Highlights from Hackett&#s 2009 Metrics and Practices of World-Class HR Organizations

Hackett’s 2009 data indicate that the performance gap between the peer group and world-class HR organizations continues to widen. World-class organizations spend less in every component of total HR cost except technology. This reflects their strategic focus on two goals. The first is reducing costs by simplifying and automating processes to the maximum extent possible, including sending some to shared services/Global Business Services organizations. The second is taking the staffing and funding resources freed up and making better use of them wherever high-touch services and strategic activities are most required and impactful.

G&A Functions Pursuing Three Main Strategies to Ensure that Key Roles Are Filled with High-Caliber Talent

A recent Hackett Group study of senior HR executives reveals a mixed picture of general and administrative (G&A) talent management initiatives. On the positive side, organizations are pursuing a balanced approach to developing talent within all G&A functions. But top-level sponsorship and support of talent management varies in individual functions. Talent management efforts are strongest in large companies, particularly in HR and finance. They are weak or missing altogether in many IT functions, which is a surprise given the skills shortages and high turnover reported in the IT field. Talent management efforts are also lacking across all G&A functions at smaller companies, which may not have the scale or resources to launch and sustain them.

The Changing Global HR Context

The Hackett Group partnered with Human Resource Executive magazine in June 2008 on a study of the effect of globalization on the HR function, and how HR has responded to its challenges and opportunities. Results reveal wide differences in the way top performers and the peer group have responded to globalization. Top performers are far ahead in terms of making the massive changes in mindset and structure required to transition from a multinational to a global company. Plus, they are rethinking their service delivery models to enable the provision of HR services and capabilities on a worldwide scale without breaking the bank.

Hackett Sourcing Location Guide: Estonia

Estonia is proving popular with companies (including outsourcers) from the Nordic region, Russia, Poland and Germany in search of a nearby, stable source of low-cost labor for their service centers. It has a small but well-educated labor force, yet compared with other EU countries, labor costs are still low. The services industry constitutes nearly 67% of the country's GDP. A stable political and economic environment, good IT infrastructure and cultural affinity with the Western European markets have greatly contributed to the success of Estonia's services industry, including captive facilities and third-party vendors. In 2007, Estonia became more prominent as an attractive services destination after debuting at number 15 on A.T. Kearney's list of the top 50 global outsourcing locations. In that report, Estonia was compared to what Ireland used to be 10 to 15 years ago: a relatively low-cost European location with largely untapped talent and a pro-business policy environment.

The Five Key Practices of Top-Performing Global HR Organizations

A 2008 Hackett study of HR globalization trends reveals wide variations in the way that companies are responding to the challenges and opportunities of globalization, ranging from total inertia to radical restructuring. The study data clearly demonstrates that HR organizations that move forward the fastest and most broadly reap the greatest benefits. Overall, top-performing HR organizations are significantly more efficient and effective in their processes that support business globalization, sometimes by several orders of magnitude. Five key practices shared by HR globalization top performers include: - Service delivery model redesign - Commitment to building global talent management and HR planning and function management capabilities - Major investments in new technology to enable global provision of HR services - Leverage of global human capital - Rigor in measuring process performance and results

Talent Management: The Basis for Enterprise-Wide Transformation at Smurfit-Stone

Facing intense competitive pressure and tightening markets, Smurfit-Stone, a global containerboard and corrugated packaging company, launched a strategic transformation in 2005. After establishing performance targets through benchmarking, the G&A functions of HR, finance, IT and procurement were charged with significantly improving efficiency and effectiveness, cutting their costs and enabling operating units to achieve higher performance. Talent management was a critical enabling force for the transformation. The company has created a culture grounded in high performance, accountability and ensuring the right people are in the right jobs.

Talent Management in Tough Times

<p>Top performers in talent management adjust to the realities of an economic downturn without resorting to knee-jerk reductions in staff or a reduced commitment to talent management. They know that bungled cost-reduction strategies can put performance at risk by disrupting the execution of key processes and driving unwanted voluntary turnover of top performers seeking greener pastures. Their strategies for avoiding these risks include: </p> <ul> <li>Finding ways to reduce costs without diminishing talent performance </li> <li>Freeing up resources to maintain vital investments in strategic capability </li> <li>Taking advantage of opportunities to upgrade talent </li> <li>Maintaining employee engagement, especially that of top performers</li> </ul>

HR Metric of the Month FEB 2008 - Strategic Workforce Planning Process Cost as a Percent of Total Talent Management Process Cost

This metric compares how much top performers in talent management spend on strategic workforce planning processes as a percent of their overall talent management process cost compared to peer HR organizations....

