2012 11 12 HR Study, 2nd edition.pdf

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Ensight Study: What is the current status of HR in Romania?Second edition, 2012

1© 2012 Ensight Management Consulting. All rights reserved.

What is the current status of HR in Romania?Second edition, 2012


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ACKNOWLEDGEMENTS

The Ensight Management Consulting team would like to thank all companies and

their representatives for participating in the second edition of “What is the currentstatus of HR in Romania?” .

We hope that the time invested by you in responding to this initiative released bythe Ensight team will be rewarded by the results contained in this report. Ofcourse, we remain at your disposal for any further questions on this topic.

Thank you for being with us for this second research and we look forward to yourcollaboration on the future editions of the Ensight HR Study.

Kind regards,

Manfred Schmauch Sandra Jitianu

Principal Manager

November 2012


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Table of Contents1. Introduction ............................................................................................... 4

1.1. Objectives of the study ........................................................................ 4

1.2. Data collection .................................................................................... 5

Profile of the respondents ..................................................................................... 5

2. A snapshot: the main results of the HR survey ............................................. 7

3. Detailed description of the HR survey results ............................................... 9

3.1. Impact of the economic crisis ............................................................... 9

Current situation .................................................................................................. 9 Outlook .............................................................................................................. 15

3.2. Company objectives and directions ..................................................... 16

HR mission ......................................................................................................... 16

HR and the company strategy .............................................................................. 17

3.3. Modern HR........................................................................................ 18

Stage of development of HR areas ....................................................................... 18

Management involvement in HR-related activities .................................................. 19

Compensation & Benefits ..................................................................................... 22

Performance management ................................................................................... 25

Competency models ............................................................................................ 27

3.4. Talent management .......................................................................... 28

3.5. 24-Months Focus ............................................................................... 33

ABOUT THE AUTHORS ........................................................................................ 34

ABOUT ENSIGHT ............................................................................................... 34


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1.

Introduction

1.1. Objectives of the study

The current study was carried out by Ensight Management Consulting with thepurpose of discovering the current “hot topics” of Human Resources in companiesacross Romania and to follow evolving HR trends.

The consultants surveyed 37 companies from different industries – mainlymanufacturing, food & beverage, financial services, IT & telecom, professionalservices, energy & utilities and retail. 85% of our respondents are HR managers,

conveying high relevance to the opinions expressed.

The 2011 research offered a first overview on the role of the Human Resourcesfunction and of its influence on establishing and implementing the companystrategy. It also provided information on the development stage of various HRareas and the degree of penetration of modern HR and management approaches incompanies around Romania. We further offered insight into HR-related decisionsand measures that companies took in order to improve their results during theeconomic downturn.

In this second edition we kept the same topics for our analysis in order to be ableto follow the dynamics of the aspects mentioned above. Thus, you will be able tofind our conclusions related to the persisting effects of the economic downturn on

HR activities, to HR and company strategy, top priorities for HR in 2012, HRperception of management responsibilities and performance management.

As last year Talent Management ranked as top priority for the HR function, wedecided to dedicate a separate chapter to this topic in 2012.

We hope that the HR Study 2012 will be used as a valuable source of informationon the current status of HR and that it will serve as a starting point for discussionsin the Romanian HR community.


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1.2.

Data collectionThe data was collected between November 2011 and February 2012. We made aseries of qualitative interviews between April and May 2012 in order to refine thefindings. The results were analyzed and interpreted in June 2012.

The invitation for participating in the research was addressed to human resourcesmanagers of 275 medium and large companies in Romania.

Respondents: 37 companies with a total turnover of 21 bn RON and 40,000employees.

FIGURE

1 –

R

ESPONDENTS’ TURNOVER

FIGURE

2 –

R

ESPONDENTS’ EMPLOYEE NUMBER

Profile of the respondents

The respondents are mainly manufacturing and food & beverage companies, butother industries are also represented: financial services, IT & telecom, professionalservices, retail, energy & utilities, oil & gas, medical services, pharmaceuticals,logistics, recycling services and public administration.

FIGURE 3 – R ESPONDENTS’ DISTRIBUTION BY INDUSTRY

The relevance of the expressed opinions is high for the HR field: almost 85% of therespondents are heading HR departments and are reporting directly to the CEO.Each company is represented by one respondent.


