Defragmenting HR organisation for a better provision of talents

Talent supply chain:

For a long period, talents were seen as an abundant, available resource. It may be time now, like sustainability movement did, to revisit this position and define new approaches.

Summary: Segmentation, tensions and silos organisations within HR do not allow to design the best supply chain to provide and manage talents over time.

Corporate Universities, different from training centres, have a specific role to play as well as career development, succession planning and mobility. New learning technologies can provide flexibility and quality levelling of functional knowledge as well as understanding of most common procedural tools to upgrade talents on common issues.

If HR wants to play as a business partner, talent supply chain becomes a must. Talents are becoming a scarce resource and have to be managed properly.

HR which was mostly a Managing Personnel department is facing a new challenge. Companies are developing their business at the international level, on new products, on new services, with new organizations and new processes. Business is more complex than before and expertises are needed around the world. This affects management development and executive education as traditional training will not sufficiently provide for new resources. Due to demography, the pappy boomers are retiring, and the market is missing recruitees. Germany is supposed to look for a few thousands of new engineers per year coming from other countries. India, like Spain is offering training to prepare for such expatriations in dedicated institutions teaching in German. New projects are more limited by the flow of talents than by the flow of financial means.

New scarce resources that should look for HR are:

strategic expertises needed for the future businesses of the Corporation
redundant or obsolete expertises
organizational and governance abilities
sharing best practices, social learning and communities and knowledge information
retention, motivation, nurturing, developing existing company talents
integrating new talents
setting up a three layer organogram to anticipate mobilities and replacements
manage closely expatriations and, above all, impatriations

In the past, HR functions was organised with training and development separated from career development, mobility, or succession planning. These sub functions where managed separately with few links, and a silo organisation was in place, forbidding these functions to cooperate. HR managers start to understand the importance of linking the two together. Until recently in a large European car manufacturer, the department in charge of career development for top executives was not in the line of HR. This created lots of tension when the issue was the organizations of management development, and preparing people for their future job. It was difficult to define the list of people to be invited to seminars because the ownership was outside HR. Career development was under the responsibility of the CEO and management development was not authorised to go and talk directly the CEO. Needs were not defined, programmes could not be designed, top executive were not prepared. It became obvious when the Corporation decided to develop internationally and have an M/A with a large foreign car manufacturer. The resources were not there, had not been anticipated, and nobody knew where they were located, if any in the company. The issue of foreign language had not been addressed properly. Succession planning was done at the CEO level but the link with management development did not exist.

The question was not only for the urgent need but also for the future of the company. Precisely, the case of the high potentials was not under scrutiny. (Dave Ulrich, a new mandate for HR HBR)

A strong tradition of fragmentation and conflicts

Traditional functions that one expects within HR are:

Recruiting
Wages and salaries and personnel management
information system HR
working conditions health and security
social and union relations
management of competencies and qualifications, specifications, mobility
succession planning and career development
compensation and benefits, contract management
expatriation, impatriation
assessment and appraisals
management development, personal development, coaching, organizational development
Corporate University
knowledge and expertise management, sharing best practices
quality and suggestions management
professional and technical training
promotion
HR communication
Governance consistency

All subdivisions of HR are exclusive turfs. Employees who do not belong to the same cluster are supposed rivals, and tensions are bound to happen. Costs of transactions are very high between departments that think they are all the unique owner of the corporate resources. It is almost impossible to organise a dedicated programme for promoted people if one does not know in advance the list of those to be promoted. Then executives and managers move from one job to another without preparation. They move to a country where they cannot speak the language. They take a very different job where everything is new for them. They are supposed to be efficient the next day they take the responsibility in the new position. The risks are very high of a failure, and in some case a huge one, if all the family is concerned, as it is in a traditional expatriation. It not only happens at the headquarters level but also frequently in the subsidiaries.

Fragmentation is then at the maximum. The ownership of talents is totally scattered and no one knows what is the exact amount and profiles of talent existing or needed. When somebody from a subsidiary has been spotted, the local boss usually wants to keep him/her, because he or she is the person who makes the performance, and the boss does not want to let the person go. The next thing that can happen is that this person might leave the company, because he or she knows that there is no future under this boss. Retention of talent comes more and more in the perspective of the talent supply chain.

