Brilliant Answers
STRATEGIC INITIATIVES
Aligning Business & HR Objectives
With all the talk about aligning business and HR initiatives, it’s easy to become confused about exactly what this means. This is why HRfocus found a panel discussion on this topic at the recent Conference Board Human Resources Conference in New York City especially valuable. We present much of what we learned here in the hopes that others’ experience will help you define and apply the concepts to your own situation.
The conference also featured a keynote address by Prudential CEO Arthur Ryan, who discussed several initiatives at his orga- nization in which HR’s contribution has been particularly impor- tant (see the sidebar, “Strategic Alignment: A CEO’s View”).
MAKING THE LINK
The panel agreed that it’s crucial to link current business imper- atives with human resources. And today’s key business impera- tives are:
Increasing productivity. Operating globally. Maintaining competitive labor costs. Cutting costs for other operations. Generating revenue growth through innovation. Managing effective and rapid change. Maintaining ethics and a good corporate reputation.
THE TALENT STRATEGY
This includes: Adjusting the staffing level. To respond to current condi-
tions, you need flexibility and an organized talent plan, said Sharon Taylor, senior vice president, corporate human resources, and chair of the Prudential Foundation, Prudential. “Who you have, what they do, how they do it—you need to know this to be able to redeploy.”
Adjusting to changing demographics. This is especially continued on page 13
disconnected from technology and, in some cases, HR was disconnected from the business strategy. Today, the focus is shifting to more manager- and strategy-oriented applications to provide the highest ROI and im- pact.
Develop an action plan to ex- pand the deployment of manager productivity applications. Then look
to performance-measurement tech- nologies as an extension of HR trans- formation.
Recognize the importance of change management in generating a successful initiative. Establish and execute a plan at all levels.
FOR MORE INFORMATION
The accompanying tables provide
information on software development and delivery vendor providers from North American respondents (see Table 1), investment to date world- wide for workforce technologies by size (see Table 2), investment so far in responding organizations by size (see Table 3), and budget for the next 21 months for workforce tech- nologies (see Table 4).
TECHNOLOGY (cont’d)
STRATEGIC INITIATIVES (cont’d from page 1)
important with regard to “offshor- ing” jobs. The question is quite com- plex, including how to explain the need for it to your stakeholders and customers and dealing with a poten- tial public relations backlash from those who find offshoring unpatriotic.
Some operations at Corning, Inc., have been sent abroad, said Kurt Fischer, vice president, human re- sources, and diversity officer. Send- ing manufacturing operations to the Dominican Republic saved the com- pany time and money.
Taylor said Prudential is develop- ing a facility in Ireland and is having some work done in India through its Exult division. “You need to look at the work that lends itself to offshor- ing, and grow other skills within the company.”
Upgrading skills and perfor- mance expectations. Both Corning and Prudential put a good deal of time and effort into reviewing employees’ capabilities and increasing their skills. Corning annually reviews 41 key po- sitions and tracks “high-potential” individuals in those posts.
Creating diversity—an “envi- ronment of inclusion.” Taylor de- scribed three interrelated areas that Prudential considers:
1. A visible representation by level and minority sub groups, with 10- year goals.
2. The ability of leadership to deal with diverse employee segments. To address this Prudential implemented
business resource groups for minori- ties, disabled people, and employees with alternative life styles.
3. Climate—which includes mea- suring the progress of the diversity effort and providing for it in variable compensation.
Corning is measuring its diversity effort and expanding it into manage- ment ranks as part of its current goal- setting initiative. The company will focus on internal development as well, tracking the progress of five to seven “diverse” employees who have been identified in the 41 key position re- views.
Most of Corning’s global opera- tions are managed by U.S. expa- triates, and the company is trying to identify local leaders for the fu- ture.
ESTABLISHING A LEADERSHIP ‘BENCH’ This involves working with the tal- ented, high-performance leaders who get business results. It includes re- viewing current talent, planning for succession, recruiting top talent, de- veloping on-the-job and external tal- ent, and managing executive com- pensation.
At Prudential, leadership develop- ment includes focusing on “non-core competencies” (among which are qualities such as courage), which are assessed in developmental reviews. Individual coaching is used to im- prove skill sets, Taylor said.
Corning uses the APEX develop- ment program for individuals, said Fischer. Global leaders are encour- aged to drive strategies, get results, communicate/motivate, and manage themselves. Corning also uses peri- odic 360-degree reviews. Metrics are important in assessing “ready now” successors—those who could step into leadership roles soon—and diversity achievements.
Corning has had several CEO changes in recent years. Its leader- ship focus today is on accountability. After reviewing key positions, com- petencies, and incumbents, the com- pany is tailoring a development pro- gram for them and for “ready-now” candidates. It has already been through two rounds of reviews and identified 56 “ready-nows.”
The issue of compensating leaders today is, as Fischer noted, a “hot potato,” with trends moving away from stock options to offering more restrict- ed stock, based on performance.
Identifying performance measures for leaders is a process that will continue for most organizations. Fischer expects more peer group comparisons among top-tier pay levels. He also believes there will be more government atten- tion focused on the audit committees of public companies as well as on com- pensation committees.
Taylor noted that the attention al- ready focused on executive compen- sation at other organizations has af- fected Prudential: Since the com-
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pany’s IPO two years ago, the senior executive compensation plan has changed twice. Strategies for talent review and management have been realigned. And return-on-equity goals—including developing compe- tencies, broadening managers’ and leaders’ experience, and managing global talent—are now part of the compensation formula.
MORE VALUE AND COST MANAGEMENT FROM HR This area includes strategies for re- ducing HR costs while improving service to the business. Key areas:
Reducing health-care/HR pro- gram costs.
Improving service delivery and self-service.
Offering high-value HR consult-
ing to the business. Outsourcing some HR functions
vs. other solutions. Prudential is implementing a “re-
fresh” strategy on health issues by focusing on wellness, the services employees use, employee profiles, consumer issues, vendors, and more variable cost values, Taylor said. Corning’s U.S. health-care costs soared 19% last year, Fischer noted, despite its use of wellness and disease management programs.
Prudential and Corning have both explored outsourcing some HR func- tions. Corning has been more tenta- tive about it, although it has consid- ered outsourcing HR, procurement, and IT. The company decided to limit outsourcing to a portion of benefits administration in the U.S. It is out- sourcing HR in Asia almost com- pletely, Fischer added.
Prudential has worked for a num- ber of years on having HR deliver high-impact services and programs at variable costs through Centers of Excellence, Strategic Partner, and Shared Services Administration pro- grams. Although much improvement was achieved, administration reached the point where it was not scalable.
To help manage costs, the company now outsources a significant portion of HR administration, including pay- roll, staffing, forms processing, ven- dor management, benefits and com- pensation administration, and HR in- formation technology. This outsourc- ing reduced HR costs by almost 40%, saving $9 million on the run rate, said Taylor.
“It was a hard decision to go this route, but it was best for the company and for HR. Now HR has refocused its energies on key deliverables.”
Technology helps with both out- source vendors and in-house deliv- ery. Other areas for cost savings in- clude self-service and e-delivery. Taylor explained that the move to outsourcing has accelerated the move to self-service, since there are fewer in-house resources.
