DOCOMO interTouch Corporate Travel Policy

New HR Challenges in the Public Sector
January 21, 2009
Na Boon Chong
Director, Consulting, Southeast Asia
Email: boon_chong_na@aon-asia.com
About Aon Corporation
Aon Corporation, the parent of Aon Consulting, is a publicly listed company (NYSE: AOC). Aon Corporation is the parent
company of a family of risk management, insurance brokerage, retail brokerage, reinsurance brokerage and human capital
consulting subsidiaries.
Aon Corporation
Aon Risk Services
Aon Consulting
Aon Re Global
§ Retail Brokerage
§ Captive Management
§
§ Affinity Programs
§ Risk Management Services
§ Capital Markets
§ Select Personal Lines
§ Premium Finance
§
Treaty & Facultative Reinsurance
Brokerage
Affinity Group
§ Health & Benefits
§ Human Capital
§ Employee Benefits Outsourcing
§
§
§
§
Retirement And Investment Consulting
Financial Advisory And Litigation Consulting
Global Benefits
Compensation, McLagan & Radford
45,000
Number of Aon colleagues around the world
500
Number of global offices
120
Number of countries in which Aon operates
$8.95 Billion
Total revenue generated by Aon in 2007
#1
#1
Reinsurance intermediary, risk services broker, and human
capital consultant
Number One Broker in number of major markets including UK,
Switzerland, Spain, Germany, Ireland, Canada, Argentina, Brazil,
Chile, India and China
#1
Business Insurance Readers Choice - Best Employee Benefits
Consulting Firm, 2006 & 2007
Aon Presence
2
About Aon Consulting Asia Pacific
Shaping the workplace of the future through benefits,
talent management and rewards strategies and solutions
Aon Consulting
Worldwide
(www.aon.com/hcc) is
among the top global
human capital
consulting firms, with
2007 revenue of $1.35
billion and 6,500
professionals in 117
offices worldwide. We
serve half the Fortune
500 and we have
10,000 clients
worldwide.
In 2006 and 2007, Aon
Consulting was named
the best employee
benefit consulting firm
by the readers of
Business Insurance
magazine.
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Australia
China
Fiji
Guam
Hong Kong
India
Indonesia
Japan
Malaysia
New Zealand
Papua New Guinea
Pakistan
Philippines
Saipan
Singapore
Sri Lanka
South Korea
Taiwan
Thailand
Vietnam
3
Agenda
• The Changing Operating Environment of Public Sector HR
Management
• HR Management As a Change Lever
• HR Function As an Enabler
• A Path Forward
4
Agenda
• The Changing Operating Environment of Public Sector HR
Management
• HR Management As a Change Lever
• HR Function As an Enabler
• A Path Forward
5
Understanding The Historical Context For Asia
Underdevelopment
Underdeveloped
Private
Enterprise
Uncompetitive
Domestic
Sector Public Sector
Expected to Drive
Growth
Weak Capital
Markets
Weakness as
Investment
Destination
Increasing Fiscal
Deficits and Public
Debt
Inefficiency
The Vicious
Circle for
Asian
Economies
Public Sector
Investments
Outstrips Income
Private Sector
Aligns with
Government
Machinery
Increasing
Government
Spending
Growing Public Service to
Corruption
Monitor and Check
Government Machinery
6
Breaking The Vicious Circle
• Size of the public service and government machinery
• Expenditure as a share of GDP
• Limiting Government functions
• Blurring of public and private roles
• Maturity of the constituencies
• A facilitator of private sector
economic activities in sectors best
operated by the private sector while
providing services in other sectors
Causing
discord with
operating
model and
style
• Major operator in many sectors
of the economy
• A regulator, controller and policy
maker on many economic
decisions
• Direct top-down and centralized
decision making
Transforming
to
• A catalyst of market development
through conducive policies and
deregulation
• Empowering and soliciting
participation, and decentralizing
decision making
7
The Old Paradigm Of Governance
Operating Principles
Organization Practices
• Direct Production and
Investment
Departmentalization and
Hierarchy
• Coordination and
Monopoly
Career Public Service
Centralization
• Strong Ministerial
Control
Command and Control
