2010 BCG Studie
Uploaded by
Abdellah Chenguiti2010 BCG Studie
Uploaded by
Abdellah ChenguitiCreating People
Advantage 2010
How Companies Can Adapt Their HR Practices
for Volatile Times
The Boston Consulting Group (BCG) is a glob- The World Federation of People Manage-
al management consulting firm and the ment Associations (WFPMA) is a global
world’s leading advisor on business strategy. network of professionals in people manage-
We partner with clients in all sectors and re- ment. It was founded in 1976 to aid the de-
gions to identify their highest-value oppor- velopment and improve the effectiveness of
tunities, address their most critical challen- professional people management all over
ges, and transform their businesses. Our the world. Its members are predominantly
customized approach combines deep insight the continental federations which are made
into the dynamics of companies and mar- up of more than 70 national personnel asso-
kets with close collaboration at all levels of ciations representing over 400,000 people
the client organization. This ensures that management professionals. For more infor-
our clients achieve sustainable competitive mation, please visit www.wfpma.com.
advantage, build more capable organiza-
tions, and secure lasting results. Founded in
1963, BCG is a private company with 69
offices in 40 countries. For more informa-
tion, please visit www.bcg.com.
Creating People
Advantage 2010
How Companies Can Adapt Their HR Practices
for Volatile Times
Rainer Strack Ernesto G. Espinosa
Jean-Michel Caye Florent Francoeur
Svend Lassen Pieter Haen
Vikram Bhalla
J. Puckett
September 2010
bcg.com
wfpma.com
© The Boston Consulting Group, Inc. and World Federation of
People Management Associations, 2010. All rights reserved.
For information or permission to reprint, please contact BCG at:
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USA
Contents
Executive Summary 4
Global Trends in Managing People 7
How Executives View the Most Critical HR Topics 8
The Tide Turns in 2010 10
Practices of High-Performing Companies 12
Improvement Through Focused Projects 13
Do You Have the Right Future Leaders? 15
Leadership Talent Is in Short Supply 15
In Search of Homegrown Talent 16
Components of Effective Leadership Development 19
A Strategic Workforce Plan to Build the Capabilities You Need 21
How Far Out to Plan 22
Measuring Employee Performance 22
Building Flexibility in the Workforce 27
Flexibility Measures: A Longer Runway but Greater Lift 27
Cutback Measures: Quick Results but Big Downside 27
Tempering Harsh Measures with Up-Front Honesty 29
Using Effectiveness and Engagement to Stay Lean and Become Flexible 30
Developing Capabilities for HR to Partner with the Business Units 33
Identifying Gaps in HR Business Acumen and Consulting Skills 33
Identifying Gaps in Business Managers’ People Skills 35
Training and Development to Support Strategic Partnerships 36
Appendix I: Methodology 39
Appendix II: Executive Interviewees 40
Appendix III: Supporting Organizations 45
Note to the Reader 47
C P A
Executive Summary
T
he challenges of leading and managing people back of this report, on the pivotal role that middle
were complicated by the financial crisis and managers play in restoring employee engagement that
global recession. The crisis layered in a new level was weakened during the crisis.
of volatility and uncertainty on top of the accel-
erating change that most businesses were al- Most industries and countries will experience a wid-
ready experiencing. Companies that don’t adapt to the new ening talent gap, notably for highly skilled positions
state of high volatility will be rendered obsolete by more nim- and for the next generation of middle and senior
ble and flexible rivals—and the key variables for adaptation leaders.
are the quality of the workforce and how it is deployed.
◊ Populations in most developed countries such as Ja-
It’s no longer feasible to conceive a strategy in an executive pan, Germany, and the United States will skew sharply
ivory tower and expect a docile workforce to implement it. In- older in the coming decade, barring radical changes in
novation and growth today require creativity and engage- immigration policies. The upcoming waves of baby
ment by employees at all levels. This survey report details boomer retirements may cause many positions to go
those human resources practices and methodologies that en- unfilled and raise the risk that companies will lose
able companies to create competitive advantage—and those valuable institutional and process knowledge. Rapid
that are no longer suited to these times. growth in many emerging nations, meanwhile, has al-
ready created a gap in skills that population growth
This global survey is the second conducted by The alone cannot ameliorate.
Boston Consulting Group and the World Federation
of People Management Associations. The first was ◊ Revising public policy to facilitate labor mobility
completed in 2008. (BCG has also partnered with the would help, but companies have to seize control of
European Association for People Management in their own fate when it comes to securing the best
2007 and 2009 on a similar European survey.) workforce today and for the future. They need to ramp
up their talent-sourcing, retention, and development
◊ The online survey generated 5,561 responses (nearly practices now, before it’s too late.
one-fih more than our 2008 survey) from 109 coun-
tries covering five continents and numerous industries. Four HR topics stand out as the most critical.
We also interviewed more than 150 executives, mostly
board and executive committee members of multina- ◊ Managing talent—identifying, attracting, and retaining
tional companies. talent—continues to be the most important future HR
topic. Corporate capabilities in this area have improved
◊ This report presents our findings and analysis of the 21 only slightly since our 2008 survey.
topics covered. We also feature short case studies on
individual company initiatives or relevant research, ◊ Improving leadership development has risen in impor-
and we have produced a White Paper, inserted at the tance over the past two years. Fiy-six percent of sur-
T B C G • W F P M A
vey respondents cited a critical talent gap for senior have a strong capability in an important HR area,
managers’ successors. In volatile times, leaders who these organizations keep refining and experimenting
can convey the company’s vision and motivate em- to grow even stronger.
ployees are invaluable. It is generally easier and more
effective for homegrown talent to step into leadership Companies need to reboot their HR function and
roles. Yet companies fill more than half of their execu- boost resources devoted to it.
tive positions from outside, suggesting that internal
leadership-development programs, in- ◊ HR professionals should be viewed as
cluding corporate universities, need to High-performing functional experts and partners to the
be improved. business units, similar to corporate fi-
companies emphasize
nance. At many companies, they have
◊ Employee engagement suffered during HR practices that been going through this transformation,
the past two years because of layoffs low performers but they still need stronger capabilities
and other cutbacks. Companies are now and larger roles. HR professionals them-
trying to restore a sense of pride and play down. selves acknowledge that they have big
trust. Our survey found that flexibility capability gaps in business analytics,
measures such as job mobility and flexible work ar- business planning, and client relationship manage-
rangements can help improve engagement and are ment. In particular, more sophisticated analytical skills
more effective economic measures than cutbacks over will permit them to better predict future requirements,
the long term. Strengthening the corps of middle man- track performance outcomes, and calculate the return
agers, who supervise the majority of employees, is an- on investment for various human-capital initiatives.
other means of bringing engagement back.
◊ While both HR professionals and business managers
◊ Strategic workforce planning is the cornerstone of fact- recognize the need for training and other developmen-
based HR management. Companies need an accurate tal initiatives, the differences in their perceptions must
picture of the composition, age structure, and capabil- be addressed. Business managers view HR profession-
ities of their people. But executives rated current capa- als’ HR expertise as less important than their skills in
bilities low in this regard. Only 9 percent of companies business planning and conflict resolution. And, while
deploy a sophisticated workforce supply-and-demand both groups agree that business managers’ handling of
model, suggesting that strategic-workforce-planning ca- poor performers is their most important people-man-
pabilities have a long way to go. Business volatility and agement skill, business managers see a far smaller gap
uncertainty increase the need for companies to rely on in their own performance than HR professionals do.
advanced analytics, scenario simulations, and other so-
phisticated workforce-planning levers. The rest of the report discusses how to strengthen
the various links among employees, the HR function,
High-performing companies emphasize certain HR and business strategy and execution. Here’s a sum-
practices that low-performing companies tend to mary of the five sections.
play down.
◊ “Global Trends in Managing People” summarizes the
◊ Performance management and rewards is a topic that survey results, revealing which topics executives deem
separates strong and weak companies (as measured by critical and which corporate capabilities need up-
revenue and profitability growth). It was ranked the grading
second-highest HR capability by high-performing com-
panies but only ninth by low performers. This correla- ◊ “Do You Have the Right Future Leaders?” discusses
tion highlights the value of focusing on performance how the HR function can build stronger capabilities in
and rewards. leadership development and talent management
◊ High-performing companies also focus their efforts on ◊ “A Strategic Workforce Plan to Build the Capabilities
fewer, carefully chosen HR projects. Even when they You Need” outlines an approach to creating long-term
C P A
strategic workforce plans that incorporate future shis Two additional elements round out and enhance the
in strategy, product mix, and technology content of the report.
◊ “Building Flexibility in the Workforce” examines the ◊ The White Paper Creating a New Deal for Middle Manag-
use of flexibility measures to create a more elastic and ers: Empowering a Neglected but Critical Group discusses
engaged workforce how to empower middle managers to better execute
the business strategy and engage employees
◊ “Developing Capabilities for HR to Partner with the
Business Units” lays out a road map for HR profession- ◊ A CD contains a PDF file of the report, detailed survey
als to develop new analytical skills and expert knowl- data by country and industry, case studies, and video
edge, and to serve as trusted counsel to business man- interviews with the global HR vice presidents of
agers Google and Nokia
T B C G • W F P M A
Global Trends in
Managing People
N
ow that companies are resuming their search excel in several HR areas relative to low performers, such as
for growth, many of them must rebuild their performance measurement and rewards. Even when they have
foundation of human capital that was erod- strong capabilities in an area, high performers dedicate more
ed during the global recession. In particular, investment to focused projects, typically leading to better re-
our survey shows, they must pay attention sults.
to such areas as managing talent and developing current and
future leaders—topics that respondents assigned high future Our online survey generated 5,561 responses (nearly one-
importance but weak current capabilities within their com- fih more than our 2008 survey) from 109 countries cov-
panies. ering five continents and many industries. (See Exhibit 1.)
Countries generating the most responses, in descending
In general, HR is conducting too many initiatives, with me- order, were Canada, the United States, France, Australia,
diocre outcomes. Companies with high financial performance Brazil, Finland, Germany, and Russia.
Exhibit 1. Executives in 109 Countries Responded to the Survey
Romania 52
Bulgaria 109
Slovakia 10 Montenegro 2 Turkey 53
Hungary 36 Italy 57
Poland 8 Serbia 22 Greece 89 Malta 74
Sweden 121 Slovenia 48 Cyprus 20
Czech Republic 28 Austria 21 Russia 166
Germany 173 Estonia 1
Norway 24 Finland 177
Denmark 42
Switzerland 67
Netherlands 89
United Kingdom 131
Belgium 26 Latvia 38
Ireland 30 Ukraine 3
France 270 Moldova 2
Andorra 2
Canada 438 Spain 50 Japan 18
United States 293 Portugal 100
South Korea 42
Mexico 19 Dominican Macedonia 30 China 73
Republic 24 Morocco 8 Albania 1 Afghanistan 1
Guatemala 16 Cape Verde 2 Tunisia 4 Taiwan 101
Costa Rica 42
Saint Kitts and Nevis 2 Trinidad and Thailand 33
Nicaragua 8 United Arab India
Panama 24 Tobago 5 Emirates 10 50 Philippines 85
Venezuela 38 Brunei 1
Colombia 50 Qatar 2
Ecuador 31 Sri Lanka 16 Indonesia 3
Brazil 201 Senegal 20 Saudi Arabia 75 Malaysia 15
Peru 26 Singapore 3
0 Bolivia 4 Ivory Coast 3
Paraguay 18
Fewer than 10 Chile 7 Benin 4 Kenya 11 Australia 220
Uruguay 27 Algeria 1 Tanzania 33
10–19
Nigeria 8 Malawi 2
20–49 Chad 1 Uganda 44 New Zealand 68
Argentina 25
50–99 Angola 1 Swaziland 1
100 or more Namibia 6 Zimbabwe 5
South Africa 97 Botswana 29
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
Note: This exhibit does not show all the countries where executives responded to the survey.
C P A
Respondents came from a broad range of industries. The topics. To start, we asked executives to rate their compa-
top five industries represented were business services; ny’s current capability in the 21 HR topics and to tell us
technology, media, and telecommunications; consumer whether they foresee the topic becoming more or less im-
goods; health care; and financial services. portant in the future. Four topics surfaced as the most
pressing challenges, with high future importance but low
We also interviewed 153 executives, mostly board and ex- current capability. These are red-zone topics, as shown in
ecutive committee members of multinational companies. Exhibit 2.
Eighty-eight of these interviews were conducted in Eu-
rope, 28 in Asia, 15 in North America, 11 in South Amer- Managing talent, which includes issues such as talent
ica, 6 in Africa, and 5 in the Middle East. pools and effective staffing of leadership positions,
continues to be the most critical topic for executives.
Moreover, corporate capabilities in this area have
How Executives View the Most Critical improved only slightly over the past two years.
HR Topics As Henrique de Melo, head of HR at Caixa Geral de
Depósitos of Portugal, noted: “The key differentiat-
This report aims to analyze how HR challenges have ing element in banking is people. Products are imitated,
been changing over time and in different economic envi- technology can be bought, but people make the dif-
ronments, through survey responses and interviews on 21 ference.”
Exhibit 2. Managing Talent, Leadership Development, Employee Engagement, and
Strategic Workforce Planning Are Perceived as the Most Critical Topics
High
Improving 2010
leadership
development
Managing
talent
Measuring Enhancing
workforce employee
performance engagement
Transforming HR
into a strategic Strategic
partner workforce planning
Sample size:
Improving 5,561
performance Managing
management Becoming change and
and rewards a learning cultural Strong
trans-
Delivering Improving organization formation need to
Future on recruiting employer act
importance branding
Managing
labor costs Managing
flexibility
Low Medium
Managing corporate Managing need need
social responsibility work-life to act to act
Mastering HR
processes balance
Managing
demographics Managing Relevance today
Managing globali-
diversity and zation
Restructuring inclusion
the organization
Providing shared services Low High
Low and outsourcing HR
High Low
Current capability
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
T B C G • W F P M A
Improving leadership development follows managing talent. low. Supply and demand of skilled employees change
Its importance has risen over the past two years—not over time and as a company’s strategy shis—from, say,
surprisingly, because leaders are the ones charged with making an industrial product to offering services around
conveying the company’s vision, serving as role models, the product. The HR function must be equipped with so-
and engaging employees. Yet corporate capabilities in phisticated models to predict supply-and-demand dynam-
this area have actually declined since 2008, so companies ics that closely align with an evolving company strategy;
will need to improve their programs to define, assess, and such models enable business leaders to undertake strate-
develop current and future leaders. gic workforce planning.