Corporate universities and talent supply chain

These fragmented organizations paved the way for influence fights, to put borders around territories and to make things even more difficult. This contributes poorly to the performance of the company and certainly not to a good image of HR. When this happens, participants to seminars, when they are organised by the Corporate University come from heterogeneous levels. Sometimes participants are not in sufficient number, and seminars have to be cancelled. The reputation of the Corporate University is at stake. Often programmes are not relevant and linked to companies or to the objectives of the strategy. The aim is developing mostly general skills and not performing competencies. Work on real projects is not on the agenda, and the seminars are seen as time lost, or as a vacation. In the long-run it is not only the question of these programs but also of the real existence of the Corporate University which will be discussed. Some of these Corporate Universities have been simply scratched because of their unrealistic approach, often too costly, to staffed, too slow, and not relevant.

Pressures on time, budget, and results have brought executive committees to stop their Corporate Universities if not performing. This has been the case of Ericsson, Shell, Lufthansa, ABB, Adecco, and Fiat. Meaningful changes came to others. At EDF, in France, the Institute of Management disappeared for a few years as too much intellectual and conceptual, and was replaced a few years after by the actual Corporate University dedicated to top executive development. Renault has tried to defragment all its provision of training programmes, reducing by a factor of 10 the number of programmes by regrouping those which were alike.

Frequently there is also a change in staff. Instead of having training personnel with mostly administrative abilities, the new settings are managed by qualified staff some of them with PhD degree (Deutsche Bank, Novartis, Daimler, and EDF). New topics become more important: strategic alignment, the needs of internal clients, real reactivity, real issues and problems, processes… More than just academic content. This new management development staffs have a better understanding of the organisation, of the strategy, of the competition map of the corporation. They also are more knowledgeable of all the internal networks. They are in a position to support the deployment of the strategy and not just train managers. New technologies help them to shorten time spent attending these programs and ease the learning. A traditional three-day seminar may become a one and half day with the use of prerequisite readings or e-learning modules plus external coaching. Workflow software allows participants to work on projects even though they are far apart. These new staffs in charge see the Corporate University as a developmental position good for their future career. They are here to learn, not only about contents of expertise but also to make new networks that will be useful for them later on. In many cases, they would have been in a position where they had truly helped participants to solve real problems.

The question then of the return on investment of such entities becomes less relevant. Useful, HR is seen as worthwhile.

Key success factors and quality issues of these Corporate Universities have been researched and assessed by the European Foundation for Management Development, EFMD, through the quality insurance process called Clip: corporate learning improvement process. The number of items covering the audit is more than 100, and the review is conducted by peers and brings a lot of information to those who are visited. It is also a good way to go down the road of defragmentation. A new lighter version of Clip: SLR, Strategic Learning Review, allows a quick audit on top priorities and issues.

How to go further in integration to be more efficient

Still, HR functions and sub functions have yet to be organised to be more synergetic. Silos should at least work together if they do not want to merge. However, these last 10 years HR was busy delayering and working on redundancies, and not too much on their own organization. Preparing the future was not clearly on top of the agenda as the question was how to get rid of people without too many difficulties. Getting rid of redundant people, of seniors, of inadequately qualified, was taking much of their time.

Performance improvements and financial objectives being more important than market share, the issue was on head counts more than anything else.

Getting top management in development or transformation programmes was not easy. In many European countries, the degree that got out of graduate education is supposed to give a passport for life. Why should then managers think about their own development? They had their viaticum for all their life. Why should they learn when they are supposed to know everything? This gives another challenge for those in charge of the Corporate University. Their mission is not to get people to learn but more to unlearn, to be able to think differently, out of the box.

With globalisation, corporations develop internationally. They are busy also with M&A, or international alliances, or organic development. They need to identify, prepare, develop, and promote new talents. Operational leadership talents, plus expertises in some fields (marketing, finance, supply chain, project management, information system..)

These needs for new talents in volume and quality is reinforced by the fact that organizations in these large corporations are more and more complex, hard to understand and that, in this new organizational jungle, new know-how are needed for the executives.

New approach for developing managers and talents

Organisation charts are less and less useful and relevant to understand organisations. They are often misleading. The result is that everybody tries to navigate his own way, using is own network, to find solutions for his/her challenges. These new form of management based on understanding the gaps of the organisation through networks, substitutes the traditional form of management based on hierarchy.

These changes happened as the consequences of cross functional management like project management, or process management. Annual appraisals have taken also an important role with the 360° feed back or assessment centres. With these new processes, appraisal comes now from a group of people, mostly your network of internal clients and suppliers, including subordinates and boss. Appraisal is not only a question of mastering expertise, or performance achievements, but of all the environment of the function. What is assessed as a lot to do with transactions, negotiations, facilitations, communication, presentation skills, cultural skills or networking skills, teamwork abilities, project work, change management, things that nobody would talk about only 10 years ago. And more, these new skills are almost totally absent of all initial degrees in business schools.

