CRF HR Conference Budapest 2010

1. Connecting The HR Supplier Ecosystem For Higher Performance CRF HR Conference Budapest 2010

2. Structure of this session 4. Review of the capabilities needed to make progress 1. A look at traditional supplier management approaches 2. Why we need to get more connected 3. Features and benefits of an orchestrated approach

3. Sound familiar? “ Our suppliers don’t quite seem responsive to our future challenges” “ We have to keep tight control of suppliers or costs creep up” “ I like the innovation of the smaller players...but they feel too risky” “ I hope the CEO doesn’t ask me to prove the value we’re getting” OR Are these the inevitable outcomes of old fashioned approaches to managing the HR supply chain? Are these just reflecting the normal market dynamics of everyday client and supplier relationships?

4. Maturity of approach may hold the key Increasingly Complex Supplier Landscape New Approaches To Maximise Performance • HRM Systems • Talent Systems Technology • Payroll Systems • Benefits Systems • Employee Portals • Talent & Recruitment Outsourcing • HR Administration • Full HRBPO HR Supplier Community • Advice & Guidance • Rewards Consulting • Business change • Strategic development • HR Transformation • Research & benchmarks Service • Recruitment agents • Training design & delivery • Coaching

5. What defines the approaches? Separated Dominated 1. Big is best 2. Procurement driven margin reductions 3. Niche providers fight to survive 4. Supplier often becomes entrenched 5. Unpicking the supplier is difficult 6. Extended senior relationships 7. Delivers potential for scale HR HR Supply consolidates around one major provider who becomes an economy of scale driven one stop shop Suppliers managed in silos or by domain with no structured connections 1. Positioned as best of breed 2. Different suppliers live in isolation 3. Internal barriers to co-operation - silos 4. High autonomy to work with whoever 5. View collaboration as threatening 6. Suppliers compete to grow 7. Often left to procurement to police

6. But new challenges have changed the game The pressures now facing our organisations and HR are immense... Ever Increasing Economic Uncertainty Age of Austerity and Public Sector spending cuts Ever Increasing Societal Change Ever Increasing Market Competitiveness The Organisation Flexibility: Develop capability to accurately scenario plan for different future outcomes and respond with agility Innovation: Overcome legacy technologies and under-investment to find new and better ways of delivering key services Cost: Drive sustainable efficiency improvements through all areas of HR without increasing risk or damaging quality Higher Performance Human Resources Effectiveness: Stronger, measurable, Human Capital solutions that demonstrate their contribution to value creation Ever Increasing Human Capital Complexity Ever Increasing Customer Complexity Ever Increasing Rates of Technology Development No. 6

7. Meaning the customer now wants more • What they want more of from suppliers are: • Risk control • Recruitment fee linked to new hire performance • Innovation • Collaborative web 2.0 tools in the workplace • Flexibility • Saas based technology with on-demand pricing Logica’s Viewpoint: The complexity of the HR supply chain is such that managing diverse partners, co-ordinating disparate programmes and aligning suppliers with strategic objectives requires a step change in thinking. Source: Equaterra 2009 Study of HR Supplier Contracts – based on perceptions of 160 UK organisations. Percentage satisfaction scores shown

8. Leaving these approaches unfit for purpose? Separated Dominated HR HR Supply consolidates around one major provider who becomes an economy of scale led one stop shop Suppliers managed in silos or by domain with no structured connections Separated Dominated Key Objectives of Supplier Management Increase responsiveness and flexibility Protect against costs increasing Drive innovation at acceptable riskOptimise effectiveness and value

9. Opening the way to new approaches Orchestrated 1. Views supply chain as an ecosystem 2. Based on collaboration with HR at core 3. Key suppliers accountable for others 4. All suppliers align with client strategy 5. Clear measures and visibility 6. Innovation co-developed and shared 7. Delivers superior results over time HR Key suppliers and component providers co-evolve performance in line with their client’s goals Integrated 1. Best of breeds become connected 2. Communication channels opened 3. Joint working and knowledge share 4. Individual supplier accountabilities 5. Reliance on goodwill and informality 6. Delivers improved results over time HR Suppliers develop connections through mainly informal routes but remain performance ‘neutral’

10. With discrete areas of HR performance focus HR must view the supplier environment as one which is orchestrated across all domains of HR performance

11. Which creates a connected ecosystem People + Business + Technology

12. Connecting for Higher Performance How a smarter approach to the supplier ecosystem gave real value to Axa Cost Containment: Recognised that costs could be cut by 80% if the supply chain focus switched from sourcing talent via costly third party agencies channels to direct attraction, more accurate demand planning and more effective selection. Since 2008 have saved £10m+ Supply Chain Visibility: Created a talent and resourcing data universe that tracked supplier and process performance within agreed tolerances and pushed dashboard alerts to managers. Suppliers agreed to attend regular briefings and roadshows Risk Management: Established a risk management monitoring and planning capability that was applied to both supplier organisations, the talent processes and external talent market factors. Dominance of two or three major suppliers was weakened and smaller niche players introduced Increasing Customer Demands: Capturing the demands in a structure that could be processed was the first step. From here agility and flexibility were engineered into key processes. This was driven through the use of predictive analytic capability that improved talent demand planning for the business Globalisation: Culturally the most difficult to change as global HR systems not well connected, managers want to keep leadership talent in country and international mobility costs under scrutiny “By facilitating the connection of suppliers and motivating them to share our vision we have succeeded in transforming the level of value we derive from our talent and resourcing activity. This improved performance sits across all aspects of the supply chain from more efficient processing right through to stronger customer impact” Samantha Rich- Talent and Resourcing Director Axa

13. Group Exercise

14. Group discussion themes • Where does “connecting HR suppliers for high performance” fit into your business and HR vision? • What examples do you have in your HR world of supplier integration or orchestration • What either drives or restrains progress along the “supplier maturity model” in your organisation? • Who should and who does take ownership for managing the HR suppliers – is it HR or is it someone else?

15. Feedback and Key Themes Emerging • Open discussion • Emerging themes • General agreement

16. Five elements for higher performance We’ve seen how a new way of organising the HR suppliers can yield better results. But what does it take to make the most of this approach? • Visibility of suppliers within your ecosystem • Stimulating supplier collaboration & integration across HR • Ownership for success within HR • Rewarding suppliers as partners to make it worth their while • Having a strong viewpoint and a vision

17. Discussion Handouts

18. A supplier management maturity model Components of activity are designed and delivered according to specialist capabilities of individual suppliers with a key partner in overall command of results Streams are harmonised often between one or two major suppliers who look to protect and safeguard position Best of breed suppliers become integrated through formal or informal governance and framework structures Suppliers pigeon-holed with services delivered in isolation of other supplier activity or potential

19. Forming a viewpoint and a vision Dominated Separated Integrated Orchestrated Tactical Focus on short-term goals and operational objectives Strategic Activity aligned with broader objectives Financial Preference placed on monetary outcomes Visionary Higher order ambitions dovetail with suppliers Goal Alignment Directive Command based approach to relationships Protective Design actions and measures to retain control Collaborative Resources and knowledge shared seamlessly Consultative Frameworks supports joint working initiatives Working Style Avoiding Any sense of exposure is avoided at all cost Managing Degrees of risk accepted and tolerance managed Controlling Risks identified and tightly assessed Embracing Higher risks encouraged if payback acceptable Risk Approach Seldom New ideas overlooked and not valued Random Ideas not actively sought but adopted by chance Continual New thinking and solutions readily emerging Planned Areas of innovation encouraged and evaluated Innovation Adoption