top Priorities
• Organization Rx
•
Talent Development
• Governance
• Executive Compensation
• Healthcare and Retirement
Priority: Talent & Diversity Management
Executive Leader Ownership
Critical Issues to Consider:
• Demographics of leadership
• Changing required leadership capabilities
• Robustness and quantity of the pipeline regarding talent and diversity
Leadership Development Process
IDENTIFY
INSIGHT
Organization
And Talent
Review
Assessment
• Organization
• Individual
• Leadership Benchmark
• “Next Generation”
High Potential
Programs
Development Plans
DEVELOPMENT
Educational
Experiences
Orchestrated
Staffing
Coaching
Core
Experiences
Mentoring
• Large Team
Leadership
• Customer Facing
Roles
• Strategy / Business
Decision / Analysis
• Start Up /
Turnaround /
Mission Critical
• Global
ACCOUNTABILITY
Individual
Organization
Performance
Management
Diversity
Metrics
Move
Metrics
Workforce Transformation Initiative
What is the evolving nature of the work?
Business Driven
Business Strategy
Fundamentals
Major
Job/Work
Segments
Labor
Shortage
Load
Demands
Time
Dimension
Brand of
Work
Financial
Model
Workforce
Transformation
How should we organize to get work done?
Operating Structures
Work
Processes
Management/
Organization
Structure
Mgmt
Structure
Information &
Knowledge
Flow
Decision
Making
Process
Human Resource Driven
What type of talent do we need?
Human Capital
Requirements
Capabilities
Training
Staffing
Behaviors
Attitudes
How do we reward and treat people to optimize their value delivery?
Human Capital
Systems
Pay
Total
Rewards
Benefits
Healthcare
Careers/
Diversity
Engagement
and Culture
Workforce Management
Hiring & Selection
Field Services
Performance Development
IT Workforces
Performance Management
Sales Workforces
Enhanced skills driving workforce
performance
Customer Contact Centers
Workforce
Transformation Areas
Key Performance Process Projects
Function-Centric Workforce
MSOC: Driving Technical &
Behavioral Capability
• Work
Measurement
Metrics &
Tools
• Management of
the operation
• Daily Schedule
Control
• Action Plans
Total
“Hard”
Performance
• Resource Loads
• Master
Schedules
• Customer
Experience
• Speed to
Market
• Employee
Capability/
Innovation
• Cost
Structure
Behaviors
• Understand
current capability
“Soft”
Improving
• Focused
development
plans
• build customer
experience skills
Top Priorities
• Organization Rx
• Talent Development
•
Governance
• Executive Compensation
• Healthcare and Retirement
Top Priorities
• Organization Rx
• Talent Development
• Governance
•
Executive Compensation
• Healthcare and Retirement
Key Findings
CEO pay rises with corporate performance

After a sharp increase in 2004, CEO compensation increased
moderately in 2005, consistent with corporate performance
2005 Median Performance