Enhancing employee engagement has moved from the yel- Taking a country view of the HR topics, executives in the
low zone in 2008 to the red zone today. In response to the vast majority of countries ranked managing talent and
financial crisis and worldwide recession, many compa- improving leadership development within their top five;
nies resorted to cost-cutting measures, which dampened only executives in Germany, the Netherlands, and
morale. Now executives want to instill a sense of pride Russia did not consider both of these to be of utmost
and trust in the company that will get employees en- importance. (See Exhibit 3.) Strategic workforce planning
gaged again. K.K. Sinha, group HR director of Jindal Steel and enhancing employee engagement also consistently
& Power in India, said that beyond compensation as a ranked high.
baseline factor, engagement is critical as “the glue” bind-
ing employees together in a common purpose. Returning to the matrix in Exhibit 2, topics with low fu-
ture importance and high current capability fall in the
Strategic workforce planning was viewed as fairly impor- green zone at the lower-le corner. Managing labor costs
tant for the future, but current capabilities were rated and restructuring the organization, for instance, are per-
Exhibit 3. Managing Talent and Improving Leadership Development Ranked High in Most
Countries
Matrix analysis
North Latin Middle
America America Europe East Africa Asia Pacific
Country United Nether- United Saudi South New Philip- Mentions
Subject Canada States Brazil France Germany Italy lands Russia Kingdom Arabia Africa China Australia Zealand pines in Top 5
Managing talent 1 2 4 1 1 2 1 1 1 2 3 1 2 2 14
Improving leadership
development 2 1 1 2 1 2 2 2 1 1 2 1 1 13
Strategic workforce
3 3 3 5 3 4 5 5 5 4 4 4 3 13
planning
Enhancing employee
engagement 4 4 3 3 3 3 3 5 8
Transforming HR into
4 2 4 3 2 5
a strategic partner
Measuring workforce
performance 5 5 4 5 3 5
Managing change and
5 2 3 4 4
cultural transformation
Becoming a learning
4 4 5 5 4
organization
Improving employer
branding 5 3 1 3
Improving performance
2 5 5 3
management and rewards
Rank 1 2 3 4 5
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
Note: This exhibit shows those countries where the number of respondents exceeds 50.
C P A
ceived as not critical, because they were addressed during seem to have improved their assessment of employ-
the crisis. ees’ performance.
Thirteen topics fall in the yellow zone, where challenges do ◊ Becoming a learning organization decreased slightly in
not pose immediate danger and can be addressed before future importance but remained close to the red zone.
they move into the red zone. However, we should highlight In a fast-changing environment, there is a premium on
several yellow-zone topics for which current capabilities skills and knowledge that help people adapt to the
are low and we believe future importance changes, as well as a premium on master-
might have been underestimated. Managing ing new digital channels of learning. Com-
panies should also capture the knowledge
demographics declined
Managing demographics, which goes hand of older employees before they retire.
in hand with strategic workforce planning, in future importance
declined dramatically in future impor- yet in our view remains ◊ Improving performance management and
tance aer 2008 because of pressing short- rewards had a slight increase in future im-
term concerns. However, in our view this highly relevant. portance, probably because of wide pub-
topic remains highly relevant to multina- lic debates on executive compensation.
tional companies. Populations in many developed coun-
tries are skewing sharply older, causing waves of retire- ◊ Managing change and cultural transformation declined
ments and a smaller pool of young skilled workers from as well, yet HR professionals must ensure that employ-
which to recruit. Companies would do well to improve ees can continuously adapt to changes in regulatory
their supply-and-demand models for guidance in long- regimes, skill requirements, and work.
term recruiting, training, and staffing decisions. According
to Nick Thripp, HR vice president at Infineum Interna- ◊ Similarly, providing shared services and outsourcing HR
tional, a global formulator, manufacturer, and marketer dropped in perceived future importance, while capa-
of petroleum additives headquartered in the United King- bilities remain very low. Yet shared services and out-
dom, “An unprecedented number of our leaders are ex- sourcing remain effective methods of improving HR
pected to retire in the next five years or so. We are con- costs and productivity.
templating further ‘life friendly policies,’ including
extended careers for people close to retirement.” Note that certain HR capabilities are assessed quite dif-
ferently depending on one’s vantage point in the organi-
Four topics in the yellow zone—managing globalization, zation. For example, HR executives tend to give higher
work-life balance, diversity and inclusion, and corporate so- ratings than do line business executives to all HR capa-
cial responsibility—also saw a drop in perceived future im- bilities. Exhibit 4 shows the seven capabilities with the
portance that we believe is unwarranted. Each of these largest ratings difference between the two groups.
topics was sidetracked both by the economic crisis and by
increases in perceived corporate capabilities in these ar-
eas. However, we would argue that they are highly rele- The Tide Turns in 2010
vant for future success, because of long-term demograph-
ic and social trends, and that managers should rekindle The survey also asked executives about the topics’ current
efforts to improve in each area. As Amy DiGeso, executive importance, and it’s worth noting what has changed since
vice president of global HR at Estée Lauder, put it, the 2008. (See Exhibit 5.) In response to the economic crisis,
company benefits from “encouraging and leveraging dif- companies generally focused more on workforce produc-
ferences; we know that inclusiveness strengthens our cul- tivity topics, such as mastering HR processes and measuring
ture and business results.” workforce performance, and less on topics related to build-
ing workforce capabilities, such as managing work-life bal-
Among other topics in the yellow zone: ance and managing change and cultural transformation.
◊ Measuring workforce performance increased in both fu- Managing talent and improving leadership development re-
ture importance and current capability. Companies main the top two in current importance, though the latter
T B C G • W F P M A
Exhibit 4. Seven HR Capabilities Are Assessed Very Differently by HR and Non-HR
Executives
Current capabilities Assessment of current HR capabilities by HR and non-HR executives
Transforming HR into a strategic partner
Mastering HR processes
Delivering on recruiting
Restructuring the organization
Improving performance management and rewards
Managing demographics
Measuring workforce performance
Low Current capability High
Current capability assessed by respondents outside of HR Current capability assessed by HR respondents
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
Note: This exhibit shows the top 7 of 21 HR topics according to the greatest difference between the two groups.
Exhibit 5. Employee Engagement and Performance Management and Rewards Have
Jumped in Current Importance Ranking
Current importance
2008 ranking 2010 ranking
Managing talent 1 1 Improving leadership development
Improving leadership development 2 2 Managing talent
3 Enhancing employee engagement
Delivering on recruiting 3
4 Measuring workforce performance
Managing work-life balance 4 5 Improving performance management and rewards
Managing change and cultural transformation 5 6 Managing labor costs
Transforming HR into a strategic partner 6 7 Delivering on recruiting
8 Transforming HR into a strategic partner
Enhancing employee engagement 7
9 Strategic workforce planning
Improving performance management and rewards 8 10 Mastering HR processes
Measuring workforce performance 9 11 Becoming a learning organization
Restructuring the organization 10 12 Managing change and cultural transformation
13 Managing flexibility
Becoming a learning organization 11
14 Improving employer branding
Managing demographics 12 15 Restructuring the organization
Mastering HR processes 13 16 Managing work-life balance
Managing diversity and inclusion 14 17 Managing corporate social responsibility
18 Managing diversity and inclusion
Managing corporate social responsibility 15
19 Managing demographics
Managing globalization 16 20 Managing globalization
Providing shared services and outsourcing HR 17 21 Providing shared services and outsourcing HR
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
C P A
is now number one. The next three topics in perceived three years, and we used those data to group the compa-
importance are all newcomers to the top five: enhancing nies into performance quartiles, adjusting for industry-
employee engagement, measuring workforce performance, specific revenue and margin differences.
and improving performance management and rewards.
From that analysis, we compared the ranking of HR capa-
Topics that have declined in current importance, mean- bilities of high- and low-performing companies in each
while, include managing work-life balance, managing change industry. One topic in particular stands out: improving per-
and cultural transformation, and managing demographics— formance management and rewards was ranked the second-
possibly because they were overshadowed by the cost highest capability by high-performing companies, but
and productivity imperatives of the economic crisis. only ninth by low performers. Excellent financial perfor-
mance clearly correlates with a focus on employee per-
As for future importance, companies are starting to formance and rewards. Three other capabilities—measur-
turn their attention to workforce-building topics such ing workforce performance, enhancing employee engagement,
as planning the size and composition of the workforce, and transforming HR into a strategic partner—also ranked
attracting talent through improved employer brand- higher among high performers than among low perform-
ing, and retaining top employees by managing them ers, but to a lesser extent.
well.
In terms of perceived HR performance, respondents
who were asked which company has the best HR prac-
Practices of High-Performing Companies tices overwhelmingly chose Google, followed by
Procter & Gamble and Microso . (See the sidebar “HR
The companies participating in our survey provided in- for ‘Googlers’: How a Giant Company Aims to Remain In-
formation on their revenue and profitability over the past timate.”)
HR for “Googlers”
How a Giant Company Aims to Remain Intimate
Google has an impressive track record and an enviable Google’s benefits and compensation packages, renowned
reputation for people management. It routinely ranks first for their largess, have a threefold purpose, Bock pointed
or near the top in “best places to work” reports. What in- out. First, to create a community—hence the microkitch-
gredients account for Google’s success as an employer— ens sprinkled around the offices, where people can inter-
beyond, of course, its financial and market success? act informally. Second, to drive innovation: the more peo-
ple interact, the higher the likelihood of creating
Google’s value proposition as an employer combines a la- serendipitous sparks of innovation. And third, to promote
ser focus on innovation and smart business practices with efficiency: on-site oil changes and dry-cleaning services
a small-company feel that includes direct access to top help hard-working employees save time in their personal
management. For instance, no one hesitates to pose ques- lives.
tions directly to the founders at the weekly all-hands
meetings. To keep a pulse on how “Googlers” are feeling, which in-
forms talent-management and development programs,
The HR management system plays a critical role in keep- HR undertakes a variety of analyses, Bock said. The com-
ing this value proposition well tuned and relevant for each pany monitors retention and attrition and looks for pat-
successive generation of employees by embedding terns. An annual employee survey plus focus groups
Google’s mission into daily work life. As Laszlo Bock, vice throughout the year provide ample qualitative feedback.
president of people operations at Google, said in an inter- On the basis of this analysis, upward management feed-
view with BCG: “If you talk to anybody at Google and ask back gets put into practice. “Every member of our execu-
them what the mission is, they’ll say, ‘To organize the tive team has goals for the year,” Bock said. “These are
world’s information and make it universally accessible not amorphous goals, like ‘make the company feel more
and useful.’ It’s rare to find a place where everyone knows engaged,’ but very specific, like ‘there were three issues in
the mission—and then actually believes it.” the sales organization that we will address this year.’”
T B C G • W F P M A
Improvement Through Focused Projects As a broad observation, HR is conducting too many initia-
tives, with mediocre outcomes. Of the five most frequent
As companies try to improve their various HR capabili- types of project, only delivering on recruiting had satisfy-
ties, they oen undertake specific projects to test alterna- ing results and therefore could be categorized in the good
tive practices against traditional methods, or to make practice group. (See Exhibit 6.) The other four—improving
step-change improvements in traditional methods. We leadership development, restructuring the organization, man-
asked respondents how many projects per HR topic their aging talent, and enhancing employee engagement—result-
company undertook and how satisfied they were with the ed in below-average satisfaction and thus would have to
projects’ outcomes. Grouping the answers for number of be called poorly managed.
projects and satisfaction with the outcome of each al-
lowed us to define four groups: Companies clearly must improve their HR project man-
agement. To conduct so many projects with unsatisfying
◊ Good practice for an above-average number of projects results squanders precious resources that perhaps could
and high satisfaction be transferred to more projects for the underleveraged top-
ics. Difficult topics, meanwhile, should be reassessed with
◊ Poorly managed for an above-average number of proj- well-structured projects that lead to greater satisfaction
ects and low satisfaction with the results.
◊ Underleveraged for high satisfaction but for just a few Analyzing the ranking of HR projects by high- and low-
projects performing companies, we find it striking that measuring
workforce performance ranks fih among high performers
◊ Difficult topics for a few projects that generated low sat- but only tenth among low performers. (See Exhibit 7.)
isfaction This project gap reinforces the capability gap between
Exhibit 6. Of the Five Most Frequent Types of Project, Four Are Poorly Managed
Underleveraged Good practice
◊ Managing corporate social ◊ Delivering on recruiting
Above-average responsibility ◊ Mastering HR processes
satisfaction ◊ Becoming a learning organization ◊ Transforming HR into a strategic
with projects ◊ Managing work-life balance partner
◊ Managing flexibility ◊ Improving employer branding
Difficult topics Poorly managed
◊ Managing change and cultural ◊ Improving leadership development
transformation ◊ Restructuring the organization
Below-average ◊ Strategic workforce planning ◊ Managing talent
satisfaction ◊ Providing shared services and
with projects ◊ Enhancing employee engagement
outsourcing HR
◊ Measuring workforce performance
◊ Managing diversity and inclusion
◊ Managing labor costs
◊ Managing demographics
◊ Improving performance management
◊ Managing globalization and rewards
Number of projects Number of projects
undertaken undertaken
is below average is above average
The five most frequent
HR projects
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
C P A
low and high performers that we noted earlier for the High-performing companies are noteworthy for their per-
same topic, despite the topic’s relatively high impor- sistence with appropriate projects. Even when they rank
tance. Projects pertaining to transforming HR into a stra- high in a certain capability, high performers continue to
tegic partner and improving employer branding were also undertake projects to improve further. Excellence in tal-
much less important to low performers than to high per- ent management, it seems, entails continual experimen-
formers. tation and refinement.
