Informe de La BCG. Creating People Advantage 2013

Creating People
Advantage 2013
Lifting HR Practices to the Next Level
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s
leading advisor on business strategy. We partner with clients from the private, public, and not-for-
profit sectors in all regions to identify their highest-value opportunities, address their most critical
challenges, and transform their enterprises. Our customized approach combines deep insight into
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78 offices in 43 countries. For more information, please visit bcg.com.
The European Association for People Management (EAPM) was founded in 1962 by the national
associations and professional institutions of personnel management in France, Germany,
Sweden, Switzerland, and the United Kingdom. Today, the nonprofit umbrella association, with 29
national member associations throughout Europe, represents professionals specializing in people
management. EAPM operates independently of employers, trade unions, governments, and
political bodies. Its objectives are to promote and develop knowledge and experience in the HR
field, specifically knowledge of people issues and people activities, and to demonstrate the
importance of these topics to both the public and private sectors. For more information, please
visit www.eapm.org.
Creating People
Advantage 2013
Lifting HR Practices to the Next Level
Rainer Strack Pieter Haen
Jean-Michel Caye Filippo Abramo
Carsten von der Linden
October 2013 | The Boston Consulting Group

Contents
3 OVERVIEW
4 EUROPEAN TRENDS IN MANAGING PEOPLE

Europe’s Top Priorities for 2013
Return on Effort Invested
7 ROOT CAUSES OF SUCCESS

Talent Management and Leadership
HR Analytics: Strategic Workforce Planning and Reporting
Engagement, Behavior, and Culture Management
Performance Management and Rewards
HR Communications and Social Media
HR Target Operating Model
Training and People Development
Diversity and Generation Management
Recruiting: Branding, Hiring, and Onboarding
Labor Costs, Flexibility, and Restructuring
3 3 APPENDIX I: METHODOLOGY
3 5 APPENDIX II: EXECUTIVE INTERVIEWEES
3 7 APPENDIX III: SUPPORTING ORGANIZATIONS
3 9 NOTE TO THE READER
2 | Creating People Advantage 2013

OVERVIEW
T he benefits of best-in-class people management are indisput-

able, yet companies struggle to translate their ambitions for their
HR practices into concrete actions. For this year’s Creating People
Advantage report, The Boston Consulting Group, in partnership with
the European Association for People Management (EAPM), used an
empirical approach to quantify the differences between companies
with high capabilities in managing people and those with low capa-
bilities. In this way, we identified specific practices, in ten broad HR
topics, that can lift companies’ people management to a higher level.
The report presents these specific practices in full detail, as well as
some overall trends that we observed across most people-manage-
ment areas.
First, companies must align their HR strategy with the overall compa-
ny strategy along the complete HR value chain. Long-term strategic
workforce planning, recruiting, performance management, and em-
ployee development require a holistic approach and systematic invest-
ments. The gears that drive HR activities need to mesh effectively.
Second, companies should break down the silos and ensure that busi-
ness units and regions do not act on their own. Instead, they need
clear governance and a structured HR model. Steering HR activities in
a consistent manner across the complete organization calls for the
proficient use of HR communications, including social media.
Furthermore, companies should continually monitor their HR activi-

ties and ground their decisions in objective data. They need to build
predictive models on the basis of data that give an accurate picture of
workforce supply and demand and that track HR KPIs. In this way,
they can develop and channel their talent effectively and adjust their
recruiting and training efforts to match business needs.
The Boston Consulting Group • European Association for People Management | 3

EUROPEAN TRENDS IN
MANAGING PEOPLE
S ince the publication of Creating People

Advantage 2012: Mastering HR Challenges
in a Two-Speed World, the operating environ-
done to concentrate on the most relevant HR
areas and allow for more in-depth analysis in
these areas. (For more about the methodolo-
ment for European companies has grown gy, see Appendix I; for a list of the executives
even more challenging. Lingering economic we interviewed, see Appendix II.)
uncertainty across Europe, the accelerated
pace of business, globalization, and digitaliza-
tion have created a more difficult arena in Europe’s Top Priorities for 2013
which to compete, and the difficulty is By asking respondents to rate their compa-
compounded by growing talent shortages in ny’s current capabilities across ten key HR
key areas. Improved people-management and people-management topics, along with
capabilities can help companies navigate the future importance of those topics, we gen-
these challenges, yet it is often difficult to erated a prioritization matrix. (See Exhibit 1.)
identify the concrete actions on which HR
leaders should focus their efforts. The three topics in the red zone—talent man-
agement and leadership; HR analytics; and en-
The 2012 global report established a clear gagement, behavior, and culture management—
connection between high capabilities in man- are those that should be the most urgent
aging people and overall economic success. priorities for executives. Although executives
Building on that foundation, our aim for this gave those topics high ratings for future im-
report is to give HR leaders clear guidance by portance, companies on average rate their
identifying actions with the greatest likeli- current capabilities as being rather low. Also
hood of getting companies from good to great among the individual countries—as well as
in people management. among the different industries—represented
in our survey, these topics were consistently
Data collected through an online survey gen- ranked among those with the highest need to
erated 2,304 responses from executives in 34 act. (See Exhibit 2.)
European countries, across a broad range of
industries. In addition, we conducted 37 in- Current capabilities were rated lowest for HR
depth interviews with HR executives from communications and social media, diversity and
well-known multinational companies. One generation management, and HR target operat-
important change in the current survey is ing model. These topics also received the low-
that we consolidated the 22 topics of the pre- est ratings for future importance. In our opin-
vious survey into 10 broader topics. This was ion, however, these topics, which are directly

Exhibit 1 | Respondents Identified Talent Management and Leadership as the Most Critical HR
Topic; They Devote the Greatest Effort to Training
High
Training and people Talent
development management and
leadership
Engagement,
behavior, and culture
Recruiting: branding, management
hiring, and onboarding
HR analytics:
strategic workforce
planning and Sample size: 2,304
reporting
Performance
management Medium Strong
Future and rewards need need
importance to act to act
Labor costs, flexibility, HR communications Low Medium

and restructuring and social media need need
to act to act
Effort invested
HR target
operating model
Diversity and
generation
management Low High
Low
High Low
Current capability
Source: 2013 BCG/EAPM proprietary Web survey and analysis.

