COMPREHENSIVE FRAMEWORKS & METHODOLOGIES TO HUMAN CAPITOL PLANNING

1. COMPREHENSIVE FRAMEWORKS & METHODOLOGIES TO HUMAN CAPITOL PLANNING Ideas for Today and Tomorrow “What can you do to get a better return on your investment in your human capital” The ROI of Human Capital, by Dr. Jac Fitz-enz VIPINNOVATIONS

2. Brief Overview of “Human Capital” • “Human Capital” - is a paradigm of human resource management that suggests a company should measure and manage its intangible assets just as it does its tangible assets. A company’s intangible assets or “intellectual capital” are defined by three categories: • A) structural capital, B) customer capital and C) human capital. VIPINNOVATIONS

3. Structural Capital - refers to intellectual property • such as patents, methodologies, etc. • Customer Capital - refers to knowledge of individual • accounts, customer demands and preferences. • Human Capital - each employee’s individual knowledge concerning the company, culture and • getting business done. • A company who successfully manages employee performance and retention will achieve a competitive advantage through human capital leverage. VIPINNOVATIONS

4. Measure overall employee satisfaction to provide a benchmark from which all other measures will be compared. Assess current state of new employee acquisition efforts Measure impact of current employee promotions, career development programs and procedures Determine overall satisfaction in areas of leadership and communication styles Determine overall satisfaction regarding general business procedures. ** Drill down into specific department to determine leadership, communication & procedures within a particular mission critical function. Apply industry standard formulas HCI&ROI analysis to set goals. Provide a HR Scorecard that establishes the foundation for ongoing tracking. APPROACH A: TRADITIONAL HC ASSESSMENT VIPINNOVATIONS

5. Assess Employee perspective on key attributes of performance & retention. Determine areas of most importance to current employees to help prioritize corrective action. Determine what problems exist among key areas of importance. Measure employee loyalty to company. Determine how current employees view the overall market of available employment & identify potential competitive employment disadvantages. Apply industry standard formulas to assess HR investments through ROI analysis which can be tracked over time. Provide HR Scorecard that assist with the use and dissemination of human capital data. APPROACH B: Employee Retention/Tracking Focused VIPINNOVATIONS

6. DEFINITION OF WORKFORCE PLANNING Workforce Planning (WFP) ensures that "the right people with the right skills are in the right place at the right time.“ This definition covers a methodical process that provides managers with a framework for making human resource decisions based on the organization’s mission, strategic plan, budgetary resources, and a set of desired workforce competencies. VIPINNOVATIONS

7. The Importance of Workforce Planning “Human Capital practices accounted for as much as 43% of the difference between a company’s market-to-book value and its competitors’” Human Capital ROI Study Deloitte & Touche 2002 VIPINNOVATIONS

8. Today’s Situation • Aging of the Workforce • Increasing Benefits/Retirement Costs • Aging Impact on Workforce Productivity • Tight Labor Market • Global Competitiveness • Fast Paced Constant Changes in Economy VIPINNOVATIONS

9. WORKFORCE PLANNING - BENEFITS • Benefits: • Drives shareholder value • Increases competitiveness by hiring the right people for the job • Bridge knowledge gaps that may result from employee turnover/new economy • Achieve maximum organizational effectiveness • Provides an opportunity to integrate separate initiatives into an overall plan VIPINNOVATIONS

10. DETERMINE THE MAKE-UP OF YOUR ORGANIZATION • Go beyond the demographic information: i.e. occupations, grade levels, skills, age retirement, diversity, turnover, etc., this info is valid and necessary but it is not the whole “snapshot”. • Important - Trend data is extremely important to workforce analysis • Is the turnover rate changing over time? • Are there identifiable factors influencing turnover? VIPINNOVATIONS

11. DETERMINE THE MAKE-UP OF YOUR ORGANIZATION (contd.) • What types of positions have been filled recently? • Include the "contingent" workforce, students, temporary, interns • Succession Planning, employee development, career development, organizational development VIPINNOVATIONS

12. DETERMINE THE MAKE-UP OF YOUR ORGANIZATION (contd.) External Influences • Customer Expectations - ability to respond quickly • Worldwide availability and supply of labor • Competition of Labor • Quality of Workforce • Quality of Life • Technology • New Competencies VIPINNOVATIONS

13. CAPITAL PLANNING FRAMEWORK VIPINNOVATIONS

14. The Framework in Action • Positively viewed factors: • The capital planning process is aligned to strategic intents and is linked to the firm’s budgeting and other performance management processes • Focus is on building longer-term capabilities for sustainable performance improvement, rather than always on short-term returns; and • Financial discounted cash flow techniques (like NPV, IRR, etc.) are used to appraise and evaluate capital investment project proposals. VIPINNOVATIONS

