5 challenges for Organisation Design and HR Analytics

JUNE 2012 OCTOBER 2013 Five challenges for Organisation Design and HR Analytics EODF, Vienna

Who we are: Concentra is a firm that delivers consulting value using innovative analytics 75 people, based in Borough Market, London Confidential | 2

Companies usually require many software products to plan and manage their organization Common software products for organization planning and management 1 BUSINESS INTELLIGENCE 3 2 Database, data warehouse and data cubes Linking multiple systems Data visualisation HR specific IP and HR analytics TALENT MANAGEMENT Confidential Succession planning 9-box grid Competency mapping Objective mapping Flight risk analysis ORG CHARTS AND WORKFORCE PLANNING 4 Org Charts Matrix reporting What-if and scenario analysis Spans and depth reporting PROCESS DESIGN AND COSTING Process definition and mapping Accountability matrix (RACI) mapping Process costing Mapping processes to customers and Cost-toServe | 3

OrgVue revolutionizes organization management by combining many capabilities in a single product OrgVue capabilities 1 BUSINESS INTELLIGENCE Database, data warehouse and data cubes Linking multiple systems Data visualisation HR specific IP and HR analytics 3 TALENT MANAGEMENT Succession planning 9-box grid Competency mapping Objective mapping Flight risk analysis PLUS POWERFUL DATA TOOLS Drag-and-drop data cleansing Confidential Surveys and web forms 2 4 ORG CHARTS AND WORKFORCE PLANNING Org Charts Matrix reporting What-if and scenario analysis Spans and depth reporting PROCESS DESIGN AND COSTING Process definition, mapping and costing Accountability matrix mapping (RACI) Mapping processes to customers and Cost-to-Serve PLUS ORG DESIGN AND MODELING Org Design Revolutionary modelling | 4

The process of Org Design has many challenges throughout PROCESS Summary organisation design steps and example issues DEFINE CASE FOR CHANGE AND MACRO DESIGN EXAMPLE CHALLENGES Contradictory drivers not well understood and too much complexity Vested interests focus on increasing power base rather than defining the optimal structures Which frameworks to use? BALANCE MACRO DESIGN TRADE-OFFS Confidential UNDERSTAND AS-IS Data not in one place DEFINE MICRO TO-BE Missing data Need to translate Macro principles into effective detail Job titles do not reflect How to right size? or clean what people actually do Key pieces missing e.g. competencies Lack of ability to visualise or understand FIGHT FOR TRANSPARENCY How to define accountabilities and link to roles? Which competencies are needed for which roles? DEFINE AN INTEGRATED SYSTEM IMPLEMENT Selection process of who gets which role Communicate the to be model, to be accountabilities, to be skills required and allocation of people to roles Deal with the transformation and ongoing change MAKE IT REAL AND SUSTAINABLE | 5

We have developed a method to address these challenges in a structured way The OrgVue 3M Org Design Method MACRO DESIGN MICRO (PLAN TO TRANSITION) MAKING IT REAL (TRANSITION) 1. Summary of the end-to-end Org Design Process 11. Baseline & data 24. MIR (Making it Real) checklist 12. Org Charting & visualisation 25. HOWWIP 13. Objectives 26. Risk Management 14. Detailed Process Design 27. Action Management 15. Detailed Accountabilities & Structure 28. Project Management inc. Governance and Quality management 2. Macro Design Challenges 3. Start-up: Contracting & Comms for project success 4. Vision-to-Mission and overall Strategy 5. Design Criteria 6. Summary process mapping 7. Structure options 8. Accountability matrix 9. Reality check: the informal organisation 10.Business Case 16. Decision Making 17. Competencies 18. Right sizing 19. Non Business-as-Usual 20. Risk Planning 21. Action Planning 22. Pay & Grading 23. Workforce Planning 29. Job Descriptions 30. Competency Assessment and Tracking 31. Workforce - Timeline & management 32. Selection Process - People to Roles 33. Impact Analysis 34. Communications 35. Talent mapping & succession planning 36. Fast Feedback & 360 degree Feedback 37. OD Review: Benefits Tracking & delivery 38. Celebrations, Review & Recap of end-toend Org Design Process Source: OrgVue, 2012 Confidential | 6

Today we want to share with you some experiences of addressing these questions Agenda The five HR challenges we want to address are: 1. How to establish a Baseline? 2. How to map Processes? 3. How to treat the organisation as a System? 4. How to Right Size the organisation? 5. How to Assess impact on the people affected? because these are not often discussed and rarely solved Confidential | 7