The need for immediate results expressed by general management, both on company objectives, on talent detection, or urging needs on concrete projects have changed the demand for management development. Nowadays it is more than ever about coaching, consulting, assessing.

Traditional training is at stake. It is no more question of training only for professional issues or expertises in specific domain. It is about dealing with real issues. This is why action learning, or problem based learning, are becoming more and more popular. Advantages are many in terms of efficiency, costs, and development. Nevertheless, it cannot be managed by the same profiles. New organisation, new skills and new expected results, which mean new process of qualification, are needed. The word of management training has shifted. More and more it is coaching and supporting organizational learning. The issues about human capital will generalise. As scarcity on talent is here, human capital approach will become more explicit and useful. This has also an impact on logistics and talent supply chain. However, the main resource as to be increased, and the capacity to move people from one job to another quickly (flexibility, fluidity: opposite to viscosity) is one key factor of success and can be implemented through talent development.

Defragment, integrate without centralising.

There is a need to think about a new model. The design of a new system of HR must take into account more integration:

recruitment
retention
development
career development
succession planning
mobility
stock options/compensations
assessment
management of seniors, management of high and low potentials

Everything has to be under the same roof and aligned with the vision and strategy of the Corporation in a way to put everything in order as a supply chain of talent managed at the top level.

HR is then split in three different dimensions quite distinct:

The first part is based on regulations, contracts, social issues, unions, labour law
the second one is about administration: information systems, compensations, administrative follow up, internal procedure, health insurance, and most of these jobs can be outsourced
and third, the strategic dimension, quite anticipative, on talent management and key differentiating expertises, governance, organisational development

In the past, the same thing happened to accounting function. Now, there is the difference between pure accounting, management control, and finance. Profiles are different. Management of these profiles is diversified.

Usually when defragmenting, corporations are pushing for centralisation. As the issue is to share vision, managerial template, processes, the true answer is not in centralising. Centralisation generates loss of contact with the ground and local needs. This increases demotivation of local actors and generates loss of empowerment.

In most Latin countries, elites feel well with centralisation. It gives apparently an easy understanding of the organisation; it is a simple solution to a wrong problem. The issue is not to simplify the work of top managers. It is about getting information back and forth, up and down. The very question is about the qualification of the local people. Do they have the resource, the ability to solve the problem they meet or not? Is the solution belonging to one person or two a group of people in different silos? It shows clearly that organizational development is an expertise that all managers should have. It is also absent of most business school programmes.

Depending on the answer, support services and contract services must be implemented at headquarters level, at the regional level or at the local level. Coordination of these support services are important to avoid duplications or conflicting investments as it has been seen with the past EADS case, on plane information systems that did not communicate.

Concerning corporate universities, Fiat or Shell have changed their organisation. Instead of having full-time facilitators internally, they have chosen to move them to consulting position. Internal clients write specifications and send tenders internally and externally. The Corporate University compete with external consultants to work on projects. If the propositions are similar in terms of price, the favour is for the Corporate University. At Siemens, the decision has been made to train internal coach to support first line managers. A specific training for coaches has been set up and assessed. Most coaches are senior people with strong internal networks.

Why looking for talents somewhere else?

When the company “knows what it knows”, the Corporation can call on his own resources and save lots of expenses on external consultants and solve quickly these problems on a much more motivating process. The company can also capitalise and share best practices to adapt them locally.

Even in management development, the same concepts call for a local adaptation. Ingredients can be the same, but recipes must be local, based on the same values. Management is a cultural activity, which implies the need to understand diversity. This is particularly true when one talk about leadership. Leadership in an Anglo-Saxon or Nordic culture does not mean the same thing than in a Latin culture.

In the past, local managers thought that their needs where different from headquarters, so, many specific local management programs where designed and implemented. This created confusion as in some case many of these programs where just replication under a different name and with different facilitators. Alcatel had 15 years ago 98 different “quality programmes”. This made communication on management development programmes as well as sharing best practice very difficult.

The basic idea is to have a common understanding and expectation from all these programs under the same brand name. Harmonisation but not homogenisation. Common goals and values, subsidiarity and convention of efforts, are the key words for such a project. A Global strategy which allows for local performance, and network management for the experts.