Increase in annual incentives
tracks corporate profitability:
–
–

Revenue:
Net Income:
+ 10.5%
+ 13.0%
LTI was flat, reflecting
moderating equity use, but TDC
was in line with stock price
appreciation:
–
1 year TSR:
Source: Mercer HR Consulting
+ 6.8%
2005 Median CEO Pay
2005
($000’s)
Base Salary
% Change
from 2004
$975
+ 3.6%
Annual Incentive
$1,437
+ 8.4%
Total Annual
Comp
$2,409
+ 7.1%
Long-Term
Incentive
$4,581
+ 0.8%
Total Direct
Comp
$6,830
+ 5.0%
Key Findings – Long Term incentives
remain a significant portion of CEO Pay
Total Annual Compensation
Profit goals and measures of individual performance tend to be
the most prevalent measures in annual incentive plans
Annual Incentive Performance Measures
(As a % of Companies Reporting)
70%
61%
% of Companies
60%
48%
50%
41%
40%
28%
30%
26%
20%
20%
19%
Net Income
ROI/ROC
10%
0%
Individual
Performance
EPS
Sales
Operating
Income
Note: Many companies use more than one measure
Cash Flow
Source: Mercer HR Consulting
Future of Equity
Options are being mixed with a broader array of long-term
vehicles rather than disappearing entirely
Long-Term Incentive Pay Mix
Prevelance of Different Vehicle Combinations
35%
% of Companies
30%
25%
24%
21%
20%
20%
18%
15%
9%
10%
4%
5%
4%
0%
Options &
Restricted
Stock
Options,
Options & Options Only
Restricted Performance
Stock &
Awards
Performance
Awards
Restricted
Stock Only
Restricted Performance
Stock &
Awards Only
Performance
Awards
Note: LTI Mix includes only those companies making grants. Excludes 10% of companies which made no award
to the CEO in 2005. Data is not directly comparable to prior page, which is based on the full sample.
Source: Mercer HR Consulting
Top Priorities
•
•
•
•
Organization Rx
Talent Development
Governance
Executive Compensation
•
Healthcare and Retirement
Forecast for Health Care Spending Gloomy
Actual and Projected Health Spending as a Percent of GDP1983-2013
Percent
19
18
17
16
15
14
13
12
11
10
'93
'95
'97
'99
'01
'03
'05
'07
Source: Centers for Medicare & Medicaid Services, Office of the Actuary
'09
'11
'13
But Benefit Growth Continues to Crowd Out Wages
Growth Rates are adjusted for inflation
Percent
Change
6
5
4
Wages
and
Salaries
Benefits
3
2
1
0
-1
-2
’94
’95 ’96
’97 ’98 ’99
’00 ’01 ’02 ’03 ‘04
Distribution of Private Sector Workers
Who are participating in an Employment-based
Retirement Plan, by Plan Type, 1979-2004
Percent
70
60
Defined Benefit Only
50
40
Defined Contribution
Only
30
Both Plans
20
10
04
20
03
20
01
20
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
19
79
0
Source: DOL Form 5500
CHRO Role & Issues
CEO View
Percentage of CEOs rating performance in business function
as “Excellent” or “Good”
Finance
Customer Service
Operations & Production
Sales / Marketing
Risk Management
Knowledge Management / Research
IT
Procurement / Sourcing
R&D
Logistics
Human Resources
0
10
20
30
40
50
60
Percent
CEO View
Percentage of CEOs rating business functions as top three
importance to realizing company strategy over the next three
years.
Sales / Marketing
Knowledge Management / Research
Customer Service
Operations & Production
IT
Risk Management
R&D
Procurement / Sourcing
Finance
Human Resources
Logistics
0
10
20
30
40
50
60
Percent
Current Effectiveness Rating –
Roles of the HR Function
Percent
Strategy-Setting
Roles Mean = 32%
Workforce Alignment to
Strategy Role Mean = 33%
Strategy-Support
Roles Mean = 59%
80
60
40
20
0
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Effectiveness of HR Skills
60
40
Percentage
Answering
“Effective”
or “Very
Effective”
Business Skill
Mean = 29%
Implementation Skill
Mean = 35%
HR Expertise
Mean = 52%
People Skills
Mean = 42%
80
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Critical Skills of HR Staff
Key
Key roles
roles of
of the
the Human
Human Resources
Resources Function
Function
Where must HR
Functions Build
Capabilities for
the Future?
• To contribute to business performance, HR functions
must increase effectiveness in the function’s strategysetting roles.
• Deliver a human capital strategy.
• Drive business strategy
What Skills are
most important to
Increasing HR
Function
Performance?
Critical Skills of HR Staff
• Build staff effectiveness
• Business analytics
• Performance and development expertise
• Accountability and commitment to diverse
perspectives.
Human Resources Department Evolution
Human Capital
Strategy
HR Process &
Performance
Management
HR Data
Systems
HR Policies,
Compliance,
Labor Admin
Personnel
Administration
Today’s HR Role
 Strategist
 Aggregator
 Builder of Capabilities
 Project Manager
 Front Line Employee Advocate
 Leader of change
New HR Staff Support Paradigm
TO
FROM
Development
Payroll
Costs
Vice
President HR
Design
People
Environment
Financial
Funding
Chief
Resources
Officer
Strategy
Work
Processes/
Technology