You are currently browsing the yearly archive for 2010.
Recently CTPartners published the European Trend Talk, the latest in this series. Following is an excerpt:
The year 2010 might be best described as a year of reckoning and recovery for mature economies around the globe. And perhaps no region has felt this effect more keenly than Europe. But even as European nations confront significant governmental challenges and fiscal concerns, many European-based companies have preserved and even sharpened their competitive edge throughout the economic downturn by recalibrating operations and strategies to position themselves for growth in their home markets and abroad.
And notably, European companies have placed a renewed focus on talent as the true competitive differentiator, taking this opportunity to upgrade both their talent portfolio and their talent management systems. Read more at www.ctnet.com
Recently CTPartners published a perspective on the global healthcare sector. Following is an excerpt:
This is a truly transformative era for the global healthcare sector. Highly demanding business challenges, combined with exciting, new opportunities and rapidly evolving marketplace conditions, will reward those institutions with the vision to develop exceptional business models and the leadership teams to execute them.
With more sophisticated competitors and investors entering the market, and helping to redefine this global arena, those healthcare institutions that fail to keep up with shifting market dynamics will struggle to survive. The risks are significant. But there may be no other sector that rivals this one when it comes to the breathtaking range of profitable opportunities that are now unfolding worldwide in a race that is attracting wellknown global corporations, regional powerhouses, leading private equity firms, and smaller, innovative niche players.
Many factors are at work here. Among the most significant are three powerful developments that are driving global growth and change throughout the healthcare sector: Increasing affluence, especially in developing countries; an aging population, which translates into growing reliance on healthcare products and services; and rising expectations, from all those men and women who expect more high-quality, sophisticated, comprehensive, and effective healthcare, in large part because so much more is now possible.
As these trends gain momentum, they exert unparalleled pressures on healthcare institutions to deliver desired results across the globe. And these desired results include an evermore important emphasis on developing and enhancing strategies to contain healthcare costs while protecting quality. That’s true throughout the U.S., Europe, Asia, and elsewhere. Healthcare cost control is nothing short of essential to ensure the future viability and sustainability of this sector.
With these various market forces at work worldwide and an expanding roster of competitors seeking new and better ways to respond, it is scarcely an exaggeration to view this as a revolutionary era for healthcare institutions, their C-Suite teams, and board directors, as well as those key professionals who will grow into tomorrow’s leaders. Read more at http://www.ctnet.com/CTNet/TheFirm/Insight.htm
Recently CTPartners released the latest in it’s Trend Talk Series, Latin America. Following is an excerpt:
As corporations around the globe search for growth, Latin America’s vibrant and diverse national economies offer some of the most promising opportunities worldwide for corporate and professional development.
Indeed, in much of the region, where nations run the gamut from emerging to well-established markets, there is an expectation that growth rates will exceed worldwide norms for the foreseeable future. That’s thanks to a robust and multi-faceted mix of industries, broadening consumer markets, sound currencies, and, in a number of countries, pro-business climates and a growing acceptance of global corporate governance practices.
According to the International Monetary Fund, the region “bounced back” as quickly as it did from the global recession–better than many other countries did, also, better than Latin America had managed to accomplish during past downturns–because its “starting positions” were strong. IMF Managing Director Dominique Strauss-Kahn recently noted in a speech given in Lima, Peru, “These countries did not make the mistakes of many advanced countries by going on a debt-fueled spending binge or using complex financial engineering to magnify risk. Rather, they learned from past mistakes and embraced cautious and prudent economic policies.”
As a result, many of Latin America’s nations stand poised to benefit from a number of key trends. Read more at http://www.ctnet.com/CTNet/TheFirm/TrendTalks.htm
Recently CTPartners released a Perspective on The Globally Relevant Human Resources Team. Following is an excerpt.
In an increasingly competitive global business environment, as corporate leaders seek a winning edge for their companies, human capital is playing an ever-more central role. Indeed, it is becoming increasingly evident that human capital may well be the biggest differentiator among companies, as well as the longest-lasting competitive asset. Technological advantages, while valuable, are too often short-lived in today’s marketplace. Similarly, cost efficiencies and pricing advantages can quickly evaporate. But the ability to retain superior talent remains as a true and meaningful competitive edge, especially in knowledge-based businesses and positions.
