1. European Association for Personnel Management The Future of HR in Europe: Key Challenges through 2015

2. 1 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt 17 relevant topics were systematically derived Note: Business and scientific literature as basis, growth rate of publications quoting specific HR topic as indicator for potential future importance Source: BCG/EAPM analysis Mastering HR processes Managing change and cultural transformation Becoming a learning organization Managing globalization Recruiting and staffing Managing talent Enhancing employee commitment Restructuring the organization Improving leadership development Outsourcing HR/providing shared services Transforming HR into a strategic partner Measuring HR and employee performance Improving performance management/rewards Managing diversity Managing demographics Managing corporate social responsibility Managing work-life balance Societal developments: changing environment Economic developments: global growth and competition Company performance Reform/ improve HR Most important topics Cluster 40 potentially relevant topics in literature Scientific assessment BCG/EAPM-expert assessment

3. 2 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt One of the broadest European HR studies— more than 1,350 responses and over 100 interviews Note: Other countries: 41 Source: BCG/EAPM analysis; Web survey in 27 countries with 1,355 responses 21Germany 12United Kingdom 102Total 3Switzerland 5Spain 12Russia 3Netherlands 11Italy 4Ireland 14France 5Denmark 10Czech Republic 2Belgium Number of Interviews Country Interviews

4. 3 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Restructuring themes topped list of business issues in Europe, growth-related issues ranked high as well ItalyIrelandGermanyFranceEstoniaDenmark Czech Rep. CyprusBulgariaAustria Other Business process insourcing Post-merger integration Business Process outsourcing Changing the scope of activities of your company Turnaround management Growth outside your home country Global competition Growth in your home country Reorganization Increasing labor productivity Cost reduction 2%6% 2%5% 23%24% 22% 26%21% 33%36% 32%45% 57%47% 48%55% 66%61% 17%14% 13%12% 15% 6%4% 29%20% 23%27% 23%26% 64% 51%35% 47%35% 47%29% 54%50% 68%58% 71%70% 16% 6%2%9%0%7%9% 0% 5%2% 5% 29% 24%6%29% 22%24%7%9% 25%44%32%48%44% 25%37%38%29%43%33% 58%68%60%48%54%51% 39%54%55%71%43%53% 72%29%77%86%71%84% 33%39%53%67%50%71% 10%14% 15%17%11%13% 11%12%13%19%13% 11%14% 17%11% 14% 8% 21% 25% 42% 32% 57% 43% 55% 13% 19% 45% 9%4%7%9%7%4%0%2% 3%0%4%7%4%8%5%8% 28%25%9%4%0%8% 3%33%25%0% 33%24% 28%13% 33%35%22%34%0% 55%25%31%26%44%35%25% 48%33%36%40%41%32%44% 45%63%28%30%34%40%35%47% 33%67%56%50%52% 40%55% 33%67%43% 68%65%67% 44%46%57% 50%52%55%61% 18%16% 17% 15%17% 15%10% 16% 17% 10% 19% UKTurkey Switzer- land SwedenSpainSloveniaRussiaPortugalNorway Still strong focus on restructuring, little focus on growth or global competition Note: Only countries with sample size equal to or larger 20 Source: BCG/EAPM analysis; Web survey in 27 countries with 1,355 responses Restructuring-related issuesGrowth-related issues % of respondents: 0–9%10–19%20–29%40–49%30–39%50–59%60–69%70–79%80–89%90–100%

5. 4 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt 5 future topics require the most immediate need for action to improve capability in Europe

6. 5 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Capabilities in managing talent and in change management will play critical role in Denmark Denmark

7. 6 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Carried out by superior capable companies Companies with successful talent management used especially two actions Which of the following aspects of talent management are and will be the key areas for action of HR in your company? Which of the following aspects of talent management are and will be the key areas for action of HR in your company? Managing talent Note: Participants could make multiple selections. The positive influences are identified through regression analysis with 10 percent confidence level Source: Web survey; BCG/EAPM analysis Developing tailored career tracks Sourcing talent locally Developing specific compensation schemes for talented people Enhancing the number of visible talents for the corporate center Sourcing talent globally Hiring talent from competitors Moving businesses to new locations to access talented people Establishing alumni networks Launching initiatives targeting specific communities Respondents (%) 0102030405060708090100 Today (2007)In future (2010–2015)  Europe +40% +60% -33% +300% +700% +38% -41% +50% +12%

8. 7 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Ensuring visible leadership Except for ensuring visible leadership all actions with a positive influence will be less important than in Europe In which of the following change levers does and will HR play a role in your company? Respondents (%) Today (2007)In future (2010–2015)  Europe Managing change and cultural transformation Communicating a vision for action Closing gaps in capabilities (assessment, training, staffing) Ensuring alignment of the HR system with the desired culture and/or the expected reorganization Managing social relations (unions, workers' council) Maintaining rigorous program management (project, milestones, financial follow-up) Mobilizing stakeholder support Installing a head of change management who is as important as, e.g., the head of finance +33% +23% +15% +33% +22% +50% +25% +400% Note: Participants could make multiple selections. The positive influences are identified through regression analysis with 10 percent confidence level Source: Web survey; BCG/EAPM analysis Carried out by superior capable companies

9. 8 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Carried out by superior capable companies All actions with positive influence will become more important in future than in the rest of Europe Which are and will be the key aspects of work-life balance your company offers? Respondents (%) Today (2007)In future (2010–2015) +100% +0% +88%  Europe Managing work-life balance +67% +0% +167% +133% +0% Flexible working hours Teleworking Part-time working Sabbaticals Job sharing Compensatory time Parent's sabbatical Career couple programs Increase headcount (and decrease productivity) -6% Note: Participants could make multiple selections. The positive influences are identified through regression analysis with 10 percent confidence level Source: Web survey; BCG/EAPM analysis

10. 9 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Danish respondents believe managing talent is #1 challenge and priority, in line with rest of Europe Need for identifying “top 10%” in an organization early – the future leaders Offer additional opportunities in terms of development, responsibility and compensation Danish respondents view “managing cultural transformation” critical Reflecting a more global footprint of most companies today and higher knowledge content Danish respondents, however, do not view demographic risk management a priority Despite aging work force, also in Denmark Despite record low unemployment – bottlenecks in all functions and at most levels already Some observations Get basic HR processes right and focus on top future topics

11. 10 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Non-HR executives want HR to get the basics (basic processes, recruiting/staffing, and strategic partnership) right However, this is where HR overestimates its own capabilities most HR capability assessed to be 65% stronger if HR receives top management support However, only 35% of HR professionals feel that they receive top management support Clear focus for the future: need for action in topics with high future importance and low current capability Only 30% of the respondents have already started to tackle the top future topics HR departments face major challenges Get basic HR processes right and focus on top future topics

12. 11 European Association for Personnel Management The Future of HR in Europe_EAPM prez_4Oct07.ppt Conclusion 4. Initiate projects with dedicated teams 5. Secure support from top management 3. Select the most critical HR topics and prioritize projects and initiatives 2. Understand the internal environment HR audit 1. Understand the external environment Business strategy HR trends 17 HR topics You can order the complete study at marketing.de@bcg.com (please provide your full postal address)