Note: Average values of countries were weighted according to the countries’ real GDP.
Exhibit 2 | Talent Management and Leadership, Followed by HR Analytics, Ranked Highest in

Most Countries
High National GDP Low
Country
HR topic DE UK FR IT ES RU NL TR CH SE BE AT NO DK IE FI GR PT RO UA HR SI BG MK MT
Talent management and 1 1 1 1 1 2 2 1 1 1 3 1 1 1 2 1 1 2 1 1 1 1 3 1 1
leadership
HR analytics: strategic work- 2 2 6 2 3 6 1 5 2 2 1 3 4 3 3 5 4 3 8 6 8 4 2 4 4
force planning and reporting
Engagement, behavior, and 7 4 3 3 2 4 5 3 6 4 2 9 2 4 1 4 2 4 5 4 3 2 1 5 3
culture management
Performance management 8 3 2 7 4 1 8 8 8 6 5 2 5 2 4 3 3 1 7 2 5 7 6 3 2
and rewards
HR communications and 5 6 4 4 5 9 3 2 3 3 4 5 7 5 7 2 5 8 3 5 6 5 8 2 6
social media
HR target operating model 6 7 7 6 8 3 9 4 7 9 10 6 6 6 5 7 9 7 6 3 4 8 4 6 7
Training and people 10 5 8 8 6 5 4 7 5 8 6 10 8 7 6 9 6 5 2 9 2 3 9 8 5
development
Diversity and generation 4 10 9 5 7 10 7 6 9 5 8 4 9 8 8 10 8 10 4 8 10 6 5 9 10
management
Recruiting: branding, hiring, 3 9 5 9 10 8 10 10 4 7 9 8 3 9 10 8 10 9 10 10 9 10 10 10 9
and onboarding
Labor costs, flexibility, and 9 8 10 10 9 7 6 9 10 10 7 7 10 10 9 6 7 6 9 7 7 9 7 7 8
restructuring
Rank 1 2 3 4 5
Note: The data are from countries with more than 20 respondents. Rankings are based on the combined values of future importance and current
capabilities. The sorting of HR topics is based on overall rankings. DE = Germany, UK = United Kingdom, FR = France, IT = Italy, ES = Spain, RU =
Russia, NL = Netherlands, TR = Turkey, CH = Switzerland, SE = Sweden, BE = Belgium, AT = Austria, NO = Norway, DK = Denmark, IE =Ireland, FI =
Finland, GR = Greece, PT = Portugal, RO = Romania, UA = Ukraine, HR = Croatia, SI = Slovakia, BG = Bulgaria, MK = Macedonia, and MT = Malta.

related to important megatrends, should not effort in these topics, they seem to generate
be underestimated. This is especially true of a marked improvement in capabilities. These
diversity and generation management, which, findings should motivate companies to in-
given the aging European workforce and the crease their efforts in these areas.
dwindling labor supply, will play a crucial
role in the future. By contrast, the lowest-efficiency topics were
talent management and leadership and perfor-
mance management and rewards. Current capa-
Return on Effort Invested bilities in these areas do not reflect the effort
We considered the current capability levels of that companies have invested in them.
the ten HR topics in relation to the effort in-
vested in them—time, money, and full-time That said, ceasing investment effort in these
employees over the past three years. That al- topics is not an option, especially since their
lowed us to assess how effective companies future importance is very high. These topics
had been in their efforts to improve HR capa- are complex and oriented to the future, and it
bilities. (See Exhibit 3.) Topics above the hori- takes longer for efforts invested in them to
zontal line show higher ratings of capability lead to visible results. It is, therefore, critical
than would be expected in view of the efforts that companies adopt a long-term view. This
invested in them over the past three years. is especially true for talent management and
Topics below the horizontal line, however, leadership, the topic that is seen as the most
show a negative return on effort invested. Ca- important for the future and that has the low-
pabilities in these areas are lower than one est return on effort invested.
would assume by looking at invested efforts:
the investments did not lead to commensu-
rate improvements.
In two topics, companies’ capabilities clearly

exceed the effort invested in them: diversity
and generation management and HR communi-
cations and social media. If companies invest
Exhibit 3 | Talent Management Is Seen as the Most Important Future HR Topic, but Its Return
on Effort Invested Is Lowest
Return on effort invested in HR topics

Diversity and generation
Higher management
capability than
effort invested
HR communications Capability in
and social media Labor costs, HR topic
HR target flexibility, and
operating restructuring Recruiting: branding, corresponds to
Return model hiring, and onboarding effort invested
on effort
invested
Engagement, behavior, Training and
and culture management people
development
HR analytics: strategic workforce
planning and reporting Effort invested
Lower
capability than Performance management
effort invested Talent
and rewards management
and leadership Low High
Low High
Future importance
Note: Average values of countries were weighted according to the countries’ real GDP; N = 2,304.

ROOT CAUSES OF SUCCESS
A key difference in this year’s report is

that on the basis of empirical analyses,
we sought to identify the root causes of
tween highly capable and low-capability
companies.
people management success among highly

capable companies across all ten of the Talent Management and
survey’s HR topics. In this discussion, the Leadership
topics are arranged by order of the identified Talent management and leadership activities
need to act. are used to identify highly capable employ-
ees and develop them for more senior posi-
Within each topic, we asked survey respon- tions of greater responsibility. It is a key
dents who reported very high or very low cur- means by which companies improve reten-
rent capabilities for their company—which tion and fill their leadership pipeline. This
also correlated with a high versus low return topic showed the highest need to act and
on effort invested—to provide more specific also the lowest return on effort invested. In
answers about subcomponents of that topic. our examination of highly capable compa-
(For details about the methodology, see Ap- nies, we identified the actions that compa-
pendix I.) The results—shown graphically for nies should take in order to increase their ca-
each topic in the following section—establish pabilities and the return on effort invested in
a clear demarcation between highly capable this area. (See Exhibit 5.)
and low-capability companies and highlight
the activities that most clearly differentiate Break down the silos. When asked wheth-
these groups. These activities represent the er their talent-identification processes were
most effective drivers of success: the process- transparent, efficient, and enterprise-wide,
es and functions that HR leaders should fo- respondents of highly capable companies
cus on to trigger meaningful improvements in showed an average degree of agreement of
people management performance and to in- 74 percent, compared with just 23 percent
crease their return on efforts invested. Exhib- among low-capability companies.1 Highly ca-
it 4 gives an overview of the most promising pable companies succeed in breaking down
drivers of high capability in each of the ex- the silos of business units and locations,
amined sections. thereby enriching their talent and leadership
pipelines. In this way, talented employees are
For each of the ten HR and people-man- not proprietary assets for individual manag-
agement topics, we provide detailed de- ers; rather, these employees support the or-
scriptions of the key differentiators be- ganization as a whole. In addition, everyone