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FIGURE 4 – R ESPONDENTS’ PROFILE ACCORDING TO THEIR POSITION

FIGURE 5 – RESPONDENTS BY DIRECTREPORTING LINE


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2.

A snapshot: the main results of the HR surveyThe behavior of business leaders continues to be influenced by the troubledeconomic situation in Romania. Our data shows that over 50% of businesses choseto apply restructuring measures in 2011, that half of the surveyed companiesare continuing restructuring in 2012 and an additional 14% plan to maintain it in2013. Layoffs remain the most widely used measure for cutting HR-related costs,followed by cutting back on training, a measure that increased significantly incomparison to the previous year. Solutions like technical unemployment and unpaidleave dropped substantially. Only about 10% of responding companies resorted tocutting salaries, quite similar to the previous year.

Regarding the role and positioning of the HR department, there is good

news: year upon year HR departments feel more in charge with providing modernHR tools to support the business, with the importance of the administrative sidedeclining a little. Continuing the positive trend, almost all HR managers considerthemselves to be involved in business strategy definition, alignment andimplementation, while in over half of the responding companies management co-opts HR managers in all strategy stages. That signals that at least in 50% ofmedium and large companies HR has earned its long awaited status of a businesspartner.

On a less optimistic note, our data shows that 85% of our respondents estimatethat employees have a medium or low awareness regarding companystrategy, which points at management not communicating strategy into the depthof their organizations.

Turning to the role of the business in HR related matters, the wide perception ofHR practitioners is that managers do not take their task of people leaders asseriously as they should. There is a 50% gap between the importance of their roleand what is happening in reality in the areas of performance management,employee development and compensation & benefits.

With regard to the maturity stage of HR areas, three areas are in great need ofdevelopment in the eyes of HR practitioners: competency management, careermodels and compensation & benefits. One positive development – there are morecompanies which adapt pay level to performance than in the previous year.However, even if around three quarters of companies have a performancemanagement system in place, there still are businesses paying out bonuses without

having a proper process for monitoring employee’s results. Another interesting – and somewhat worrying – finding related to performance management is that inonly 20% of companies low performance is communicated clearly and possibleconsequences will be executed.

This year’s focus area, Talent Management, brings promising facts: around halfof our respondents have set up a talent management system and 20% plan tocreate one in the near future. Virtually all companies which have a talentmanagement system have included team leaders in it; regular staff is presenthowever only in half of the cases.

Turning our eyes to the future, the biggest challenges for HR practitioners in thenext 24 months are the way employees understand HR policies and practices, thedegree to which senior management gets involved and line management deliversHR initiatives and the way HR activities are integrated in business strategy.


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The results of our study reflect the feedback we received from 37 medium andlarge companies with a combined number of 40,000 employees. The vast majorityof our respondents are HR practitioners reporting directly to the CEO or anothermember of the board.


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3.

Detailed description of the HR survey results

3.1.

Impact of the economic crisis

Companies felt the effects of the economic downturn also during the period ourresearch was carried out, as shows the data below. Moreover, the economicenvironment has a strong impact on the way HR people are seeing their role:almost half of our respondents consider that the main task of the HR department isto support the company in overcoming the crisis and achieving cost savings. Werethere any paradigm shifts? Did companies adopt solutions that were similar ordifferent from those applied last year? We kept our focus on this topic in order tosee how companies adapted to the reality they face on the market.

Current situation

FIGURE 6 – INCREASE / DECREASE IN COMPANY TURNOVER OF PARTICIPATING COMPANIES

Whether we like it or not, the crisis in its various forms is still felt in Romania: 40%of the participating companies registered a decrease in turnover in 2010 incomparison to 2009.

The way a business reacts to the „economic tsunami” depends on a series ofvariables ranging from available resources to the distribution of work. Whilesome prefer to reduce personnel, others transfer employees to the more busysegments to maintain a balance. Wise companies chose those measures thatallow them to stay flexible and make an easy come-back as soon as theprospects are better.


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FIGURE 7 – IMPACT OF THE CRISIS ON MAIN INDICATORS

Conclusions

Even if seriously impacted by the crisis in terms of reduction of company turnover

and costs, most companies kept their staff. Having to choose between cutting theemployee number and cutting their costs, they preferred the latter.

However, the companies that suffered a significant reduction of their turnover hadto adjust their employee number in order to survive.

Now let us look which are the measures that are considered as most appropriatefor overcoming the crisis. While asking us this question we also wondered if HRpractitioners would have the same point of view as business representatives in thisrespect.

