Transcript AHRI Commercial Opportunities 2009
Human Resource Management in the New Economy Challenges and Opportunities
Serge Sardo FAHRI Chief Executive Officer Australian Human Resources Institute Victorian TAFE Association’s HR Conference 2009 Copyright AHRI 2009 ©
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1952 1961 1974 1981 1990 2008
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GFC Early Days – News Headlines
“Dark clouds ahead”
The Age,
13 September 08 “Fear eclipses greed on financial markets”
Sydney Morning Herald,
9 October 08 “The fall of the little Aussie battler”
Morning Herald,
11 October 08
Sydney
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September 2009 News Headlines
“Penny dreadfuls start making cents again”
Australian Financial Review,
14 September 09 “Housing market up lots”
The Herald Sun
, 14 September 09 “ How we stayed one step ahead of financial disaster ”
The Age,
12 September 09 “ What comes down must go up again ”
The Daily Telegraph,
14 September 09 Copyright AHRI 2009 ©
How big is the GFC?
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Further Events Around this Time
• A change in government • Another overhaul of the industrial relations laws
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The past year we have experienced more change in the workforce than the previous 17 years combined “
The world has changed and continues to change faster than we can comprehend” Steve Vamos, President, Society for Knowledge Economics Former Vice President of Microsoft in Australia and New Zealand, CEO NineMSN, Managing Director of Apple Computer AsiaPac
Source: Bridges 1980 Copyright AHRI 2009 ©
My how things have changed
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The Change Process
Ending
Years of booming economy Low regulation/ accountability A political philosophy
Neutral Zone
Limbo Uncertainty Apprehension Anxiety Potential for opportunity Possibilities Source: Bridges 1980 Copyright AHRI 2009 ©
Beginning
The new landscape not yet defined
GFC and HR - AHRI EXECpulse Survey on the Impact of the GFC
Source: executive database - late April 2009 Responses from 122 organisations: - 20% - ASX listed - 28% - privately owned - 29% - global subsidiary - 23% - public or not-for-profit Copyright AHRI 2009 ©
Causes of the Crisis
79% believe GFC mainly the result of over reliance on shareholder value and short-term thinking Respondent comments:
“ Both ‘shareholder value’ and short-termism’ are just substitute terms for greed” “Because shareholders only look to short term” “Because it drives aberrant behaviour by executives”
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Downsizing
75% downsized up to 10% 8% by more than 20% Copyright AHRI 2009 ©
CSR and Ethics
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Will the HR Function Change?
“Will have to return value for money or become a victim. Need to align more closely to corporate activities” “The focus will be much more strongly on retention of key talent” “Reduction in scope and direction of HR initiatives … far greater business alignment” “More reliance on transactional activity in short term and postponement of strategic projects for organisational development”
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Will People Management Practices Change?
“Improved performance measures and performance reviews for individuals” “Less time and resources allocated to functions that are not considered core business” “We may introduce more review practices against P&L performance and headcount management” “In the short term there will be less investment in new technologies and processes … increased pressure to provide ROI metrics for HR initiatives”
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Summary of Pending Changes
Shareholder value driven by longer-term sustainable business strategies rather than short-term quick gains Stronger regulation of the finance industry Remuneration and benefits structures need to change, less focus on STI and individualism CSR and ethics higher on the agenda Greater business alignment for the HR function, potential to reduce transformational activities Stronger management of performance and greater use and reporting of people related metrics Competition across all markets will intensify Copyright AHRI 2009 ©
Other Business Challenges
Productivity low and getting lower
Nearly one in three employees at the general staff level are not performing to their full potential.
Sardo, 2004
Business sustainability
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Sustainability of the Workforce
Diversity will increase
Several generations at work as workforce age span increases Increasing cultural and ethnic diversity as immigration fills skill gaps; and knowledge workers chase global opportunities Attitudes of Gen Y and the retiring baby boomers they have market power – they both want work that fits their chosen lifestyles; and because of skill shortages Companies must foster innovation to compete – and innovation is nurtured by diversity of ideas, knowledge, professional networks, perceptual and learning styles, problem solving styles, etc But research highlights the critical moderating role of leadership, organisational culture and HR policies Copyright AHRI 2009 ©
Other Business Challenges
Global and local competition intensifying “On the basis of the current level of skill formation, in 2020 Australia will have nearly three times the proportion of low skilled or unskilled workers than the best performing countries.” (Australian Government,
Skilling Australia for the Future
, 2008) “Continuing the existing level of training outcomes in vocational education and training would result in a shortfall of 240 000 in the VET trained workforce over the ten years to 2016.” (Shah and Burke, Report to National Training Reform Taskforce, November 2006, cited in SAF) Copyright AHRI 2009 ©
Other Business Challenges
Global and local competition intensifying “Introducing greater competition to the training system, including contestability for government funding, and providing public institutions with the flexibility to compete, will ensure that training providers are better able to respond to industry and employer needs.” (Australian Government,
Skilling Australia for the Future
, 2008) Copyright AHRI 2009 ©
Other HR Challenges
Managing Talent: A Global Challenge
A study conducted by Manpower in March 2009 surveyed 39,000 employees across 33 countries and asked:
“Are you having difficulties filling positions due to lack of suitable talent”
Source: Manpower, 2009
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Managing Talent: A Global Challenge
In Australia
49%
of employers stated having difficulty in recruiting talent: Skilled trades Sales representatives Engineers Management/executives Accounting & finance staff Technicians Customer service representatives / support Machinists / machine operators Production operators drivers Drivers Total number of respondents: 2,799.