Exhibit 4 | Thirty People-Management Measures That Make the Difference
Usage by highly
capable versus low-
HR topic HR measure capability companies
Establish transparent, efficient, and enterprise-wide talent- 3.3x
identification processes
Strategically plan talent and leadership needs on a long-term (more 3.6x
Talent management than five-year) basis and by business unit, expertise, and location
and leadership Develop talent systematically through the right opportunities 3.0x
and programs
Consistently apply leadership criteria in selection, promotion, and 2.2x
reward processes
Define a clear process for measuring HR and workforce KPIs 2.2x
HR analytics: strategic Implement a demand model linked to such driving forces as
workforce planning business strategy, productivity, and technology 2.2x
and reporting
Establish a systematic and regular process to update analyses and plans 2.0x
Invest significantly in developing company culture 2.3x
Engagement, behavior, Measure behavioral change and associated result improvement 2.4x
and culture
management Establish a management cascade process to define actions for 2.2x
improving engagement
Define clear performance criteria for each job function 3.4x
Performance Consistently apply performance criteria in the feedback and 3.3x

management and promotion process
rewards Establish a compensation and benefits policy that fosters the 2.6x
right results and behavior
Define a clear and integrated HR communications and social-media strategy 3.7x
HR communications Foster effective monitoring of the company’s social-media presence 2.8x
and social media
Provide dedicated employees responsible for social-media activities 2.8x
Foster the business’s acceptance of HR business partners as strategic 2.3x
sparring partners for all people-related topics
HR target operating Foster delivery of high-quality service by bundling HR expertise 2.2x
model
Create an effective balance of localized and globalized HR roles
2.5x
and responsibilities
Use learning and development activities for insights regarding 2.6x
strategy development
Training and people
development Foster the commitment of senior management to learning and development 2.0x
Establish a clear link between business strategy and learning
2.0x
and development
Invest systematically in building senior employees’ capabilities 1.9x
Diversity and Systematically apply cross-cultural team-building activities and
generation 1.9x
management cultural-awareness trainings in diverse teams
Establish processes that encourage junior employees to share their opinions 1.6x
Define the recruiting strategy for different candidate pools, entry levels,
2.5x
and channels
Recruiting: branding, Develop an employer value proposition systematically on the basis
hiring, and onboarding 2.4x
of a thorough analysis
Establish a systematic process for cultural onboarding of new hires 2.2x
Labor costs, flexibility, Strive for transparency on workforce supply and demand 1.9x
and restructuring Maintain flexibility in the workforce by implementing tools and methods 2.0x
Source: BCG analysis.

Note: For each HR measure, we divided the average usage among the highly capable subset by the average usage among the low-capability subset.
For example, average usage values of 74.5 percent and 22.9 percent for the top HR measure result in the displayed multiple of 3.3. Highly capable
companies had a maximum capability rating of 5 for each respective HR topic; for low-capability companies, the rating of future importance was at
least three points higher (on a scale of 1 to 5) than the value of capability. HR topics were sorted according to average need to act. Companies all
have more than 50 employees.

Exhibit 5 | Root Causes of Success in Talent Management and Leadership
Talent management Degree of agreement of highly capable

and leadership versus low-capability companies (%)
Our talent-identification processes are transparent, efficient, and

52
enterprise-wide
We strategically plan our talent and leadership needs on a long-term (more
49
than five-year) basis, as well as by business unit, expertise, and location
We develop talent systematically through the right opportunities
49
and programs
Our leadership criteria are consistently applied in selection,
40
promotion, and reward processes
We have reviewed and redesigned our leadership model within the
39
past five years
We have specific processes for developing and engaging middle
39
managers
Our leaders are rewarded for their people-development efforts
34
and results
Low-capability companies Highly capable companies 0 20 40 60 80 100

Note: We define highly capable companies as those with a self-reported capability score of 5 in this HR topic. We define low-capability companies
as those with a self-reported score of future importance that is at least three points higher than the self-reported score of current capability. Both
scales range from 1 to 5. All companies have more than 50 employees. Degree of agreement (from 1 for “disagree” to 5 for “agree”) has been
turned into a percentage value by linear transformation. Highly capable companies n = 94; low-capability companies n = 258; total N = 2,304.
should have a fair shot at rising to leadership talent to rise to top-leadership positions.
roles, and the evaluation and decision proc- Because of this long development process, it
esses should be perceived as transparent and is key to strategically plan talent and leader-
unbiased. ship needs on a long-term basis instead of
simply reacting to ad hoc short-term trends.
Highly capable companies have predictive
“Talent does not belong to indi- models in place for planning for their talent
needs at least five years into the future—by
vidual managers but to the organ- business unit, expertise, and location. This
ization as a whole. By realizing allows them to manage their talent proac-
tively and, for example, to modulate the
this concept, we have been able career pace of certain employees to prevent
to optimally allocate across the temporary oversupplies or talent gaps. As
Société Générale’s approach makes clear,
group and enhance the career planning for the long term also implies
development of our best people, maintaining talent development programs
because they’re no longer limited in times of crisis. (See the sidebar “Société
Générale Succeeds in Retaining Talent
to a particular silo.” While Undergoing a Major Transformation
Jean-Claude Le Grand, director of Process.”)
International HR Development at Make talent, not war. Best-practice compa-

L’Oréal nies analyze the experiences that a future
leader requires in order to succeed, and they
systematically develop their talent by
Plan your talent for the long term and invest. offering the right trainings, opportunities,
About 60 to 80 percent of a company’s and programs. By motivating talented
leaders are typically promoted from within, employees to migrate to strategic, high-
and, in general, it takes 10 to 12 years for growth zones (for example, through rotation

Société Générale Succeeds in Retaining Talent
While Undergoing a Major Transformation
Process
Société Générale, a French multinational strated that it still recognized talent and
banking and financial-services company, that Société Générale would remain an
successfully managed to keep and develop employer that offered promising career
its talent throughout a workforce reorgani- options.
zation. As a result of the global financial
crisis, the company had experienced Another important pillar of the talent
significant turbulence dating back to 2007, strategy was a new “mobility campus,”
and it needed to reduce its cost base and which was staffed with former line manag-
simplify the organization to become more ers and strong members of the HR func-
agile and adaptive. Bank leaders proposed tion and which helped organize thousands
a vast transformation program that would of internal transfers efficiently. The mecha-
reorganize its operations in all divisions nism allowed the bank to triple the
worldwide. number of transfers in a short period of
time, so employees could shift from
The reorganization forced the bank to divisions and areas with overcapacities to
reduce the total number of employees, and, those with greater need. To support these
working in conjunction with the strong employees, the mobility campus also
French labor unions, it agreed on a new trained them in the skills they would need
social contract, which among other in their new roles, helping them adapt
measures, included a voluntary process for quickly and further increasing the retention
layoffs. At the same time, the bank’s of key talent.
leadership insisted on continuing to
develop internal talent and preventing the These talent-management measures are
loss of key employees. still in place today, and as Société Gé-
nérale’s head of group HR, Edouard-Malo
The strategy built on robust talent proc- Henry, says, they “enable us to retain our
esses that Société Générale had put in best performers and prepare our future
place in 2009.1 Among other improve- with high potentials, while running the
ments, there was a highly efficient talent- necessary bank transformation.”
cycle process that included regular
performance reviews, succession plans, This simultaneous process of reducing the
and mobility management. The company workforce and developing and retaining key
also established a standard talent-gover- talent is symptomatic of a broader shift
nance model that it could apply in all that has unfolded over the past several
regions. years. While traditionally the primary focus
of companies was to attract, retain, and
The high level of transparency associated motivate talent, today, in many cases, the
with the talent pipeline and international challenge is to reduce and retain at the
standardization proved crucial when the same time.2
bank had to reduce its workforce in 2012.
In order to ensure that it would retain key
Notes
talent, Société Générale systematically 1. See Creating People Advantage in Times of Crisis: How
reviewed more than 3,000 key employees to Address HR Challenges in the Recession, BCG report,
(high-potential employees and high March 2009.
performers, ranging from emerging talent 2. See Reduce and Retain: Adjusting Workforces for the
New Reality, BCG article, December 2012.
to prospective senior executives) out of a
total workforce of more than 150,000. In
doing this, the bank leadership demon-