0%

6%

8%

47%

38%

67%

29%

25%

14%

24%

31%

11%

0% 20% 40% 60% 80% 100%

No. of employees

Company turnover

Costs

Impact of the crisis on number of employees,company turnover and costs

Significant (>20% reduction) Medium (6-20% reduction)

Small (


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FIGURE 8 – K EY MEASURES FOR OVERCOMING THE CRISIS

* The Business / Board point of view is obtained from the respondents, not from separate interviews

with the Board.

Conclusions

Things look pretty similar to last year. HR managers consider that the companyBoard’s opinion regarding reduction of personnel-related and non-personnel relatedcosts is similar to theirs. Each of these choices gathered 20% of the votes.

The differences between the opinions of HR practitioners and believed point ofview of the Board arise when evaluating the effectiveness of improving operationsand improving sales / sales-related measures:

While most HR managers consider that improving operations is the most effectivemeasure for surviving the crisis, the Board sees sales as the key.

Looking at percentages, over half of the respondents believe that constructivebusiness-oriented measures are more effective than cutting costs.

20% 20%

22% 19%

25% 33%

33% 28%

0%

20%

40%

60%

80%

100%

Business / Board point of view HR point of view

Improve sales / implement sales improvement measures

Improve operations (processes, etc.)

Reduce cost other than personnel (cancel events, stop investments, etc.)

Reduce cost of personnel


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FIGURE 9 - PERCENTAGE OF COMPANIES WHO PERFORMED RESTRUCTURING MEASURES

Conclusions

In 2010 around 71% of participating companies implemented restructuringmeasures, and 30% estimated to continue them in 2011. The data from 2011shows that after all many more companies resorted to restructuring measures lastyear: 54%. However, the 17% difference might be taken as a positive signalregarding a possible stabilization of the economic situation. A stabilization, but not

complete recovery, as shows the large number of companies that plan to continuerestructuring in 2012 and 2013.

8% of the respondents said no cost-cutting measures were taken in theircompanies.

For the 92% of the respondents who did perform restructuring measures wediscuss the actions in more detail below:

No,46% Yes,

54%

Did your company performrestructuring measures in 2011?


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FIGURE 10 – COST REDUCTION MEASURES (HR-RELATED)

* This was a multiple-choice question, the total does not add up to 100%.

** No data available for 2010

Conclusions

Companies reacted to the crisis in similar ways in 2010 and 2011: their first optionswere reducing jobs, cutting back on employee events and on recruitment; therewere also no major differences regarding the application of measures like changingthe contract type or reducing bonuses and employee benefits.

Layoffs remain the most widely used measure for cutting HR-related costs (53% ofour respondents applied it in 2011). However, the more flexible approach to costcutting is also represented by reversible measures like cutting back on events(44% of surveyed companies), bonuses (35%), and benefits (26%).

The second-most applied solution was cutting back on training (47%). This is asignificant increase compared to the previous year, when only 30% of respondentscut the training budget. Looking at the popularity of this measure we can concludetraining is mostly being perceived as having little importance and being “optional” – or that companies chose to focus on internal training or co-finance courses withthe participating employees. While training may be easy to cut, this is notnecessarily a wise thing to do, especially that it is not a mere cost item but it hasdirect impact on future performance.

Only about 10% of companies resorted to salary cutting both last year and twoyears ago. It may be because this is one measure that employees are surely goingto take badly: beyond all the rest, it affects the bank loans they took – and as we


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know1 1 of 4 of Romanians have a loan. Salary cuts rank low also because acompany needs the consent of the employee in order to change the salary level.

We have a major difference between last year and two years ago in the case ofmeasures like using technical unemployment and encouraging unpaid leave inorder to lower HR costs. These actions are much more seldom applied now, severalyears into the crisis, because they are short-term measures which can solve anovercapacity or cash problem only for a limited period of time. Companies that didnot manage to overcome these problems in several months will have resorted tomore radical measures by now – like cutting part of the jobs.

FIGURE 11 – OTHER RESTRUCTURING MEASURES

Conclusions

Reorganization and job enrichment are among the most popular restructuringmeasures. An interesting finding is that even if HR practitioners don’t considerthem suitable, they will still apply it. Job enlargement is a logical consequence oflayoffs and cutting back on recruiting and, if overdone, it will lead to demotivationon the long term.

