State of Idaho

1. State of Idaho • Enhancing the Effectiveness of the HR Function in Today’s Business Environment • SEPTEMBER 20, 2011 • NEVILLE KENNING

2. About Hay Group: The facts and figures 2600 Employees worldwide 8000+ clients 84 Offices in 48 countries $470m Revenue

3. Hay Group experience • Hay Group has extensive experience and has a proven track record in consulting with the Public Sector throughout the USA

4. Hay Group experience (cont’d) Hay Group has worked with a wide range of State Governments, such as: State of Alabama State of Arizona State of Colorado State of Delaware State of Florida State of Idaho State of Kansas Commonwealth of Kentucky State of Louisiana State of Maine Commonwealth of Massachusetts State of Minnesota State of Mississippi State of Montana State of Nevada State of New Hampshire State of New Jersey State of New Mexico State of North Dakota State of Oklahoma State of Oregon Commonwealth of Pennsylvania State of South Carolina State of South Dakota State of Washington State of West Virginia State of Wyoming Government of Guam

5. Individual and team competence Reward and recognition Leadership Values and culture Management processes and systems Organization, team and job design Work processes and business systems Achieving strategy through people Strategic objectives Results Integrated alignment process

6. Does HR add value? • -“nestling warm and sleepy in your organization, like an asp in Cleopatra’s bosom, is a department whose employees spend 80% of their time on routine administrative tasks. Nearly every function can be performed more expertly by others for less cost. Chances are its leaders are unable to describe their contribution to value added except in trendy, unquantifiable and wannabe terms, yet, like a serpent unaffected by its own venom, the department frequently dispenses to others advice on how to eliminate work that does not add value. I am describing, of course, your HR Department and have a modest proposal: Why not blow the sucker up?” • (Thomas Stewart- The Leading Edge- Fortune Magazine January 15, 1996)

7. HR drives strategic solutions and leads effort HR illuminates strategic issues to help drive the business forward Progressive Practice HR partners on solutions HR focus on OD to drive business results, promote agility & clarity HR aligns activity with business strategy Strategic talent management Focus on Future Leaders Precision workforce plans HR engages the business in capability debate HR proactively sources talent Manpower & Succession plans Managers ‘own’ people issues Web-based portals / ‘paperless’ administration HR delivery streamlined by technology & outsourcing The HR journey Leading Edge Traditional Practice Business Imperatives HR isolated in HR Strategic Intent HR for HR professionals Organizational Capability HR responds to requests Human Capital HR recruits for open jobs HR Service Delivery HR processes transactions

8. Defining the HR operating model Transformational/ Consultative Customer Intensive Strategic Impact HR Business Partners “Corporate” HR People/ Service Delivery Policy/ Process Development HR Administration/ Shared Services Centers of Excellence Operational Excellence HR Discipline Leadership Transactional/ Operational

9. No universal recipe for HR structure • Ideal design depends on business needs and readiness • Role of HR: operations vs. business value • Burning platform: cost vs. service • Focus of control: centralized vs decentralized • Complexity of the organization • Key HR processes • Nature of employment • Technology status • Change orientation • Investment capacity • Implementation capacity • Courage

10. What are the characteristics of high performing HR functions? • This database of the Most Admired Companies has been captured by Fortune/Hay Group over the last 11 years • Organizations were rated by CEO’s, Senior Managers and Analysts against a range of attributes • Top performing clients were then interviewed to understand the precise practices that drove these judgments

11. Top quartile characteristics: the value chain

12. Plan resourcing and HR delivery • Typical practices • Below Benchmark • React to short-term supply pressures • Exclusive focus on today's skills and capabilities • Fails to link future demand requirement to quality of current supply • Top Quartile Benchmark • Clear translation of business strategy into required jobs and people • Move beyond today's skills and capabilities to consider those the organization will need to survive and compete in the future including how they can be assessed • Deep understanding of what capabilities will be more/less important in future and understanding of current capability against these benchmarks

13. Attract and recruit people • Typical practices • Below Benchmark • Hire people for jobs not careers to meet short-term needs without considering longer- term requirements of the business • Maintain static competence models • HR levers are not aligned to re-enforce the “image” of the organization • Top Quartile Benchmark • Create strong links between the organization and employee identity • Deliver on its promises of mission, values and culture • Take a rigorous approach to selecting employees with an on-going re-assessment on the competencies for success for the longer-term

14. On boarding people • Typical practices • Below Benchmark • Have no clear on-boarding process for supporting leaders but relies on managers ‘picking it up as they go along’ • Let managers off the hook in implementing agreed process • Top Quartile Benchmark • Formally address key questions about the new role and its implications for maximizing performance • Develop 30-60-90 day plan • Culture strongly supports need for high quality process/content and necessary development for leaders to do this