Exhibit 7. Three High-Priority Projects of High-Performing Companies Are Neglected by Low
Performers
Top ten HR projects of Low-performing companies rank five HR projects
high-performing companies lower than high performers do
1 Improving leadership development –1
2 Managing talent –1
3 Restructuring the organization 2
4 Delivering on recruiting 0
5 Measuring workforce performance –5
6 Enhancing employee engagement 1
7 Managing labor costs 0
8 Improving performance management and rewards 0
9 Transforming HR into a strategic partner –4
10 Improving employer branding –4
–5 –4 –3 –2 –1 0 1 2 3 4 5
Number of ranks different from high performers
Sources: Proprietary Web survey with 5,561 responses; BCG/WFPMA analysis.
T B C G • W F P M A
Do You Have the Right
Future Leaders?
T
he leadership pipeline can be a resource for ◊ Building a larger, stronger pipeline of future senior ex-
growth or a bottleneck. Fiy-six percent of sur- ecutives by balancing the talent available from inter-
vey respondents cited a critical talent gap for se- nal pools with the targeted new capabilities that can
nior managers’ successors, in part because their be acquired through external recruitment
internal talent pools are too shallow. High-
potential employees have many options, so companies must ◊ Devising better approaches to career development
adapt their leadership-development programs in order to re- conversations and plans, and to building the capabili-
tain and motivate the best and the brightest inside the or- ties among high-potential employees to handle com-
ganization—including women, who tend to be underrepre- plexity
sented in talent pools. Companies should augment their
training curricula and job assignments to foster the critical ◊ Planning and organizing talent flows internally
skills of formulating and executing strategy, navigating com- and externally on a multinational—even global—
plex markets, and attending to a diverse set of stakeholders. scale
Corporate leaders today must be comfortable navigating ◊ Encouraging leadership training by, for instance, estab-
a more complex and fast-changing business environment, lishing or augmenting corporate “universities”
where boundaries between different players are more
porous, competitors sometimes serve as collaborators,
and the range of stakeholders making demands on the Leadership Talent Is in Short Supply
company has greatly expanded.
Our survey reveals a major gap for high-potential employ-
Yet most companies report a shortage of future leaders ees who will serve as the next generation of leaders. In
with the requisite capabilities. This shortage, which has the leadership pipeline, we distinguish among four
existed for certain highly skilled technical positions, is groups: emerging potentials—young university graduates
now emerging at all levels of organizations. It will only who are likely to flourish; high potentials—promising
get more extreme in most Western countries and Japan employees who can be found at any level; and senior
because of well-documented demographic shis. manager and CEO successors—who have already ad-
vanced and have the potential for senior executive lead-
Executives also worry that their leadership-development ership.
programs have not kept pace with the new complexities.
Many such programs are disconnected from workforce- Our survey respondents are most worried about the tal-
planning activities, divorced from explicit career paths, or ent gap for senior manager successors, with 56 percent
lacking transparent criteria for employee selection. citing a critical talent gap for this group. Fiy percent of
respondents are concerned about the gaps for CEO suc-
Companies will thus be pressed to advance their leader- cessors and high potentials, and 40 percent for emerging
ship development along several fronts: potentials.
C P A
The leadership talent shortage is most acute in IT and, to A clear and well-structured leadership-talent strategy is
a lesser extent, in support functions and in marketing critical. Companies with such a strategy fill roughly one-
and sales. The regions with the biggest gap are the Com- third more positions internally than do companies with-
monwealth of Independent States (the former Soviet out a clear strategy, our survey finds. High-performing
Union), India, and South America. (See the sidebar “Stim- companies, for instance, report filling 60 percent of top
ulating Economies Through Talent Mobility.”) executive positions with internal candidates, while low
performers fill just 13 percent of those slots internally.
In Search of Homegrown High-performing MTR Corporation of Hong Kong, which
Talent operates rail systems around the world,
companies fill most
maintains a pipeline with three levels of
Many companies are dealing with this top executive seniority to meet the need for future lead-
shortage of qualified future leaders by re- positions with ers who will steer the company for growth
cruiting from outside the organization, and sustainability, said William Chan, HR
even though they have many young, tal- internal candidates. director. Besides identifying and nurturing
ented employees eager to advance their promising employees, talent programs
careers. Respondents said their companies recruited ex- should improve staffing decisions. Staffing decisions can
ternally, on average, for 52 percent of top executives, 48 be made on the basis of an individual’s potential and de-
percent of senior managers, and 44 percent of middle velopment path, not just on competence and past perfor-
managers. mance. And a more forward-looking approach to staffing
would anticipate the need for leaders ten years out.
They are looking externally because internal talent-
development programs have not produced a sufficient As Marcelo Madarasz, manager of development and lead-
number of strong candidates—a major shortcoming in ership at Natura, a Brazil-based cosmetics manufacturer,
HR management. Only about one-fih to one-third of re- noted: “We can’t sustain this growth—and the complex-
spondents said their companies have talent manage- ity it brings—if we don’t develop our own leaders in-
ment programs dedicated to developing each of the house. That’s because we need leaders who breathe and
groups. retransmit our values, vision, culture, and beliefs.”
One frequently overlooked pool of potential leaders is Filling too many middle and senior leadership positions
women. Despite the strides made by women in many pro- with outside candidates, or with internal candidates who
fessions, they still struggle to break into leadership ranks. have not demonstrated the requisite characteristics and
In 44 percent of the companies surveyed, women consti- capabilities, undermines the organization in several ways.
tute 10 percent or less of the talent pool. Practically speaking, employees need opportunities for
Stimulating Economies Through Talent Mobility
Talent mobility is widely recognized as one effective shortages regardless of the country. Other countries,
means of addressing the increasing skill gaps in some such as Brazil, Sweden, and Italy, are unlikely to expe-
countries. BCG has been collaborating with the World rience acute shortages. (See the exhibit “The Region-
Economic Forum on a project to design concrete recom- Industry Matrix Highlights Likely Skill Shortages in 2020
mendations to policymakers that will facilitate talent mo- and 2030.”)
bility.
Making cross-border mobility easier for employees is one
Over the next 20 years, countries such as the United way that governments, for their part, can address the chal-
States and Japan will face large talent gaps in many indus- lenges of demographic shis and resulting talent gaps,
tries. And certain sectors, including health care, educa- and thereby foster economic growth. Policymakers should
tion, IT, and business services, will likely experience major consider these other avenues as well:
T B C G • W F P M A
Stimulating Economies Through Talent Mobility (continued)
◊ Assess current and future shortages through strategic skills Governments should ensure the proper integration of
planning. Governments should analyze capacity and immigrants, provide them with employment and lan-
productivity risks for each job type and develop policies guage support, and facilitate the portability of pensions
to mitigate anticipated shortfalls. Australia, for instance, and social benefits. A new category of short-term work
has set up an independent body consisting of multiple visas targeting highly skilled immigrants can further in-
stakeholders that advises the minister for education, crease workforce flexibility and help mitigate immedi-
employment, and workplace relations on Australia’s ate shortages.
current and future skill needs.
◊ Develop public-private partnerships in education and train-
◊ Develop recognized skills training for native and immigrant ing, working with businesses and academic institutions
employees, particularly for critical skills in short supply. For to better match supply and demand. The collaboration
instance, the U.K. government, industry associations, among IBM, Google, and leading U.S. universities is one
and training providers have established 25 Sector Skills such partnership.
Councils to develop training solutions and to influence
development of qualifications. ◊ Integrate migration into the development strategies of send-
ing countries. Hosting and sending countries must col-
◊ Design comprehensive immigration policies that cover a laborate to design policies that encourage talent circu-
range of immigrants, from students to experienced workers. lation and ensure the transfer of migrants’ skills.
The Region-Industry Matrix Highlights Likely Skill Shortages in 2020 and 2030
Projections, 2020 2030
Transport
and Hotels IT and Public
Manu- Construc- communi- and Financial business Health admin-
facturing tion Utilities cations Trade restaurants services services care istration Education Others
CAN
The USA
Americas MEX
BRA
SWE
UK
FRA
GER
Europe POL
ESP
ITA
TUR
RUS
IND
CHN
Asia
KOR
JPN
Pacific AUS
Employability/immigration capability: Low Medium High
No pressing talent Talent shortage High talent shortage Very high talent shortage
shortage or skill gaps or skill gaps or skill gaps or skill gaps
Source: BCG analysis.
C P A
career growth. Lacking those opportunities, top talent to create the bench strength it needs for its ambitious
will notice their company’s tendency to court outsiders, growth agenda.
and they will become disengaged and leave for greener
pastures. In addition, it takes outsiders a longer time to But external recruiting should be combined with a dedi-
acquire the institutional knowledge and informal net- cated internal-development plan. Companies benefit
work that are essential for getting things accomplished. from strong internal-development programs by promot-
ing people who have been thoroughly assessed, have
External recruiting will always have a role, strong connections in the company net-
especially for young or fast-growing com- Companies can work, and know the business well. And
panies. One Indian company in the con- high-potential employees, meanwhile, ben-
attract more external
struction materials market, which has a efit by receiving more development oppor-
goal of growing ten times its size over four candidates by working tunities. (See the sidebar “Sanofi-aventis
years, faced a severe talent challenge. The with second-tier Confronts the China Talent Squeeze.”)
company developed a detailed manpower
model for the next five years, plotting the universities. Companies can also ensure that they have
demand and supply of talent for each role. an adequate supply of external candidates
For example, for roles in high demand and high supply, by expanding relationships with second- and third-tier
the company cast a wide recruiting net and built an “on- universities, whose top students are oen overlooked.
boarding” engine that emulated IT companies. For roles
in high demand but short supply, the company instituted The Indian IT and business-service firm Wipro has done
cross-functional rotations, a fast-track development pro- just that by expanding its university-graduate sourcing
gram for top performers, and on-the-job training. Through and linking it with a dedicated internal-development
a combination of initiatives, the company has been able plan to meet its strong demand for new talent.
Sanofi-aventis Confronts the China Talent Squeeze
Explosive growth and intense competition have strained rates. The forecasted demand included the type and
the management attention of pharmaceutical giant quantity of talent that would be needed year by year.
Sanofi-aventis in China in recent years. Like other compa-
nies in China, the firm experienced high employee turn- ◊ Conducted interviews and a “talent vision” workshop to
over, which has been particularly challenging in the mid- align senior management and the HR function on the
dle management ranks because middle managers provide main talent challenges.
key leadership for a fast-growing organization. To com-
pound the problem, Sanofi-aventis forecast that it would ◊ Established a dedicated talent center for the Chinese
need to double the size of its China operation within five market.
years.
The new talent center, which operates alongside the HR
In response, said David Ford, global head of executive tal- function, has several unique characteristics. Through
ent management, the company decided it needed to de- funding and staffing mechanisms that smooth the impact
vise a strong talent strategy that would identify high- of talent movements on business units, it avoids the usual
potential employees at each layer of management and conflict with business unit leaders, who don’t want to lose
give them opportunities for new challenges and profes- their best people to grooming and transfer, and who have
sional development. Sanofi-aventis took several steps: no incentive to underwrite talent development.
◊ Forecast baseline revenue and head count by function, Training sessions and coaching will increase development
seniority, and future job families. opportunities for high-potential talent, as well as increase
the flow of talent through to managers at all levels. As a
◊ Defined future talent demand for China on the basis of result, Sanofi-aventis is far more confident about over-
global data adjusted for local trends, such as attrition coming the unique HR challenges of the Chinese market.
T B C G • W F P M A
Components of Effective Leadership versations and plans, and on-the-job projects—were each
Development undertaken in nearly half of the companies surveyed.
Technical and functional training, along with on-the-job
Our interviews and experience suggest that the most ef- projects, were deemed the most effective in developing
fective approach to leadership development contains a leadership skills. (For a conceptual guide to leadership
blend of training sessions, frequent conversations, coach- training content, see the sidebar “Navigating with a Lead-
ing, and hands-on experience. In each activity, the survey ership Compass.”)
findings suggest that companies should devote more time
to people development and effective decision-making. High- On the other hand, regular development conversations
performing companies rank their capabilities in those and plans were not considered very effective, in part be-
two skills much higher than do low performers. cause they are too infrequent and disconnected from
other initiatives. (See Exhibit 8.) At many companies, a
The most common leadership-development initiatives— manager or even an executive might have just one con-
technical and functional training, regular development con- versation with his or her supervisor each year, to review
Navigating with a Leadership Compass
Young, promising employees need focused training and mentoring to project assignments. Companies can offer a
other measures to help them step into leadership roles. It’s range of practices to help leaders think and behave con-
essential to have a leadership “compass” that helps the sistently with these new imperatives.
next generation of leaders develop the right set of skills for
navigating a volatile, interconnected, and complex world.1 First, they should actively expand future leaders’ hori-
In a recent study, BCG interviews with nearly 30 senior HR zons. Promising early-career leaders can be immersed in
executives around the world revealed that four capabili- unfamiliar regions, product lines, or customer segments.
ties—the four points of the compass—will differentiate More experienced leaders can be assigned temporarily
the most successful leaders in the coming years: to important external initiatives concerning policy or
trade.
◊ Navigate. Leaders will need to combine analytical skills
with an ability to interpret mixed signals in order to Second, they should lay down fast tracks that provide op-
make decisions in uncertain situations. portunities for high-potential employees to skip a rung.
