Contact Vivienne Cramer on 011 781-4228 to register. In-company workshops customised to your requirements.

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# Managing For Diversity (Managers & Supervisors)*

13-14 April; 4-5 May; 8-9 June; 6-7 July; 28-29 Sept

# Workforce Planning (HR & Line Managers)*

11-12 May; 15-16 June; 13-14 July; 10-11 Aug; 21-22 Sept

# Managing Change & Transition (HR, Line Managers & Teams)*

27-28 April; 27-28 July; 24-25 Aug

# Moving HR Into Line (HR, Line Managers)

18-19 May; 29-30 June; 7-8 Sept

Contact Jeff Sacht on 0824561049 to discuss your needs.

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CALL FOR CASE STUDIES: HUMAN CAPITAL BEST PRACTICES

By Donald H. Ruse, Senior Vice President - Sibson Consulting &

Steven Angel, Senior Consultant - Sibson Consulting

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1. Introduction

It's that time of year again when companies completes their annual business plans and reviews and refreshes their strategic plans. As part of this process, Business Units and functional areas review and update market, financial and operational analyses to ensure they undertake the actions necessary to achieve strategic objectives. However, when it comes to determining the human capital required to execute on strategy, decisions about the number and type of talent needed lack the same level of analytical rigor. Worse, people decisions are frequently made with incomplete or inaccurate information that result in costly decisions that impact profitability and growth through understaffing, overstaffing or an inappropriate mix of skills.

So why does this happen?

Oftentimes the organization lacks a robust Human Capital Planning (HCP) process that directly, clearly and methodically links business strategy and with human capital needs. Sibson’s recently conducted "HR At the Table" study found that of the 40 global companies surveyed, only 23% indicated they were effective at forecasting the number and type of talent required to execute their business strategy and only 55% believe they were effective at identifying specific talent gaps.

If you believe your company has a strong grasp of the human capital requirements and corresponding investments needed to execute your strategy, read no further. If your business requires a better understanding of the number and type of talent required to execute its strategy, this article outlines what our research and experience has identified as the "gold standards" of effective human capital planning. We suggest you read through these standards and compare your current human capital planning capabilities to these to determine opportunities for improvement.

2. The "Gold" Standards of Human Capital Planning: Insight, Analytics and Information

# Insight

Value-added human capital planning processes provide meaningful insight into the number and type of talent required to execute your strategic objectives. Insight provides leadership the ability to understand and manage the company’s talent pool like a portfolio of assets. It clarifies the talent implications of the business strategy and informs decisions around where to invest, protect, shrink or divest your talent portfolio.

Effective human capital planning processes bring the following insights to the strategic decision making table:

>> The relationship and value that various roles or talent segments have/will have toward achieving strategic objectives. Segmentation enables more effective investment allocations decisions and provides direction to the actions required to align your talent with future business needs.

>> The potential changes in your current talent portfolio that will result from anticipated retirements, turnover (planned and unplanned) and other movement (e.g., promotions, re-assignments across functions/business units) and the implications this movement has for having the right people in the right place at the right time.

>> Anticipated talent gaps between your current and required future talent portfolio and the financial, operational and customer impact they will have on strategy execution.

# Analytics

Bringing insights to the table that are based only on "gut" feel and anecdotal information often fall short of what the business needs to make informed human capital management decisions. Sound and rigorous analytics are the backbone to developing fact-based human capital insights. Your HCP analytics should use a consistent and rigorous methodology to:

>> Understand and model key internal and external variables that can impact current and future talent supply and demand in identified roles/segments. These include:

– Historical turnover rates

– Historical movement (e.g., promotion, assignments across functions/business)

– Expected retirements based on eligibility and historical experience

– Projected labor market dynamics that could increase/decrease expected turnover

– Current skill proficiency of incumbents and the degree to which this proficiency impacts qualified internal labor supply

– Impact of anticipated changes in HR policies that could increase/decrease turnover, movement and retirement experience

>> Forecast and model future headcount based on how each role contributes to achievement of strategic objectives. This relationship is relatively obvious for roles/segments directly related to top line growth (e.g., revenue/sales employee). It is less obvious for roles that do not have a direct relationship. HCP analytics should enable you to identify the direct or indirect relationship between the role and the objective.

>> Forecast and model future headcount (and corresponding sourcing and training investments) recognizing the impact of skill proficiency on total number of people needed. Often overlooked when projecting future headcount is the impact of staff that are not fully proficient in their role. If you strictly counted "heads," those who are not fully proficient would be considered in the same light as those that are proficient. Doing so gives you an inaccurate picture of what you really need given expected productivity from those not fully proficient. Below is a tool we’ve developed to help clients calculate their year-on-year sourcing needs.