Reversely, there are measures of which HR people know they are viable andappropriate for overcoming the crisis, but they will still not apply them – like thecentralization of functions, outsourcing of non-core activities and process redesign.The reason might be that they have already carried it out it in the past – or thatthe decision does not lie with the HR department.

The survey also shows that one quarter of respondents are planning to implementnew systems or to enhance the existing ones. However, most companies arereluctant to implement new systems during the economic downturn, maybe withthe exception of payroll solutions, as one respondent told us. In any case, HRsystems are expected to have a lower priority during these times.

1 GfK Financial Market Data System Study 2010

0% 10% 20% 30% 40% 50%

Centralization of functions

Process redesign

Externalization (outsourcing)

New systems implementations(enhancements)

Job enrichment / enlargement

Reorganization

Appropriate for overcoming the crisis

To be applied in 2012


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Now let us see what HR practitioners expect for the future.

Outlook

FIGURE 12 – R ESTRUCTURING DURING THE FOLLOWING PERIOD

Conclusions

Half of all surveyed companies continue restructuring measures in 2012, and anadditional 14% plan to maintain them in 2013, too.

Only one third of participants stopped restructuring altogether.


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3.2.

Company objectives and directionsIn this chapter we will deal with the position of the HR department within thecompany: what are its roles and how strong is it involved in business strategy?

HR mission

FIGURE 13 – THE PRIMARY ROLES OF HR WITHIN THE COMPANY

* This was a multiple-choice question; the total does not add up to 100%.

Conclusions:

Year upon year, the HR department’s role of providing modern HR tools andsystems to the company strengthens to the detriment of its traditionaladministrative function: 63% of HR departments see themselves as providers ofsolutions for the business while only 43% name personnel administration asprimary task, which is a slight decrease in comparison to the year before.

40% of the respondents still feel the strain of the financial crisis and have an activerole in supporting cost cutting or downsizing measures. Last year however thisnumber was 30% higher, showing that the effects of the economic downturn,while still quite strong, have begun to fade.

With regard to what we called “modern HR tools” some interesting findings fromthe qualitative interviews with our respondents are that HR practitioners are keenon developing a way to measure return on investment on training, aligning thecompany culture with the business objectives and outsourcing the administrativepart of HR. Of course, there is also the money issue, which is never an easy one -especially during the economic downturn.

Other projects of our respondents include increasing the motivation level andretention of employees by improving the "Leadership" dimension; conductingEmployee opinion surveys and following up on them.

3%

34%

40%

43%

63%

4%

41%

57%

46%

61%

Other

Offer support for increasing company

turnover

Offer support for surviving the crisis /

cutting costs / downsizing

Handle personnel administration

Provide modern HR tools and systems

in order to support / improve business

processes

2010

2011


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HR and the company strategyFIGURE 14 – THE INFLUENCE OF THE HR FUNCTION IN DEVELOPING AND IMPLEMENTINGBUSINESS STRATEGY

Conclusions

Good news for HR practitioners: around 90% of HR managers consider themselvesto be involved in strategy definition, alignment and implementation.

In over one half of the companies the management values the input from the HRmanagers and co-opts them in all strategy stages. This is a clear sign that in thosecompanies HR has earned the long-desired business partner status.

FIGURE 15 – LEVEL OF AWARENESS REGARDING THE COMPANY STRATEGY / DIRECTION

Conclusions

Most respondents consider that the HR department is privileged regarding accessto company strategy compared to colleagues in the middle management.

85% of responding HR experts perceive that staff as having medium or lowawareness of the company strategy. This shows that many top managers eitherdon’t want to or don’t know how to communicate their vision across the company.Either way this is unfortunate, because, to name just one advantage, people whoknow and appreciate what they are working for have a higher productivity.

3%

6%

9%

43%

40%

37%

54%

54%

54%

0% 20% 40% 60% 80% 100%

Implementation

Discussion / alignment

Developing / datagathering

Low Medium High

11%

6%

3%

74%

37%

31%

17%

14%

57%

66%

83%

0% 20% 40% 60% 80% 100%

Staff (all employees)

Middle management

HR department

Top Management (Board)

Low Medium High


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3.3.

Modern HR

Stage of development of HR areas

After seeing how HR practitioners see their mission we wanted to analyze how wellthey consider that the various HR areas are developed and which of the areas arein strongest need for development in the following years.

