HR Pastime or Critical Business Strategy Enabler

“An organization is nothing more than the collective capacity of its people to create value.” Lou Gerstner former CEO of IBM  Largest potential gains in revenue and profits for business leaders came from building bench strength when looking at a variety of talent outcomes* *CLC Talent Management Effectiveness Survey: Corporate Leadership Council Research

 According to Marshall Goldsmith, on average, the executives he meets give their succession planning process a grade of C+ and they give their execution of succession plans a grade of D  How are you doing?

 Time To plan To develop To fill open positions with the right people To think further down the road  Getting Feedback and Buy-In from Others  It is Hard Requires tough and direct conversations  Not Defining the Business Case

Business Strategy feeds into talent strategy Executive Commitment and Accountability - Reinforcement Identify Critical Positions Develop competency and assessment model Assess Talent and ID Successors; Calibration Talent Development, Acquisition and Planning Metrics that Matter Manage Ongoing process and Action Plans Succession Planning is an Ongoing Process

 Identify the External Trends in your Business Environment  Define your Business Strategy How do you compete? What do you do better than the competition? Can you do this without the right people? What is needed now and what will be needed in the future? What kind of culture is needed to drive success?  Feeds into the Talent Needed Business Strategy feeds into talent strategy

 After Sarbanes-Oxley, Boards have become more involved with succession management  Leadership Responsibility should start with CEO  Talent Expectations for leaders and managers  Hold ongoing reviews, consider talent management results as part of bonus plan or performance management ratings Executive Commitment and Accountability - Reinforcement

Direct strategic impact on the business; can drive competitive advantage High variability in performance can have major impact on business Critical positions may require and receive larger and/or differentiated investment and development Make sure the discussion is around the position not the people Identify Critical Positions

PositionVariability in performance Impact on strategic outcomes Scarcity of resource Impact on other strategic activities Total Score Job A Job B Job C Complete the table for each job using a scale from 1 (low) to 5 (high) Highest Total Score = Most Critical

 List 3 or 4 most important sources of competitive advantage for your company – examples:  Identify relative importance by allocating 100 points among them where no two sources of competitive advantage can have equal weighting  Using this list helps you identify core, technical capabilities/positions Michigan Ross School of Business Executive Education Innovation Quality Branding On-time Delivery Cost Distribution First to Market Relationships Service

Defining Characteristics “A” Position – Strategic “B” Position – Support“C” Position - Surplus Scope of AuthorityHas direct strategic impact and exhibits high- performance variability in the position, representing upside potential Has an indirect strategic impact by supporting strategic positions and minimizes downside risk by providing a foundation for strategic efforts, or has a potential strategic impact, but exhibits little performance variability among those in the position. May be required for the firm to function but has little strategic impact. Primary Determinant of Compensation PerformanceJob LevelMarket Price Effect on Value CreationCreates value by substantially enhancing revenue or reducing costs Supports value-creating positionsHas positive economic impact Consequences of MistakesMay be very costly, but missed revenue opportunities are a greater loss to the firm May be very costly and can destroy value. Not necessarily costly. Consequences of Hiring the Wrong Person. Significant expenses in terms of lost training investments and revenue opportunities. Fairly easily remedied thru hiring of replacement. Easily remedied thru hiring of replacement Source: “The Differentiated Workforce Transforming Talent into Strategic Impact” Adapted from “A Players” or “A ‘Positions’? The Strategic Logic of Workforce Management,” Harvard Business Review, December 2005

Develop Competency and Assessment Model

 Hy-Vee ◦ Culture – how it drives ◦ Position Identification  Internal vs. External  Candidate Development and Assessment  Hy-Vee University ◦ Identification of Potential candidates ◦ Etc……  Mentors  Diversification tool

 Reviewed External Environment, Trends and Current Performance  Redefined the Business Strategy and what Cultural Capabilities we needed to succeed  Analyzed the # of Director Level and Above Positions that we Hired Externally the Prior Year  Reviewed Current Number of Open Director and Above Positions  Calculated the Cost of Turnover Search agency costs Relocation costs Lost productivity/revenue from open positions Business Strategy feeds into talent strategy

Senior Leaders have performance goals and objectives specific to talent development and upgrade/acquisition BU Leaders, HR Partners, CEO, CHRO Review of Succession Planning and Talent Management and Upgrade Process Senior Leadership Calibrates Talent Assessments and ID’s Successors MANAGERS Perform Talent Assessments LEADERSHIP TEAM Identification and Alignment of Critical Positions CEO Active Involvement and Accountability Executive Commitment and Accountability - Reinforcement ID of Critical Positions

 Understanding of company’s cultural capabilities  Consideration of motivation, ability and engagement  Performance and Potential  Definition of competencies and derailers  Defined promotability and retention risk assessments Develop Competency and Assessment Model

22 Motivation AbilityEngagement

23 Motivation Extent in which an employee wants: Prestige and recognition in the organization Advancement and influence Financial rewards Work-life balance Overall job enjoyment AbilityEngagement Motivation Resources Employee career goals in SAP Talent Profile Regular development conversations

24 Ability A combination of characteristics and learned skills to carry out day-to-day work: Mental and cognitive ability Emotional intelligence Interpersonal skills Functional and technical skills Motivation Ability Engagement Resources Employee competency self-assessment in Skills Profile Performance history