Migrating to new roles and new assignments benefits
◊ Empathize. Leaders must respect and understand di- both young and later-stage leaders.
verse perspectives and build networks of people outside
their organization. Empathy with people at all levels Third, they should accelerate skill development, bench-
and with different perspectives can be quite valuable marked against the top talent in key markets. Leading a
when entering new regions or market segments. peer group or a joint venture can provide a controlled ex-
perience in authority, monitored through regular reviews
◊ Self-correct. Leaders will want to challenge and periodi- to explicitly mine the points that can be learned.
cally revise their assumptions about leadership styles
and modes of interacting with people. They should also Finally, companies should strive to inspire and retain
be willing to reframe their business paradigms on the their future leaders through opportunities to work on so-
basis of changing demands. cial causes that align with the business, through sabbati-
cals to pursue personal passions, or through challenging
◊ Win and win. Leaders should broaden their view of what assignments that foster a sense of continuous learning
constitutes success, as success increasingly depends on and personal growth.
cooperation with competitors, nongovernmental organ-
izations, and regulators.
These four compass points should inform every initiative 1. Roselinde Torres, “New Leadership Rules,” online article, The
that aims to develop leadership skills, from training to Boston Consulting Group, May 2010.
C P A
Exhibit 8. Development Conversations and Plans Are Relatively Popular but Not
Considered Very Effective
Training actions performed (% of respondents) Effectiveness of each training action
Technical and functional training 48
Regular development conversations and plans 47
On-the-job projects 44
Individual coaching 40
Internal executive-development programs 33
Mentoring 30
Cross-functional assignments 30
International assignments 22
Tailored career tracks along functions, regions, positions 21
External assignments (such as joint ventures and NGOs) 8
Low High
Sources: Proprietary Web survey with 5,561 responses; 1,089 responses in this section; BCG/WFPMA analysis.
past performance and future objectives. Such initiatives grams typically aim to develop job skills, as reflected in
clearly should be improved through more frequent con- the curriculum; courses on leadership behavior, for ex-
versations, additional 360-degree reviews, follow-up plans ample, would be relevant for senior and middle manag-
with a specific development agenda, and training ses- ers. In addition, corporate universities can communicate
sions that explicitly connect to that agenda. and also contribute to development of the company’s
strategy, thereby reinforcing desired behaviors and cul-
In order to facilitate training, 22 percent of the respon- ture as well as providing networking opportunities.
dents have launched a corporate university. These pro-
T B C G • W F P M A
A Strategic Workforce
Plan to Build the
Capabilities You Need
W
ill you have the capabilities you’ll need in key jobs. Since our last global survey, published in
in your workforce in five or ten years? 2008, a small amount of progress has been made in un-
Huge gaps are developing in companies’ derstanding workforce supply: 15 percent of respondents
workforces, owing to both economic fluc- now use a supply model to predict the availability of
tuations and demographic shis. It takes workers. (See Exhibit 9.) These models lack sophistica-
years to train personnel in complex skills and to put in place tion, however: less than half, for example, can simulate
other measures to address workforce capacity shortages or attrition or retirement rates at the job function level.
surpluses. Yet currently, only 9 percent of surveyed compa-
nies are analyzing their future workforce supply and de- Demand is more difficult to predict because it hinges on
mand under different growth scenarios—and a mere 6 per- a company’s corporate strategy. Strategy determines the
cent have begun developing a retention, recruiting, and markets that a company expects to pursue and the prod-
talent management strategy for the job functions at greatest ucts or services it expects to provide—and consequently
risk of a labor shortage. the capabilities that will be needed. Furthermore, compa-
nies should anticipate and simulate several different de-
Companies that systematically assess their workforce ca- mand scenarios, depending on how they anticipate that
pacity risk and then put a strategic plan in place to man- markets could develop.
age that risk will gain a clear competitive advantage in
the next decade. Very broadly, strategic workforce plan- Only 9 percent of the surveyed companies model demand
ning involves estimating the future supply of and de- as well as supply. Most of their demand models, however,
mand for human capital and then figuring out how to lack the sophistication to simulate an array of scenarios,
close gaps. Such planning allows companies to think such as market-disrupting changes in technology.
through their workforce alternatives to the high fixed cost
of full-time employees. The final step in strategic workforce planning combines
supply-and-demand calculations to determine the risk (the
The supply, of course, is determined by the availability of size of the shortfall or surplus) and its immediacy. Capacity
employees. A quick analysis, drawing on easily available risk may be quantitative (number of workers) or qualitative
company data, can be used to identify locations and busi- (competencies and qualifications of available workers).
ness units facing the most critical capacity losses that oc-
cur because of attrition, retirement, or other trends. For When spotted early enough, workforce shortfalls and sur-
those locations and business units, a more granular anal- pluses can be addressed through a variety of measures,
ysis is necessary, with jobs categorized into relatively including recruitment, retention programs for critical job
broad groups, narrower families within each group, and functions, cross-training programs within job families, job
functions within each family.1
1. For more information, see Rainer Strack, Jens Baier, and Anders
With such an analysis in place, businesses can determine Fahlander, “Managing Demographic Risk,” Harvard Business Review,
whether they will face surpluses or, more likely, shortages February 2008.
C P A
Exhibit 9. Basic Workforce Models Are Prevalent, but More Sophisticated Simulations Are
Rarely Used
Percentage of respondents in each subgroup
Consider current job groups 72
Consider age of current workforce 62
Have a Simulate new hires 47
supply 42
Simulate retirement
model:
15%
1 Derive workforce supply for
the entire company by job 36
Simulate attrition 36
Simulate different scenarios 33
Consider current job groups 70
Simulate different scenarios 53
Have a
supply-and- Derive workforce demand for 47
the entire company by job
demand
model: Simulate productivity increases 45
2
9% 39
Simulate technology changes
Recruiting actions with quantified goals 77
Derive
actions from Qualification actions with quantified goals 57
a supply-and-
Staff reductions 53
demand
model: Apprenticeship actions with 47
6%
3 quantified goals
Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA analysis.
1
Subgroup is asked to further specify workforce supply model.
2
Subgroup is asked to further specify supply-and-demand model.
3
Subgroup is asked to further specify actions derived.
transfers, and outsourcing. These measures require a The most effective HR plans have a time horizon of at
long-term vision; for example, some specialized jobs re- least four years. Planning ahead even further is difficult
quire seven to ten years of training and certification. without the supply-and-demand models that most com-
panies lack; even so, prospective planning of five or more
Very few companies are currently in a position to miti- years is considered more effective than using a shortsight-
gate their capacity risk before a crisis occurs. Only 6 per- ed horizon of one or two years for strategic workforce
cent of the surveyed companies have implemented planning.
measures to address risks identified through modeling of
future supply and demand. (For an example of a compa-
ny that has, see the sidebar “Luhansa Technik: Mitigat- Measuring Employee Performance
ing Capacity Risk.”)
Traditional metrics, such as return on assets or return on
equity, measure capital productivity. Such metrics are of
How Far Out to Plan little use in measuring employee performance. To identify
where and how people are creating—or squandering—
Strategic workforce planning links corporate strategy to value, companies need performance metrics that are as
HR strategy. But most companies do not take full advan- rigorous as those used in the finance department but are
tage of this opportunity. Their time horizon for HR is designed to measure human productivity. As a senior ex-
much shorter—generally just one or two years—than ecutive from a global pharmaceutical company said, “We
their strategic horizon. (See Exhibit 10.) are trying to align our KPIs with the de facto strategy.”
T B C G • W F P M A
Lufthansa Technik
Mitigating Capacity Risk
Luhansa Technik, an industry leader in aviation tech- sulted in the maintenance services demand model being
nology services, has successfully incorporated a longer- based on drivers such as aircra type, year of construc-
term perspective into its strategic workforce planning. tion, maintenance measures, and efficiency increase.
(See the exhibit below.)
The degree of uncertainty that is always inherent in sup-
The airline created a taxonomy of approximately 230 job ply-and-demand modeling makes the simulation of sce-
functions, 150 job families, and 90 job family groups. Indi- narios indispensable. Through scenario simulations, mar-
vidual job functions at the airline are highly specialized, ket developments can be reflected in the strategic
yet the taxonomy allowed Luhansa Technik to identify workforce plan along with the impact of corporate deci-
opportunities for cross-divisional exchange of personnel sions, such as the introduction of new aircra types, on
as well as for training personnel to move up into more the workforce.
complex job functions.
Results from the supply-and-demand simulations are
Luhansa Technik uses supply-and-demand modeling to combined in a gap analysis to calculate the difference be-
forecast future gaps in the workforce and take the appro- tween the existing and the required workforce for each job
priate countermeasures. cluster over a set period. The gap analysis provides a
meaningful, quantitative foundation for taking actions to
Supply modeling identifies the impact of personnel aging reduce Luhansa Technik’s capacity risk.
and retirements, employees moving among company
divisions, and employees leaving the company, as well as For example, maintenance employees undergo five to six
other parameters that influence staff capacity at the job years of training beyond the vocational level so that they
cluster level. can be certified for aircra maintenance work. This in-
vestment offsets the risk associated with underestimating
Demand modeling requires precise knowledge of influenc- demand and suffering a critical capacity shortage in this
ing factors and strategies; these insights result from dis- job function that cannot be addressed on short notice—
cussions among HR, the business units, and the finance or, if it can, only at great effort and expense.
function. At Luhansa Technik, these conversations re-
Strategic Workforce Planning at Lufthansa Technik
2 Simulate workforce supply 4 Identify gaps/risk
per job role
Current workforce Future supply
Gap analysis per
qualification group 2008 2009 2010 2011 2012 2013 2014 2015
Assumptions—for example, Specialist mechanical
–19% –27% –34% –39% –42% –46% –49% –64%
engineer
◊ Fluctuation
1 Define job ◊ Retirement
Specialist electrician 9% –25% –41% –35% –50% –55% –65% –71%
roles ◊ Phased retirement
Supervisor mechanical
engineer
–15% –33% –40% –39% –33% –38% –61% –66% 5 Propose measures
Illu
Specialist electroplater –11% –38% –41% –38% –51% –58% –65% –67%
Development scenarios
FY10 FY11 FY12 FY13 FY14 FY15
Specialist machinist 6% –10%
str
–22% –33% –44% –44% –45% –46% ◊ Recruiting
Job family ati ◊ Training
group
Instrumentation engineer
ERI
21% 20% 17%
ve—
17% 15% 15% 7% –19%
◊ Transfers
fic
tiv
Specialist for
nondestructive testing
–7% –36% –42% –48% –9% –57% –57% –58%
◊ Insourcing/
Job family en outsourcing
3 Simulate workforce demand Specialist for blasting 23% 21% 21% 20% 14%
um
21% 11% –9%
be ◊ Capacity
rs
Specialist painter/graphics
Job per job role –18% –38% –51% –64% –67% –58% –62% –62%
reduction
Supervisor electroplater –9% –21% –36% –36% –40% –47% –61% –61%
function
Workforce demand logic Future demand Instrumentation engineer
electrician
–12% –22% –24% –33% –37% –40% –51% –48%
Supervisor machinist –2% –13% –15% –21% –21% –24% –31% –38%
Assumptions—for example, … 5% –1% –21% –38% –47% –53% –65% –67%
◊ Strategic planning
Surplus or shortage of requirements in the respective year (%)
◊ Growth scenarios
◊ Technological changes >20 >5 to 10 <–35 to –20 <–80 to –65
>15 to 20 <–5 to 5 <–50 to –35 –80
FY10 FY11 FY12 FY13 FY14 FY15
Strategic scenarios >10 to 15 <–20 to –5 <–65 to –50
Sources: Lufthansa Technik; BCG analysis.
C P A
Exhibit 10. The Time Horizon Is Often Shorter for Workforce Planning Than for Corporate
Strategy
6 or more
years 2% 3%
5 years 2% 14% 2%
4 years 1%
Company’s time
horizon for
workforce
planning
3 years 2% 17% 2% 7%
2 years 5% 5% 1% 3%
1 year 9% 4% 10% 5%
1 year 2 years 3 years 4 years 5 years
6 or more
years
Company’s time horizon for strategic planning
Percentage of respondents Companies that use the same time horizon for workforce planning and strategic planning
Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA analysis.
Note: Values below 1% not shown.
In line with the previous global survey, our current survey related KPIs, and fewer than 20 percent for output-relat-
results show that companies primarily use quantitative ed KPIs. And only rarely do companies motivate employ-
input-related KPIs that are relatively easy to calculate— ees and hold middle managers accountable for reaching
such as cost of personnel and training time per employee. goals by linking performance, measured against KPIs, to
(See Exhibit 11.) Output-related KPIs are harder to derive compensation.
and therefore are used less oen: only 27 percent of the
companies surveyed track value added per person, for ex-
ample. Yet these output KPIs are essential for measuring
true performance—both of people and of a business.2
(See the sidebar “Workonomics: A More Useful Way to
Calculate Profit.”)
To improve employee performance, companies must not
only measure but also take action on the performance
KPIs they select. (See the sidebar “Total Workforce Man-
agement at Deutsche Telekom.”) This involves setting
predefined values for their human resources KPIs and es-
tablishing efficient processes to improve disappointing
2. For more information, see Felix Barber and Rainer Strack, “The
scores. Fewer than 40 percent of surveyed companies Surprising Economics of a ‘People Business,’” Harvard Business Re-
have targets and follow-up processes in place for input- view, June 2005.
T B C G • W F P M A
Exhibit 11. Companies Rely More on Basic Input-Related KPIs and Often Lack Efficient
Follow-up Processes
Target values, processes to
Input-related KPIs are used much more widely improve results, and compensation
than output-related KPIs linkage to KPIs are rarely used
(% of respondents) (% of respondents)
Employee head count 68
Input- Cost of personnel 62
related
KPIs Training time per 46
employee
Training costs as percent- 41
age of total budget
Value added per person 27
Output- ROI of training 14
related
KPIs ROI of recruiting 13
Percentage of new hires receiving
top performance ratings 12
0 10 20 30 40 50 60 70 0 10 20 30 40 50
Use of metric Target value Process to improve results Compensation link
Sources: Proprietary Web survey with 5,561 responses; 833 responses in this section; BCG/WFPMA analysis.