FIGURE 16 – THE MOST DEVELOPED HR AREAS / PRIORITIZATION FOR FUTURE DEVELOPMENT

Out with the old, in with the new! Surviving and succeeding in the world ofbusiness is a tricky thing; not everybody has business awareness, andmaintaining a growing company means having the right people put to action.The development of modern HR brings into discussion new standards andideas, like talent and competency management, as well as a continuouspartnership among leaders and employees. The HR function is emerging as afacilitator for goals and targets; in contemporary organizations businessstrategy is strongly correlated with human capital management.


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Conclusions

Personnel administration continues to be perceived as the best-developed area ofhuman resources.

HR practitioners are content with the maturity level of recruitment, trainingmanagement, management and leadership development, performancemanagement and HR reporting.

The three areas that are in greatest need for development are competencymanagement, career models and comp & ben.

Management involvement in HR-related activities

HR does a lot in order to support the business, but by definition it cannot be a loneplayer. It needs backing and sometimes even operational support from themanagement. In this section we will see how HR practitioners in Romania perceivethe degree to which management should get involved and if it does so in reality.

FIGURE 17 – IN WHICH HR-RELATED ACTIVITIES SHOULD M ANAGEMENT PLAY AN ACTIVE ROLE?

Conclusions

Between 60% and 80% of HR managers agree that management should play anactive role in activities directly related to their employees, like recruitment, trainingor performance evaluations. This is a slight decrease in comparison with the valuesof last year.

Performance management counts, again, as the process where management

should be most involved.


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Surprisingly, 30% of HR managers do not think that leading employees is amanager’s job. This is the more unexpected, especially as the answers are comingfrom HR professionals.

FIGURE 18 – TO WHAT EXTENT DO MANAGERS ASSUME THEIR HR-RELATED ROLE?

Conclusions

There is only one company where HR believes that managers take their role ofpeople leaders really seriously.

Over one half of the responding HR practitioners consider that management shouldassume a more active role in employee development, compensation & benefits andin dealing with performance management. However, an interesting finding duringthe qualitative interviews is that managers start taking performance appraisalsmore seriously and that they give more meaningful feedback than several yearsbefore.


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FIGURE 19 – M ANAGEMENT INVOLVEMENT

Conclusions

To sum it up: there are serious differences between the perceived importance ofline managers’ roles in several HR areas and the actual degree to which managersget involved in these activities.

In case of training, compensation & benefits and the performance managementprocess there is a ~50% gap between the importance of the role and what ishappening in reality. Managers do not take these topics seriously enough – theymight think that these topics are rather the responsibility of HR – or could it bebecause they underrate their relevance in the first place?


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Compensation & BenefitsC& B has always been a complex area of utmost importance to all parties involved:business, where the money is coming from, HR, who tries to find the best way tosplit this scarce resource, and employees, who are the final beneficiaries. Let ussee which policies companies apply with regard to this sensitive area.

FIGURE 20 – CRITERIA INFLUENCING COMPENSATION LEVELS AND BENEFITS

Conclusions

Half of the participating companies base their decisions regarding salary level on job evaluation and performance management. Top management decision still playsand important role for 50% of the companies surveyed.

27% of companies buy salary surveys in order to decide salary levels. They onlyserve as a guideline and companies make their own decisions taking intoconsideration how they want to position themselves on the job market. The mostlargely used surveys are Mercer and Hay.

In state-owned companies salaries are provided by law and management cannot

influence them at all.

Only 27% have defined clear salary ranges for their employees.

Our qualitative interviews show that unfortunately in most companies theCompensation & Benefits system is not communicated clearly and that theprinciples that stay behind it are not transparent.


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FIGURE 23 –T ARGET GROUPS FOR THE PERFORMANCE-BASED PAY

Conclusions

Not surprisingly, sales staff is the category that qualifies most for performancebonuses. However, only 57% of participating companies pay their sales personsdepending on their performance.

Top and middle management in half of the companies receive a performance

bonus.

Experts are less rewarded for performance than blue collar workers or supportstaff.

With regard to the criteria used for a bonus payment our study shows that, like lastyear, it is individual performance (80% of companies) and company results (73%of companies) which matter most when paying out a bonus.


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Performance management As we have seen, the vast majority of respondents adapt pay level to performance.The question is – do they measure performance in a structured way? If so – howmature is their performance management process?