Yet even as the focus on talent is sharpening, the challenge of how to access superior talent is becoming more difficult. The shifting global economic landscape, with the rise of some emerging markets and relative decline of other markets, virtually ensures some regional talent shortages. At the same time, demographic trends, including an aging world population, will create other human capital strains. And shortages of certain highly skilled professionals are already apparent in some regions and professions.
For businesses around the globe, the confluence of these two forces is putting human resources (HR) leadership squarely in the forefront. Never has the need for a strong, globally relevant human resources team been more apparent. Accordingly, talent management now garners greater attention from senior corporate leadership than has been the case in the past. As a result, CHROs are playing a larger role than ever in the C-Suite as strategic partners.
Read more at http://www.ctnet.com/CTNet/Practices/HumanResources.htm
Roger Kenny, Vice Chairman of CTPartners Board Consultants writes about the importance of a strong and active board of Directors.
One of the most critical elements of responsible corporate governance is maintaining a strong and active board of directors. As some of the most highly respected directors and CEOs have expressed, the best and worst things that happen to a company begin with the board of directors. Yet all too often, the task of building a strong board is either overlooked or continually pushed down the list of corporate priorities.
The risks presented by a weak board are almost too numerous to list. Boards are charged with supporting a company and its executive team by engaging in critical evaluation, keeping focus trained on the strategic plan, and acting as a ready resource to partner with the management team in tackling key business challenges. Given the weight of that charge, the threat posed and opportunity lost when even one individual director is under-qualified for the role is considerable. Directors who don’t bring much energy or active contribution to the table can impede progress, as can directors who have held a seat for too long, beyond the time when they are making a new and significant contribution. And a single domineering director can squelch innovative ideas or stand in the way of those who want to ask tough questions.
As a group, a board must be prepared to challenge management assumptions and ask those tough questions. Diverse viewpoints among board members can prompt meaningful discussion. Yet too many boards are overly congenial, polite or just uncomfortable sparking debate.When directors primarily seek consensus, it can be difficult to make the necessary decisions.
Ineffective boards pose a tremendous business risk whether the board is affiliated with a public or private company, or a non-profit organization. In today’s challenging economic environment, no organization should shoulder the added risk of a weak board of directors.
Building a strong board is, quite simply, a business imperative.
To read more, click here.
Recently CTPartners released the latest report in the Firm’s Trend Talk series: Asia Pacific: The Strategic Business Imperative. Following is an excerpt.
During a time period that was characterized by upheaval and uncertainty for global leaders, at least one point was clarified by the financial crisis of 2008-2009. For multinational corporations and other businesses around the globe, a solid presence in the Asia Pacific region is now, more than ever, a keystone for business success.
Never has Asia’s strategic position as an economic powerhouse seemed more evident, and the impact of the region’s growth upon global talent strategies continues to become ever more pronounced.
Any tour of the region’s growth inevitably begins with China. During the global recession of 2009, when worldwide GDP declined by 0.8% and advanced economies suffered an average decline of 3.2%, China’s GDP grew by a robust 8.7%. Looking ahead, the International Monetary Fund predicts that China’s GDP growth during 2010 and 2011will exceed that rate.
Many other AsiaPac nations are experiencing a continuing growth trend, along with a related impact upon talent demand, as well. India, which enjoyed 5.6% growth in GDP during 2009, is expected to see GDP expansion of 7.7% in 2010. The more mature Australian economy should see a 2.5% growth in GDP this year. And the developing ASEAN-5 (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) should enjoy 4.7% GDP growth. Importantly, this strong economic performance in AsiaPac will take place while advanced economies, according to IMF predictions, will experience, on average, a more modest 2.1% GDP growth this year.
Given this economic outlook, it is not surprising that many of the world’s corporations are looking east toward Asia Pacific, hoping that the region’s economic engine will help spur worldwide recovery and growth opportunities. New investment and expansion programs in AsiaPac are underway. Meanwhile, as the world looks to Asia, and especially China, for growth, Asian companies are looking out to the world with aspirations and plans to build their own domestic businesses into global competitors.