and international-mobility programs), HR and workforce KPIs. Implicit in this ac-
companies can proactively develop their tivity is the analysis of data to make predic-
talent according to their needs instead of tions, as well as the monitoring and improv-
being forced to buy talent.2 ing of HR and people management
processes.
Walk the talk through consistent leadership
criteria. Highly capable companies have This topic showed the second-most-urgent
clearly defined leadership criteria that need to act, as well as a low return on ef-
pervade the HR value chain. By systematical- fort invested. In digging deeper into the
ly applying their leadership criteria in all results, we identified the key actions that
selection, promotion, and reward processes, companies should take in order to increase
these companies give transparent guidance to their capabilities in HR analytics. (See Ex-
their employees and make sure that the hibit 6.)
talent that best fits the company’s strategy
makes it to the top. Build predictive models. Highly capable
companies have a regular and clearly
defined process for measuring HR and
HR Analytics: Strategic Workforce workforce KPIs (the difference in the
Planning and Reporting degree of agreement between highly
We define HR analytics as those activities capable and low-capability companies was
that companies use to forecast workforce 38 percentage points), and they use this as
supply and demand and to track and report the basis for building predictive models
Exhibit 6 | Root Causes of Success in HR Analytics
HR analytics: strategic workforce Degree of agreement of highly capable

planning and reporting versus low-capability companies (%)
We have a regular and clearly defined process for measuring HR

38
and workforce KPIs
We have a demand model that is linked to driving forces such as
36
business strategy, productivity, and technology
We have a systematic and regular process for updating analyses and plans 33
We derive initiatives and actions (for example, hiring, training, and

33
downsizing) on the basis of the results of workforce planning
HR and workforce KPI results that outperform targets are
31
systematically used to derive best practices
We use a systematic target-setting process for KPIs
30
(linked, for example, to medium-term planning and budgeting)
HR and workforce KPI results that fall below targets are
29
systematically translated into action plans
Our workforce supply modeling has a long-term (more than five-year) horizon 29
We measure the value added to the business by human capital

28
(that is, value added per person)
We have a consistent job-family structure across the entire organization 25
HR and workforce KPI results are discussed by the corporate board 23


regarding workforce engagement, perfor- revamping the overall business strategy.
mance, and behaviors. Using data to (See the sidebar “Syngenta Uses Strategic
establish predictive models gives a quanti- Workforce Planning as a Strategic Tool to
tative foundation to decisions along the Support Its Growth Profile.”)
complete HR value chain—from selecting
the most promising candidates in the
recruiting process to predicting attrition
and identifying the characteristics of
successful leaders. Furthermore, the regular “Over the past four years, we
collection of HR data helps a company spot have developed a much more
issues that need to be addressed and to
quantify the success of people manage-
quantitative and scientific ap-
ment initiatives. proach to mapping available
internal and external talent, and
“In the past, HR decisions were comparing this to future needs by
often driven by conventional job function and capability.”
wisdom, but without links to hard Hugo Bague, group executive, organi-
facts. In today’s new environ- zational resources, Rio Tinto
ment, we are already improving
Don’t do it only once—update it. Highly
our analytics to study, plan, and capable companies have a systematic and
monitor workforce dynamics, regular process for updating their HR and
including strategic workforce workforce analyses and plans. When they
measure KPIs, companies need to make
planning. In addition, analyt- sure that they are still in line with the
ics will help us internally sell all company’s strategy. This assessment should
be done on a regular basis. The same is true
proposed HR actions, such as for predictive models: to improve the
investment needs, learning devel- precision of predictions, the models should
be updated regularly with the newest
opment, and hiring plans.” available data.
Paolo Cornetta, group head of HR,
UniCredit Engagement, Behavior, and
Culture Management
Accurately assess job demand. Best-practice Engagement, behavior, and culture manage-
companies have a demand model linked to ment includes the degree to which the or-
their business strategy that enables them to ganization can establish company-specific
predict job profiles that will be needed by norms and behaviors for employees, engage
business unit and location. By using strate- and retain them, and give them the sense
gic-workforce-planning tools that enable that they are contributing to something
companies to compare workforce supply meaningful.
with demand, HR can anticipate future
shortages and surpluses and mitigate their With high ratings of future importance and
impact on the company through proactive only moderate current capabilities, this topic
measures (such as increased recruiting also shows a high need to act. We identified
efforts). To integrate workforce planning several key activities for companies that
with the corporate strategy and finance, HR want to improve their capabilities in engage-
employees should work closely with line ment, behavior, and culture management and
managers. As Syngenta demonstrates, to increase their return on effort invested.
strategic workforce planning can also lead to (See Exhibit 7.)

Syngenta Uses Strategic Workforce Planning as
a Strategic Tool to Support Its Growth Profile
Syngenta, a large global Swiss chemical planned increase in sales. To generate new
company that manufactures seeds and ideas, business units were asked to
pesticides, launched a plan to increase its respond to hypothetical scenarios—for
sales from $14 billion in 2012 to $25 billion example, what they would need to do to hit
in 2020. Achieving that growth would the goals with no increase in staff size.
require an increase in staff, and Syngenta
needed to accurately forecast the future This innovative approach inspired open
demand and supply of employees, espe- discussions and led to new ideas on how
cially for key roles. It turned to strategic forecast capacity requirements could be
workforce planning. reduced. Ultimately, in both pilot units,
leaders identified specific measures with
The approach entails not only identifying the potential impact of reducing employee
the gaps in future demand and supply but demand growth by more than 50 percent.
also defining initiatives that can close In this way, the people strategy challenged
those gaps. To start, the company ran two and ultimately changed the business
pilot tests on units with particularly rare strategy.
job profiles. For these pilot areas, Syngenta
analyzed both supply and demand for key In order to spread this impact across all
positions, and then it performed a gap business units on a long-term basis and for
analysis by comparing the two. The model all business units, Syngenta’s leadership
focused on more than merely adding decided to install a global strategic-work-
employees in a linear relationship to sales. force-planning team. The team’s objectives:
In fact, Syngenta held brainstorming to continually monitor future employee
sessions to challenge the forecast work- demand and supply, provide a means to
force demand and to determine whether challenge business strategy, and inspire
there were other means of achieving the discussions on how to do things differently.
Exhibit 7 | Root Causes of Success in Engagement, Behavior, and Culture Management
Engagement, behavior, Degree of agreement of highly capable

and culture management versus low-capability companies (%)
We invest significantly in developing our company culture