Workonomics
A More Useful Way to Calculate Profit
At many companies, personnel costs exceed capital-relat- Employees are at the core of the value chain, so restate
ed costs, which skews the relevance of traditional capital- the equation to show the contribution per employee.
oriented performance metrics such as return on capital. Algebra is used to factor in the number of people em-
A company with few hard assets on its books can post ployed (P):
seemingly high returns but nonetheless be struggling. R – MC – D PC
Alternatively, it can post volatile returns when the under- = – P
P P
lying business is sound. Another approach, which we call
Value added Average People
workonomics, shis the focus from capital to people and per person cost per employed
thereby provides a more accurate indication of the funda- (VAP) 1
person (P)
(ACP)
mentals of the business. (See footnote 2 on page 24.)
The equation determines an average personnel cost per
The standard calculation for earnings can be reformulat- person employed (ACP) and the value added per person
ed in a few quick steps to achieve this shi , in which peo- (VAP). What exactly does VAP reveal? To answer this
ple become a source of value rather than just a cost fac- question, consider the following simple graphic:
tor. Start with the calculation of earnings before interest
and taxes (EBIT): MC R
Revenue Depreciation
D
EBIT = R – MC – D – PC Employees generate revenues (R) from their customers,
Earnings before Material Personnel
so the simplest productivity metric is revenues per person
interest and taxes costs costs (R/P). Many companies use this metric. But to generate
C P A
Workonomics (continued)
A More Useful Way to Calculate Profit
revenues, employees need materials, which are represent- ductivity per employee and the average personnel cost
ed by MC (material costs), and they use machines and per employee, multiplied by the number of employees.
other assets that are accounted for through depreciation This equation links the control of HR performance with
(D). They add value by leveraging these inputs. So a more the key financial metric. If a company uses a financial
sophisticated productivity metric recognizes material metric other than EBIT (such as economic profit), the
costs and depreciation through the following equation: equation could be readily adjusted.
(R – MC – D) / P These new HR metrics are easy to calculate for compa-
nies or business units. Value added per person can be the
This term in the second equation is referred to as value starting point for understanding the productivity of busi-
added per person. Therefore, EBIT can be written as: ness units and for adequately compensating value-added
performance, as well as for controlling personnel costs
= (VAP – ACP) P and head counts. The resulting insights into people per-
formance will enable companies to make smarter and
In this restated version, EBIT is expressed through three better-balanced decisions, especially if their goal is to cut
people-oriented metrics as the difference between pro- costs wisely in times of crisis.
Total Workforce Management at Deutsche Telekom
Deutsche Telekom, the global telecommunications group, a “use case” that detailed the steps required to address
rolled out a successful implementation of strategic work- the HR issue at hand. Next, a set of the most relevant
force planning in two-thirds of its German business units quantitative, qualitative, and process-related KPIs could
in 2008 and 2009. By 2010, the company was ready to wid- be derived and made accessible in a TWM online “cock-
en the scope of the program to launch Total Workforce pit,” tailored to the specific needs of the business part-
Management (TWM). Alongside the existing quantity and ners. As a result, transparency on these KPIs can be pro-
cost dimensions, Deutsche Telekom added skill, demo- vided instantaneously as executives sort out the
graphic, and quality dimensions, and then rolled out the strategic-use cases and HR challenges.
new program internationally. Concurrently, HR integrated
itself not only in the planning process but also throughout One early outcome from TWM has been Deutsche
the entire management cycle, including strategic and fi- Telekom’s labor-cost management pilot, spanning labor
nancial planning, monitoring, and controlling processes. cost issues from collective bargaining and strategy devel-
opment to systematic labor-cost monitoring and bench-
The program has three goals: marking across foreign assets. The company thus has
gained an effective instrument to identify and counteract
◊ To develop a systematic approach that will optimize negative cost developments on an international scale. A
medium-term internal and external capacities second early outcome was the skills-based restructuring
of the company’s systems-integration business.
◊ To derive strategic HR initiatives from a comprehensive
and detailed view of all relevant workforce dimensions By tying HR’s activities closely to the strategic business
challenges, TWM has made HR professionals even more
◊ To enable HR business partners to better support—but relevant for the business side, shiing their role from ex-
also challenge—the businesses ecuting strategy to being independent challengers and
true strategic partners.
The TWM measures derive directly from specific business
challenges, whether related to location, demography, or
other variables. For each challenge, the company defined
T B C G • W F P M A
Building Flexibility
in the Workforce
T
o maintain a lean, agile workforce, high- cent above the average. (See the sidebar “Short-Time
performing companies favor measures that Work in Germany: Using a Flexibility Measure to Avoid
increase fl exibility, such as job mobility or Layoffs.”)
streamlining processes. By contrast, low-
performing companies tend to rely on layoffs Three other flexibility measures were also touted as
and other cutback measures to weather crises. Cutback highly effective. Reinforcing job mobility allows companies
measures destroy morale and ultimately are less effective to respond to economic vicissitudes without laying
than flexible approaches. A creative, balanced approach to- off employees. At Oracle Corporation in the Philippines,
ward these workforce measures gives compa- for instance, employees from one office
nies the tools to help them emerge from eco- Cutback measures that had excess capacity would help at
nomic crises stronger than before. another office that was quite busy, said Ju-
destroy morale and
dith Rivera, HR director. Tightening hiring
The global economic recession of the last are less effective criteria typically results in the hiring of
few years has underlined the importance than flexible fewer, but higher-potential, employees,
of a flexible workforce. Flexibility enables while streamlining processes allows more
agility in both strategy and execution—for approaches. work to be done with less effort.
example, allowing companies to move
quickly into a new market or shut down an underper- Flexibility measures are sustainable, both during and af-
forming product line. Building flexibility into the strategic ter crises. Nearly two-thirds of companies with flexibility
workforce plan is thus critical to success in a volatile measures in place in 2009 planned to maintain these
world. measures—which is approximately twice the number
planning to rely on cutback measures in their longer-term
strategic workforce plans. Rather than waiting to react to
Flexibility Measures: A Longer Runway the next economic crisis, companies would be wise to im-
but Greater Lift plement flexibility measures now as a sustainable ap-
proach to building agility.
Flexibility measures center on work organization such as
streamlined processes, flattened hierarchies, and outsourced
work. (See Exhibit 12). Cutback Measures: Quick Results but
Big Downside
These measures may take months or years to imple-
ment—but they are clearly worth the investment. Sur- Workforce cutback measures such as layoffs or ending
veyed executives described these measures as consider- overtime pay are pervasive during times of crisis, particu-
ably more effective than the average. Flexible work time, larly among lower-performing companies that need to
with reduced compensation for reduced work hours, re- reduce labor costs. During the recent recession, for exam-
ceived high marks, with an effectiveness ranking 10 per- ple, nearly one-half of respondents laid off employees and
C P A
Short-Time Work in Germany
Using a Flexibility Measure to Avoid Layoffs
Against all expectations, overall unemployment in Ger- While costly to the government, short-time work compen-
many rose only slightly during the recent financial crisis, sation is potentially less expensive than funding unem-
to a high of 8.3 percent in mid-2009. Companies were ployment. Furthermore, particularly in the engineering
able to keep their experienced employees—and employ- sector, German companies that used this flexibility
ees their jobs—because of economic stimulus packages measure and, as a result, kept their workforce together
from the government that funded so-called short-time are now in a good position to serve soaring demand in
work. Through this flexibility measure, companies reduce their markets.
employees’ work hours, and their pay, instead of laying
them off.
To soen the blow, either individuals or companies can
apply for short-term allowance to local employment agen-
cies—up to 67 percent of the forgone net wage for up to
24 months. Because of this benefit, employees even
at hard-hit companies were less anxious about losing
their jobs. Many used the drop in hours as an opportunity
to improve their skills through training or certification
courses.
Exhibit 12. Flexibility Measures Tend to Be More Effective
Actions to be Effectiveness in
Actions performed maintained in comparison with
in 2009 (%) the future (%) the average (%)
Performance management is tightened 50 79 4
Compensation
and benefits The profit-related component of 14 79 –1
compensation is increased
Employees take time off to 31
compensate for earlier overtime 53 6
Work time Flexible work time is set up: pay is reduced 25 71 10
for reduced work hours
The workweek is shortened temporarily 16 19 2
Job mobility is reinforced 43 66 9
Head count Fixed-term contracts are not extended 40 30 5
Hiring criteria are tightened 38 72 9
Processes are streamlined 61 75 9
The number of hierarchies is reduced 34 61 1
Tasks are centralized in 29 62 0
Work shared service centers
organization
Work is outsourced 27 65 –4
Subcontracted activities are insourced 19 46 1
Work is offshored 9 61 –5
Less More
effective effective
Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
T B C G • W F P M A
an even larger percentage adopted measures such as cut- Companies should take the time, for example, to put the
ting back company events and cutting back recruiting. (See right layoff processes in place, always with an eye to the
Exhibits 13 and 14.) future. Talk to the top performers, explaining the steps
required to move forward and ensuring them that their
Despite the prevalence of cutback measures as a quick jobs are not in danger. Furthermore, choose which people
reaction to crises, most of these measures turn out to to lay off on the basis of performance rather than on less
be notably ineffective and demoralizing—and therefore significant criteria such as longevity. Doing so allows a
act as barriers to building lean, flexible workforces. company to keep its best people, regardless of length of
Cutting back training, a measure adopted by almost service, and therefore protects the future as much as pos-
half of respondents in 2009, is the least effective in this sible while the company navigates the current crisis. Of
category, with negative effects rippling out across com- course, leaders should not wait for a crisis-induced re-
panies. structuring to confront poor performers; that should be
part of their ongoing role.
Tempering Harsh Measures with Up- In 2009, more than 50 percent of respondents took steps
Front Honesty to ensure that top performers were actively retained.
That measure was perceived as 12 percent more effective
Honest communication, transparency, and fairness lessen than the average measure, and three-quarters of the com-
the damage inflicted by any workforce measure. How a panies using this measure said they planned to retain it.
measure is implemented matters. The large share of companies that intend to carry forward
Exhibit 13. Cutback Measures Tend to Be Less Effective
Actions to be Effectiveness in
Actions performed maintained in comparison with
in 2009 (%) the future (%) the average (%)
Company events are cut back 64 30 –10
Training is cut back 47 19 –24
Bonus payments are cut back or postponed 44 23 –9
Fringe benefits are cut back or postponed 29 42 –8
Compensation
and benefits Overtime is no longer paid out 21 50 –3
Base salaries are reduced 19 28 –7
The nonmonetary component of 9 85 –7
compensation is increased
Pension plans are reduced 9 52 –15
Employees are forced to take their vacations 35 48 5
Part-time work arrangements are increased 19 46 3
Work time Unpaid leaves are increased 18 29 0
Employees are encouraged to go 11 43 –15
on sabbaticals
Recruiting is cut back 63 30 4
Employees are laid off 48 17 4
Head count
The share of temporary employees is increased 24 47 0
Early retirement is increased 21 33 3
Less More
effective effective
Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
C P A
Exhibit 14. Labor Cost Reduction Was Often Achieved by Reducing Head Count
In 48% of companies,
labor cost reduction
equaled head count
In 34% of companies, reduction
>40 labor cost reduction was
higher than
head count reduction 1
21–40
1 1 3 4
11–20
Labor cost 2 2 6 7 2
reduction
in 2009 (%)
5–10
6 6 16 4 1
2–4
7 6 4 In 13% of companies,
labor cost reduction was
lower than head count
reduction
<2
14 2
<2 2–4 5–10 11–20 21–40 >40
Head count reduction in 2009 (%)
Percentage of respondents
Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
Note: Values below 1% not shown.
similar approaches, such as communications programs, measures to implement, using two criteria: effect on em-
underlines their importance. ployee engagement and effectiveness.
As a general principle, cutback measures are relatively
Using Effectiveness and Engagement to ineffective and erode employee engagement. By contrast,
Stay Lean and Become Flexible flexibility measures tend to be more effective, and en-
gagement is higher in companies that rely on them. Tak-
During economic crises, low-performing companies react ing a closer look at the differences among the measures,
by implementing a vast array of cutback and flexibility however, will help companies select the right mix.
measures, relying heavily on the former. (See Exhibit 15.)
High-performing companies use a more selective and Exhibit 16 organizes the measures according to their ef-
balanced approach—which is better suited to sustaining fectiveness and the employee engagement they foster.
the strength of the workforce as a competitive differen- The upper-right quadrant represents the ideal, including
tiator. relatively effective measures that also drive the highest
engagement. Virtually all of the choices in this quadrant
These results underscore the importance of developing a are flexibility measures: job mobility, streamlined processes,
workforce strategy that can carry a company through tightened hiring criteria, and flexible work arrangements.
good times and bad. A critical task in developing such a (See the sidebar “KLM: Keeping the Family Together” for
strategy is selecting which combination of workforce an example of job mobility.)