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The New Paradigm Of Governance
Operating Principles
Organization Practices
• Internal Deregulation
Devolution and subsidiarity
• Purchaser / Producer
Split
Dynamism and Service
Orientation
– - Contractualization
of Relationships
– - Agencification
– - Outsourcing
• Market Competitiveness
Commercialization and
Budgeting Process Reform
Performance Focus
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Implications On Performance Measurement
Organization Practices
Performance Measurement
Devolution and
subsidiarity
Measures Linked to Changing
Roles and Structure
Dynamism and Service
Orientation
Balanced Measures Customer, Process and
Learning
Commercialization and
Budgeting Process
Reform
Performance Focus and
Accountability
Business Plans, Strategy and
Budgeting Linked with
Measures
Performance Management and
Rewards Link with Measures
10
Balancing Multiple Stakeholder Expectations The Ethos Of “Value”
Impact
“Continuously improving
our internal business
processes”
Outcome
“Meeting the needs of the
people we serve”
Mission,
Vision,
Strategy
Capacity
“Developing people and
nurturing ideas”
Activity
“Managing our resources
judiciously”
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Comparison Of Public With Private Sector
12
Value Creation In Public Service
Policy /
Direction
Service
Advisor
Strategist
Architect
Catalyst
Provider
Promoter
Environment
Review and
Recommend
Plan,
Develop and
Monitor
Privatization
Potential
Execute and
Manage
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Identifying The Primary Value Creating Mechanism
PROMOTER
CATALYST
STRATEGIST
ADVISOR
Generate Interest
and Funding
Customer Service
Service Customer
Needs
R&D /
Development Firm
Consulting Firm /
Incubator
Venture Firm /
Corporate
Finance
Independent
Consultant
How do we create value?
ARCHITECT
What is our Business Model?
What business are we in?
PROVIDER
Activist / Non
Profit Firm
Plan and execute
projects
Help others fund and
implement strategies
Develop and deploy
strategies
Build and Sell
Knowledge
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Hypothetical Example: Economic Agency
How do we create value?
Business Model
Consulting Firm / Incubator
Primary Value Creation Process
Help others fund and implement strategies
Strategic Themes
Help implement country economic growth
strategies
Help global players (in key sectors) fund and
grow their businesses in country
Fund and incubate new business ideas in
country
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Financial / Strategic Measures
Lag
Lead
Help country implement
economic growth strategies
• Economic Growth
• Real ROI
• Real ROI - Cost of
Capital
• Investment in Growth
• Estimated ROI
Help global players (in key
sectors) fund and grow their
businesses in country
• Sector Growth
• Real ROI
• # of New Players
• Sector Investment
• Estimated ROI
Fund and incubate new
business ideas in country
• Growth from New
Ideas
• Real Returns
• # of New Ideas
• Funding Level
• Estimated Returns
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Structural Changes In The Public Sector
(Singapore)
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Corporatization/Privatization Success Factors
• Clear separation of commercial activities from policy, regulatory, and social functions
is critical in establishing accountability and optimizing performance.
• Organizations need to be given clear commercial objectives and performance
targets with the autonomy to operate.
• Comprehensive industry, institutional and organizational reviews prior and during
corporatization are useful for developing a coherent privatization plan and avoiding
transaction problems.
• Influences to be dealt with during corporatization include pre-transition conditions,
preparatory mechanisms, the competitive environment, and agency and governance
mechanism.
• Thorough reorganization is critical. This includes defining core businesses and
strategies, aligning the organization design with the new strategic directions, shared
services arrangement, and improving HR programs and practices.