45
(for example, performance orientation, teamwork, and agility)
We measure behavioral change and associated result improvement 38
We have a management cascade process to define actions to

37
improve engagement
We invest significantly in corporate social responsibility
35
(this includes employee involvement)
We regularly assess employee engagement and seek to understand
34
employees’ needs and expectations regarding work
We invest significantly in improving employees’ work-life balance
26
(for example, flexible work arrangements)


Be proactive in shaping your culture. Best-in- sure that middle managers really care about
class companies realize that the right corpo- the organization rather than that they are
rate culture does not simply grow organically. simply conveying the change. The middle
Instead of waiting to see whether employees’ managers can also adapt initiatives to local
behaviors might destroy value, they invest peculiarities.
significantly in developing their culture. (See
the sidebar “A Pharma Company Changes the
Culture at a Production Site.”) Although many “After the formation of our Euro-
leaders think that shaping the culture is main-
ly a communication effort, success requires pean-level organization and some
actively changing the environment in order M&A activity in the Balkans, we
to embed cultural shifts and make behaviors
stick.3 In many cases, this is a big investment
faced a challenge in managing
and can mean transforming processes that cultures. At the European level,
have a strong impact on the company’s cul-
ture, such as budgetary oversight and control,
our culture focused on results,
strategic planning, capital expenditure con- while at the level of business
trols, and performance and career manage- units and countries, the organiza-
ment. And generally, it is the leaders them-
selves who must change their behavior. For tions had their own very distinct
example, a leader who wants to foster an en- cultures. Our challenge is to find
trepreneurial culture must not micromanage
his employees. the right balance between Euro-
pean group culture and operat-
Measure how much value your culture is
creating. Highly capable companies have
ing-company culture in each local
measurement tools in place that gauge the market.”
impact of culture initiatives and their influ-
Vassilis Stavrou, executive vice presi-
ence on employee behavior. Leaders should
implement systematic and recurring surveys dent, human resources, organization
with a very long reach (such as engagement development, and sustainability,
and culture surveys) to assess how changes to
the culture affect the bottom line and to iden- Delhaize Europe
tify negative trends. With the emergence of
Web-based surveys, it is much easier to do
this today than it was in the past.
Performance Management
Use a clearly defined management cascade. and Rewards
Best-in-class companies use a management Performance management and rewards includes
cascade process to improve engagement the assessment of how employees work,
and steer their culture in the desired direc- along with the effectiveness of incentives to
tion. Although senior managers need to be improve performance. This involves activities
onboard and supportive of culture initia- such as monitoring employees’ performance,
tives, they are too far removed from front- providing constructive and timely feedback,
line workers to succeed in delineating spe- and using a compensation model that links
cific steps. It is crucial that management use rewards to key behaviors that the company
the right mix of communications channels, seeks to foster.
which should include leader-led face-to-
face discussions through organized manage- Although this topic received high ratings of
ment cascades (extending down at least four future importance, the return on effort invest-
or five management levels). Furthermore, ed is very low. We identified the key aspects
when they undergo cultural-change proc- that companies should focus on in order to
esses, many successful companies use a co- advance from good to great performance
design, or “middle out,” approach to make management. (See Exhibit 8.)

A Pharma Company Changes the Culture at a
Production Site
A long-established and successful pharma- introduction and the implementation of
ceutical-production site recently was facing projects. Interviews and workshops with
new competitive challenges and cost the employees involved helped uncover
pressures. The senior leadership was the antecedents and consequences that
concerned about the level of responsibility were driving both positive and negative
and accountability among employees, how behaviors.
well they followed through on plans, and
their ability to work cross-functionally Designing Solutions and Developing
rather than in isolated silos. Action Plans. Once the root causes were
better understood, the challenge was how
The senior leaders developed a blueprint best to change the antecedents and
for a new organization structure and consequences in order to get the desired
recognized the need to make fundamental behaviors. Through brainstorming sessions,
changes in the way things worked at the interviews, and cross-functional workshops
site. They chose to use what is commonly with employees and managers in key
referred to as the ABC approach. The operational areas, the team identified
rationale underpinning this approach is concrete changes to implement. For
that the behaviors (the Bs) you get are a example, one antecedent was to prioritize
result of the antecedents (the As) and initiatives and ensure that all team
consequences (the Cs). If you want differ- members understood their roles and
ent behaviors, you have to change the management’s expectations. And a
context. The ABC methodology enables meaningful consequence was peer recogni-
leaders to pinpoint high-impact behaviors tion of accomplishments and constructive
(positive and negative) and either reinforce feedback.
or change the context that leads to these
behaviors. The approach was implemented Implementing the Changes. In the last
in the following four phases: step, the team prepared the action plans
and began implementation. This included
Identifying the Key Behavioral Issues. tightly defining role accountabilities and
The process began with an analysis of key decision rights as part of the organization
behavioral issues at the site, analysis of ex- design work and implementing changes in
isting data (including employee surveys and the tracking and review of progress on key
the output of workshops and focus groups), metrics.
and integration of this bottom-up insight
with top-down insight from senior-leader Overall, the process strengthened account-
interviews on the key behavioral challenges. ability, improved prioritization, and in-
creased collaboration. It helped the site
Understanding the Antecedents and ensure that important organizational
Consequences. The team then conducted changes were accompanied by real change
more in-depth analyses to identify the root in the way people did things at the site.
causes of high-impact behaviors (both This was not just an exercise in moving
positive and negative) in a number of spe- boxes on an organization chart: it was a
cific situations—for example, new-product step change in the way the site operated.
Make expectations clear. Highly capable com- ly beneficial for the company, leaders must
panies have clearly defined performance cri- carefully analyze which KPIs really drive
teria for each job function and, thus, ensure the company’s overall success and support
that employees know what is expected of its overarching strategy. The KPIs by which
them. In order to spur behavior that is tru- an employee is evaluated should be clear-