25 Engagement Includes four elements of commitment: Emotional commitment to the organization Rational commitment – a belief that staying with organization is in the employee’s self-interest Discretionary effort Intent or desire to stay Motivation Ability Engagement Resources Regular performance and development discussions

26 Promotability Scale: Highly promotable (HP): Seen as having the ability and motivation to be promoted two levels within five years. Include in succession planning. Promotable within 2 (P2): Seen as having the ability and motivation to be promoted one level within two years. Include in succession planning. Promotable within 5 (P5): Seen has having the ability and motivation to be promoted one level within 5 years. Include in succession planning. Lateral Development (LD): Consider for lateral move within the next 12 months to broaden experience base and potentially enhance long-term promotability. Include in succession planning. Well Placed (WP): Continue development in current role based on employee’s expertise and motivation. At risk: Not meeting current performance expectations; may be due to poor job fit or poor performance.

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31 Possible Ratings:

32 Possible Ratings:

33 Required – Indicate Next Position

34 Possible Ratings:

 Talent development plans put into place for Internal successors listed for critical positions Individuals identified as promotable/lateral development  Talent acquisition plans put into place to diversify existing capabilities and fill in gaps  Action plans put into place for individuals “At Risk” as assessed  “Stay” discussions initiated where retention risks identified  Leaders and managers accountable for owning in partnership with HR  Tools to use throughout the year  Review action plans Talent Development, Acquisition and Planning

 Consider experiences needed Manage large groups of people Make significant decisions Work on cross functional teams Work in customer/client facing role Launch new business, initiatives or programs Assign a mentor – inside or outside the company Strong P&L knowledge  Consider knowledge/credentials needed  Create accountability for success in new roles (internal and external hires)  360 assessment tool Talent Development and Planning

Metrics that Matter

 Percentage of externally sourced successors versus internally sourced  Total number of internal succession candidates considered for open positions  Critical turnover - % of high potential employees leaving is higher than average or low potential employees  Time to fill critical positions  Cost of external hires versus internal promotions/development  What questions are you trying to answer or what decisions are you trying to make? Metrics that Matter

 Manage vacancy risk – focus succession efforts by translating business strategy into talent strategy  Manage readiness risk by providing needed development experiences and enabling movement across the organization  Manage transition risk by understanding derailers, manage expectations and create accountability for success in roles  Manage portfolio risk by effectively aligning and deploying talent against evolving business priorities 2006 Corporate Executive Board Manage Ongoing Process and Plans

Employee Information Name: Current Job Title: Date of Meeting/Interaction: Individual/s Providing Feedback: Cultural Capabilities – Provide any feedback on behaviors related to our cultural capabilities Tenaciously Resourceful Dynamically Responsive Passionately Aligned Leadership Competencies: Ratings: (N/A – Not Applicable, IE – Ineffective, SE – Somewhat Effective, E – Effective, VE – Very Effective, O – Outstanding) Business Acumen: Dealing with Ambiguity: Decision Quality: Developing Direct Reports and Others: Drive for Results: Interpersonal Savvy: Managerial Courage: Managing Vision and Purpose: Managing and Measuring Work: Describe purpose for rating/s above, be as specific as possible: Functional Competencies: Derailers: List any of the following you witnessed and explain what you witnessed: Betrayal of Trust, Defensiveness, Lack of Ethics and Values, Failure to Staff Effectively, Insensitive to Others, Performance Problems

Leadership Competencies Rating: N /A – Not ApplicableIE – Ineffective SE – Somewhat Effective E – Effective VE – Very Effective O - Outstanding Name of Individual Business Acumen Dealing with Ambiguity Decision Quality Developing Direct Reports & Others Drive for Results Interpersonal Savvy Managerial Courage Managing Vision & Purpose Managing & Measuring Work Priority Setting Problem Solving Strategic Agility Cultural Capabilities Rating: N/A, IE, SE, E, VE, O Derailer Assessment Rating: NP – Not a Problem PNP – Probably Not a Problem NS – Not Sure PP – Probably a Problem DP – Definitely a Problem NEI – Not Enough Information Name of Individual Tenaciously Resourceful Passionately Aligned Dynamically Responsive Derailers: Betrayal of Trust Defensiveness Lack of Ethics & Values Failure to Staff Effectively Insensitive to Others Performance Problems

Business Strategy - Current and Future Needs, External Environment Succession Management – Link Business Strategy into Talent Strategy: Commitment, Assessment, Actions, Measurement Talent Development and Retention - how and where should we target our development investments? What experiences are needed? How are we communicating to employees? Talent Acquisition - what skills, capabilities and gaps did we identify that we might want to find externally? Performance Management - how are we defining, measuring and rewarding work performance – does it tie to strategy? Do we consider talent management performance for managers and leaders?

 In Real Time, how do we keep this front of mind versus quick fix solutions when openings occur?  Not just an HR responsibility  Calibration – does it sound easy? It’s not!  Assessment Tools  Employee Ownership  How and what should you communicate?  How do you build breadth at the entry to mid level roles?  What about positions that aren’t critical?  Generational differences and expectations

 Define your culture and business needs Use your company’s culture – don’t force it  What is your process today? Can – should you develop internal candidates?  Do you have senior leadership enthusiastic support and accountability?  Discussions are crucial for success – amongst leaders, with employees, etc.  Model Succession  Evaluate  Plan  Review  Evaluate