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Some Singapore Examples On A Spectrum
IE Singapore
Singapore
Tourism Board
Statutory
Boards
Spring
Civil Service
College
AStar
Economic
Development
Board
PSA
DBS
PUB
SIA
Jurong
Port
Management
Contracts
Corporatize
JTC
Privatize
Tuas
Power
PSB
Corporation
Listed
Singapore
Telecom
Singapore
Power
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Corporatization/Privatization Success Factors
Transformational change is best carried out rapidly
rather than in an evolutionary manner, in general.
However, rapid and effective organizational and
cultural change requires leadership skills and clarity of
vision, management synergy, appropriate
organizational structure and accountabilities, the
reform of HR practices including performance and and
reward systems, explicit cultural change programs,
and a structured and sustained investment in
management and talent development.
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Balanced Approaches To Organization Change
Purposes
Value
Organization
and Means
Creation
Learning
• Purpose:
• Economic value
• Organization
• Leadership:
• Top-driven
• Focus:
• Structure and
• Planning:
systems
Capabilities
• High involvement
• Culture
• Motivation:
• Programmatic
• Emergent
• Consultants:
• Extrinsic
• Intrinsic
• Knowledge-based
• Process-based
• expertise
• facilitation
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Summary Of Key Points
• Governance, charter and structure in the public sector is
transforming to meet environmental changes.
• Successful transformation requires a systematic change in
structure and roles, measurement, process, technology,
capability and culture.
• It is important to identify the value creation role of the specific
agency as a starting point and align the changes to support the
value creation.
• Public sector is different from the private sector but there are
lessons that one can adapt and apply across judiciously.
• What are the HR management levers to pull in creating the
desired capability and culture?
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Agenda
• The Changing Operating Environment of Public Sector HR
Management
• HR Management As a Change Lever
• HR Function As an Enabler
• A Path Forward
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Theme One: A Wholistic Approach To Talent
Management
Define the Brand
2
Analogy of
constructing a
house that
Attracts,
Motivates and
Retains talent…
Fit Out & Refurbishment
TALENT BRAND
DIFFERENTIATION
3
Structure
Ensure Alignment
COHERENCE IN PROGRAM OBJECTIVES,
DESIGN, COMMUNICATION & DELIVERY
Measure Impact
4
Foundation
ENGAGEMENT
1
Architect
Develop Leaders
LEADERSHIP
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The Power Of Talent Branding
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Theme Two: Talent Identification And
Development
Best Practice
Actions Needed
Governance
Transparency
Compensation
Board and CEO
• Define the types of talent
• Define the criteria for
assessment
Talent Pool
Senior Leadership
Emerging Leaders - Talent Pool
Emphasis for each group
Succession
Planning
Culture
Leadership
Competence
Succession
Management
Engagement
Differentiation
Accelerated
Development
Accountability
Engagement
• Train operating managers in
the assessment
• Calibrate the results
• Develop & monitor individual
development plans
• Align reward to support
talent objectives
Management
Trainees
Future Leaders - Young Talent
Engagement
Development
Alignment
Compensation
• Talent Management
Committee to oversee
programs
• Measure the success of the
Policy, process and practices in place to identify talent programs
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Talent Development Model
Talent Pipeline
Concepts Used:
Board and CEO
Succession
Planning
Output
• Input/output
mode
Senior Leadership
• Size of pipeline
• Product
specification
Talent Pool
Process
Emerging Leaders - Talent Pool
• Investment
• Process work
cycle time
Management
Trainees
• Quality
assurance
Future Leaders - Young Talent
Input
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An Integrated Talent Management Framework
I. Recruitment &
Selection
Plan recruitment
strategy with clear
talent value
propositions
Organize college
recruitment
Supplement
selection with
behavioral-event
interviews to identify
early signs of highpotential
II. Career Development
For all employees focusing on behavioral & technical skill development.
