(documento riservato) Italian Public Sector MercerHR Value proposition November 2006

2 (documento riservato) Copyright © 2005 Mercer HRC Index 1.Italian Public Sector: Overview and Human Resources System Implication 2.Mercer Value proposition for Public Sector 3.Case study: Mercer project for Public Sector on Performance Measurement

3 (documento riservato) Copyright © 2005 Mercer HRC 1. Italian Public Sector Short overview Central Administration XV Legislature Parliament: new Government, Chamber of Deputies, Senate 26 Ministry (18 of those with portfolio-resources assigned) such as Economy and Finance, Defense, Foreign Affairs, Interior, Healt, Cultural Assets and Activities, Infrastructures, Transports, Environment, Agriculture, Labor and Social Welfare, Justice, Reforms and Innovations in the Public Administration, Education, University and Research Local Administration 20 Regions 103 Provinces and 8101 Town Councils Company owned by the Government Railway Transportation (FS group) / Postal Services (Poste group) Oil and Energy (ENI, Enel group, Terna, one of biggest italian company for market value) Utilities (local energy companies as ACEA, AEM, many of these are on the italian stock exchange) No profit No-profit companies and institutions Research Institutions University and Public Schools Public Hospital

4 (documento riservato) Copyright © 2005 Mercer HRC 1. Italian Public Sector Some key data Public Sector* Head count 2005**: 3.5 Millions of people employed Total 2005 cost: 399 Billions of euros of wich: Total cost of Central Administration: 83 Billions of euros (87% is cost of central administration employee) Total cost of Local Administration: 227 Billions of euros assignment centrally *Include Central and Local Administration and no profit, without Company owned by Government ** Source: 2005 Italian State budget

5 (documento riservato) Copyright © 2005 Mercer HRC 1. Italian Public Sector Main changes The Italian Central and Local Administration is experienced on the following important challenges:  Assignation of central public functions to local administration  Optimize the operating cost (employment blocking)  Liberalization of some strategic sector  Privatization of some public company  Introduction of Information Technologies into traditional activities  Measure the quality of services  Diffusion of the digital management  Introduction of managerial system on traditional “burocratic” processes

6 (documento riservato) Copyright © 2005 Mercer HRC 1. Italian Public Sector Human Resources System Implications Based of our experience on the Italian Market (Mercer as a consulting firm worked since 1990 in Italy) the main issues in the HR management and development in the Italian Public Sector, following the main issue above, are the following: Develop an effective appraisal and rewarding process for the public executives population Define and implement a performance measurement system Develop a managerial culture in the public executives Use of service's quality as organizational drive in order to adjust the structure to the new requests Train and develop the correct competencies for professional Motivate the key people (without or with low rewarding system) Organize and support the succession processes when senior key people will leave the organization (in particular considering that the hiring processes is stopped since 10 years)

7 (documento riservato) Copyright © 2005 Mercer HRC 2. MercerHR value proposition for Public Sector HR organization Needs Central and Local Government HR management and development HR measurement and administration Mercer proposition Results SUPPORT ON CHANGE MANAGEMENT SUPPORT ON PEOPLE MANAGEMENT SUPPORT ON HR SYSTEM AND PROCESS (organizational model, processes optimization, headcount estimate, communication, design procedures) (competences model, talent recognize and management, managerial training, succession planning) (performance measurement, appraisal system, rewarding system, benefit audit, retirement evaluation and support, investment consulting support) Efficiency Motivation Culture Efficacy Performance orientation

8 (documento riservato) Copyright © 2005 Mercer HRC Case study: Mercer project for Public Sector on Performance Measurement

9 (documento riservato) Copyright © 2005 Mercer HRC 3. Mercer project for Public Sector on Performance Measurement Ministry of cultural heritage (1/4) Client Department for the live shows and sports of the Italian Ministry of Cultural Assets and Activities. Such Department is responsible for the management of the government subsidy to all forms of cultural shows: cinema, live music, theatre, prose, the dancing, lyrical foundations and circus. The Department is organized into two General Segment: Cinema, Live Shows Needs Develop an integrated system of Key Performance Indicator that enables to verify the external impact and the effectiveness of the department activities and support the communications of results This system should be helpful and will use to support the performance management process of Executives and to evaluate their bonus

10 (documento riservato) Copyright © 2005 Mercer HRC Project articulation In the project will be used the balanced scorecard method. In accordance to this method the KPI will be related to four perspectives. There will be an analysis in order to customize the perspectives expected by the method (financial, client, internal process and learning) basing on the specific mission of the department (to help the diffusion of the Italian culture through cinema and live shows in Italy and worldwide) 3. Mercer project for Public Sector on Performance Measurement Ministry of cultural heritage (2/4) Financial Perspective (KPI such as the capacity to maximize the fund distribution - the capacity to increase the tax revenue) Process efficiency perspective (KPI such as: cost reduction; time to delivery increase) Customer/ Citizen Perspective (KPI such as the capacity to increase the audience; audience satisfaction; the job increase) Quality / Innovation perspective (KPI such as: the number and the kind of prizes obtained in specific festival/competitions; the number of young authors / artists that have been funded)

11 (documento riservato) Copyright © 2005 Mercer HRC Project articulation The project will be conducted through the following steps:  Personal interview with all Department executives;  Business model and process analysis;  Analysis of the survey and researches conducted in the previous year on the effective of Department's activities;  Data sources analysis;  Definition and test of the balanced scorecard in each General Direction and in each service. 3. Mercer project for Public Sector on Performance Measurement Ministry of cultural heritage (3/4)

12 (documento riservato) Copyright © 2005 Mercer HRC Project outputs Document describing mission, business model and the performance objectives for each Direction and each Executive of the Department  Objectives  Key performance Indicators  Targets  Action plan to development 3. Mercer project for Public Sector on Performance Measurement Ministry of cultural heritage (4/4) The scorecard will help each service: To verify the effectiveness of funds allocation To estimate the external impact of the own activities To facilitate the performance appraisal for the executive To support training program to develop managerial competences Customer benefits