FIGURE 24 – PERCENTAGE OF COMPANIES WITH A PERFORMANCE MANAGEMENT PROCESS IN PLACE

Conclusions

77% of our respondents have a performance management process in place.Correlating this number with the percentage of companies that reward their

employees for performance we notice that some organizations pay out bonuseswithout having a proper process for monitoring results of their employees.

FIGURE 25 – M ATURITY LEVEL OF THE PERFORMANCE MANAGEMENT PROCESS

Yes77%

No23%

Is there a performance managementprocess in your company?


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Conclusions

Three quarters of participating companies have a structured process for managingperformance. However, only 57% of them hold regular check-ups with employees.

Good performance is twice as easy to talk about and reward as weak performance – as our study reflects as well. Poor results are tackled openly only in 22% ofresponding companies. As one of our respondents put it, “Managers need toimprove the way they communicate negative feedback, they are too nice". This

“niceness” is not necessarily the result of fear of confrontation or false diplomacy. Very often it is the mere lack of preparation that makes managers avoid giving thenegative feedback. It takes either long memory or a high discipline to make notesabout the good and bad facts one wants to discuss during the performance review.

Beside feedback, performance reviews have another function, at least asimportant: allowing the company to make adjusting measures like changes insalary level, promotions or demotions, development plans, etc. Performancereviews which have no consequences – be they good or bad – will slowly loselegitimacy in the eyes of both assessors and reviewed employees and will become

“another time-consuming useless HR practice”. There are many companies whichstarted regular check-ups with employees in good faith and then slowly gave themup. This is why it is important for HR professionals to make sure that 1. everybodyunderstands the rationale behind performance reviews and 2. actions are beingdecided as a result and they are followed through.

Performance reviews are both avoided, and embraced. Leaving aside thereluctance of communicating negative feedback, the conversed informationshould offer answers to the “why”, “how” and “where” questions the employeesare going to ask when confronted with these reviews. This way the feared andhated performance reviews can become the start of a self-improvement programfor the employee.


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Competency modelsCompetency models are a handy tool for HR practitioners. They are an inventory ofcapabilities (hard and soft skills) that are needed for each job family. Thenecessary skill level is usually indicated for each job level. They are mostly used inrecruiting, in order to define job specifications, and in training, to be able to trackdevelopment needs. However, they can be helpful in many more HR areas.

90% of participating companies use competency models in one way or another. Letus see below which purposes they serve.

FIGURE 26 – USES FOR COMPETENCY MODELS

Conclusions

As last year, three quarters of companies that participated in the Ensight researchuse competency models for recruitment purposes and around 60% for training.

Only one third or below use them for planning workforce and reviewing talent.


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3.4. Talent management

FIGURE 27 – PERCENTAGE OF COMPANIES WITH A T ALENT M ANAGEMENT S YSTEM

Conclusions

This specific part of the study has a very optimistic and promising finding: 53% ofthe respondents have set up a talent management system, and 21% will createone in the near future. Companies are aware of the potential of such a system.Nurturing and “upgrading” staff is not a 3-step program, but a strategic andmethodical approach - which brings us to our next point.

Talent management is a term intensely used since the 90’s, surprisingly findingitself again in the spotlight. Why surprisingly? Considering the path manybusinesses have chosen to fight the crisis, this re-vamped paradigm managed toattract the attention of managers (not only HR managers) who found withintheir teams the answer to the company’s problems. Attracting new talents,

keeping them and motivating them could bring the consolidation of thefoundation any company was built on.


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FIGURE 28 – USES OF THE T ALENT M ANAGEMENT S YSTEM

Conclusions

Our study reveals that the uses of talent management are in an intertwined

relationship, and the elements with the biggest percentage (73-82 %) make a lotof sense: identification of key successors and of key positions, talent review anddevelopment plans. Key positions require a great sense of tenacity and businessawareness, and identifying and developing these qualities asks for well-organizedcareer developments plans, as well as constantly reviewing staff.

Only one third of our respondents who have a talent management system in placeuse it for purposes of job rotation. It could be because job rotation is not a well-spread practice in Romania yet.