EXERCISE Challenges of Organisation Design What do you see as the main challenges of Organisation Design? Discuss in groups of 3 or at your tables Prepare to feedback your answers Source: | 8

The process of Org Design has many challenges throughout PROCESS Summary organisation design steps and example issues DEFINE CASE FOR CHANGE AND MACRO DESIGN EXAMPLE CHALLENGES Contradictory drivers not well understood and too much complexity Vested interests focus on increasing power base rather than defining the optimal structures Which frameworks to use? BALANCE MACRO DESIGN TRADE-OFFS Confidential UNDERSTAND AS-IS Data not in one place DEFINE MICRO TO-BE Missing data Need to translate Macro principles into effective detail Job titles do not reflect How to right size? or clean what people actually do Key pieces missing e.g. competencies Lack of ability to visualise or understand FIGHT FOR TRANSPARENCY How to define accountabilities and link to roles? Which competencies are needed for which roles? DEFINE AN INTEGRATED SYSTEM IMPLEMENT Selection process of who gets which role Communicate the tobe model, to be accountabilities, to be skills required and allocation of people to roles Deal with the transformation and ongoing change MAKE IT REAL AND SUSTAINABLE | 9

We have developed a method to address these challenges in a structured way The OrgVue 3M Org Design Method MACRO DESIGN MICRO (PLAN TO TRANSITION) MAKING IT REAL (TRANSITION) 1. Summary of the end-to-end Org Design Process 11. Baseline & data 24. MIR (Making it Real) checklist 12. Org Charting & visualisation 25. HOWWIP 13. Objectives 26. Risk Management 14. Detailed Process Design 27. Action Management 15. Detailed Accountabilities & Structure 28. Project Management inc. Governance and Quality management 2. Macro Design Challenges 3. Start-up: Contracting & Comms for project success 4. Vision-to-Mission and overall Strategy 5. Design Criteria 6. Summary process mapping 7. Structure options 8. Accountability matrix 9. Reality check: the informal organisation 10.Business Case 16. Decision Making 17. Competencies 18. Right sizing 19. Non Business-as-Usual 20. Risk Planning 21. Action Planning 22. Pay & Grading 23. Workforce Planning 29. Job Descriptions 30. Competency Assessment and Tracking 31. Workforce - Timeline & management 32. Selection Process - People to Roles 33. Impact Analysis 34. Communications 35. Talent mapping & succession planning 36. Fast Feedback & 360 degree Feedback 37. OD Review: Benefits Tracking & delivery 38. Celebrations, Review & Recap of end-toend Org Design Process Source: OrgVue, 2012 Confidential | 10

Agenda 1. How to establish a Baseline? 2. How to map Processes? 3. How to treat the organisation as a System? 4. How to Right Size the organisation? 5. How to Assess impact on the people affected? because these are not often discussed and rarely solved Confidential | 11

If you can get the baseline clear, it enormously helps you to make the case for change Situation: Power of a fixed starting point 1 HOW TO ESTABLISH A BASELINE? Give me a place to stand, and a lever long enough and I will move the Earth. Archimedes, 280-211BC How do you establish how many people, who does what, what the costings are? Confidential | 12

Yet issues with data arise from many angles Complication: typical issues that we see 1 HOW TO ESTABLISH A BASELINE? TYPICAL ISSUE EXAMPLE Scale of data We have between 7,000 and 7,500 people across more than 50 countries but we cant say for sure in any one country. Multiple systems We have started to implement Peoplesoft. We are 2 years in and its about half completed. Most of the remaining countries keep their HR data in excel HR people in 15 countries out of 50 Inconsistent meta data Different job titles, grade structures, pay bands even within countries We have grown by acquisition and we have nightmares about the different terms and conditions we have inherited Reporting lines unclear Its not clear who reports into whom Three types of matrix reporting Changing data, not kept up to date Our organisation charts are always out of date Grading becomes inconsistent across business units Job titles in the system not keeping pace with what people do Confidential | 13

EXERCISE What is your experience of creating a baseline as part of Organisation Design? In your pair or group, discuss: In what percentage of your Org Design interventions have you established a clear baseline? How easy was it to establish the baseline? How did you use the baseline? Would you recommend establishing a baseline to others? | 14