>> Easily model different scenarios and/or actual changes to the business strategy to determine the implications these changes have on current and future talent requirements. As the proverbial saying goes "stuff happens!" Internal and external business environment changes impact strategic and annual operating plans. An effective HCP process enables HR and Line management to quickly model real or anticipated changes and identify their human capital and business implications.

>> Identify and prioritize talent gaps based on their importance and relative size. On the surface, some gaps may be large but their strategic impact may be de minimis. Small gaps, even 1 – 2 openings in key technical or leadership roles can have significant business impact. Analytics should enable you to identify and understand what talent gaps mean the most to your future business performance. Below is a tool we developed to help clients measure, compare and prioritize talent gaps.

# Information

Meaningful insights and analytics require useful and valid information. The challenge faced by many companies is that they don’t have it, can’t get it, don’t know what to get or have so much of it that it becomes meaningless. A core set of information that is needed to effectively identify future human capital requirements:

We believe that if you can acquire and maintain this basic information, you should be able to bring meaningful insights and analytics to the strategic decision making table. This information will support your ability to forecast future talent requirements predict potential talent gaps and make informed human capital management decisions based on the implications these gaps have on achieving strategic and annual business plan objectives.

3. How Do You Stack Up?

What separates companies that realize consistent value from their Human Capital Planning process from those that do not? It’s those companies that bring meaningful, fact-based insights around the talent needed to achieve strategic and annual business objectives that are based on sound and rigorous analytics and accurate and complete information.

To improve the value and impact of your human capital planning process, begin understanding the specific insights your business requires. The insights we have outlined above are requisite, but not all inclusive. Sit down with your business leaders and determine what other insights are required for the business to make informed human capital decisions that enable strategy execution. Once you have identified the insights your business needs, identify the specific analytics required to provide these insights. Again, the analytics outlined above are requisite to an effective process. Additional analytics may be required to provide the complete set of insights required by your business. Finally, identify, gather and maintain the right information you need. A common mistake we have seen in many companies is attempting to build an all-encompassing database on its employees. This is often an overwhelming, expensive and, low return exercise. Knowing the insights your business needs around human capital and the analytics required should point you to the specific information you should collect and maintain.

*Reprinted by permission

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An Intensive and Practical 2- DAY WORKSHOP FOR HR & LINE MANAGERS

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2. The Future Of Technology In HR*

By Clinton Wingrove CEO and Principal Consultant, Pilat (North America) Inc.

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THE EVOLVING VENDOR-SPACE

The last decade has seen a significant shift in HR’s use of technology. The substantial investments in core HR infrastructure and, specifically, transaction cost reduction applications have continued. However, the time from sign-off to live usage of these was much longer than hoped for, costs were higher than promised, and flexibility was found to be very limited. On-going maintenance and upgrade costs have become prohibitive. Returns on investment were, therefore, generally lower than anticipated and HR has become more cautious, even reluctant, about moving into new areas of functionality. The exponential growth in the use of the web, and employee expectations in this respect have, however, sustained interest in self-service web applications; HR is faced with a dilemma.

The mid-nineties dot-com collapse produced a surfeit of highly skilled programmers. This, combined with a very difficult economy for those in the HR vendor-space, created an explosion in companies providing niche HR software applications. The rapid growth in the computer games industry, and advances in web technology, produced tools and ideas that found homes in many applications. Unfortunately, many of the companies had little, if any, HR experience and few had sound business plans. The rapid downturn in 2002 of HR niche application sales forced a spate of failures, mergers, and acquisitions. This has continued to this day; albeit, but under the more positive guise of consolidation. There are now far fewer vendors, with many claiming to offer fully integrated product suites but few truly have these; the smoke and mirrors culture has returned. Most, either have multiple products, each of which are based on different architectures and integrated in a variety of ways, or they have little, if any, HR experience and their products are technology-focused rather than HR-focused.

THE EVOLVING HR-TECHNOLOGY SPACE

On a more positive note, the last few years have seen at least four exciting waves of change with specific relevance to HR:

A. Web technology being used as a behavioral engineering tool. Examples include: Performance Management (As opposed to just Performance Appraisal) where individual behavior is continuously aligned with shifting organizational needs; Talent Management (As opposed to just Succession Planning) where real-time access to data is changing the way in which deployment decisions are made; Development Management (As opposed to just Development Planning) where executive development is being managed rather than merely planned! The use of targeted behavioral triggers and reinforcement, and the application of compliance consequences and shortfall escalations, through e-mails and desktop alerts to drive behavior change are now commonplace.

B. Sophisticated use of the data that major HRIS and peripheral systems offer. Examples include: Detecting rater bias and producing de-biased indices to inform better decision making; Computing medium to long term probability of success indices for units and divisions based on Objectives set, competencies needed, and known competency bench-strength; Managing HR process-compliance; Developing in-process control HR metrics; Detection of exposure, especially in relation to executive and senior management resourcing; Identification of import cause and effect and predictor-outcome relationships; Contemporary HR functions are now much more data literate in terms of understanding their data content as well as the statistical tools they can use.