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FIGURE 29 – MOST IMPORTANT BENEFITS OF A T ALENT M ANAGEMENT S YSTEM

Conclusions

Undeniably, the implementation of a talent management system brings along awide array of benefits, both for the company’s success and the individual’sprofessional development. The time spent in a work position translates into gainedexperience, know-how, expertise and business open-mindedness, and the loss ofcapacities like these is a minus for any company. Talented and knowledgeable

employees ensure business continuity, the perpetuation of trends and methods,inspiration for new trainees who want to learn from the best, as well as settingfoundations for strong and lasting business partnerships. That is why most of ourrespondents classify “reducing loss of talents and knowledge” and “ensuringbusiness continuity” as very important in the entire talent management equation.

However, a lot of people still do not consider managing talent as a critical thing todo. Around 25% of our respondents do not see the link between fostering talentedemployees in their companies and business continuity.

FIGURE 30 – ORGANIZATION LEVELS FOR WHICH TALENT IS MANAGED

47%

47%

53%

80%

93%

93%

0% 20% 40% 60% 80% 100%

Board Members

Corporate Support Functions

Staff

One level below Board Members(Regional Directors, etc)

Department Managers

Team Leaders


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Conclusions

Virtually all responding companies which have a talent management system inplace have included team leaders and department managers in it. Senior staff isalso fairly present in the companies’ endeavor to single out and f oster talent (in80% of responding companies). However, only half of our respondents includeregular staff in this system – even if logic would tell us that here you find thelargest pool for potential.

Interestingly enough, half of our respondents keep their proven talents, C-levelemployees, on their “watch list”, by including them in their talent managementsystem. This comes somewhat as a surprise, especially considering that in Romaniathere still is this wide-spread mentality that those who have achieved a high

position have no need to learn anymore; moreover, it might be seen as a weaknessto attend any development program at all.

Including senior staff in a company’s talent management system is a wiseapproach; it allows organizations to make sure the necessary skills in the criticaltop positions are available and constantly updated, thus reducing risk in the highlysensitive area of management succession (cf. “business continuity” in Figure 29).

FIGURE 31 – PERCENTAGE OF EMPLOYEES INCLUDED IN T ALENT M ANAGEMENT S YSTEM

Conclusions

Business leaders expect the full 100% from their staff in terms of focus onrevenue, customer attention and adapting to change; effective personnel planningand talent management pave the way for meeting those business goals. Knowingwhich staff is ready and which of the staff needs the extra training finally boilsdown to making business targets easier to reach.

With a percentage of 74%, team leaders and first line managers are the firstcategory of employees taken into consideration for talent management programs,

33%

35%

45%

53%

68%

74%

0% 20% 40% 60% 80%

Corporate Support Functions

Staff

Regional Directors

Department Managers

Board Level

Team Leaders / First Line Managers


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since they are most in contact with new projects and clients and set the basis forsignificant business partnerships. Board members take the second spot with 68%,partly because of the extensive networking advantage and the existing leadershipskills and knowledge. Since many companies have regional branches across thecountry, regional directors are given more and more attention due to the nature oftheir job: more employees to supervise and pressure to meet monthly targets.


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3.5.

24-Months Focus After assessing the current status of a series of major HR topics we wanted to seewhere the focus of the HR practitioners would be during the next couple of years.

FIGURE 32 – A REAS OF MAJOR STRENGTH OR REQUIRING IMPROVEMENT IN THE FOLLOWING 24 MONTHS

Conclusions

We asked our respondents to assess a series of HR areas in terms of necessaryimprovement during the following 2 years. Predictably, HR administration came outas doing fairly well. The remarkable insights lie elsewhere:

70% of responding HR professionals considers that there is the need for significantdevelopment in the way employees understand HR practices and the way the linemanagement carries them out. Tellingly, these are big frustrations because theyhave to do with the very core of HR activity. People who understand the company’sHR practices are sure to accept them more readily. People who don’t may even

come to question the HR department’s legitimacy. And if we are talking about linemanagers, there is no surprise that they won’t deliver HR initiatives to the fullcontentment of HR experts if they don’t understand them in the first place .

More PR for HR!

One way to bring about these necessary improvements is for HR professionals tofocus on explaining to the staff the how’s and why’s of HR practices. This way whatmay have been perceived so far as meaningless, arbitrary and tiring will beaccepted as the logical thing to do.

Two further points on the wish-list of 60% of responding HR people are correlatingHR activities with each other and integrating them into the business strategy. Thebest way to do this is to start the other way round, namely by deriving the

necessary HR activities from the business strategy. One consequence would beincreased management buy-in for HR initiatives, to be sure!