Our approach is a consistent 5 step approach to building the baseline Resolution: baseline approach 1. AGREE DATA PRIORITIES 2. SOURCE AND LOAD 3. CLEANSE Define questions that need to be answered Map source systems and Excel islands Visualise gaps and errors Collect Use standard lists to prioritise data elements Automate if needed on an ongoing basis Put data into the hands of those that know it best Run surveys and/or workshops to plug data gaps Provide a system to make it easy to clean errors Agree owners Agree meta data and fix Confidential 1 4. TRIANGULATE AND SIGN OFF Identify key stakeholders who can verify data Facilitate meetings to resolve differences HOW TO ESTABLISH A BASELINE? 5. MAINTAIN Provide the process Provide the method Provide the skills to: Keep it up to date Achieve one source of the truth Ensure numbers match with Finance | 15

1 1. Agree the data priorities and sources Example fields for baseline data DATA ITEM NOTES First Name HOW TO ESTABLISH A BASELINE? Might want to include fields such as known as Employee ID Line Manager ID Role If not consistent between systems, OrgVue can create unique global ID The ID may vary between country systems; some line managers appear in multiple country systems Will, in due course, need to agree a common definition of the roles Salary Will need to include benefits, bonuses, other costs inc. tax Currency Will need to achieve consistency in functional definitions Site Location Could reference site name or code; potential to aggregate regionally and nationally Performance review rating Typically from another system; history would add additional insight for spotting trends Useful for responding to regulatory queries on diversity Employment status Permanent, Temp, Ltd Co. Contractor, other Contractor, FTE Hours FTE = Full Time Equivalent. Termination costs What FX rates should be included? Department NOTES Gender Last Name DATA ITEM Start date Birth date First Name Confidential Allows calculation of tenure, risk of turnover and termination costs Could be useful for strategic workforce planning and predicting potential waves of departures Might want to include fields such as known as Grade Absence record For example number of days or Bradford factor For each: 1 What is the source? 2 Data quality and plan to plug gap? 3 What if we dont have the data? 4 What is the need now vs. later? | 16

2. Load the data from multiple systems Data sources and usage process CONSOLIDATE DATA STORE AND MANAGE DATA 1 HOW TO ESTABLISH A BASELINE? USE DATA Local HR systems Local upload Customer Performance Training Copy / paste local upload Review Environment Canonical data set Readonly data viewing Local data use CSV local upload Feed back where required changes are identified Confidential | 17

3a. Visualise the data to get stakeholder views Example org chart sized by headcount 1 HOW TO ESTABLISH A BASELINE? Visualise to identify quickly where there may be issues in the data Confidential | 18

3b. Cleanse the data intuitively and easily Dragging and dropping in action 1 HOW TO ESTABLISH A BASELINE? Drag and drop to correct information regarding individuals or groups Confidential | 19

1 4. Achieve sign-off by triangulating from multiple angles Sign-off process Data collected from HR department HOW TO ESTABLISH A BASELINE? Data collected from Finance department Compare HR data against a function thats likely to have accurate data e.g. Finance. IDENTIFY DIFFERENCES Confidential Get a sense check from stakeholders who should have a strong gut feeling THATS CORRECT! | 20

5a. Maintain the insight for the long-term 1 HOW TO ESTABLISH A BASELINE? The data must be easy to maintain long after the project team has gone Confidential | 21

5b. Maintain the insight for the long-term Example data quality tracking Chart 1: 1,470 employees, of whom 175 are orphans. An employee is an orphan if he has nobody to whom he must report and nobody who reports to him. Chart 2: 266 employees are at depth 1. After subtracting the 175 orphans, the data still counts 91 orphan groups Chart 3: Many examples of low spans of control Chart 4: Each data entry refers to exactly one employee. This is how it should be! Confidential 1 HOW TO ESTABLISH A BASELINE? Data reveals many orphans and broken hierarchies. HR datasets often include some inaccuracies | 22

Complexity often overwhelms the process mapper Situation: examples of complex process mapping Too complex Confidential 2 HOW TO MAP PROCESSES IN ORG DESIGN? Frankly useless | 24

You have to know when to stop and how to capture ongoing value from the process map Complication: Level of detail and maintaining the value Know when to stop Focus on the business value in the workstream Scale the depth to the size of the organisation 2 HOW TO MAP PROCESSES IN ORG DESIGN? Convert one-off exercise into ongoing value e.g. data driven, not just images Ongoing link to other data sources, e.g. roles Process mapping risks disappearing into detail or being a one-off exercise Confidential | 25