C. Use of data integration tools. The prior explosion of different systems led builders to develop techniques and tools that enabled their products to be integrated with others. These tools have now become significant in their own right. They have enabled niche application providers to integrate their products with any others. This has freed end user organizations from the need to have a same platform or single vendor strategy. The opposite may now be the most appropriate strategy for cutting edge organizations; they can select the best-of-breed application for each process or function yet still have the benefit of shared databases, single user interfaces, and integrated processes.

D. HR has a seat on the board. For decades, HR sought a seat on the board but did little of truly strategic value to achieve this. Then came the Service era, triggered largely by the worldwide Total Quality concept. HR sought its clients wishes, needs and ideas and redefined its role as one of satisfying them; at last, it was given a seat on the board. However, in many organizations, HR still failed to justify that position. The fourth wave of change is the realization that HR must play a more proactive and accountable role. Recent evolutions in technology provide HR with tools to collect, analyze, distribute and use data about people, their jobs and their performance, to manage compliance and to substantiate and validate their solutions. HR can now be accountable and earn the boardroom seat it has been given.

THE EVOLVING BUSINESS ENVIRONMENT

As the economy recovers and the socio-economic environment changes, organizations are once again entering a period where new recruits will be difficult, if not impossible, to find; and those individuals they do find will display a new and more diverse cultural mix. This will be especially true in management and executive areas as well as in certain vertical markets such as Healthcare. The demands of employees will become greater and their ability and willingness to move-on will increase dramatically. Finding excellent talent will become harder and so will keeping it. In the context of Succession Planning software, these issues pose a number of challenges:

A. We will need to use every piece of information to validate and refine recruitment and deployment processes; thereby, to maximize the percentage of successful placements. To do so, we need to integrate data from recruitment (scores and who assessed), performance management (how well each recruit performed, and under whom), opinion surveys (how happy each person is), career management (their aspirations), development planning (what we and they are doing to grow).

We will then need a new generation of tools that enable managers to access, cross reference, interrogate, analyze, interpret, and report on data about their staff, the jobs and the performance; not simple reports or query tools.

B. Organizations will find it increasingly difficult, especially at senior levels, to design roles and then fill them. Changing socio-economic pressures will lead organizations to become more organic evolving to capitalize on prevailing strengths and inclinations, and focusing on sustaining and capitalizing on the fittest. Managers will need systems to support this new paradigm.\par

Succession Planning and Career management will merge even more than now, and pass through Talent Pool Management to an even more flexible Total Resource Growth and Deployment Management model. This will be characterized by:

- Initiatives that accelerate the growth, of groups of individuals, in specific skills etc managed by specialists in their field, not generalist trainers or coaches

- Specialist management of deployment decisions to achieve greater flexibility

- Regular and frequent assessment of Human Capital (in effect a Human Assets P&L and a Balance Sheet)

C. Organizations will have to address the current limitations in most Executive and Management Development processes (those where development is not driven by day to day skill demands and/or critical incidents):

- They largely produce development wish lists rather than genuine development activity

- Development solutions are selected using poor quality diagnosis and even less robust prognosis. Planned solutions are often superficial and focus on rehabilitation rather than optimization of performance or realization of potential

- The development that does take place would probably have happened anyway (because of the individual’s own motivation) but there is an illusion that the process is having a much larger positive impact than is the case

- Managers and their staff DO see development as important; but, on any one day, it is rarely as urgent as their other tasks. So, it does not get done.

D. We will have to find better tools for assessing an individual s ability to grow and, therefore, their true potential. Systems and processes will then have to be established that complement the normal management reporting structures and communications, change the relative priorities and urgency of development plans, and make sure that they are implemented.

E. Spans of control are likely to stabilize or increase; but they will not reduce. Managers, faced with large numbers of reports and less time, will expect systems to HELP them. At the same time, organizations will expect systems to ENSURE that effective management happens. This apparent conflict will be addressed with new tools. On one hand, they will make triggering and reinforcing behavior easier and more acceptable to the recipient. On the other hand, they will provide the manager with reminders of critical issues (e.g. objectives where there appears to have been little progress, or development plans that have not been effected), analyze data and warn her/him of risk exposure (e.g. detect and warn of potential attrition or other resource shortage issues), etc.

F. Day-to-day technology that we use will change even more rapidly. Already combined wireless cell phones, PC’s, personal organizers, and GPS systems are common. The concept of a manager who has a permanent base in a single office really is now under challenge. The manager of tomorrow will expect to have all of the information that he/she needs in her/his purse or pocket and to be able to exchange this painlessly with peers, bosses and reports without having to plug anything in! Data displays will become more flexible and shared; projectors will be replaced with wall and desktop displays; with multiple user displays in each. Access to all your data and all your contacts will be 24x7 and everywhere!