15. Developing people • Typical practices • Below Benchmark • Only provide leadership training for Senior Leaders • Place over-reliance on ‘promotion through the ranks’ to enable leadership development • Focus on individual development rather than working more effectively in teams • Top Quartile Benchmark • Leadership Development is a key Top Executive priority • Invest early in Leadership Development • Spot future stars early and support their progress • Development linked to improving team performance not just individual performance

16. Manage people’s performance • Typical practices • Below Benchmark • Strong focus on lag indicators • Lack of courage, consistency or understanding causes a failure to tackle performance issues • Failure to align all HR levers to reinforce consistent messages, (reward, culture, performance management, succession) • Top Quartile Benchmark • Equal focus on lead and lag indicators • ‘Line of sight’ between strategy and roles is clear throughout the organization • Poor performance is tackled • Performance measures support need to work across boundaries

17. Transition people • Typical practices • Below Benchmark • Are not good at giving stretch assignments; based on leadership potential vs. technical ability • Do not have a systematic way of planning for moves on a pro-active basis but tend to be driven by events • Top Quartile Benchmark • Clear understanding of managerial capability • Create stretch assignments • Transition supported through active leadership training and development • Role matched to peoples skills/competencies and motivation

18. Issues for the human resources function • Do our HR professionals have what it takes to thrive and be effective in today’s business environment? • Can we move from often being perceived as “centralist controllers” to being effective business partners who are effective problem solvers with our internal “clients?” • Successful HR transformation requires our HR professionals to have a necessary blend of HR expertise and consulting skills, together with critical competencies to help our “customers” to identify and solve business issues

19. Costs Value Added Strategic Partnering 10% 60% 30% 30% Services Delivery 10% 60% Administration Value added human resources

20. Expectations of the HR function • Manage work culture, including the integration of different work cultures • Attract, develop, and retain the next generation leaders • Become a more effective business partner • Help the organization reinvent/redesign itself to serve more effectively

21. Human resources organizational change • Reduce routine, low value added work • Align HR culture with Organizational culture • Shift mindset from “HR Professional Expert” to “HR Process Expert/Consultant”

22. Coach Relationship Manager Trainer HRConsultant Doer Project Manager Facilitator Content Expert The HR internal consultant “hats”

23. Critical HR competencies • Leadership • Listening, understanding and responding • Analytical thinking • Strategic business sense • Impact and influence • Teamwork and cooperation • Achievement motivation • Conceptual thinking • Developing others • Customer-service orientation

24. Contracting/Partnering with Clients 1 2 3 4 5 6 7 8 9 10 Evaluating the Outcomes Diagnosing the Situation Implementing the Solution The consulting framework

25. Consulting skills needed • Establish credibility and trust • Understand client’s business • Active listening • Strong communication skills; easily understood • Analyze and synthesize issues • Understand multiple perspectives • Good conflict management skills • Diagnose and suggest appropriate interventions/solutions to help client meet their objectives • Provide feedback without creating defensive reactions • Accept feedback without reacting defensively

26. Blending HR expertise with consulting skills • Resource to clients • Calculated risks • Influence • Process expert • Business results focused • “Transformations” (e.g., process change, strategy, cultivating knowledge, developing talent networks) • Regulate clients • Risk adverse • Direct persuasion • Technical expert • HR results focused • “Transactions” (e.g., benefits, compensation, administrative)

27. Centralized vs. decentralized • It doesn’t need to be an either/or • The key is to define “who is accountable for what” and then establish the means by which these accountabilities will be implemented: • Policy • Execution • Review

28. What can we learn from other States? • Full range along the spectrum of how HR is organized and does business • Example of Centralized – South Dakota • Example of Decentralized – Texas • The Importance of an HR Business Plan – South Carolina • Effective Use of Single Point of Contact – New Mexico • Effective Use of Measuring HR Effectiveness – New Mexico • Effective Use of Technology for Communication of a Major Initiative – Wyoming

29. In summary • Manage work culture including the integration of different work cultures and organizations • Attract, develop and retain the next generation of leaders • Help the organization to re-invent and re-design itself to do business more effectively • Deliver core HR/Administration functions in a timely and efficient manner through the enhanced use of technology and data • The optimal mix of Centre of Excellence specialist advice and Division focused generalists • Provide value-added internal consultancy services - provide HR partners who understand the human capital implications of business problems and can develop solutions to address them • HR services that are characterized by a focus on internal customer satisfaction • A common policy framework and consistent application of policies