T B C G • W F P M A
Exhibit 15. High-Performing Companies Are More Selective in Their Use of Specific
Measures
Processes are streamlined
Job mobility is reinforced: employees are trained to perform different jobs
Fixed-term contracts are not extended
The number of hierarchies is reduced and the span of control is increased
Performance management is tightened
Hiring criteria are tightened
Flexibility Flexible work time is set up: pay is reduced for reduced working hours
measures Employees are compensated for earlier overtime
Tasks are centralized in shared service centers
Work is outsourced
Subcontracted activities are insourced
The workweek is shortened temporarily
The profit-related component of compensation is increased
Work is offshored
Company events are cut back
Recruiting is cut back
Employees are laid off
Training is cut back
Employees are forced to take their vacations
Bonus payments are cut back or postponed
Fringe benefits are cut back or postponed
Cutback Part-time work arrangements are increased
measures Overtime is no longer paid out
The share of temporary employees is increased
Early retirement is increased
Base salaries are reduced
Unpaid leaves are increased
Pension plans are reduced
Employees are encouraged to go on sabbaticals
The nonmonetary component of compensation is increased
High performer Low performer Less oen More oen
(usage of methods by low performer in comparison with high performer) Seldom Oen
Usage of measure
Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
KLM
Keeping the Family Together
From oil price shocks to avian flu to terrorism, few indus- “We had pilots handling baggage or doing quality and
tries work as close to the edge of the next crisis as the air- maintenance checks. Or we had cabin crew members
line industry. KLM, the Dutch arm of the Air France–KLM working with the ground staff. All this happened on a vol-
Group, recognized the importance of developing a less re- untary basis,” Kooijman said. Besides the direct savings
active approach to crisis management. Under the theme associated with hiring fewer temporary workers, KLM
“Keeping the Family Together,” this initiative has changed benefited from engaging the workforce in taking on these
the mindset of KLM employees, employee representa- challenges.
tives, and managers.
The alternative offered only temporary relief, since forced
Flexibility in the form of occupational mobility represents layoffs come with high direct and indirect costs. Even
a pillar of the new initiative. As Wim Kooijman, KLM’s ex- worse, Kooijman pointed out, “You paralyze the organiza-
ecutive vice president for HR and industrial relations, put tion for a long time beyond the actual crisis. Employees
it, “Being a KLM family member means that everyone in freeze their effort when they expect redundancies and
the firm is willing to work where they are needed the only slowly unfreeze when the situation improves. Trust is
most, that they are willing to develop new skills, look af- killed and the probability of social unrest rises, which
ter themselves, and stay healthy.” makes the crisis even worse. Aer layoffs in the 2000 and
2004 crises, we learned that this is not the right way. It also
In return for a no-layoff commitment, KLM’s manage- ruins your image as an employer—something we need to
ment asked employees to be willing to step out of their avoid in the extremely tight labor market for pilots and ex-
current roles and temporarily transfer to other positions. pert technicians.”
C P A
Exhibit 16. Flexibility Measures Tend to Rank Higher on Perceived Effectiveness and
Employee Engagement
Above Examples of cutback measures
average 10 9 8
7 1 Employees are laid off
2 Early retirement is increased
3 Base salaries are reduced
6 Average
1 flexibility 4 Bonus payments are cut
2 measure back or postponed
5 Company events are cut back
Average
effectiveness
Examples of flexibility measures
Average 6 Performance management
cutback is tightened
measure 7 Job mobility is reinforced:
employees are trained to perform
3 different jobs within the company
4 5 8 Processes are streamlined
Below
average 9 Hiring criteria are tightened
10 Flexible work time is set up
Below average Average engagement Above average
Cutback measure Flexibility measure Average cutback Average flexibility
Sources: Proprietary Web survey with 5,561 responses; 731 responses in this section; BCG/WFPMA analysis.
Note: Size represents the percentage of companies using the measure during the crisis.
The lower-le quadrant highlights measures that poison The upper-le quadrant includes measures that may be
a company in the long run. Companies that rely on meas- bitter medicine but work relatively effectively, at least in
ures such as reducing base salaries, cutting back bonus pay- the short term: layoffs, shortening of the workweek, and ear-
ments, and eliminating company events will rapidly experi- ly retirement all fall here. The lower-right quadrant con-
ence a drain of high-potential and highly valued tains a single flexibility measure—increasing the profit-
employees. related component of compensation.
T B C G • W F P M A
Developing Capabilities
for HR to Partner with
the Business Units
H
R is increasingly positioned as a strategic ed,” said Thomas Wessel, chief HR officer of the Degussa
partner of the business units in adding val- chemicals business of Evonik Industries of Germany. HR
ue to the company. At many companies, should focus on questions such as, “How can we attract
however, neither HR professionals nor busi- the right talent to HR?” and “How can we develop the
ness managers have developed all the skill necessary skills among existing HR staff ?” HR is adept at
sets required for this partnership to flower. While both this line of questioning for other functions, but less so for
groups recognize the need for training and other develop- itself. “The HR function is much better at identifying tal-
mental initiatives, the differences in their perceptions of the ents outside its own function than within,” Wessel said.
gaps must be addressed.
Just as a capabilities gap exists for HR personnel filling
For example, business managers view HR professionals’ HR the business partner role, there is a gap in people man-
expertise as less important than their skills in business plan- agement skills (such as recruiting and training) among
ning and conflict resolution. And, while both groups agree business managers. As Exhibit 17 shows, respondents rat-
that business managers’ handling of poor performers is their ed the second most common transformative initiative, in-
most important people-management skill, business managers tegrating HR activities into line management, as highly inef-
see a far smaller gap in their own performance than HR pro- fective. It is the responsibility of HR to support business
fessionals do. managers in becoming better people managers instead
of acting as a substitute for them.
Companies have adopted a variety of initiatives as part
of ongoing efforts to transform the HR function. “HR to-
day is at the center of the business, just like finance, pro- Identifying Gaps in HR Business Acumen
curement, or marketing,” explained Hallstein Moerk, and Consulting Skills
former executive vice president of HR at Nokia. “As such,
HR is not just a strategic partner—it is in the business Regarding the specific competencies required for HR
itself.” business partners, the survey uncovered some significant
differences in perception between HR professionals and
Respondents rated the most common of these initiatives, business managers. (See Exhibit 18.) A striking finding is
introducing or enhancing the role of the HR business partner, that HR professionals perceive HR expertise as the most
as highly effective. (See Exhibit 17.) important skill that a business partner should bring to
the table. By contrast, business managers ranked HR ex-
However, with the workforce now front and center in the pertise fih in importance.
creation of sustainable competitive advantage, the bar
has been raised for HR professionals filling this role. They Grouping skills and capabilities helps in the effort to de-
now need strong consulting skills and business acumen, fine a set of requirements for anyone moving into an HR
paired with people management expertise. Raising the business-partner role. For example, the HR business part-
bar means that “an internally focused HR for HR is need- ner needs to be able to talk to business managers about
C P A
Exhibit 17. HR Is Enhancing Its Role as a Business Partner, but Integrating HR Activities
into Line Management Is Proving Ineffective
Percentage of respondents that introduced a concept Effectiveness of each concept
Introduced or enhanced the
73
role of the HR business partner
Integrated HR activities into
line management 43
Introduced HR employee
self services 41
Bundled HR services in HR 35
shared service centers
Built HR centers of excellence 30
Bundled HR services in enterprise-
26
wide shared service centers
Outsourced HR activities 24
Low High
Sources: Proprietary Web survey with 5,561 responses; 641 responses in this section; BCG/WFPMA analysis.
Exhibit 18. Business Planning and Analytics Rank as High Priorities, but Capabilities Lag
HR Business-Partner Skills: Differences in Importance and Capabilities Ranked by Gap
HR professionals’ view Business managers’ view
Business analytics 8 Business planning 2
Business planning 6 Conflict resolution 4
Client relationship 2 Marketing 10
management
7 Client relationship 1
IT acumen management
Resource management 5 Business analytics 6
Conflict resolution 3 Policy implementation 3
Contracting 10 IT acumen 11
Marketing 11 Resource management 9
HR expertise 1 Contracting 7
Project management 9 HR expertise 5
Policy implementation 4 Project management 8
Low High Low High
Capability Importance Rank by importance
Sources: Proprietary Web survey with 5,561 responses; 641 responses in this section; BCG/WFPMA analysis.
T B C G • W F P M A
personnel issues and be a strategic partner (business ana- functions. What we have found is that when you put
lytics, business planning, and client relationship manage- those two together, the HR folks learn a tremendous
ment) to the business. In addition, the business partner amount about business and problem solving from the
needs to have the skills to act as a change agent and driv- consultants, and the consultants get very quickly up to
er of transformation (conflict resolution, resource manage- speed on the pattern recognition you need to be success-
ment, and policy implementation). ful on the people side.”
Laszlo Bock, vice president of people operations at The other third, Bock said, “are people with advanced de-
Google, explains how the Internet giant thinks about the grees in various analytic fields—PhD’s and master’s de-
blend of skills needed for HR to excel in its broader role. grees in operations, physics, statistics, and psychology.
In an interview with BCG, Bock said, “One-third of the They let us run all kinds of interesting experiments and
people come from traditional HR backgrounds. They’re raise the bar on everything we do.”
outstanding HR generalists and outstanding compensa-
tion-and-benefits folks.
Identifying Gaps in Business Managers’
“The second third come out of strategy-consulting firms. People Skills
We don’t really pursue folks from the HR consultancies
as much, because we are looking for two things: great Currently, business managers participate actively in the
problem-solving skills—the ability to take a really messy eight people-management activities identified in Exhibit
problem, disaggregate it, and drive to data-driven an- 19. In virtually every instance, business managers get in-
swers—and really deep business sense, a deep under- volved in recruiting, making promotion decisions, and deal-
standing of how business actually works in the different ing with low performers. Even for the activities in which
Exhibit 19. Dealing with Low Performers Is a Development Priority for Both Groups
Business Managers’ Skills: Differences in Importance and Capabilities Ranked by Gap
HR professionals’ view Business managers’ view
Deal with low 5 Deal with low 1
performers performers
Assess training 3 HR strategy 4
needs development
HR strategy 8 7
development Provide training
Recruiting 2 Assess training 2
needs
Manage staff costs 6 Manage staff costs 6
Make redundancy 4 Recruiting 5
decisions
Make promotion 1 Make redundancy 8
decisions decisions
Provide training 7 Make promotion 3
decisions
Low High Low High
Capability Importance Rank by importance
Sources: Proprietary Web survey with 5,561 responses; 641 respondents in this section; BCG/WFPMA analysis.
C P A
they are the least involved—providing training and HR Training and Development to Support
strategy development—participation still exceeds 50 per- Strategic Partnerships
cent. Furthermore, the majority of business managers
expressed a desire to be more involved in these activ- Relatively few organizations have deployed the right
ities. measures to develop the capabilities of their HR business
partners on business expertise. (See Exhibit 20.) Less than
However, as the exhibit highlights, business managers do half of the respondents offer training on business exper-
not yet have the people management skills tise—and current curricula are focused on
to support their active involvement in Handling low HR expertise and people management, re-
these activities. By their own assessment, flecting the past rather than the future of
performers is the most
their skills are relatively undeveloped. HR the function.
professionals agreed with that evalua- important people
tion—although the two functions priori- activity for business The good news is that virtually all of the
tized the skills differently, just as they did measures displayed in Exhibit 20 were rat-
with the skills required for HR business managers. ed as highly effective. That trend is tem-
partners. pered by the scant deployment of these
measures, which has not matched demand for the skill
In their self-assessment, business managers’ largest skills sets. (For an example of closing this gap, see the sidebar
gaps lie in dealing with low performers, HR strategy develop- “Credit Suisse: Developing HR Business-Partner Capabil-
ment, and providing training; and again HR professionals ities.”)
largely concurred with that selection. Both groups identi-
fied the appropriate handling of low performers as the Just as development paths for HR business partners
most important people-management activity for business hew too close to the old paradigm, development meas-
managers—a priority that may reflect the recent econom- ures for business managers still focus on classical
ic crisis. management skills. (See Exhibit 21.) Training in specific
HR skills is rare. Furthermore, less than one-quarter of
HR professionals, who are oen less senior than their business managers are measured or given incentives
business-manager partners, may have difficulty pointing on their performance as people managers—and even
out failings and enabling business managers to develop fewer companies select HR knowledge and experience
their people skills. It is notable that HR professionals as key criteria when hiring new managers from
identified a far broader gap in business managers’ han- outside.
dling of low performers than did the business managers
themselves. Overall, business manager respondents gave poor
ratings to the training and development measures
As a solution, HR professionals need to mentor business available to them. We find that business managers are,
managers—for example, in how to weed out lower-per- in general, more skeptical of the value of training than
forming employees respectfully, with a tone and ap- HR is; aer all, training is at the crux of the HR function.
proach that the business managers can practice. If low And business managers are particularly skeptical when
performers are dismissed ruthlessly, the “survivors” will the training is on a topic outside their comfort zone.
be unlikely to commit fully to the company. Survivors
need to believe that layoffs are necessary and that they Therefore, time and passionate reinforcement will be
have been carried out fairly. Those beliefs can be shaped required in order to convince business managers of the
not only by hard facts—such as the amount of notice, the value of HR. The more frequently hard facts are integrat-
kind of support, and the size of the severance packages ed into their training, the easier it will be for business
terminated employees receive—but also by more qualita- managers to accept a sea change in HR’s role as a part-
tive judgments. For example, were the layoffs evenly dis- ner with them in creating business value.
tributed across all levels of the organization? Were prom-
ises kept?
T B C G • W F P M A
Exhibit 20. Only 40 Percent of Respondents Offer Training on Business Expertise to HR
Partners
Activities performed (% of respondents)1 Effectiveness of activities
Offer training on HR expertise 57
Offer training on leadership 56
and managing people
Develop change management 41
capabilities
Offer training on business 40
expertise
Measure and provide incentives on 37
the basis of business performance
Prioritize business knowledge and
capabilities in hiring 34
Employ people from outside HR 29
(such as business managers)
Build financial acumen 27
Offer rotational programs
outside the HR function 15
Low High
Sources: Proprietary Web survey with 5,561 responses; 641 responses in this section; BCG/WFPMA analysis.
1
Includes only companies that have introduced the HR business-partner position.