Data access and analysis will not be a series of monthly exercises; it will become an integral part of day-to-day activity; technology will advise managers of patterns, trends, and exceptions; managers will not have to search for them. Clearly, these changes will take time; but not as much as expected! Organizations have to ensure that they are heading in the right direction and taking such eventualities into account before investing in highly expensive technology.

CONCLUSIONS

In short, HR processes will continue to become more integrated with each other and the wider business processes. Contemporary technology will offer solutions to the classic process issues, new behavioral engineering tools, new data intelligence tools, and proactive support. Processes that have typically been events characterized by rapidly constructed and rarely implemented plans, with little ultimate impact, will become much more dynamic, responsive to day to day demands, and truly value adding. HR will move from being a service function to a driving strategic enabler. It will assume a proactive role of organizational business process designer, accountable for compliance and impact. The above will differentiate the successful organizations from the failures.

*Reprinted by permission

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An Intensive and Practical 2- DAY WORKSHOP FOR HUMAN RESOURCES AND LINE MANAGERS TO REPOSITION HUMAN RESOURCES AS A LINE DRIVEN FUNCTION

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An Intensive and Practical 2- DAY MANAGEMENT/ SUPERVISOR WORKSHOP

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As baby-boomers exit the workforce, businesses are bracing for a dramatic increase in retirement rates, as well as a widening gap in corporate knowledge and leadership. In fact, between 2002 and 2012, the Bureau of Labor Statistics predicts that more than 23 million workers will leave the labor force—the greatest number in history. Perhaps more compelling is the corollary, that more than 40 million new workers will enter the workforce during that same time frame. This massive swing in labor resources over the 10-year period creates risk and opportunity for employers of all shapes and sizes, particularly as senior leadership reaches retirement age and organizations look to the next wave of leadership development. Compounding the challenge is the increasing willingness of employees, middle management in particular, to jump ship after a particularly harsh economic lull.

Chief learning officers who understand these new dynamics must prepare for the resulting change in leadership requirements. Companies should organize around five key pillars to enable the next wave of leadership development:

- Learning Environment: Look to create flexible and sustainable learning environments.

Communication: Improve corporate communication and information dissemination.

Trust: Build cultures of trust.

- Advancement: Develop the mechanisms to successfully promote and monitor manager advancement.

- Visibility: Provide greater visibility into the business for middle management.

This article will examine each of these areas, focusing on key strategic and operational measures that can, and should, be taken with the help of technology to ensure that companies are better prepared to address the looming leadership challenge.

# Creating a Learning Environment

Often, too much weight is placed on the softer side of learning. While training, communities of practice and mentoring all have valid roles in the enterprise, the return on "soft" investment is difficult to track, tough to validate and uneven in its ability to impact the workforce. Yet companies have invested significant capital in course design, distance learning and training software to try to facilitate this type of learning. The disconnect between the return on investment and the money actually spent offers clear insight into the reasons that budgets for these initiatives are increasingly difficult to justify.

The issue with most training regimens is that they are simply a single instance of instruction with little residual impact. The employee attends, gets tested and passes (or gets certified), and puts the courseware on the shelf until the next time. The information delivered through training typically is focused on a specific job skill or objective, and is delivered out of context in relation to the rest of the organization. Although many companies have used some of the better-known e-learning toolsets to help with training delivery over distance and archiving, this mostly impacts cost of delivery, not necessarily effectiveness.

Enterprises are comprised of myriad interrelated processes and transactions that occur in series or in parallel between employees, partners, materials, equipment and customers. The more middle management understands the impact and context of the transactions in which they are involved, the more inclined they become to learn about the rest of the enterprise. Many companies make a critical mistake by assuming that middle managers should be constrained to their specific area of the business, rather than gain a greater understanding of the business as a whole.

That fuller understanding and shared vision of the organization can be achieved through technology, but only when that technology is closely linked to business process and context. We’ve seen whisperings of this technology assist in software such as knowledge management and portals. Companies are beginning to invest in technologies that capture and deliver the information on how business gets done at a process and activity level, linking those activities to the precise resources that employees use to do their jobs. This information helps to form a business-operating model that can be communicated on an ongoing basis.

A detailed approach to documenting and organizing enterprise knowledge should be process-centric. Focusing on the process generates a more effective model for learning because it provides a context for each and every activity. Once processes are documented, no one needs to guess about how the business operates. Information can be shared across the organization for others to navigate and reference as required by their own roles, not only affecting existing employees, but also serving as a mechanism to more quickly on-board new ones.