EXERCISE What is your experience of mapping processes as part of Organisation Design? In your pair or group, discuss: In what percentage of your Org Design interventions have you sought to map processes? How have you used the processes that you have mapped? How valuable has it been to map the processes? | 26

Our approach is to map processes visually, in a way that can be linked, calculated and updated 2 HOW TO MAP PROCESSES IN ORG DESIGN? Resolution: Process map showing activities, decisions and deliverables Confidential | 27

It is useful to connect the processes to the roles that carry them out Example of linking by RAS or by capability Confidential 2 HOW TO MAP PROCESSES IN ORG DESIGN? | 28

It is valuable to show the links visually to help clarify responsibilities Organisation chart with linked cards showing responsibilities Confidential 2 HOW TO MAP PROCESSES IN ORG DESIGN? | 29

Org Design experts value a holistic approach Situation: what the experts say 3 THE ORGANISATION AS A SYSTEM Organisation Development is about building and maintaining the health of the organisation as a total system (Schein, 1988) Organisation Design requires holistic thinking (systems, structures, people, performance measures, processes, culture, skills); not to be undertaken lightly; a fundamental process and not a repair job (paraphrased from Stanford, 2007) We have to learn how to view an organisation as a system .... the way all parts work together will determine how well the system works. (Seddon, 2012) A common error in organizational improvement work is to address certain design elements in isolation (Hanna, 2013) Confidential | 31

The reality is that OD is often based on part of the system Complication: examples of OD in action 3 THE ORGANISATION AS A SYSTEM So how do you think about the organisation as a system? Confidential | 32

Merger with integration and cost-synergy challenge Vodafone: 03 Dec 2012 Confidential Tech Market View, 03 Dec 2012 Source: | 33

We seek to treat the organisation as a system Resolution: linking the key aspects of the organisation Confidential 3 THE ORGANISATION AS A SYSTEM | 34

Case study: a client had aggregate revenues customer numbers & revenue build-up by brand 3 THE ORGANISATION AS A SYSTEM CASE STUDY Aggregate Revenues by Brand Revenue build up by Brand Number of customers per Brand Confidential | 35

We sought to understand 100% of costs either as people, processes or customers 3 THE ORGANISATION AS A SYSTEM People (e.g.: 56m of cost) CASE STUDY Percent time spent by each person on each process e.g.: 40m of cost Processes e.g.: 16m of cost Direct allocation to customers based on time percentage and driver ratios Process cost distributed by driver ratios Customers (e.g.: 56m of cost) Confidential | 36

We* interviewed the majority of level 3 managers and key figures at levels 4 and 5 3 THE ORGANISATION AS A SYSTEM CASE STUDY L4 Level 3 Level 2 CEO Confidential * Project team of two: one external person and one internal person | 37

We documented 72 business processes covering 700 process steps Confidential 3 THE ORGANISATION AS A SYSTEM CASE STUDY | 38

By week 4 we had linked a third of employees to business processes (170 out of 526) Confidential 3 THE ORGANISATION AS A SYSTEM CASE STUDY | 39

By week 6 we had allocated 15% of overhead costs to business processes (8.5m of 56m) Confidential 3 THE ORGANISATION AS A SYSTEM CASE STUDY | 40

By week 10 we had fully allocated all cost to the customer and process levels Confidential 3 THE ORGANISATION AS A SYSTEM CASE STUDY | 41

There are few agreed ways for sizing the organisation Situation: A gap in methodology 4 HOW TO RIGHT SIZE THE ORGANISATION? Id like to know how many people Ive got and Id love to know how many people I need. US CardCo Ops Director How do you set the organisation at the right size for what it needs to do? Confidential | 43

Typically, right-sizing isnt done with anything like the rigour it deserves Complication: 4 frequent default options 4 HOW TO RIGHT SIZE THE ORGANISATION? It just evolves Magic Number Confidential Who shouts loudest Across the board cut | 44

EXERCISE What is your experience of right-sizing as part of Organisation Design? In your pair or group, discuss: In what percentage of your Org Design interventions have you sought to Right Size the organisation? What method did you use? What was the organisations reaction to the analysis? Would you recommend using a right-sizing method to others? | 45