Define career development paths supported with developmental
programs, and create internal job posting systems
Determine business
strategy and plans
for three- to five-year
time frame
III. Performance Management
Differentiate between exceptional, effective and ineffective performance
Consistent exceptional performers will qualify for leadership
development, subject to potential assessment
Identify critical roles
and capabilities
needed to deliver the
business plans
IV. Leadership Pipeline
Estimate the demand
for technical and
general management
skillsets
Gate 1 : Accelerated
development for
graduate trainees
Gate 2 : Leadership
development for
potential leaders
Provide realistic job
preview
Activate on-boarding
process
VI. Manpower
Planning
Gate 3 :
Succession
planning for
senior leaders
V. Rewards Management
Clearly differentiating rewards for high, effective and low performers /
potentials
Career banding
Short and long term incentives
Project current
workforce to the
future and identify
gaps
Identify development
pathways and
external market
sources to bridge the
gaps
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Theme Three: Opportunity And Pay Differentiation
Example
POTENTIAL
Issue
Distinguished
Performer
P
E
R
F
O
R
M
A
N
C
E
Excellent
Performer
Solid
Performer
Needs
Improvement
Well Placed
Expandable
High Potential
• Resources: $5,000/person
• Compensation:
— Base: 60th target
— Bonus: 75th target
— LTI: 50th target
• Executive Offsite: Maybe
• Assessment Center: No
• Devel. Assignment: Maybe
• Resources: $15,000/person;
at least $5,000/person
• Compensation:
— Base: 60th target
— Bonus: 75th target
— LTI: 75th target
• Executive Offsite: Yes
• Assessment Center: Yes
• Devel. Assignment: Yes
• Resources: Up to $1,000/
person
• Compensation:
— Base: 50th target
— Bonus: 50th target
— LTI: 30th target
• Executive Offsite: No
• Assessment Center: No
• Devel. Assignment: No
• Resources: $3,000/person
• Compensation:
— Base: 50th target
— Bonus: 50th target
— LTI: 60th target
• Executive Offsite: Maybe
• Assessment Center: Yes
• Devel. Assignment: Yes
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Alternative Types Of Performance
Aggregation For Incentivization Purposes
Additive
Combination
Multiplicative
Corporate + Business Unit +
Individual
(Corporate + Business Unit) X
Individual
Corporate X Business Unit X
Individual
Pros:
Cons:
Pros:
Cons:
Pros:
Cons:
• Payouts can
be weighted
based on
the bank’s
and business
unit’s
performance
• Weaker
alignment to
bank and/or
business
unit’s
performance
• Payouts can
be closely
tied to bank’s
and business
unit’s
performance
• Not able to
sufficiently
distinguish
payouts
across
different
levels of
individual
performance
• Payouts are
differentiated
heavily by
individual
performance
• Individual
may not be
able to
control bank
and business
unit’s
performance
that will
affect
individual
payout
• Tightest
alignment
among the
bank,
business unit
and
individual’s
performance
• Poor
performance
at either
bank and/or
business unit
level beyond
individual
control will
determine
yes or no to
payout
• Everyone
gets some
reward
irrespective
of their unit
and/or
individual
performance
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Corporate vs. Business Unit Measures
Inclined towards
Corporate Measures
Inclined towards
Business Unit Measures
• Significant corporate
management
• Significant autonomy
• Shared resources and
synergy
• Diverse business and
strategies
• Need for collaboration
• Need for independence
• Mobility of talent
across units
• Little talent mobility
across units
• Strong corporate
culture and values
• Strong business unit
cultures and values
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Summary Of Key Messages
• To support organization transformation, we need take a
wholistic approach to talent management, development,
performance and rewards.
• The key lies in leadership to drive the talent strategy with a
distinct brand proposition to attract and retain.
• This is reinforced by an integrated talent management model
that emphasizes performance and develop, and supported by
the appropriate rewards strategies.
• How should HR organization serves as an enabler to the
transformation process?
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Agenda
• The Changing Operating Environment of Public Sector HR
Management
• HR Management As a Change Lever
• HR Function As an Enabler
• A Path Forward
33
Changing The Nature Of HR: New Operating
Framework
Change Focus...