# Communication and Information Dissemination

The most effective employees are the ones who are able to translate company goals into the types of strategic, operational and tactical decisions that are made all along the management chain. Employees, especially middle managers who typically accept the burden of translating ideas into action, can benefit from a common and clearer understanding of the relationship between decisions made at the highest levels and the impact those decisions have down on the shop floor. This is not about knowledge management initiatives that at best help to capture best practices, and at worst cloud decision making with a lot of irrelevant information. It is about creating a shared view of the organization—one in which managers have better visibility into the impact of their activity as it relates to their peer’s activity, even though that peer may be miles away and in an entirely different silo of the organization. Many companies are uncomfortable with the sharing of strategic information, and it should be the chief learning officer’s mission to break down that mistrust and find the mechanism best suited to disseminate it.

Breaking down the barriers within an organization requires that detailed knowledge–business expertise about how the organization operates–be captured effectively, organized consistently and then easily shared so managers can actually operate around the information. Many companies understand the important role this type of knowledge plays, but struggle with how to really solve the problem.

Some companies seeking to capture information invest in business process management (BPM) technology to model the way the organization works. Others expend effort on organizing business information through content management technologies or invest in portal technology to kludge everything together in a user-friendly Web interface. Still others invest in workflow and transaction-oriented systems, in the hopes that productivity gains will lead to more time spent on the non-automated aspects of the business.

Unfortunately, these efforts rarely are united into a common environment, even in a superficial way. For example, the business process team may capture a great high-level model of the business, but employees are left wondering how to operate around the charts, graphs and arrows once the result of the modeling is communicated. CLOs should serve as a bridge between these measures, ensuring that new projects or initiatives in one area leverage the investments already made in another. The best mechanism for disseminating information combines discipline and rigor to extract process information in a consistent manner, with a portal framework that can disseminate the information in context.

# Building a Culture of Trust

Companies that have invested in technology to support learning and have made attempts to improve dissemination of information are well on their way to building a culture that cultivates trust. Middle managers should be empowered to perform their jobs and manage their teams in support of the goals of the organization. But too often, managers are not connected closely enough to those same goals, lacking the context to operate around them.

Mistakenly, senior management sometimes views the corporate strategy as an annual process and not the operating mantra that it should be. It is senior management’s job to provide a context to middle management and clearly communicate their strategic plan for doing battle in business. Strategic planning done well takes into account not only internal realities, but also external realities. A complete planning cycle evaluates many more data points than middle management has access to, or even the means to analyze. The value is in sharing that information. What’s lacking is a mechanism for senior leadership to effectively flow down its plans, the reasons behind them and the factors that influenced the development of those plans in the first place. So the brightest middle managers in the organization, often the most curious, use their own means to uncover kernels of management’s plans and place them into their own context. This is hardly scalable, and always incomplete.

Companies should aim to meet their middle managers at least halfway. Broad dissemination of corporate strategy as it is renewed should take place in a timely manner. Middle management should be encouraged to interact with and incorporate the details of strategic planning, regardless of their area of responsibility. Allow them to help reengineer core business processes in support of the strategy. Ask middle managers for their recommendations on process improvement and inefficiencies, and confirm that you are listening by taking action on the best ideas. When middle managers feel like they can truly impact the business, they recommit themselves to the goals of the organization.

Using emerging process-oriented collaboration technologies, business users can create a framework that takes corporate goals and strategy and explicitly connects them to the operational and tactical activities that take place beneath each layer of process. This helps establish a context and gives middle managers a peripheral perspective of the other processes they are impacting.

Flowing strategy down to the tactical level motivates your middle managers and builds trust by connecting them more closely to the business. It also ensures quicker ramp-up around corporate goals and objectives as they evolve, improving productivity and results toward those same goals.

# Monitoring Growth and Leadership

Almost every enterprise has a system in place for monitoring employee growth and achievement. Often, this manifests itself in the form of annual performance reviews. These are conducted top-down. Many organizations will invest in additional mechanisms for peer review of more senior staff, including 360-degree reviews or leadership assessment tests, among others.

These examples of annual testing regimes typically fall short of the mark. Don’t misunderstand, they are important to the business for a whole host of reasons, but in terms of leadership development, these mechanisms are really just moments in time that mostly look backward and don’t provide a comprehensive accounting of the middle manager’s understanding of the business and ability to execute.

Compounding the problem, many middle managers and their bosses see annual reviews as a painful administrative burden, not as an opportunity for discovery and improvement, as human resources managers would like to believe. Also, management churn frequently leaves the middle manager in the position of being evaluated by someone they’ve worked with for far less than the full-year period of the review.

In combination, evaluation, peer review and mentoring programs can work. However, the real challenge in identifying future leaders from the ranks of middle management is being able to evaluate them on a continuous basis. Additionally, there are other leadership traits that are difficult to capture through the typical review process, such as recognizing innovation and determining which managers are best at bending the rules to get things done. A well-architected and -implemented technology solution can help identify, implicitly and explicitly, activities and subject-matter expertise among managers on an ongoing basis. This allows executives to evaluate and identify leaders based on their actions, not just words.