We believe you can select robust methods to Right Size the organisation Resolution: 4 right-sizing methods 4 HOW TO RIGHT SIZE THE ORGANISATION? Increasing frequency 1 Ratio analysis The comparison of the number of FTEs in one area to another measure, e.g. Total: HR; Sales: Sales people cost 2 Activity analysis Survey how much time people spend on each of their key activities In large changes when what each person does is unclear 3 Driver analysis Powerful analytics deliver rapid insights and help the business address drivers of performance When demand for effort is unclear and needs to be tested 4 Mathematical modelling and simulation Used in non-deterministic and complex settings, e.g. when there are flows or demand; uncertainty of effort; system dynamics Rarely and in the most complex situations Always used Increasing sophistication Confidential | 46

Typical questions can help you get started Example right-sizing questions 4 HOW TO RIGHT SIZE THE ORGANISATION? Sample starter questions What are the standard roles & job families in operations, customer service, Finance and HR? What are the core value-adding activities? (test: would the end customer want us to do this?) Are the core roles fixed costs or variable costs? (are they independent of or driven by business volumes?) Where are the highest ratios of outputs achieved per core role? Where are the lowest ratios of support to core roles? How much would it be worth if we could get to the best (or 2nd best) levels of each? What would we need to do to get there? How best to triangulate and balance the various ratios/KPIs? What is must have vs nice to have? . Source: Concentra Confidential | 47

5 There are multiple types of impact from organisational change Situation: five typical issues Change in manager? Change in who is reporting to whom? Change in responsibilities? Loss of job? HOW TO ASSESS THE IMPACT? Change in location? How do you calculate the impact of change and communicate it to those affected? Confidential | 49

Each role or employee might be affected in its own way Complication: Tracking impact in detail Confidential 5 HOW TO ASSESS THE IMPACT? | 50

EXERCISE What is your experience of impact analysis as part of Organisation Design? In your pair or group, discuss: How often in your Org Design interventions have peoples roles, line management relationships, salaries, or locations been affected? In what percentage of these cases have you done an impact analysis? How did you do it? What was the organisations reaction? Would you recommend using impact analysis to others? | 51

You need to be able to see the impact of change at the summary level Resolution: Visualisations of impact 5 HOW TO ASSESS THE IMPACT? It helps if impact can be quantified easily and visualised by area Confidential | 52

and each manager needs to know who is affected in what way, in their area Resolution: Lists of people impacted 5 HOW TO ASSESS THE IMPACT? Impact has to be easy to list for managers Confidential | 53

We have covered five Challenges for Organisation Design and HR Analytics and how to solve them Agenda for the working session The five HR challenges we want to address are: 1. How to establish a Baseline? 2. How to map Processes? 3. How to treat the organisation as a System? 4. How to Right Size the organisation? 5. How to Assess impact on the people affected? because these are not often discussed and rarely solved Confidential | 54

Reminder: the OrgVue approach to Organisation Design The OrgVue 3M Org Design Method MACRO DESIGN MICRO DESIGN MAKING IT REAL 1. Summary of the end-to-end Org Design Process 11. Baseline & data 24. MIR (Making it Real) checklist 12. Org Charting & visualisation 25. HOWWIP 13. Objectives 26. Risk Management 14. Detailed Process Design 27. Action Management 15. Detailed Accountabilities & Structure 28. Project Management inc. Governance and Quality management 2. Macro Design Challenges 3. Start-up: Contracting & Comms for project success 4. Vision-to-Mission and overall Strategy 5. Design Criteria 6. Summary process mapping 7. Structure options 8. Accountability matrix 9. Reality check: the informal organisation 10.Business Case 16. Decision Making 17. Competencies 18. Right sizing 19. Non Business-as-Usual 20. Risk Planning 21. Action Planning 22. Pay & Grading 23. Workforce Planning 29. Job Descriptions 30. Competency Assessment and Tracking 31. Workforce - Timeline & management 32. Selection Process - People to Roles 33. Impact Analysis 34. Communications 35. Talent mapping & succession planning 36. Fast Feedback & 360 degree Feedback 37. OD Review: Benefits Tracking & delivery 38. Celebrations, Review & Recap of end-toend Org Design Process Confidential | 55

Reminder: The Organisation as a System Resolution: linking key aspects of the organisation Confidential | 56

Reminder: Visualising the organisation Confidential | 57

Revolutionise the way you see, plan and manage your organisation For more information contact us at: [email protected] Confidential | 58

5 challenges for Organisation Design and HR Analytics

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