As multinationals and domestic Asian corporations alike develop their businesses to capitalize on current opportunities, the demand for talent will be significant and far-reaching. Businesses operating in AsiaPac will need sophisticated leaders with the capabilities to guide large-scale company expansions, recognize business opportunities as well as potential pitfalls, and lead businesses to enhance and solidify their position in the global marketplace.
Indeed, given the economic opportunities, it’s hard to overstate the region’s potential long-term demand for senior executive and boardroom talent. To read the full CTPartners report, visit: http://www.ctnet.com/CTNet/TheFirm/TrendTalks.htm
Brian Sadowski, CTO of ACS on Transforming IT Leadership.
Much has been said and written about Transformational Leadership recently and the value this approach can bring to business. To many, this is still an abstract concept that seems beneficial but remains difficult to put into practice. When broken down to its basic tenants, transformational leadership is about caring for the individual team member no less than caring about the mission of the company, the satisfaction of the client or the value returned to the shareholder. It is through the genuine concern and care for the team member that extraordinary results can be achieved. Information Technology team members are no exception to this approach, however buried in the data center, telecom closet or cube maze they may be.
Throughout the evolution of technology over the past several decades, one thing has remained constant. Change. Protocols, languages, toolsets, you name it. Very little if anything in technology is exactly how it was 20-30 years ago. It takes great effort to keep pace and to seek out opportunities to leverage innovation for business benefit. From a personal perspective, technologists must continually pursue ways to stay current with their specific discipline. For many, this is a source of great anxiety and can breed a sense of insecurity in the individual IT team member. A worrisome and insecure staff cannot be expected to deliver extraordinary results. In these instances, it is the role of the transformational leader to help his/her team change their view of their contribution to the organization. To be sure, technology endeavors require a minimum level of required skill in order to execute. However, business stakeholders crave a technical staff that truly understand the business and the nature of the challenges and opportunities the business faces. In the end, a technically elegant solution has little value if it does not clearly address business objectives. By connecting the technical staff with the business and its objectives, one can expect a technology solution that does not reflect a “technology for technology’s sake” approach. Rather, business stakeholders will find a better partnership mentality present within IT and may be surprised to have IT present new ideas, models, product offerings, etc… From the IT team member’s perspective, the value that they have attached to themselves drifts away from a specific tool or technology expertise and more towards the knowledge they have of how their technical discipline contributes to the goals of the business and perhaps delivers a competitive advantage for the organization.
It is also the role of the transformation leader to place equal value in understanding elements of the IT team member’s personal life that may contribute to their performance at work. For many, this is where the principles of transformational leadership become difficult to subscribe to as this type of leadership requires a degree of personal touch and sincerity that may feel out of place at work. When it comes to IT team members, it may seem even more foreign as technologists have generally been characterized as introverted technical “geeks” who fear communicating with the business world, let alone exposing what may be happening in their personal life. A truly transformational leader finds a way to breakthrough this veneer and connects with the individual, identifying the things that make that person tick. The key to it all is sincerity. Going through the motions will only drive a wedge between the leader and the team member. Demonstrating genuine care for the team member, how they feel about their place in the organization, their contributions, career path, personal life, etc… can also offset the negative effect an economic downturn has on an organization, manifested as frozen salaries, reduced benefits, diminishing bonuses, etc… When a team member knows that his/her leadership truly cares about the impact these type of steps have on their lives, and when the team member is more in tune with how they contribute to the results of the organization, both good and bad, there is a greater degree of acceptance and understanding as opposed to the typical negative backlash that occurs. Again, this is something that cannot be faked.
Are you behaving as a transformational leader today? It’s really an easy question to answer. Put yourself in your team members’ shoes. Do you speak with them about topics outside of their immediate work deliverables? Do you truly have an open door policy even if it requires that the door be open on a weekend or in the middle of your vacation? Are you helping your team understand their contribution to the business objectives or are you focusing them simply on technical deliverables on a project plan? Granted, a traditional, transactional style of leadership can be very effective. But if you desire to lead and be part of a truly extraordinary team delivering truly extraordinary results, consider altering your approach. You may find it benefits not only your team, but it also delivers real fulfillment and satisfaction for yourself.