# Providing Visibility Into Opportunities for Growth

The January 2004 Employee Tenure Report prepared by the Bureau of Labor Statistics notes that workers in management, professional and related occupations had a median tenure of five years. Turnover rates are even higher for younger workers, who form a large portion of middle management that will ascend to future leadership positions. (See Figure 2.)

Some of the most significant factors leading to improved retention are tied to satisfying the innate human needs to learn and grow. In the frequently referenced September 2003 Job Recovery Survey, conducted by the Society for Human Resource Management and The Wall Street Journal’s Web site CareerJournal.com, study participants identified "dissatisfaction with career development opportunities" and "ready for new experience" as the second and third reasons, behind compensation, for conducting a job search. Explanations like boredom and looking for a career change weren’t far behind.

By providing peripheral visibility across the organization into other business processes, people, assets and business drivers, middle management is given the best chance to innovate and bring their own fresh perspective into the business. Exposure to the framework around the way the business operates encourages your best employees to look within the organization rather than outside for growth opportunities. The technology to capture process information effectively and consistently exists. It’s in the area of organization and usability of that process information where technology is evolving, driven to a large extent by the Web and technologies like XML.

The Bottom Line

Statistics on employee churn and management job dissatisfaction are more compelling than ever. The massive swing in labor resources as the baby boomers retire and Generation Y enters the workforce represents the largest changeover in U.S. history. Tomorrow’s leaders will ascend from today’s middle management ranks, and companies will need to transform themselves by focusing on the five pillars–learning environment, communication, trust, advancement and visibility–as well as the common thread that binds them, culture. Chief learning officers ultimately must take the lead in helping their companies to evolve, adapt and address future leadership requirements in this increasingly dynamic employment environment. Technology that captures, organizes and disseminates the multidimensional aspects of how the business operates will play a key role as an enabler for this transformation.

*Reprinted by permission.

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An Intensive and Practical 2- DAY WORKSHOP FOR HUMAN RESOURCES AND LINE MANAGERS TO DEVELOP THE CONFIDENCE AND COMPETENCE TO PLAN FOR AND LEAD TEAMS THROUGH CHANGE & TRANSITION

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4. Got a Good Strategy? Now Try to Implement It*

By Knowledge@Wharton

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For nearly 30 years, Wharton management professor Lawrence G. Hrebiniak has taken the art of business strategy and put it under a microscope. Over time, he has brought one critical element into irrefutable focus: Creating strategy is easy, but implementing it is very difficult.

In his new book, Making Strategy Work: Leading Effective Execution and Change (Wharton School Publishing), Hrebiniak presents a comprehensive model to help business leaders bridge the gap between strategy making and successful strategy execution. He challenges executives to recognize that making strategy work is more difficult than setting a strategic course -- but also more important -- and he documents the obstacles that get in the way of successful performance.

The book relies on Hrebiniak's research as well as case studies from companies like GM, Chase-Manhattan, Disney and GE. After examining why businesses find strategy execution so difficult, Hrebiniak provides a roadmap that incorporates the critical areas of organizational structure, coordination, information sharing, incentives, controls, change management, corporate culture, and the role of power and influence in a company. The book concludes with a case study on mergers and acquisitions, which Hrebiniak uses to show "how practical execution can be in confronting an important and pervasive real-work issue and how it can save management a lot of time, effort and money."

In April and September, Hrebiniak will lead two executive Wharton School workshops on "Implementing Strategy" that will focus, in part, on why the devil is in the details when it comes to strategy execution. Below, he discusses his book with Knowledge@Wharton.

Q: Knowledge@Wharton: The premise of your book is that "making strategy work is more difficult than strategy making." Why do you think this is so difficult for companies to grasp?

A: Hrebiniak: I've asked myself that question for years. In the book, I talk about how managers in MBA and undergraduate business programs are well-versed in how to plan but not to execute. They first learn about it in the work place, and that's difficult because people tend to jump into execution without thinking about why it is so important.

Q: Knowledge@Wharton: So execution is like the strategy stepchild?

A: Hrebiniak: Yes. Only recently have people begun to realize that effective execution is a competitive business advantage. Companies are now seeing that if they execute better, they perform better. If they integrate long-term and short-term objectives, if they consider incentives, controls and feedback, they execute better. And if one company has that and the other doesn't, the competitive advantage is clear.

Another reason why it's so difficult for companies to grasp this, is that there are more people involved in executing strategy today - and execution takes longer than people expect. Political and organizational problems typically surface. So you develop a strategy, but you have to go throughout the organization and through dozens of planners to make sure it is carried out. It takes longer. Once execution starts, it could be one or two years, or even require a three-to-five year time frame.