Credit Suisse
Developing HR Business-Partner Capabilities
The Zurich-based banking giant Credit Suisse has been prepared recommendations for addressing underperfor-
actively investing to develop the capabilities of its HR mance and talent issues in a key regional market and
business partners. A customized program aims to im- business area, or developed a strategic workforce plan for
prove partners’ consulting skills in advising business man- a division. To track the impact of the program, Credit
agers and, more generally, to help them think and act with Suisse embedded the training in a broader process that
the business in mind. The goal is for HR professionals to includes recurring goal-setting as well as impact and skills
become more strategic partners to the corporate decision- assessment.
makers in developing, challenging, and implementing the
business strategy.
Credit Suisse identified three levels of consulting skills—
essential, advanced, and expert—and then detailed which
levels applied to 12 relevant consulting skills, ranging
from slide design (essential), to quantitative tools and analy-
sis (advanced), to becoming a trusted advisor (expert).
Credit Suisse launched a global blended learning program
that combines entry tests and semiannual formal ses-
sions with on-the-job training and e-learning. The formal
training sessions employed a case study approach that
develops new skills in a highly interactive and business-
oriented context. For instance, participants analyzed and
C P A
Exhibit 21. Leadership Training Dominates Business Managers’ Curricula
Activities performed (% of respondents)1 Effectiveness of activities
Offer training on leadership and
managing people 43
Offer training on HR expertise 27
Offer training on business expertise 27
Offer training on change management skills 23
Measure and provide incentives on the 22
basis of people management performance
Prioritize HR knowledge and 18
expertise in hiring decisions
Offer training on HR information 17
technology
Employ former HR professionals
as business managers 7
Offer rotational programs that include 6
a stay in the HR function
Low High
Sources: Proprietary Web survey with 5,561 responses; 641 responses in this section; BCG/WFPMA analysis.
1
Includes only companies that actually performed the activity.
T B C G • W F P M A
Appendix I
Methodology
W
e started our original research in To adjust for high- or low-scoring tendencies among on-
2006 by compiling a list of 40 topics line survey participants in particular countries and mar-
in human resources and subsequent- kets, we normalized the assessment of current capability,
ly focusing on the 17 most relevant current importance, and future importance for each coun-
topics. We narrowed the field by try and industry.
conducting an exhaustive literature search both in gen-
eral business publications and in HR journals. In our lit- In the five optional sections, respondents could answer
erature search, we considered how the number of men- questions on developing future leaders of the company,
tions for each topic had changed over time, and we staying lean and becoming flexible, engaging employees,
ranked each topic according to whether interest in it had hardwiring HR and corporate strategy, and building an
been increasing or declining. Next, in order to discover HR function focused on value creation.
emerging topics whose importance might not have been
captured in the literature search, we gathered input on We conducted the online survey from December 2009
the topics from HR experts within BCG and WFPMA. through March 2010, receiving 5,561 responses from ex-
ecutives in 109 countries. In conjunction with that survey,
The survey consisted of two parts: one mandatory part we interviewed 153 executives. In these one-on-one inter-
and a second part seeking responses in any of five option- views, we explored HR topics and practices in greater
al sections. In the mandatory section, respondents were depth, tried to understand how companies were making
asked questions about themselves and their organiza- the transition from the recession to renewed growth, and
tions. They were also asked to rate 21 topics, assessing cur- discussed sustainable HR practices.
rent and future importance and rating their organization’s
current capabilities in the topics on a scale of 1 (low) to
5 (high).
C P A
Appendix II
Executive Interviewees
In interviews, the following senior ex- Edécio Brasil Victoria Martínez
ecutives shared their insights and dis- Global HR Processes Director General Manager, Branches &
Vale Distance Banking
cussed our findings. We thank them Banco Estado
for their valuable contributions. The Diego Hernandes
list here consists of those interviewees HR Executive Manager Alejandro Mena
Petrobras Vice President HR
who have agreed to have their names
Anglo American Chile
published. Gilberto Lara Nogueira
Corporate Director, Human and Jaime Piña
ARGENTINA Organizational Development Vice President HR
Enrique Behrends Votorantim Industrial Codelco
Area Manager, Organizational
Development and HR Marcelo Madarasz Ana Maria Rabagliati Grunwald
Banco Galicia Manager of Development and Corporate Director, HR
Leadership Masisa
AUSTRALIA Natura
CHINA
Lynelle Briggs Roberto Menezes Dumani
CEO William Chan
Executive Vice President, HR Director
Medicare Australia Organizational Development MTR Corporation
Cielo S.A.
Barbara Chapman
Group Executive, Human Resources Harding Shen
Ralf Piper HR Director
and Group Services HR and Governance Director
Commonwealth Bank of Australia Sanofi-aventis China
Sadia
David Diment COLOMBIA
CANADA
First Assistant Commissioner, Cielo Liliana Muñoz Noreña
ATO People Sylvia Chrominska Profesional Adscrita a la División de
Australian Taxation Office Group Head, Global Human Resources Talento Humano
and Communications Universidad de Manizales
Joanne Farrell Scotiabank
Vice President, Organisation Resources FINLAND
Rio Tinto Iron Ore Teri Currie
Group Head, Marketing, Corporate Hallstein Moerk
and Public Affairs and People Former Executive Vice President of HR
Susan Karson Nokia
General Manager - People and Culture, Strategies
Wholesale Banking TD Bank Financial Group
FRANCE
National Australia Bank
Zabeen Hirji Laurent Choain
Liz Kavanagh Chief Human Resources Officer HR Director
Former HR Director Manager Royal Bank of Canada Caisse Nationale des Caisses d’Epargne
Nationwide News
CHILE Karen Ferguson
Amber McDougall Ramón Burr Executive Vice President, Global HR
Former Director, HR Vice President, HR Schneider Electric
Coles Group Antofagasta Minerals
David Ford
BRAZIL Alberto Lungenstras Global Head of Executive Talent
Manager, HR Management
Edna Bedani Sanofi-aventis
HR Development Manager Banco Itaú
Accor Service Brazil
T B C G • W F P M A
Marc Janssens de Varebeke Cornelia Hulla Jörg Schwitalla
Performance Director, Executive Chief Human Resources Officer Chief Human Resources Officer and
Manager Department Coca-Cola Erfrischungsgetränke Member of the Management Board
GDF Suez MAN
Harald Krüger
Anne Marion-Bouchacourt Director of HR and Industrial Ulrich Sieber
Head of Group HR Relations and Member of the Member of the Board of Managing
Société Générale Management Board Directors, Group Human Resources
BMW Group and Group Integration
Jérôme Nanty Commerzbank
HR Director Stefan Lauer
Caisse des Dépôts et Consignations Chief Officer of Aviation Services Karl-Heinz Stroh
and Human Resources and Member Chief Human Resources Officer and
Roberto Pucci of the Executive Board Member of the Management Board
Senior Vice President HR Luhansa Praktiker
Sanofi-aventis
Rainer Ludwig Ulrich Weber
Véronique Rouzaud Member of Board of Directors, HR Head of Personnel and Member of the
Executive Vice President, Director for and Social Welfare Management Board
HR Ford Werke Deutsche Bahn
Veolia Environnement
Wolfgang Malchow Gregor Wehner
Anne Vaucheret Member of the Board of Executive Vice President Corporate
Vice President, Compensation & Management and Director of Industrial Human Resources
Benefits Relations Merck
Publicis Groupe Bosch
Hendrik Weiler
GERMANY Zygmunt Mierdorf Chief Financial Officer Central Europe,
Ralf Blauth Former Chief Information Officer, Human Resources and Member of the
Chief Human Resources Officer and HR Executive Vice President, and Management Board
Member of the Management Board Member of the Management Board ABB
Evonik Industries Metro
Thomas Wessel
Werner Boekels Thomas Nöcker Chief Human Resources Officer
Group Human Resources Director Personnel Director, Member of the Evonik Degussa
The Linde Group Board of Executive Directors, and
Member of Management HUNGARY
Wolfgang Brezina K+S Ágnes Jagicza
Chief Human Resources Officer and Chief HR and Legal Officer
Member of the Management Board Wilfried Porth Invitel Holdings
Allianz Deutschland Human Resources and Labor Relations
Director and Member of the István Kapus
Christoph Dänzer-Vanotti Management Board Corporate HR Director
Former Chief Human Resources Daimler Nestlé Hungária K .
Officer and Member of the
Management Board Richard Pott Erika Kiss
E.ON Head of Strategy and Human HR Director
Resources, Director of Labor, and Magyar Posta Zrt.
Peter Dollhausen Member of the Board of Management
Director CC Human Resources Bayer Ferenc Rolek
ThyssenKrupp Head of HR, Deputy CEO
Siegfried Russwurm Budapest Bank Nyrt.
Alwin Fitting Chief Executive Officer of the
Chief Human Resources Officer and Industry Sector and Member of Éva Somorjai
Member of the Management Board the Management Board Chief HR Officer
RWE Siemens Magyar Telekom Nyrt.
Ulrich Holtz Harald Schwager INDIA
General Manager Human Resources Member of the Management Board
BASF Suresh Bose
International General Manager, Human Resources
Microso Sterlite Industries (I)
C P A
K.K. Sinha Alejandro Mora NORWAY
Director, Group HR Human Resources Corporate Director Tor Aamodt
Jindal Steel & Power Limited El Puerto de Liverpool Group Vice President HR
Nortura
ITALY Alejandro Noriega Besga
Andrea Faragalli Human Resources Director Beate Hamre-Deck
HR and Development Director Grupo Nacional Provincial Senior Vice President, HR
Intesa Sanpaolo - Corporate and Statkra
Investment Banking Division Luis Novelo
Human Resources Director Anne Harris
Fausto Palumbo IBM Mexico Head of Human Resources and Health,
Former HR Director Safety and Environment
Nestlé Italia Mauricio Reynoso Norsk Hydro ASA
Personnel and Organization Director
Gianfilippo Pandolfini Petcare – Mars Mexico Jens R. Jenssen
Director, HR Senior Vice President, HR
BNL Xavier del Río Statoil
Senior Vice President, HR
Salvatore Poloni Wal-Mart Stores Bjørn Magnus Kopperud
Organization and Security Director Executive Vice President and Head
Intesa Sanpaolo Miguel Angel Sanchez of Group People and Organization
Human Resources VP Telenor Group
Pierluigi Renzi Kra Foods
Executive Vice President, HR and THE PHILIPPINES
Organization THE NETHERLANDS
Nic Lim
ENI Federico Giovannini Senior Vice President, HR
Senior Vice President, HR JG Summit Holdings
Massimo Roascio Sara Lee International
Vice President, HR Organization & John Philip Orbeta
Management Development Wim Kooijman Managing Director, Group Head of
Alitalia Executive Vice President Human Corporate Resources
Resources & Industrial Relations Ayala Corporation
MEXICO KLM Royal Dutch Airlines
Salomon Achar Judith Rivera
Human Capital Director Sander Nieuwenhuizen HR Director
Comex Vice President Recruitment Oracle (Philippines) Corporation
Royal Dutch Shell International
Bruno Bittencourt PORTUGAL
Human Resources Director Alexandra Philippi
Chief HR Officer Henrique de Melo
L’Oréal Mexico Head of HR
ABN Amro Bank
Caixa Geral de Depósitos
Gabriela García Cortes
HR Director NEW ZEALAND
Carlos Nuno Gomes da Silva
PepsiCo Americas Foods - Gamesa - Leeanne Carson-Hughes Member of the Executive Committee
Quaker General Manager, HR Galp Energia
Christchurch International Airport
Angelica Garza RUSSIA
HR Director Alan Davis
PepsiCo Americas Foods Assistant Vice-Chancellor, People Svetlana Chekalova
and Organisational Development Head of HR
Guillermo Gonzalez Massey University Sibur Holding
HR Director
Kellogg’s de Mexico Jennifer Kerr SINGAPORE
Group Director, HR Deena Abraham
Jose Luis Lopez Fonterra Co-operative Group Director Human Resources ASEAN
Personnel Director BASF
Grupo Bachoco Kristin Murray
HR Director SOUTH AFRICA
Claudia Maya Presbyterian Support Central Junaid Allie
HR Director Executive Director Human Resources
American Express Company Group Five
T B C G • W F P M A
Italia Boninelli Silvia Ayyoubi UNITED KINGDOM
Senior Vice President, HR Head of Human Resources, Liz Bell
Gold Fields Limited Member of the Executive Committee HR Director
F. Hoffmann-La Roche B&Q
Bhabhalazi Bulunga
Managing Director - Human Resources Christoph Bitzer Tony Cooke
Division Head of Human Resources HR Director, UK & Ireland
Eskom Holdings Limited Swiss Reinsurance Company adidas
Mpho Letlape Yves-André Jeandupeux Katherine Galliano
Managing Director Head of HR and Member of the Head of HR
Sasol Inzalo Foundation Executive Management Médecins Sans Frontières UK
Swiss Post
Ronnie Philipps Mark Moorton
Former Senior Manager TURKEY Director of HR, International Human
First National Bank Hande Akyol Eskinazi Resources Department
Human Resources Director Specsavers Optical Group
Elsie Pule Pfizer İlaçları
Human Resources Division Ian Muir
Eskom Holdings Limited Gokhan Erun HR Director
Executive Vice President HR Director Charter International
SPAIN GarantiBank
Baltasara Blanco Peter Nicholson
Director, HR Serdar Gencer Group Head of Human Resources
Empark Aparcamientos y Servicios Deputy CEO - Responsible for John Wood Group
Strategy and Corporate Performance
Juan José Chaparro Management and Enterprise Toby Peyton-Jones
HR Director İşbank Director of HR
Merck - España Siemens UK
Mehmet Gocmen
Patricia Mántel Group President, HR Angie Risley
Corporate Director, People Sabanci Holding Group Human Resources Director
Management Lloyds Banking Group
Repsol Zeki Tuncay
Executive Vice President, HR Maria Stanford
José Antonio Molleda Akbank HR Director
General Director, Strategy and Selfridges
Corporate Resources Ülker Yıldırımcan
Multiasistencia Talent Management Division Manager Karen Sutherland
Türkiye İş Bankası Global HR Business Partner
Luis Sanchez Navarrete AstraZeneca, Clinical Development
Director of Development and UKRAINE
HR Corporate Policies Elena Kropivianska Nick Thripp
BBVA HR and Organization Development Vice President, Human Resources
Director Infineum International Limited
Marta Panzano Kyivstar GSM
Head of HR EMEA Geoff Tranfield
Cemex UNITED ARAB EMIRATES Group Head of HR
Petrofac
Mikel Tolosa Nasser Abdul Kareem Al Awadhi
HR Manager Director of HR UNITED STATES
Orona Group UAE Ministry of Education
Richard Beyer
Abdulrahman Al Awar Senior Vice President, Human
SWITZERLAND Resources
Director General
Rudolf Alves Federal Authority for Government JE Dunn Construction
Head of Human Resources Human Resource (FAHR)
Allianz Suisse Laszlo Bock
Maliha Abdullah Al Ayar Vice President of People Operations
General Manager HR and Google
Development
Burgan Bank
C P A
L. Kevin Cox Phebe Farrow Port Sandra J. Price
Executive Vice President HR Senior Vice President Global Senior Vice President, Human
American Express Company Management Strategies Resources
Estée Lauder Sprint
Amy DiGeso
Executive Vice President, Global HR Janice Hall Alison Quirk
Estée Lauder Vice President, Global Talent Executive Vice President, Global
Management Human Resources
Craig Dinsell Estée Lauder State Street Corporation
Executive Vice President Human
Resources Lisa Peters Mara Swan
OppenheimerFunds Chief HR Officer Executive Vice President, Global
The Bank of New York Mellon Strategy and Talent
Dennis Dowdell, Jr. Corporation Manpower
Vice President of Human Resources &
Chief Human Resources Officer
Memorial Sloan-Kettering Cancer
Center
T B C G • W F P M A
Appendix III
Supporting Organizations
The following member organizations Asociación Venezolana de Gestión Humana Dutch Association for Personnel
(ANRI), Venezuela Management & Organization Development
of WFPMA helped with or were re-
(NVP), Netherlands
sponsible for the preparation, distri- EUROPE
HR Norge, Norway
bution, and collection of the online European Association for People Manage-
survey. Without their assistance, this ment (EAPM) Polish Human Resources Management
Association (PHRMA), Poland
report would not have been nearly so Österreichisches Produktivitäts- und
comprehensive and insightful. Wirtschalichkeits-Zentrum (ÖPWZ), Associação Portuguesa dos Gestorese e
Austria Técnicos dos Recursos Humanos (APG),
Personnel Managers Club (PMC), Belgium Portugal
NORTH AMERICA
North American Human Resource Bulgarian Human Resources Management HR Management Club, Romania
Management Association (NAHRMA) and Development Association (BHRMDA), National Personnel Managers’ Union
Canadian Council of Human Resources Bulgaria (ARMC), Russia
Associations (CCHRA), Canada Cyprus Human Resource Management Association of Human Resource
Asociación Mexicana en Dirección de Association (CyHRMA), Cyprus Professionals, Serbia.