Current
State
Transition
Interim
State
Transition
Desired
State
Strategic
Strategic
Strategic
Consultative
Consultative
Consultative
Administrative
Administrative
Administrative
Model for the 21st Century
Shift from HR being responsible for the entire chain of work
to a shared responsibility between HR and a network of providers
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Changing The Nature Of the Work:
New Proposition
 Administrative tasks and traditional technical expertise still needed but
outsourced
–
–
–
–
Remove middle man from the transaction
Obtain speed and agility
Achieve savings in time and money
Recognize better expertise and value externally
 Be an advisory function rather than a place people go to get something done
–
–
–
Shift focus of advice from how ―processes can be improved‖ or ―technical program
enhancements‖ to people-related issues that impact the business
Manage systems and processes that give employees access to information and answers,
rather than giving it yourselves
Use technology as a facilitator to integrate yourself into the heart of the business
 Provide strategic and trusted advisor services; become the people consultant to
the business; moving from delivery of services to delivery of competencies
–
–
–
Become a business leader first; understand leaders’ goals and concerns
Accept joint ownership of problems of the business
Provide credible coaching and teaching in everyday interactions
The Result: Growing and Increasing Value to the Organization
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HR Shared Services Model
Concept—Shared Services
Business
Unit
Business
Unit
HR
Manager
HR
Manager
• Compensation and
Benefits Design
• Benefits Administration
• Salary Administration
HR Strategy &
Design
Consulting
Services
• Payroll Administrative
Services
• HRIS
• Organizational Effectiveness and
Change Management
• Strategic Human
Asset Planning
• Training and Development
• Talent Management
Business
Unit
HR
Manager
very thin corporate
core - focused on
governance only
HR
Manager
Business
Unit
• Administrative services
centralized (sometimes
outsourced) to provide
primary interface between
employees and HR
• Design/strategic expertise
pooled to consult with
businesses where
functional knowledge is
required. Most design
decisions remain with
business units
• Client managers focused
on business units; provide
or “broker” needed
services from inside or
outside the Company
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High-Level Workflow Within Shared Services
Partner with
High Level Workflow within Shared Service
business to stay
close to changes Provide information on key business opportunities
Pull resources as needed to solve issues
Business
Focus
Advise on what is possible,
state of the art solutions
Design
and one-off
technical
support
Center of
Expertise
Direction
HRLT
Service
Center
On-going data and administrative Delivery
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HR Roles In Shared Services
Primary Group
•Business
Partner
Primary Duties
Primary
Customer

HR
Partners
Business
Leaders



Strategist

Developer
HR Consultants
(Center of
Expertise)
Employee
Advocate
HR Partners
and
Middle
Management



Provider
HR Services
(Service
Center)
Employees
and
Managers


Strategic link to business unit
Diagnose HR issues to make
business more effective
Lead HR initiatives; address
identified issues using resources in
COE
Receive data from Service Center,
analyze trends and take actions as
needed
Units of specialized consultants in
HR disciplines
Work with HR Partners to develop
strategies to address specific issues
in integrated fashion
Work with HR Partners to develop
programs and interventions to
address issues
Source of day-to-day information
and transactions for employees and
managers
Delivery and implementation of
programs/systems
Data and information source to
management and HR Partners
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Changing Skills And Capabilities In HR:
Valued Attributes For The 21st Century
Creativity
Next Generation
HR Professional
• Delivering
breakthrough
thinking to
internal
customers
Talent Deployment
Functional
Leaders
• Recruitment strategy
formulation
• Labor market analysis
• Sourcing approach/
tactics
Business Acumen/
Amassed Knowledge
HR Business/
Strategic Partners
• Being steeped in
knowledge of
profession,
organization, industry
Accountability
Engagement and
Environment
Teamwork
Quality
• Collaborating
and building
relationships
across all areas
of HR
• Raising the bar
and ensuring
organization and
individual
performance
improvement
• Being responsible,
taking risks, and
ensuring
commitments
delivered with
speed and
accuracy
Performance
Management
• Monitoring climate
and attitude
• Building community