ly measurable, and companies should limit Build a meritocracy governed by consistent
them to a manageable number. (See the side- performance criteria. Highly capable compa-
bar “Henkel Rebuilds Its Performance-Man- nies apply consistent performance criteria in
agement System Around Accountability and the feedback and promotion process, and they
Gets Results.”) Moreover, performance criteria align performance metrics both vertically and
must be updated in line with changes to the horizontally across the organization. By
strategy—otherwise compensation and ben- transparently and consistently linking individ-
efits might end up incentivizing yesterday’s ual results to bonuses and individual employ-
target behaviors. ees’ careers, companies foster a sense of
fairness, eliminate any perceptions of favorit-
ism and bias, and make sure employees know
“The biggest challenge is to es- that good work will pay off.
tablish a differentiated perfor- Reward both results and behaviors. In the

mance-evaluation process that past, many organizations assessed results and
behaviors separately. Employees with the
clearly distinguishes between out- right behaviors received promotions, while
standing and weak performance. those who delivered results got bonuses. To-
day, best-practice companies are moving to-
Differences in performance have ward a more comprehensive system for meas-
to be communicated openly and uring performance, in which behaviors and
need to be linked to clear conse- results are linked to and rewarded through a
transparent system of incentives. This holis-
quences.” tic approach is described by Ivana Bonnet,
Uwe Tigges, chief human resources human resources director at Crédit Agricole
CIB: “In the new corporate- and investment-
officer, RWE banking context, we have to make sure that
all business lines work together effectively to
Exhibit 8 | Root Causes of Success in Performance Management and Rewards
Performance Degree of agreement of highly capable

management and rewards versus low-capability companies (%)
Every job function has clearly defined performance criteria 61
We consistently apply our performance criteria in the feedback

57
and promotion process
Our compensation and benefits policy fosters the right results
46
and behaviors
We ensure regular (at least yearly) performance reviews and
feedback for all employees 45
We ensure regular (at least yearly) performance reviews and

feedback for all employees in leadership positions 42
We use lateral-review forms (for example, peer-to-peer review)

to calibrate employee performance 40
Our nonmonetary offer (including, benefits and perquisites)

is competitive 35
Our monetary offer (including, pay, variable pay, and stock) is competitive 32


Henkel Rebuilds Its Performance-Management
System Around Accountability and Gets Results
Henkel, a global manufacturing company percentage of managers could be in each
based in Germany, recently conducted a of the four performance categories—both
major cultural shift to become a perfor- within each operating unit and across the
mance-driven organization. With 47,000 company.
employees and a heritage that dates back
to 1876, Henkel had grown quite solid by In this way, the new system imposed tough
the middle of this century’s first decade, choices. The grid gave the company a way
when it held the second or third spot in to compare the performance of managers
many product categories but lacked a across locations and business units and,
strong competitive spirit. thus, discover its most promising future
leaders. Moreover, it introduced a means
In 2008, the board named Kasper Rorsted for identifying poor performers and offering
as its new CEO. He started by outlining a them specific training to improve their
bold set of financial goals and restructuring performance. In that way, the system
the company. He also took steps to revamp brought transparency to the way that
the company’s culture, rewriting its values managers were evaluated, helping them
and vision statement to focus on excel- calibrate their own performance and
lence and a strongly customer-oriented motivating them to be accountable and
approach. To make these changes stick, improve over time.
however, Henkel would need a new perfor-
mance-management system. The new, high-performance culture was
reflected in a new reward system, which
At that point, the company’s performance- linked bonuses to the financial perfor-
management system was not sufficient to mance of the overall company, team
thrive in such a competitive environment. performance (that is, the manager’s
According to Rorsted, during the five-year business unit), and individual perfor-
period that ended in 2008, 95 percent of mance. In previous years, bonus payouts
the company’s employees hit their indi- had been linked to complex scorecards
vidual targets. However, during that period, with numerous KPIs; today, the perfor-
the company did not hit its overall targets mance on each of the three levels is
even once. Such dramatic gaps between measured with a maximum of three clearly
individual and overall goals can be found at defined KPIs.
many companies. The company needed a
new system with stronger management As Kathrin Menges, executive vice presi-
capabilities and increased individual dent, human resources, puts it, “The new
accountability. performance-management system is an
integral part of our corporate culture and
Henkel’s approach involved the introduc- the basis for the development of our
tion of a four-by-four grid by which the employees. We believe that in highly
company’s 9,000 managers would be competitive international marketplaces,
rated on their performance and future the quality of our global team plays a
potential. The ratings would be assigned decisive role. With clear and unequivocal
during collaborative roundtable sessions feedback, rewards in recognition of indi-
consisting of a group head, his or her vidual performance, and tailored develop-
direct reports, and a moderator from the ment plans, we want to ensure that our
HR department. Each manager’s perfor- 47,000 employees around the world are
mance and potential was discussed for well prepared to take on the challenges
about ten minutes and was given a they confront every day. In the end, it’s our
designation on the grid. Only a certain people who make the difference.”

Henkel Rebuilds Its Performance-Management
System Around Accountability and Gets Results
(continued)
The new system has helped turn Henkel adjusted profit margin increased from 10.3
into a highly performance-driven company, percent to 14.1 percent.1
and its financial results since the system
was introduced have been very positive.
Note
Despite the harsh economic environment, 1. Robert Simons and Natalie Kindred, “Henkel:
from fiscal 2008 through 2012, Henkel’s Building a Winning Culture,” Harvard Business
total revenues grew by 17 percent, and its School Case 112-060, February 2012.
optimize client service and adopt more long- Besides money and benefits, the “total offer”
term-oriented business behaviors. Therefore, is being assessed according to the work
we base rewards around integrated holistic environment, the job’s development opportu-
performance measures, which are grouped in- nities, and the employer’s reputation.
to four clusters: business results, human capi-
tal management, cross-business-unit collabo-
ration, and corporate social responsibility.” HR Communications and
Social Media
Look beyond financial performance. Our HR communications and social media includes
results show that competitive monetary and activities aimed at consuming, sharing, and
nonmonetary offers have relatively little creating information and knowledge from
effect in differentiating highly capable and within the HR department. Implicit in this
low-capability companies. This result is in category is the use of different communica-
line with earlier BCG findings showing that tion channels, including digital media.
employees generally look far beyond a mere
compensation package and benefits. In our On average, companies’ current capabilities
experience, employees are willing to forego a in HR communications and social media were
significant component of their salary if other lower than for any of the other HR areas we
aspects of the work experience are positive. analyzed. As Exhibit 9 shows, highly capable
Exhibit 9 | Root Causes of Success in HR Communications and Social Media
HR communications Degree of agreement of highly capable

and social media versus low-capability companies (%)
We have a clearly defined and integrated HR communications

51
and social-media strategy
We monitor our social-media presence effectively 49
We have dedicated employees responsible for our social-media activities 48
We experiment with new and innovative forms of interaction