Looming Retirement Crisis Reveals Breakdown in Strategic Workforce Planning

Although the oldest baby boomers began turning 60 in 2006, few companies have seriously assessed the impact baby boomer retirements will have on them. While many employers expect to increase their investments in recruitment and training, they often overlook the impact of critical skills shortages; lost knowledge and experience; increased medical and disability costs; and related declines in workforce productivity. Companies might have mitigated these risks if they had conducted strategic workforce planning and addressed the aging workforce in the broader context of workforce needs and gaps. This HR Executive Insight advocates the use of strategic workforce planning principles and such tools as The Hackett Group’s talent segmentation process and risk matrix to help manage the issues associated with an aging workforce.

Executive Guide to The Hackett Group Talent Management Maturity Model

Definitions of talent management vary from company to company, and often within the same organization. The Hackett Group’s Talent Management Maturity Model was designed to help organizations gain a shared understanding of talent management and its component parts. This Executive Insight explains the model’s core principles and provides a practical framework that organizations can use to assess their talent management capability. Included: The complete model, featuring the four stages of talent management maturity and descriptions for 17 elements of talent management across the dimensions of Culture and Organization; Core Process; and Technology and Information.

DuPont_Transforming for a Third Century

Two centuries after its founding, DuPont is in the process of transforming the way it manages its human capital, from largely decentralized strategies and processes to a “one DuPont” philosophy. The multi-year transformation, now in progress, includes streamlining and simplifying all HR practices, including creating centers of expertise: designing global, end-to-end HR processes; embedding HR relationship teams in the business and functional units for two-way information sharing about HR and business needs; outsourcing all HR transactional work to Convergys in a landmark, 11-year deal; and retooling the HR organization of the future to deliver measurable business value. Adapted from a presentation delivered by James Borel, DuPont’s SVP of Human Resources, at The Hackett Group’s 2007 Best Practices Conference.

Caterpillar Inc. Reduces Healthcare Inflation by $200 Million Using Six Sigma and Investments in Total Rewards Planning

This Hackett Book of Numbers Insight describes targeted investments Caterpillar Inc. has made in benefits planning and administration that will improve employee health through a focus on prevention and wellness, along with other initiatives to reduce healthcare inflation by more than $200 million by 2010. By using Six Sigma and Hackett benchmarking, Caterpillar was able to identify areas that needed improvement and to implement changes leading to better healthcare and lower costs.

Sarbanes-Oxley: Implications for HR and Challenges to Overcome

Sarbanes-Oxley compliance is not just the CFO's problem. HR has compliance responsibilities, too, which extend beyond employee communication, training and culture into investigation and establishment of new and improved controls and reporting on key processes. HR executives need to understand the implications of Sarbanes-Oxley and look to create streamlined, sustainable, repeatable processes to reduce the costs of complying with this complex legislation. This Insight provides a brief overview of the Sarbanes-Oxley Act and how it impacts HR, especially as it relates to the changes required in HR processes. It also discusses the key controls HR must provide for access to corporate resources and how HR systems need to change to ensure full compliance with the legislation.

Using Creative Destruction, Key Talent Selection and Benchmarking, Koch Industries Drives Innovation and Lower Costs

The ability to drive major change with minimal operational disruption has become a required competency for successfully competing in today’s business landscape. This case study showcases how Koch Industries has inculcated robust and innovative change processes and philosophies among its 90,000 employees through its trademarked Market Based Management approach, which comprises five distinct dimensions: vision; virtue and talent; knowledge processes; decision rights; and incentives.

Lockheed Martin and Georgia Pacific Leverage Diversity as a Key Enabler of Talent Management

With the demographic time-bomb ticking, leading organizations are radically rethinking how they attract and retain talent. Pivotal to this is recognition that diversity is both a recruitment differentiator and a way to broaden the talent pool. This Hackett Perspective showcases two organizations that are trailblazing best-practice approaches to diversity management: the 130,000-employee-strong advanced technology systems integrator Lockheed Martin and Georgia-Pacific, which deploys about 55,000 people in the manufacture of tissue, packaging, paper, building products, pulp and related chemicals. The contents of this report are based on moderated discussions that took place at The Hackett Group's 2005 Best Practice Conference, held in Atlanta this past spring.