Source: Manpower, 2009
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Changing Demographics: The ageing workforce
Peter Drucker suggested:
“
the confluence of a bulging aged population and a shrinking supply of youth is unlike anything that has happened since the dying centuries of the Roman empire”
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Other HR Challenges
Ageing workforce poses considerable risk Demography poses an existential risk for many companies
• Loss of competence • Declining productivity • Lower motivation • Increasing costs • Less innovation
Many companies are affected
• Directly: age structure within company • Indirectly: employment markets and cross-industry effects
"If there is a crisis, it will be too late" 1
Age 1. David Ellwood (Dean of Harvard University`s Kennedy School of Government) in J. Barrett "An impending work crisis" ( Newsweek, 2002) Source: BCG analysis Copyright AHRI 2009 ©
Copyright AHRI 2009 © Baby Boom generation will turn 62 By 2050, 40 percent of Europe’s total population and 60 percent of its working age population will be people over 60.8
Globally, the number of elderly has tripled over the last 50 years and this is expected to further triple in the next 50 years In Australia, by 2020 employees retiring will outnumber those entering the workplace CRUNCH TIME!
What caused this?
Leadership, the most discussed yet least understood topic Charles Handy
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Costs to the economy Australia $31.5 billion France 100 billion Euros UK US$64 billion Singapore US$6 billion USA US$350 billion
Source: Deloitte Research
Leadership…the Next Paradigm!
1900-1970s Business as central
Scientific management, quality, production, personnel
1980s-2000 People as central
Relationships, transformational, communication, understanding, human resources Copyright AHRI 2009 ©
Evolution of Business Leadership
• Australian Defence Force Video Copyright AHRI 2009 ©
Evolution of Business Leadership
70% of North American students surveyed said they would not apply for a job at a company deemed socially irresponsible. 68% percent disagreed that salary was more important than social responsibility. A 2003 Stanford University study on MBA Job Choice, found that MBA graduates would sacrifice an average of $13,700 in salary to work for a socially responsible company.
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Why employees engage
A sense of purpose and meaning in my job A good relationship with my Co-Workers A good relationship with my Manager New and Interesting Challenges Great work / life balance Fair and Reasonable Pay and Employee Benefits Long term Job Security Development opportunities - training\rotation A culture of fairness / equality among co-workers Open communication with Management Reward and Recognition A set career path / promotional opportunities Feeling more valued by the organisation Other, please specify Better Social Responsibility i.e. fundraising No factors apply 61.9% 60.8% 54.6% 52.5% 50.2% 48.4% 37.8% 35.7% 32.1% 31.7% 30.3% 30.3% 28.4% 8.2% 5.0% 0.7% 16 113 185 0 200 400 600 728 719 856 809 688 687 643 800 1238 1190 1137 1097 1404 1378 1000 1200 1400 1600
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Leadership…the next paradigm!
1900-1970s Business as central
Scientific management, quality, production, personnel
1980s-2000 People as central
Relationships, transformational, communication, understanding, human resources
2000 People in society as central
Business in context of community, connected, Gen Y – moral conscious, work as greater meaning Copyright AHRI 2009 ©
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Companies that get it right!
The ‘world’s most admired companies’, by shareholder value, are those that have:
best people management practices and strategies the HR director at the executive table HR intimately involved in executing business strategies through their people
The Hay Group
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Companies that get it right!
Apple - the new no 1 from the 2008 survey GE – regularly no 1 or 2 in the last 10 years Toyota - in the top 5 Berkshire Hathaway, Fedex and Microsoft (US) BMW, Singapore Airlines, Nokia of Finland, Nestle from Switzerland, Samsung of Korea, Siemens from Germany, L’Oreal from France Tesco and HSBC from UK – HSBC now the world’s biggest bank - its strong values steered it clear of sub-prime fiascos
The Hay Group
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Companies that get it right!
The best companies take a hands-on approach with people Jack Welch said he was the GE gardener: “I was a gardener providing water and other nourishment to our top 750 people” “Of course, I had to pull out some weeds, too” Copyright AHRI 2009 ©
Companies that get it right!
Let’s look at best practice hard data:
82%
of companies have regular monthly reporting to board - with information and metrics on human capital management
77%
have a preferred internal candidate as the next CEO - 23% admit they need to get back there
81%
of CEO, executive and boards have KPIs that include success measures for developing people
100%
have strong performance and career development cultures
90%
have delegated decision making at the right level
88%
have well understood visions and are known for being quick to communicate and implement change
HR presents data on the job it performs at executive table
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Are people really our greatest asset?
Market Capitalisation (Company Value) 100% 80% 60% 40% 20% 0%
20% 80% 60% 40%
1980's Now Tangible Assets Non-Tangible Assets
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Strategic Focus for HRM
Source Develop HR Excellence Perform Affiliate Source: BCG Creating People Advantage 2008 Copyright AHRI 2009 ©
So what’s the new beginning for the workforce landscape?
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