15. Finding the Best HCM Strategy ONE SIZE DOES NOT FIT ALL! • Tailor your HC strategy to your unique business strategy and market orientation • Develop HC practices that align with this strategy and orientation • Evaluate your current HC practices to ensure alignment VIPINNOVATIONS

16. Finding the Best Strategy (contd.) Focus on the basics • Understand which jobs are critical to company success • Identify and nurture top performers • Provide multiple career paths for employees • Design incentive plans that hold individuals accountable • Effectively communicate key strategic information to employees • Ensure that employees understand what is expected of them VIPINNOVATIONS

17. Finding the Best Strategy (contd.) Turnover ratios may not be a good predictor of financial performance • Examine the metrics you are using to assess human capital management Research shows that companies who “tailor” their human capital practices to their market orientation, reap financial rewards . . . . . VIPINNOVATIONS

18. Focus on Value • Focus on how HCM drives important business outcomes: • Revenues, profits • Customer retention • Quality performance VIPINNOVATIONS

19. Secret to Success • Early identification, measuring and fine tuning human capital approach • Keeping necessary data • Questioning workforce tactics, for example: • Does the proposed action fit our business context? • What is the return on investment? • How long until we get results? VIPINNOVATIONS

20. The Merits of Reorganization using HCM Case Study #1 CNA Financial Corporation VIPINNOVATIONS

21. CNA Financial Corporation • Problem: • matching the internal auditing staff capabilities with stakeholders expectations • Approach: • Strategic assessment of the department in question • Develop a tailored Human Capital Management process using five key steps VIPINNOVATIONS

22. Five Key Steps Step 5: Implement an action plan Step 4: Perform a gap analysis Step 3: Develop a human capital model Step 2: Determine value drivers Step 1: Identify stakeholder expectations VIPINNOVATIONS

23. The Conclusion… • The final results: • Internal auditing is recognized as a valuable business unit • Other departments seek to partner with auditing • Employees from this unit have become key leaders • The department is recognized as providing top financial talent VIPINNOVATIONS

24. Analytical Systems Case Study #2: SAS’s Approach to HCM and a Government Agency Success Story VIPINNOVATIONS

25. Moving from HR Management to HCM • “Just as financial management, supplier management and customer management are critical to the well-being of an organization, human capital management is no longer a tactical process; rather, it needs data-driven expertise.” SAS Best Practices: A Blueprint for Human Capital Management Strategy VIPINNOVATIONS

26. The Changing Model of Human Resources Management • Human capital management requires HR professionals to apply new practices, including: • Measuring intangibles • Identifying patterns in data by using analytical-based technology • Anticipating future needs by understanding correlations between measures and take action VIPINNOVATIONS

27. SAS Human Capital Management in Practice “We are constantly inundated with requests for personnel information and reports from a variety of internal and external sources. We needed a fast, efficient way to get our HR data to our managers and reduce the burden on the HR staff.” Tom Gramlich Assistant Personnel Officer US Census Bureau VIPINNOVATIONS

28. Why Adopt a New HR System? • Aid in developing effective workforce plans • Help retain employees and/or recruit new ones • Anticipate the loss of employees to retirement and attrition VIPINNOVATIONS

29. Today’s HCM should include: • Organizational goals supported by manpower-driven data • Align people, processes and technology around a common goal • Anticipate, forecast and predict future HC needs and changes • Leverage benchmark data to identify best practices VIPINNOVATIONS

30. HCM Drivers VIPINNOVATIONS

31. After Implementation • Once a HCM driven analytical system is implemented, HR practitioners can: • Deliver valuable HR information to decision makers • Easily accommodate changes in organizational structure • Validate HR activities by providing the tools to build business cases supported by quantifiable data • Anticipate changes and build models VIPINNOVATIONS

32. Public Service Workforce Planning Case Study #3: Australian Capital Territory Approach to Workforce Planning and Management in the Public Service VIPINNOVATIONS

33. Analyzing the future environment Strategic planning environment HRMIS environment Capacity & capability gap analysis Evaluate program Strategic workforce planning & management Strategic planning environment Implement program Choice of strategy ACT Framework HRMIS environment VIPINNOVATIONS

34. ACT’s Workforce Planning and Management Framework • Desired outcome of this program: • That each agency adopts this framework • Workforce planning and management activities increase within an agency • Review and report effectiveness of workforce planning and management programs VIPINNOVATIONS

35. Success • The Roads Department has made workforce planning a number one priority in their 2003-2004 HR plan • ACT Fire Brigade Certified Agreement 2003-2004 contains many aspects of the framework • The Treasury department listed workforce planning in the top five requirements in the 2003-2005 Strategic Directions document VIPINNOVATIONS