Q: Knowledge@Wharton: You write that managers often dream up ambitious scenarios but leave the execution of strategy to their underlings - which leads to the perception of what you call the strategy "grunt." To achieve successful execution of a strategy - and to make sure that it gets the right emphasis - isn't it important to change this hierarchy of planning vs. executing strategy? Don't managers have to get rid of the idea that executing strategy is somehow inferior to making strategy?

A: Hrebiniak: Absolutely. There is still the perception that smart people plan and grunts execute. The short answer is that those who have power or influence have to embrace, believe in and foster execution. Some people think it is a lower-level responsibility - that's the older perception of execution - but this simply isn't true. I'm talking with a CEO of a global aerospace company who is starting to see that changing strategy is a high-level execution issue. If the CEO gets his VP involved and they get their managers involved, people take it more seriously through the organization.

When companies separate the planning and doing - that's wrong. Executive strategy requires ownership at all levels, from corporate level managers on down. Strategic success really demands a simultaneous view of planning and doing. The greater the overlap of doers and planners, the greater probability of success. It's so important for managers to be thinking about execution as they are formulating the plans.

Execution takes longer. Execution is a process, and not an action or a step. And execution involves more people than strategy formation.

Q: Knowledge@Wharton: In Making Strategy Work, you point out that managing change, including "culture change," is an important but often elusive concept.

A: Hrebiniak: Managing change has always been a problem. Look at the Wharton-Gartner Survey from the book [a joint project between Wharton and researchers at the Gartner Group that asked managers about the challenges they face]: Based on responses from 223 managers, we know that their number-one problem is the inability to manage change effectively or to overcome internal resistance to change. Why? Because change is difficult. It creates resistance. People lose power, resources, autonomy, or they perceive that they might lose autonomy. The real problem, though, is that people don't lay out a change plan. They don't even think about a change plan. They do everything at once. They don't set priorities. This makes coordination difficult. And if you fail, you can't explain it. If there is a problem, and you are doing 22 things wrong, you don't know if it's the interactions of the 22 or the interactions of the subsets. What accounts for the failure? People try to change, and when they can't, they turn around and say, 'We can't manage change. We tried this three times and screwed up.' Change has to be taken seriously, not 'What's hot this week?' You set priorities and decide up front what it is you want to change. Every plan should have an action agenda, with steps laid out for accountability and follow-up.

Q: Knowledge@Wharton: What about a timeframe?

A: Hrebiniak: It means different things in different industries. Management doesn't like sequential change. It takes longer. It's too boring. I often say to them, 'Factor in some smaller, more manageable pieces in your strategy, so that you can celebrate each step and move sequentially.' But managers love to jump in, grab the low-hanging fruit, grit their teeth and get it done. The problem is, speed kills. You jump in and do change all at once, and you can't coordinate and you don't understand the cause and effect, and you can't explain mistakes. The biggest error is that we do too many things at once. I warn people about speed. Excessive speed or moving very fast when it comes to culture change sometimes sounds desirable but it's dangerous.

Q: Knowledge@Wharton: Who should be in charge of making strategy work? Do companies need a CSO - a chief strategy officer?

A: Hrebiniak: This is a difficult issue. Some companies are large enough and so complex that they need someone who literally is in charge of integration, so companies are creating these roles. In most good organizations, there is delegation. Let's say we are entering a new market and we are going to execute a new global strategy. Who is involved with that? The CEO says, 'Me and my executive committee,' so the VPs get together, and now we have changed the structure worldwide. This affects IT capabilities. Then who is in charge of that? The chief information officer who reports to the CFO has to get involved, and then that person has to deal with the IT people worldwide. My point is, there has to be a logical flow of strategic information between the upper and lower levels in terms of strategy and tasks, and there has to be accountability along the way. If you come up with a good goal - but don't identify the who, what, when and why up and down the organization -- accountability varies along the way. Also -- and I want to stress this point -- I don't want people to think that execution is doing something different. We do it every day.

Q: Knowledge@Wharton: In your model of strategy execution, you stress that business strategy is important to the execution of the corporate strategy. Why isn't this given more priority? And would this be at the heart of why more mergers and acquisitions don't work?

A: Hrebiniak: Yes. The two are interdependent. In a corporate plan for diversification or, if a company is acquired, as an acquisition strategy, the business has to know where it fits in and have clear performance metrics from the corporation -- such as, 'Here's why we bought you.' Often there is not clear communication between corporate and the business. I do say in the book that the dog should wag the tail, but sometimes the tail wags the dog if the division is powerful and it's not integrated into corporate-level strategies.

Q: Knowledge@Wharton: You call your concept the "model of strategy execution." No catchy phrase, no clever acronyms. Was this intentional?