45
in social-media environments
We use social media effectively for internal communications and
44
knowledge dissemination (in, for example, virtual training rooms)


companies in this area focus on several activi- what people are saying, a company can gain
ties. With the increase in digitalization and valuable and actionable insights. Companies
the entry of Generation Y into the job mar- should use these insights to assess current
ket, these activities should be high priorities social-media activities and, if necessary, to
for companies—especially as our analysis of craft measures for improving their external
return on effort invested shows that such in- image. A helpful tool is an employee Web
vestments seem to pay off. survey that measures how much employees
advocate and promote their company. This is a
Be ahead of the social-media game. With good indicator for the company’s e-reputation,
the emergence of social media, companies and companies can improve results by linking
have become fully transparent. Dozens of managers’ compensation to the results.
social-media tools give both employees and
candidates a holistic means of assessing the Integrate digital activators and social-me-
company—without controls or oversight. Best- dia experts. Although many companies are
in-class companies are proactive and have a still struggling to use new media proficient-
clearly defined and integrated HR communica- ly, highly capable companies have dedicated
tions and social media strategy that is built on employees for social-media activities. These
multimedia; leverages, for example, tradition- employees can act as surveyors and digital
al Web channels, e-mail, company intranets, activators. They monitor activity in social-
and social networks; is consistent across these media communities and channels and pro-
channels and also across different functions vide content to actively shape the company’s
(for example, ensuring that client and em- external image. Moreover, some companies
ployee communications are aligned); and is have “digital activators,” who use social me-
tailored to match the preferences of relevant dia to stimulate discussions and viral spread
target groups. (See the sidebar “How Social and to maintain strong ties with alumni. The
Media Can Improve Recruiting.”) precise impact of social media in business is
still unfolding. However, one thing is clear:
Take the pulse of the Web. By monitoring its social media will only become more impor-
social-media presence and actively listening to tant over time.
How Social Media Can Improve RECRUITING

Given the growing importance of social •• Recruiting Strategy. Recruit through
media—not only for the younger genera- appropriate channels. Use career
tions but also for all other audiences— networks to identify relevant candidate
companies need to actively address the groups by applying filters that isolate
capability gap shown in our survey. One of specific functional expertise, qualifica-
the areas in which social media already tions, and regions.
play a decisive role is recruiting. To become
best-in-class, companies should use an •• Candidate Recruiting. Be sure that the
integrated approach for external communi- online application process is as stream-
cations from HR, addressing all stages lined as possible, making the most of
along their recruiting processes. online-screening tools, interview
simulations, and online tests.
•• Employer Branding. Use all media
channels and platforms to create a •• Onboarding. Use both the company
comprehensive portrait of the company intranet and external social networks to
that resonates with a wide base of help new employees get situated.
potential employees. Reach out to
target candidates with campaigns on
the company website, online job
forums, and social networks.

HR Target Operating Model smoothly and efficiently. The next is being
The HR target operating model includes effec- a good partner to business units by helping
tive HR processes, organization, and gover- managers evaluate the performance of
nance, and positions HR as a strategic busi- their staff, transitioning poor performers
ness partner. On average, companies showed out, promoting top performers, and train-
low-capability ratings regarding their HR tar- ing those in the middle. At that point, HR
get operating model. Exhibit 10 shows what business partners will have built up a pro-
companies can do to improve. (See the side- found understanding of the business and
bar “E.ON Implements a New HR Target Op- will be able to dedicate their time to busi-
erating Model.”) ness-related strategic tasks. As Kjetil Kris-
tiansen, head of HR for the Norwegian
Make your HR a strong sparring partner of holding company Aker ASA, put it, “A key
the company’s leaders. If HR is to link its objective for human resources is to under-
processes effectively with the company’s stand the business context and the real im-
overall strategy—and adapt the strategy to plications for HR—and not run HR in isola-
HR—HR leaders must be accepted by the tion from the business. That is crucial for
business as strategic sparring partners for all success.”
people-related topics. That said, HR staff
must understand that there is a balance. In Build critical-mass HR expertise instead of
some cases, ambitious HR executives consid- fragmenting it. In order to avoid a silo
er themselves change agents and start approach, HR has to bundle its expertise
thinking strategically before they have built across multiple areas, such as talent, learn-
up sufficient credibility in the organization. ing, and leadership. This requires strong
Instead, they must build from a base of HR collaboration and is usually more easily
expertise and then apply that to strategic achieved with centers of expertise, which can
considerations. offer high-quality services and create clear
points of contact for company leaders and
In fact, there are levels that HR profession- business units.
als must work through before they can
achieve the true strategic-partner role. The Translating this theoretical HR model with
first is making HR processes function HR business partners and centers of exper-
Exhibit 10 | Root Causes of Success in the HR Target Operating Model
HR target Degree of agreement of highly capable

operating model versus low-capability companies (%)
Our HR business partners are accepted by the business as strategic

46
sparring partners for all people-related topics
We deliver high-quality service by bundling our HR expertise
43
(for example, talent, learning, and leadership)
We have an effective balance of localized and globalized
42
HR roles and responsibilities
Our top HR representative is a member of the company’s
37
highest-level management committee
We have effectively bundled administrative HR processes into
31
shared-services centers to improve cost efficiency
Our HR information systems and e-HR platforms are systematically
30
adapted to our needs


E.ON Implements a New HR Target Operating Model
E.ON, one of the world’s largest investor- the COCs and BSC and the line manag-
owned power and gas companies—with ers for their specific unit. They advise
more than 72,000 employees—launched the line managers on strategic HR
an extensive efficiency-improvement and topics and provide coaching and
cost-cutting program in mid-2011. At the guidance.
time, the Germany-based company had
very heterogeneous HR structures in its There are some outstanding aspects of
global and regional units—from well- E.ON’s approach.
established and mature HR functions
with clearly defined HR governance Enabled HR Employees and Line Manag-
systems in some markets (such as ers. The new HRTOM strongly supports
Sweden and the U.K.) to fully decentral- HR employees in meeting the require-
ized HR departments in other regional ments of their new roles by conducting
units. In order to increase the efficiency of workshops and training for their expected
HR across all units, the management tasks, as well as in handling the transition
board decided to globally reorganize the phase. Using a train-the-trainer concept,
HR function into a new target operating the BPs also support the line managers
model (HRTOM). during the transition, helping them
understand the changes in HR processes
Due to high cost pressures and changing and systems.
market conditions, E.ON implemented this
new model companywide and within an Colocation of COCs. In order to ensure
ambitious timeframe. It led to huge efficient and bundled HR competences, the
changes for the HR departments as well as COCs are located close to group manage-
line managers. The new HRTOM intro- ment instead of having client experts
duced three distinct HR roles for all global spread across all units. This colocation
and regional units. fosters frequent interaction among HR
experts and leverages synergies in the
•• HR centers of competence (COCs) are respective competency fields.
responsible for groupwide governance
and HR policies. Located in Düsseldorf Focus on Value Creation in the BSC. The
and Essen, they provide centralized BSC is designed not only to realize econo-
topic expertise for areas such as talent mies of scale but also to create value
management and employer branding, through more efficient services. One
global learning, HR controlling and example is recruiting. By managing
planning, rewards, and employee applications on a global level, E.ON
relations and labor law. increases the efficiency as well as the
quality of application management. Since
•• The HR business service center (BSC) in the recruiting department is not limited to
Berlin provides a set of clearly defined a single management unit, applicants can
global HR services, such as recruiting, be forwarded to a position in a unit or
executive HR services, and learning, country where they are likely to deliver the
and it steers the regional services in biggest value.
each country to ensure consistent and
efficient service delivery for all global Careful Selection of BPs. Since the BPs
and regional units. provide the interface between HR experts
and line managers in the management
•• HR business partners (BPs) are located in units, they are crucial in driving acceptance
the units and act as an interface of the new HR processes and systems.
between central HR topic experts within Accordingly, E.ON put great effort into the