A report entitled ‘A talent shortage for European Banks’ (Putzer et al, 2008) concluded that a shortage of strong internal candidates for critical positions will force European banks to overhaul their talent management efforts in order to stay competitive and ensure strong growth. Thirteen banks were represented in their study and they found a common theme, ‘That the CEOs and top executives of banks must personally endorse and live talent management, so that an understanding of its importance percolates throughout the organisation.’ (Putzer et al, 2008). They are encouraged to do this by having more rigorous talent management processes and by using objective indicators to measure effectiveness.
This is not an issue peculiar to the banking sector in Europe but an important theme for all industry sectors in Asia-Pacific and the conclusion and advice is consistent with recent research findings that note the importance of CEO and senior business line managers driving their organisation’s philosophy towards management of firm human resources, and which emphasises the importance of data to measure success (Aldrich, 2009).
Talent portfolio segmentation
A recently completed piece of doctoral research (Aldrich, 2009) predicts the widespread development of additional functional roles within the human resource functions of institutions in the capital markets and investment banking sector and also other industry sectors. This may include, the increase of people-related risk specialists and an increase in human resource professionals that are employed to produce business-impact related metrics that allow for a more granular analysis of the human resource environment. To engage both senior business line managers and senior human resource professionals in this discussion, the management of human resources has been conceptualised as a form of portfolio management (Aldrich, 2007).
A number of studies support the approach of conceiving the talent pool of organisations as an investment portfolio. For instance, Wright et al (1994) define the human resources of organisations as a ‘pool of human capital under the firm’s control in a direct employment relationship’ and Agrawal et al (2003) state that
‘In most businesses, not all employees are created equal. A sub-set … always plays a disproportionate role in creating value. Our experience suggests that workforces fall into six segments: top executives, knowledge workers, middle management, skilled workers, less-skilled workers and bureaucrats … any of these can emerge as the most pivotal.’
Developing the theme of segmentation, Boudreau and Ramstad (2005) wrote that
‘The human resource function should begin its transformation by applying tools of segmentation … Just as marketing systematically segments customers to target investments strategically, human resources function needs to segment talent to deploy human capital strategically.’
Further to this, management consultants McKinsey (Guthridge et al, 2008) also state that talent management should not be limited to ‘top talent’ but instead should follow a more inclusive approach by thinking of employees as ‘a collection of talent segments.’
Therefore, just as certain business activity involves the management of asset portfolios, such as: foreign exchange; equity; loans; bonds; and, commodities, ’Talent Portfolio Management’ involves taking an investment-based, strategic approach to the management of human resources. For instance organisations in the capital markets and investment banking sector can segment their talent portfolio into different human asset groups, for example, front-office stars, their teams and those in key support roles. The ultimate goal is to ensure that organisations can consistently deploy the right people, in the right place, at the right time, for the right cost and for them to be fully engaged.
Talent Portfolio Management
A Talent Portfolio Management approach, Table 1.0, requires the following:
- a clear focus on talent as a strategic investment by the CEO as chief talent officer/chief investment officer who segments the talent portfolio and the most senior business line managers;
- business line managers who portfolio-manage segments of the talent portfolio;
- commercially aware, credible, business partners in the human resource function who analyse the talent portfolio from a financial perspective; and
- human resource specialists who provide risk management support.
The CEO could be described as the chief investment officer: senior line business managers as the portfolio managers of talent for each segment of the talent pool; human resource business partners as portfolio analysts and advisors; and, other human resource specialists acting as portfolio risk managers.
Changing functional roles and competencies in human resource management
A Talent Portfolio Management approach to managing human resources requires advanced skills, for example in organisational analysis and statistical modelling, which may not currently be part of the core competencies of professionals in the human resource function and therefore this approach, though straightforward to conceive, may require a radical change in thinking by business line managers and the human resource professionals that support them. The implications include:
- a strategic approach to management of the talent portfolio, led by the CEO. This involves an understanding of the fundamental links between leadership and management competency as it relates to the human resource environment; talent portfolio management; and, better firm performance;
- an integrated and strategic working relationship between the human resource function and business managers;
- stronger numerical, analytical and commercial skills in the human resource function;
- greater measurement around talent, building up to sophisticated human capital metrics; and
- the identification and active management of people related risk.