A: Hrebiniak: No, not really. I'm pretty straightforward. The only time I come close to [using a catchy phrase] is when I claim that the model offers the "25,000-foot view" -- an important integrative perspective to help the reader understand the logic of the entire strategy execution process. I hope it gets people to see the whole picture of making strategy work

*Reprinted under license agreement with Wharton School of Business University of Pennsylvania

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COOP & OTHERS v SABC & OTHERS

Case No: 01/23604

Judgment Date: 18 September 2004

Jurisdiction: High Court, Witwatersrand

Judge: Blieden J

Subject: Grievance: Unilateral Action

# ISSUE: The applicants had all been employees of the SABC. Each of them considered himself to be a retiree of the employer, and as such entitled to all the benefits which accrued to all other retirees of the employer. The SABC denied that any of them were entitled to be considered as retirees for the purposes of claiming the benefits. The employer claimed that they were retrenched or resigned with the consequence that they had no further claims against it. The very idea of unilaterally cutting costs by targeting the rights of pensioners to a subsidy to the medical scheme is not only distasteful but constitutes reprehensible and dishonest conduct. The claims were successful.

SUMMARY OF FACTS: All 93 applicants had been employed by the SABC or divisions thereof and had retired from employment in the period 1993 to 2000. They had all received a 60% subsidy in respect of Medical Aid contributions and subsidies on their television licences until recently. The SABC now claims that all of these applicants had been retrenched or had resigned and the benefits that they had received were unauthorised. The benefits were withdrawn respectively on 30 September 1999 and 30 October 2001. All the applicants, save for Claassen, had been in the employ of the SABC for periods in excess of 10 years. Some for as long as 30 or 40 years at the time they left the SABC. Each of them was entitled to take early retirement and this was agreed to by the SABC.

The consequence of taking early retirement was that the employee concerned was entitled to be treated as a retiree, with all the benefits attaching to such person, and in particular to continue receiving the subsidy to his medical scheme contribution and the subsidy to the television licence. In addition he was entitled to a pension card, which entitled him to certain benefits. At no stage was any hint given by the SABC to anyone during their period of employment that the medical scheme subsidy was a gratuity and not a condition of service. The pensions’ adviser was told that persons who were otherwise entitled to early retirement and who elected to withdraw the actuarial value of their pension monies due to them from the fund could remain on as retirees in all other respects, which included remaining members of the medical scheme. This would also apply to staff members who were retrenched and who also qualified for early retirement. These persons were to be issued who with pensioner cards, which were issued by the SABC to all retirees. They then continued to receive a 60% subsidy of the medical aid fund as well as a subsidy in respect of television licenses until this was withdrawn by the SABC in 1999 and 2001.

SUMMARY OF JUDGEMENT: The group of people, who resigned in order to take advantage of withdrawing the full actuarial value of their pension, did not attempt to hide what they were doing. In their exit letters, which were written on advice of employees of the SABC, they explained that they were exercising this option but that their true intention was in fact to take early retirement. The conduct of the SABC in paying these benefits for a period of 7 – 8 years confirms that this was an arrangement that the SABC had agreed to. The paragraph in the letters received by the employees in this matter, which indicates that the rate of the medical aid subsidies would be subject to revision, does not entitle the SABC to withdraw this subsidy unilaterally. The court then went of to find that the medical aid subsidy was not a gratuitous payment, but a condition of employment, as all employees, with certain well-defined exceptions were obliged to join the SABC medical aid, and the subsidy had not been varied at all in the past 10 years or more.

The SABC argument that it would be illogical for it to contract to continue to pay a medical aid subsidy to pensioners as this group of people no longer deserve a quid pro quo for services rendered was described by the court as cynical and was rejected as it is common practice to continue to reward pensioners for past services. As to the subsidy of television licenses, the court found that this was in fact a gratuitous allowance, but that this gratuity may not be withdrawn from any of the applicants in this matter as long as other pensioners still enjoyed this benefit. The applicants in this matter, whether they took early retirement or the "resignation option" was for all purposes pensioners and should be treated as such.

The court found that the SABC was not entitled to summarily withdraw the subsidies to the medical scheme and to their television licenses. THE COURT WENT ON TO COMMENT THAT "THE VERY IDEA OF UNILATERALLY CUTTING COSTS BY TARGETING THE RIGHTS OF PENSIONERS TO A SUBSIDY TO THE MEDICAL SCHEME IS NOT ONLY DISTASTEFUL BUT CONSTITUTES REPREHENSIBLE AND DISHONEST CONDUCT ON THE PART OF THE SABC IN THE CIRCUMSTANCES OF THIS CASE." The SABC was ordered to reinstated all benefits and to repay all monies which were due, but not paid in respect hereof with interest at a rate of 15.5%. Costs of the trial were reserved.

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WORKSHOP: BACK TO BASICS: EMPLOYMENT EQUITY COMMITTEE TRAINING

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