The learning entities are dedicated, whatever their name, Institute, academy, corporate university, to support the implementation of the corporate strategy, and are one of the favourite canals for communication cascading from the executive committee. This is a place where they can communicate their ambitions, their vision, and their values and have in the same time the opportunity to discuss with top managers and answer their questions.

The professional training side of these centres can be organised differently and handed to operational or functional people concerned, as they are the best to know what the expertise needed are, and develop programmes with the help of managers. A further look about the consistency between the two settings, management development and professional training, should avoid redundancy and conflicts.

Qualifying networks

The management of learning officers, of networks of talents, in correlation with the needs of the locals, avoids what many corporate universities have seen recently: inflation of needs and costs, inflation of programmes, increasing gaps between needs and programs, lack of creativity, intellectual ghettoes , and lack of relevance with strategy. The smallest change in the executive committee, or when the company’s results are not as good as expected, the risk is big to see the Corporate University disappear. It is immediate benefits for the executive committee in place, but leaves unsolved issues for the future.

The HR managers should try to transform this network of training officers, or internal consultants in a community of learning and of talent management. Corporate Universities are not museums or conservatories.

As it has been seen in many occasions, progresses are made at the frontier. This is why project management is successful. The same story goes for HR which should rethink its missions, its processes, and its organisation. If HR wants to be a business partner, HR must learn about all the expertises, talents and key factor of success of the Corporation. HR must also supply talents had the right time, the right place, the right cost. HR is also in total quality.

It is not always HR culture to think of itself as a process function. HR does not see itself has the support function for logistic issues like delivering relevant talent just-in-time, as other functions do for their own performances of their own flow.

The attribute “human” associated to HR does not excuse it for not being strategic and process oriented. The traditional mechanical representation of the company had certainly favoured a hierarchical approach more classifying and crystallising the organisation. Today’s business model is closer to chaos, or organic, and forces us to think differently about corporations.

The HR function is a living one and at the service of a living company, at the service of living talents existing or to come, creativity and dynamism must be reinforced.

Practical issues: talent pool manager, the “maitre de chai” as in the wine business

Managing talent pool calls for a multidimensional approach. Each individual can be listed on his/her different expertises: technical, managerial, financial, marketing and sales, project management, organizational, international, communication skills etc.. Each individual comes in the system with its own level of qualification under different references. This means that he belongs to many different pools, each one in a different level depending on his knowledge. Each new position in the company can improve or not, each expertise.

Managing the talents and the different pools of talents implies that anticipation of the needs of the company is on the agenda. What are the key strategic expertises needed, which one will be strongly differentiating the company from its competitors and do the firm has the different programmes to qualify those that are in place? What are the new expertise to create, which new pool to set up, what new program to develop managers to design, who should be sponsor, and which internal or external network is available to contribute. When a new mission comes in, an expertise profile must be drawn. Looking through the pools of talent can give the profile of those who are close to it.

The distribution business stigmatises almost the exact opposite situation. When developing internationally, most of the corporations had not prepared their managers for international issues. Mastering foreign languages, understanding foreign cultures, preparing families for expatriation, managing pools of potential expatriates, preparing for mobility, defining compensation and benefits for expatriates, thinking about re-impatriation where just not an HR issue. Consequently, expatriates that go abroad for a three-year contract show high cost and a high-risk profile. As they cannot communicate in the local language, the level of performance is modest. They cost about 10 times more than a local, and when they come back, even if it has been a success, there are looking for a much better job that often cannot be afforded, and become quite frustrated at the point of leaving the company. In fact, their expertise is managed neither before nor after expatriation.

When managing talent pools, the weight of each pool show the critical strategic importance of each expertise. If the business is changing it is time to reassess the importance of the pool concerned and to make talent to move from one pool to the other.

Specific indicators must allow watching for the level of each pool. It is good to compare with competition. This should be a prerequisite of all people review that takes place in most large corporations. Each pool as a specificities: turnover, mobility, redundancy, time and cost of qualification, maturation process, external sourcing.. And nice analogy would be with the wine industry. The “maitre de chai”, manages the different qualities, the vintage, and proposes the different blend to give the full flavour. Some grapes are good for keeping the wine; others are good for the flavour, some for the colour. The excess of high potential is as dangerous as the lack of potentials, as in a wine, such a balance must be made between sugar, alcohol, acidity, fermentation, time to keep, temperature..

This is a prerequisite to human capital approach. It is certainly necessary in case of mergers and acquisitions, to avoid redundancies and lacks, and to value active talents, and to keep them as long as possible.