The above implies the creation of functional human resource roles that focus on human capital metrics, human resource portfolio modelling and people risk management.
Making talent a strategic priority
Talent must be a strategic priority in practice however, continued progress is needed to address the findings of Gutheridge et al (2008) that
‘Companies like to promote the idea that employees are their biggest source of competitive advantage. Yet the astonishing reality is that most of them are as unprepared for the challenge of finding, motivating and retaining capable workers as they were a decade ago.’
Firms that take a disciplined approach to the management of their talent will achieve the ultimate goal of ensuring that in they can consistently deploy the right people, in the right place, at the right time, for the right cost and for them to be fully engaged. A Talent Portfolio Management approach gives organisations clear guidance that will enable them to implement talent management strategies that will have real business impact.
The world has focused its attention on Asia-Pacific, expecting this region to provide both revenue growth and diversification but the supply of talent continues to lag demand. Talent Portfolio Management requires organisations to leave less to chance as it forces a systematic and ongoing dynamic review of the talent policies, practices and processes that support their management of talent.
Dr Paul Aldrich is a Partner based in CTPartners Hong Kong office who covers the capital markets and investment banking sector for Asia-Pacific. CTPartners is a global executive search firm which differentiates itself by it’s Performance, Quality and Results.
The Board of Directors Institute on Human Resources convened its first annual Institute on Monday, March 1, 2010 at the New York City headquarters of TIAA-CREF. With panelists and participants from corporations in North America, Asia, and Europe, private equity firms, and nonprofits, the daylong discussion focused on themes that included “empowerment, accountability, and the goal of achieving the maximum return from human capital in an era of expanding risk and regulation,” in the words of Brian Sullivan, Chairman of CTPartners. One of the panels focused on an important issue that has become the focus of many debates in recent years – “The Elephant in the room – Why doesn’t Human Resources have a seat at the table in the boardroom?”
“The first panel established that talent is indeed the true differentiator,” commented Laurence “Lon” O’Neil, President and CEO of the Society for Human Resource Management. “Our panel will take a hard look at the roles and responsibilities of the board, given the current economic and regulatory realities. As the pace of change increases,” he added, “we need to consider what’s been missing from boards. Where does HR fit, and how can this profession’s skills and insights empower boards and management teams to be more successful over time?”
Mr. O’Neil moderated a panel that included Michael Feiner, a Professor of Management and Sanford C. Bernstein, Ethics Fellow at Columbia Business School, and the former Chief People Officer for Pepsi-Cola’s worldwide beverage operations; Gerald M. Lieberman, former President and COO of AllianceBernstein L.P.; Patricia M. Nazemetz, Corporate VP and Chief Human Resources and Ethics Officer of Xerox Corp., and a Director of WMS Industries Inc.; and Dermot J. O’Brien, EVP, Human Resources and Corporate Services, of TIAA-CREF.
Mr. Feiner launched the discussion with a bold assertion: “There are a lot of elephants in this ‘room.’ Many senior corporate leaders honestly believe that the main thing HR does is organize the picnics, the blood drive, and the employee handbook. Meanwhile, there simply aren’t enough world-class HR leaders to satisfy the need out there for them. And there are company line managers who may know that they should have an HR partner, but they don’t have a clue about how to find the right person, build the right partnership, and get the best value from what HR could potentially offer. These are very big stumbling blocks.”
Mr. O’Brien asserted that a board’s primary responsibility should center on governance and oversight. “But that should be conceived of in terms of a full ‘portfolio,’ and certainly the human portfolio is part of that.” He stressed that there’s more at stake than simply developing the right compensation strategy. “Let’s talk about corporate culture,” he said. “Boards need to make certain that their companies nurture the kinds of cultures in which people could feel comfortable raising their hands if they see a problem. Human resources has a big role to play in promoting a culture of transparency and accountability.