relationships
• Managing conflict
Organization
Change
• Career management
systems
• Management
development systems
• Organization capability
assessment
Change Agent
• Advocate for beliefs—
confident, decisive,
action driven
• Act with power
• Culture, process,
structure advisement
• Design and change
technologies
• Communication
support
Innovate
• Exploit full capabilities of
technology/drive high
performance
• Deliver new approaches
that add value
• Seize and create
opportunities
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HR Transformation Levers
At the heart of HR Transformation lies HR Strategy which is influenced by the
other cornerstones of success for Transformation
What is the strategic intent
and strategies to achieve that
HR Strategy*
HR Structure*
• Organizational principles
• Reporting relationships
HR People*
• Types of roles
• Required competencies
How should HR employ technology to improve
service and cost effectiveness
HR Technology
HR
HR
Transformation
Transformation
HR Programs/
Processes*
• Primary focus areas
• Activity/process analysis
HR Accountabilities and
Measurement*
• Description of the work
• Measures of performance
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What Transformation Entails
• Customers: HR Community
• Needs:
• Partner successfully with the line managers to achieve results
• Bring to the table expertise and world class practices in people
management
• Deliver low cost , effective and efficient solutions
• Necessary end-outcomes of Transformation:
•
•
•
•
Redefined HR structure and roles
Articulated competencies for success in defined roles
Metrics to measure effectiveness
Programs and processes that deliver outcomes required for other
cornerstones
41
What Transformation Entails
Being
Effective
Effectiveness or Efficiency ?
Doing
Better
Things
Doing
Things
Better
Getting
Things
Done
Value
Added
Results
Process
Improvement
Basic Execution
Enable aligned behavior
Improved access, efficiency
and customer service
Meet administrative and
mandatory requirements
42
Learnings From The Front Lines—
What Makes Shared Services Work?
– Competence, and willingness to get it where
you don’t have it
– Allowing flexibility to meet business units’
needs
– Living with the overlaps and ambiguity
– Teamwork
– Flexibility and willingness to reevaluate and
change
– Setting priorities on HR overall, not by
individual function
– Emphasis on monitoring process, not rules
– Strong customer service orientation
43
Agenda
• The Changing Operating Environment of Public Sector HR
Management
• HR Management As a Change Lever
• HR Function As an Enabler
• A Path Forward
44
HR Challenges
“The HR function now must become a strategic player…a player adds value:
more importantly, a player scores. HR’s focus must, therefore, be on scoring—on
making things happen rather than merely being a part of the team”
— Richard W. Beatty, Rutgers University
and Craig Schneier, Management Consultant
• HR operating budgets are flat or declining
• HR organizational models continue to evolve
• Technology issues are increasingly complex
• Strategic vs. operational imperatives
• There is a strong need for better data in managing the HR function
• Accountability of the HR function - move from ―measure‖ to ―add
value‖
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Meeting The HR Challenges
• Know the reality - clearly, in quantifiable terms
• Know the customer - like a marketing professional
• Know your costs / returns - like a finance
professional
• Know you technology - like an IT professional
• Know your partners - like a business development
professional
• Know your business - Like a CEO and execute with
conviction and courage
46
Where Are We As A Profession?
“My advice is to resist the temptation to believe that HR managers and staff in
organizations have a rosy future or, for that matter, any future at all, because
there are some profound problems facing Human Resources as a function
within organizations”
— Jeffrey Pfeffer, Stanford University
Self Assessment;
• Do we have the right people doing the right things in the organization to
achieve our business goals?
• Are we doing what others are doing and, yet, be winning in the
marketplace?
• How do our internal customers perceive us and our contribution to business
results?
• How are we apply the concept of differentiation, alignment, integration with
benchmarking as an aid?
• How do we balance the needs of the business and the talent?
• How do we know if we are on the right track?
• What do we as an HR team want to be famous for?
• What do we need to do DIFFERENTLY to get to our vision?
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Point Of Contact
Na Boon Chong
Director, Consulting, Southeast Asia
Email: boon_chong_na@aon-asia.com
48