Recursos Humanos (AMEDIRH), Mexico Czech Society for Human Resources Slovak Association for Human Resources
Society for Human Resource Management Development (ČSRLZ), Czech Republic Management (ZRRLZ), Slovak Republic
(SHRM), United States Personnel Managers in Denmark (PID), Slovenian Association for Human Resource
Denmark Management and Industrial Relations
CENTRAL AND SOUTH AMERICA
Estonian Association for Personnel (ZDKDS), Slovenia
Federación Interamericana de Asociaciones
de Gestión Humana (FIDAGH) Development (PARE), Estonia Asociación Española de Dirección y
Finnish Association for Human Resource Desarrollo de Personas (AEDIPE), Spain
Asociación De Recursos Humanos de la
Argentina (ADRHA), Argentina Management (HENRY), Finland Sveriges HR Förening, Sweden
Asociación Boliviana de Gestión Humana Association Nationale des Directeurs des HR Swiss—Schweizerische Gesellscha für
(ASOBOGH), Bolivia Ressources Humaines (ANDRH), France Human Resources Management; Société
Deutsche Gesellscha für Personalführung Suisse de Gestion des Ressources Humaines,
Associação Brasileira de Recursos Humanos Switzerland
(ABRH-Nacional), Brazil e.V. (DGFP), Germany
Greek People Management Association, Türkiye Personel Yönetimi Derneği
Federación Colombiana de Gestión (PERYÖN), Turkey
Humana (ACRIP), Colombia Greece
Hungarian Association for Human Chartered Institute of Personnel and
Asociación Costarricense de Gestores de Development (CIPD), United Kingdom
Recursos Humanos (ACGRH), Costa Rica Resources Management (OHE), Hungary
Chartered Institute of Personnel and AFRICA
Asociación Dominicana de Administradores
de Gestión Humana (ADOARH), Dominican Development (CIPD Ireland), Ireland African Federation of Human Resource
Republic Management Associations (AFHRMA)
Associazione Italiana per la Direzione del
Asociación de Gestión Humana del Ecuador Personale (AIDP), Italy Association Africaine des formateurs du
(ADGHE), Ecuador personnel (AFDIP)
Latvian Association for Personnel
Asociación de Gerentes de Recursos Huma- Management, Latvia Association Algérienne des Ressources Hu-
nos de Guatemala (AGRH), Guatemala maines (ALGRH), Algeria
Macedonian Human Resource Association,
Asociación Nacional de Profesionales de Former Yugoslavian Republic of Macedonia Talents Plus Conseils, Benin
Recursos Humanos de Panamá (ANREH), Foundation for Human Resources Institute of Human Resource Management
Panama Development (FHRD), Malta (IHRM), Botswana
Asociación de Profesionales Uruguayos en Association Nationale des directeurs et
Gestión Humana (ADPUGH), Uruguay cadres du personnel (ANDCP), Senegal
C P A
Institute of People Management (IPM), Human Resource Association for People Management Association of the
South Africa Chinese and Foreign Enterprises (HRA), Philippines (PMAP), Philippines
China
Association des Responsables de Singapore Human Resources Institute
Formation et de Gestion Humaine des Hong Kong Institute of Human (SHRI), Singapore
Entreprises (ARFORGHE), Tunisia Resource Management (HKIHRM),
HR MAX, South Korea1
Hong Kong
Human Resource Managers’ Association
Institute of Personnel Management (IPM),
of Uganda (HRMAU), Uganda Confederation of Indian Industry (CII),
Sri Lanka
India1
Institute of People Management of
Chinese Human Resource Management
Zimbabwe (IPMZ), Zimbabwe Japan Society for Human Resource
Association (CHRMA), Taiwan
Management ( JSHRM), Japan
ASIAPACIFIC
Personnel Management Association of
Asia Pacific Federation of Human Recruit Management Solutions (RMS),
Thailand (PMAT), Thailand
Resource Management (APFHRM) Japan1
Australian Human Resources Institute Malaysian Institute of Human Resource
(AHRI), Australia Management (MIHRM), Malaysia
China International Intellectech Human Resources Institute of New Zealand
1. This organization is not a member of
Corporation (CIIC), China1 (HRINZ), New Zealand WFPMA.
T B C G • W F P M A
Note to the Reader
This report, the fourth installment in Acknowledgments BCG senior experts in coordinating
our research on current and future We would like to thank the many ex- and conducting interviews and for
HR challenges, presents new and de- ecutives who shared their thoughts their expert advice: Miguel Abecasis,
tailed results on the global situation. during interviews, as well as the ex- Vassilis Antoniades, Sri Aparajithan,
It is based on a close collaboration ecutives who completed the online Allison Bailey, Jorge Becerra, Maurice
between The Boston Consulting survey. The insights and expertise of Berns, Lamberto Biscarini, Dag Fre-
Group (BCG) and the World Federa- these individuals have greatly en- drik Bjørnland, Jo Brady, Massimo
tion of People Management Associa- riched this report. A list of intervie- Busetti, Charmian Caines, Miguel
tions (WFPMA). wees who were willing to be named Carrasco, Santiago Castagnino, Jean
is provided in Appendix II. We thank Le Corre, Elisa Crotti, Christopher
BCG has worked closely with leading Markus Benicke, Oliver Dost, Rolf Daniel, Nan DasGupta, Filiep
companies around the world on a Hülsenbeck, Torsten Kordon, Thom- Deforche, Giuseppe Falco, Dominic
wide range of HR issues, helping as Krüger, In-Hae Lee, Michael Le- Field, Marguerite Fitzgerald, Patrick
with HR strategy, management, KPIs, icht, Stefanie Michor, Frauke Ueker- Forth, Karen Gordon, Alexandre
and strategic workforce planning. mann, and Angelika Witt for their Gorito, Deepak Goyal, Mayank Gup-
BCG has assisted its clients in man- research and analysis, and John ta, Rajneesh Gupta, Knut Haanæs,
aging talent, organizing HR func- Campbell and Elizabeth Collins for Bent Dyhre Hansen, Carl Andreas
tions, managing performance, rede- their help in writing this report. Holm, Michael Imholz, Rune Jacob-
ploying the workforce, and managing sen, Angus Jaffray, László Juhász,
demographic risk. It has also helped The authors also thank the members Klaus Kessler, Pilasinee Kittikachorn,
companies establish shared service of the BCG and WFPMA steering Danny Koh, Philip Krinks, Børge
centers and outsourcing arrange- committees for their help with this Kristoffersen, Vinoy Kumar, Jason
ments. project. From BCG: Jens Baier, LaBresh, KJ Lee, Frederic Leperre,
Vikram Bhalla, Rolf Bixner, Andrew Frankie Leung, Derek Locke, Mark
WFPMA and its member associa- Dyer, Grant Freeland, Fiona McIn- Lohmann, Daniel Lopez, Emilia
tions have worked to enhance the tosh, Benjamin Pinney, J. Puckett, Lopez, Ross Love, Dave Matheson,
quality of HR management and to Steve Richardson, and Roselinde Tor- Chris Mattey, Anthony May, Mathieu
develop and elevate professional res. From WFPMA: Fernando Arice- Ménégaux, Mario Merino Lucchini,
standards. Through its programs, HR ta, Stephanie Bird, Carolyn Gould, Fiona McIntosh, John Miller, Rutger
executives have opportunities to gar- Janaka Kumarasinghe, Elijah Litheko, Mohr, Matthew Mooney, Tim Mon-
ner insights and exchange ideas that P.O. Mak, Jorge Jauregui Morales, ger, Riccardo Monti, Yves Morieux,
enhance corporate and personal ca- Horacio Quiros, and Peter Wilson. Olga Narvskaia, Gustavo Nieponice,
pabilities in HR. Tomas Nordahl, Christian Orglmeis-
We extend further thanks to the ter, Anthony Oundjian, Nimród Pais,
We believe that our findings will WFPMA country organizations that Francesco Pavoni, Craig della Penna,
appeal to HR professionals and se- supported this study. A complete list Philippe Peters, Steve Richardson,
nior business executives alike. On of the supporting organizations is Rodrigo Rivera, Matthew Rogozinski,
the basis of the positive feedback provided in Appendix III. Michelle Russell, Francisco Salm-
from our previous reports, we plan erón, Jürgen Schwarz, Tuukka Seppä,
to continue our regular research in Furthermore, we are grateful for the Yulia Shpilman, Silvia Sonneveld,
HR issues. support we received from various Nick South, Burak Tansan, Paul
C P A
Tranter, Andrew Toma, Øyvind Jean-Michel Caye Ernesto G. Espinosa
Torpp, Anna Vichniakova, Rohit Partner and Managing Director President, WFPMA
Vohra, Rahul Wadhawan, Jan Dirk Global Topic Coleader for People + 63 2 726 1532 81 88
Waiboer, Douglas Woods, André Advantage and HR ernestogespinosa@gmail.com
Xavier, and Kuba Zielinski. BCG Paris
+33 1 40 17 10 10 Florent Francoeur
Finally, we thank the editorial and caye.jean-michel@bcg.com Immediate Past President, WFPMA
production team that worked on this +1 514 879 1636
report: Katherine Andrews, Gary Svend Lassen f.francoeur@portailrh.org
Callahan, Angela DiBattista, Sean Project Leader
Hourihan, Monica Petre, Sharon BCG Düsseldorf Pieter Haen
Slodki, Sara Strassenreiter, Simon +49 2 11 30 11 30 President, European Association for
Targett, Mark Voorhees, and Janice lassen.svend@bcg.com People Management
Willett. +31 343 578 140
Vikram Bhalla pieterhaen@duurstedegroep.com
For Further Contact Partner and Managing Director
If you would like discuss our obser- Leader of the Organization Practice
vations and conclusions, please con- in Asia-Pacific
tact one of the authors listed below. BCG Mumbai
+91 22 6749 7000
Rainer Strack bhalla.vikram@bcg.com
Senior Partner and Managing Director
Leader of the Organization Practice J. Puckett
in Europe and Africa Senior Partner and Managing Director
Global Topic Coleader for People Member of BCG’s Americas
Advantage and HR Leadership Team
BCG Düsseldorf Leader of the Organization Practice
+49 2 11 30 11 30 in the Americas
strack.rainer@bcg.com BCG Dallas
+1 214 849 1500
puckett.j@bcg.com
48 THE BOSTON CONSULTING GROUP • WORLD FEDERATION OF PEOPLE MANAGEMENT ASSOCIATIONS
For a complete list of WFPMA publications and information about how to obtain copies, please visit our website at www.wfpma.com.
For a complete list of BCG publications and information about how to obtain copies, please visit our website at
www.bcg.com/publications.
To receive future BCG publications in electronic form about this topic or others, please visit our subscription website at
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