During these challenging times, boards must balance many essential responsibilities. “Selection of the CEO may be the most important because without the proper CEO, the company will flounder,” said Ms. Nazemetz. “Yet it’s also a core objective for any director to try to ensure that talent is deployed within the organization at its highest level of return. HR should find many ways to help here. For example, when I’m a director, I don’t just want to see a human resources presentation. I want HR to help me get beyond the data to understand what’s truly going on in the company and in the workforce. I want to have different ‘touch points’ and sources of insight.”
Too many boards are preoccupied with “risks and the headline issues,” concluded Mr. Lieberman. “Yet there are so many complex issues that demand their attention, including things that are very hard to assess, like competence, culture, and values. Data can and should be an important part of the board’s assessment process. But there’s more that’s necessary. I firmly believe that when there’s trust, dialogue, and healthy interaction between directors and human resources leaders, corporations will be much stronger.”
Over $30 billion in retail bankruptcies and 250,000 store closings. Iconic, category leaders like Blockbuster, Zales and Borders are contemplating bankruptcy or fire sales. Top private equity firms lead retail portfolio companies into bankruptcy. These headlines over the past two years illustrate the seismic shift shaking the world of retail. The bad economy, inept management and Wal-Mart are insufficient explanations for their misery. The real reason is both scary and exciting; but has more to do with the world their customers live in, and the inability of these retailers to adapt to it.
For most of the 20th Century, retailers flourished by focusing on product, price and brand. Today, that’s no longer enough. Purveyors of everything from apparel to groceries to consumer electronics and general merchandise are battling four macro trends: Price pressure from larger-scale retailers; market share competition from innovative, low-cost rivals; product commoditization; and brand glut from an excess of specialty and private label operators.
Retailers — even those hawking goods in the earliest bazaars — have always profited by exploiting their superior knowledge of merchandise, prices and availability. The Internet, however, is rapidly shrinking this information gap; in fact, in many cases shoppers are more sophisticated than their retail counterparts in using online tools. To make money today, retailers must offer personalized solutions by bundling unique products and services, for which well-informed shoppers are willing to pay a premium.
To succeed, retailers have to come to grips with the new reality that they operate in a multi-channel, customer-centric (mc3) world. Over 80% of retail transactions today involve customer interactions across multiple channels for research, purchase or service.
Americans have dramatically changed the way they shop, consume media, communicate and access information but most merchandisers have barely altered the way they acquire, communicate, inform, sell to and serve customers. U.S. consumers now devote almost 30 minutes, on average, each day to browsing the Internet—more time than they spend with the ads in any other shopping medium. Yet retailers earmark less than 5% of their advertising and customer acquisition budgets for online purposes; and continue to fork over billions for newspaper advertising. Retailers can increase sales while reducing marketing expense 30-50% by shifting to new Internet based platforms — where customers are.
We are at the cusp of a millennial shift in the way things are bought and sold – from a product focus to one based on deep customer relationships, from transactional to emotional. Sellers now have access to two things they did not before. For one thing, when buying or browsing online, customers reveal exponentially more information about themselves. For another, new media (Internet, kiosks, cell phones) allow sellers to personalize each interaction with each buyer. The key to a seller’s success in the next millennium, one may surmise, will be his ability to capture as much customer information as he can and then use it for the benefit of the customer. Sellers who build deep, powerful, and trusted relationships with buyers will be the winners and may end up selling the same buyers a diverse set of products and services. Sellers will likely be classified not by the category of products and services they sell but rather by whom they sell it to. The question retailers need to answer is: How well do I know my customer?
Retailers with outmoded business models like Borders and Blockbuster will shortly be extinct if they don’t change. By putting the names and addresses of millions of their customers interested in books, movies and games to better use, they can still build new, innovative billion-dollar businesses with superior operating economics.
This new world of retailing can either be an ominous threat or an exhilarating opportunity. The good news is that most leading retailers still have the financial resources to adapt if they choose to. If not — well, we all know what happened to the dinosaurs.
Love Goel is the Chairman and CEO of GVG Capital Group, a private equity firm focused exclusively on building market leaders in the multi-channel retail and consumer sector.