3%

7%

10%

13%

10%

13%

17%

23%

13%

17%

23%

17%

23%

23%

37%

33%

37%

40%

40%

37%

33%

23%

23%

27%

17%

10%

7%

13%

7%

3%

0% 20% 40% 60% 80% 100%

Efficiency of HR administration

Increased board/senior managementinvolvement

Correlation of HR activities with eachother

Integration of HR activities in businessstrategy

Delivery of HR initiatives by the linemanagement

Employee understanding of HR policiesand practices

5 - requires big improvement 4 3 2 1 - no improvement necessary


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ABOUT THE

AUTHORS

Manfred Schmauch isa Principal with EnsightManagement Consulting,with an experience of 15years in HR and ChangeManagement. He hasworked as program andproject manager for

various international large scaletransformation projects. His focus is onrestructuring, career development,

recruiting, set up of shared-servicecenters, HR organization and businessprocess reengineering, communication& mobilization, cultural transformation,enabling/competency management andchange management.

You can contact him by email [email protected].

Sandra Jitianu is a Manager withEnsight ManagementConsulting. She has 9years of experience inHR and 5 years inmanagement consulting.Her consulting missions

include HR function analysis anddesign, business process redesign,restructuring and reorganization,performance management,compensation systems, changemanagement and transformation,assessment centers and training.

You can contact her by email [email protected].

ABOUT ENSIGHT Ensight Management Consulting is a management consulting company evolving

since 2000. In terms of turnover and number of employees, Ensight is the mostimportant local management consulting company.

Our “People” Practice area supports businesses during phases of development,post-merger integration, restructuring or outsourcing.

Our belief is that employees – your people – are more than anonymous resourcesor simple production factors, they represent the core and heart of a business. Thesame logic counts for the management of employees: it’s about setting upstructures that enable people to drive performance and achieve results.

Our People Capabilities:

Reorganization & transformation

HR processes, procedures, roles & responsibilities

Performance management models

Competency modeling & assessment

Capability development

Talent management framework – design & implementation

Change management strategy and implementation

Implementation of HR information systems

Analysis and optimization of personnel cost

Audit for payroll and conformity of personnel files

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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LIST OF FIGURES

Figure 1 – Respondents’ turnover ..................................................................................... 5

Figure 2 – Respondents’ employee number....................................................................... 5

Figure 3 – Respondents’ distribution by industry ............................................................... 5

Figure 4 – Respondents’ profile according to their position ................................................ 6

Figure 5 – respondents by direct reporting line ................................................................. 6

Figure 6 – Increase / decrease in company turnover of participating companies ................. 9

Figure 7 – Impact of the crisis on main indicators ........................................................... 10

Figure 8 – Key measures for overcoming the crisis .......................................................... 11

Figure 9 - Percentage of companies who performed restructuring measures ..................... 12

Figure 10 – Cost reduction measures (HR-related) .......................................................... 13

Figure 11 – Other restructuring measures ....................................................................... 14

Figure 12 – Restructuring during the following period ...................................................... 15

Figure 13 – The primary roles of HR within the company ................................................. 16

Figure 14 – The influence of the HR function in developing and implementing businessstrategy ........................................................................................................................ 17

Figure 15 – Level of awareness regarding the company strategy / direction ...................... 17

Figure 16 – The most developed HR areas / prioritization for future development ............. 18

Figure 17 – In which HR-related activities should Management play an active role? .......... 19

Figure 18 – To what extent do managers assume their HR-related role? ........................... 20

Figure 19 – Management involvement ............................................................................ 21

Figure 20 – Criteria influencing compensation levels and benefits..................................... 22

Figure 21 – Satisfaction with compensation & benefits system ......................................... 23

Figure 22 – Percentage of companies paying for performance ......................................... 23

Figure 24 – Percentage of companies with a performance management process in place .. 25

Figure 25 – Maturity level of the performance management process ................................ 25

Figure 26 – Uses for competency models ........................................................................ 27

Figure 27 – Percentage of companies with a Talent Management System ......................... 28

Figure 28 – Uses of the Talent Management System ....................................................... 29

Figure 29 – Most important benefits of a Talent Management System .............................. 30

Figure 30 – Organization levels for which talent is managed ............................................ 30

Figure 31 – Percentage of employees included in Talent Management System .................. 31

Figure 32 – Areas of major strength or requiring improvement in the following 24 months 33


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