E.ON Implements a New HR Target Operating Model
(continued)
selection of outstanding candidates. After broad-based expertise, allowing them to

defining a detailed job description—requir- focus on business-related and strategic
ing qualifications that included HR and HR aspects. To ensure the efficient
business expertise—E.ON performed audit steering of the new HR function, E.ON
procedures with external support during established central governance bodies—
the selection process to guarantee that the such as an HR board for strategic top-
right candidates were placed in the right ics—and a product and process commit-
positions. tee for process-related topics. Members of
the HR governance bodies come from all
Clearly Defined Governance Model. By three HR roles.
establishing a holistic governance model
with clearly defined roles and responsibili- Although E.ON is still in the implementa-
ties for all three HRTOM roles, E.ON tion phase of the new model, the HRTOM
prevents responsibility overlaps and project has significantly reduced costs
redundant HR tasks. Instead of the and—more important—created the
former HR generalists in all units, all HR prerequisites for higher quality in the
expertise is now concentrated in the delivery of global HR services.
COCs. Meanwhile, the BPs have more
tise into real-world practice is a sizable chal- each company has to adapt the degree of
lenge for many companies today. Merely standardization to its unique needs.
creating these HR roles does not mean that
they will be applied effectively. As Albina
Nash, senior HR director at PepsiCo Russia, Training and People Development
noted, “We have an HR business-partner The training and people development topic in-
model, but we’re not fully satisfied. It’s not cludes all activities aimed at helping employ-
clear who’s responsible for which types of ees improve their performance and learn
business tasks, especially in some geograph- new skills that will prepare them for new
ic markets. In part, this is likely because roles within the company. This area compris-
we’re currently integrating multiple acquisi- es a broad range of programs, such as formal
tions. We’ll need to establish and maintain classroom training, job rotations, and tuition
the right structure to clarify roles.” reimbursement for self-directed learning.
Establish the right balance of global and Companies devote the most effort to training
local responsibilities. Global corporations and people development, and this area shows
require global HR departments. However, the highest average capabilities. With the
they must also remain flexible and adapt to third-lowest return on effort among all ten
local requirements and customs. In many HR topics, however, there is a lot of room for
cases, the ideal solution is an effective improvement, specifically by focusing on the
companywide balance of global standards activities highlighted in Exhibit 11.
that are implemented through localized roles
and responsibilities and organized under a Use training as a way of engaging employees
central global HR function. As the 2012 in the company’s strategic agenda. Highly
survey showed, globally standardized activi- capable companies use learning and devel-
ties are often perceived as more effective, yet opment activities to generate strategic in-
sometimes companies need to be able to sights. Some companies have approached the
adjust to local markets.4 Although strategic challenge by forming corporate universities.
activities should be globally standardized, for While in the past, corporate universities were
its functional and administrative activities, used primarily to deliver specific training to

employees, many today serve as strategy plat- and development programs. To achieve this,
forms and actively support the development companies need to regularly assess the kinds
and execution of the company’s strategy. (See of capabilities that are required for creating
the sidebar “Success Factors for Corporate value and reaching their strategic goals and
Universities.”) then allocate their learning and develop-
ment resources accordingly. This high level
Fundamentally, the company’s overall of reactivity becomes even more important
strategy should not result in a one-way flow in times of rapidly changing market condi-
of mandates and directives from manage- tions, which require adaptations in the
ment to employees. Rather, leaders need to company’s overall strategy.
make sure that there is a two-way exchange,
in which the strategy stays responsive to the
ideas, insights, and current capabilities of the “Our learning and development
entire organization.
model is strongly linked to our
Make your company’s leaders your faculty. business strategy and leverages
Highly capable companies are distinguished
by their leaders’ commitment to learning and
HR business partners. Our cor-
development. This commitment goes beyond porate university is the vehicle
providing financial resources: above all, these
leaders actively promote, support, and
for all learning and development
participate in learning and development activities globally, with a clear
activities and act as sponsors for important value-creation approach.”
programs.
Teresa Manobens, talent manage-
Allocate your training resources according to ment and corporate university direc-
your strategic goals. Highly capable compa-
nies have established a clear link between tor, Gas Natural Fenosa
their business strategy and their learning
Exhibit 11 | Root Causes of Success in Training and People Development
Degree of agreement of highly capable

Training and people development versus low-capability companies (%)
Learning and development activities are used for insights

41
regarding strategy development
Senior management is committed to learning and development 40
Business strategy and learning and development are clearly linked 39
Detailed action plans for learning and development activities

39
are developed
Current staff capabilities per job family are assessed and forecast 34
Gap analyses are performed 29
Strategic goals are translated into required staff capabilities

29
per job family


Success Factors for Corporate Universities
Many companies that strive to develop •• Stay close to the business. Establish close
their talent turn to corporate universi- collaboration in needs assessment and
ties. In the past, corporate universities include business representatives on an
focused on training design and delivery. advisory board.
Currently, these organizations are expand-
ing to support overall corporate strategy •• Provide high-caliber offerings. Restructure
and culture. Corporate universities are no the staff to include learning experts
longer simply training centers: many are who can provide high-quality programs
dedicated strategy platforms that act as that outperform those of competitors.
partners with senior leadership. (See the
exhibit below.) •• Create a link to employee development
processes. Integrate performance
To guide businesses in fortifying their management and development, and
existing corporate universities and pro- provide programs that support new
vide a roadmap for organizations aiming assignments and positions.
to create them, BCG recently conducted
a major study to identify trends and best •• Measure the value. Assess capabilities
practices.1 This study identified seven key and skill needs, and measure the
success factors. impact of learning programs. Invoice
business units at full cost so that they
•• Engage the CEO. HR leaders should can easily compare the value of the
develop a close relationship with the offering with open-enrollment options.
CEO to shape offerings and ensure that
the corporate university is widely •• Market internally and externally. Commu-
accepted. Individual board members nicate the ways in which the corporate
should sponsor specific programs. university is a key component of the
employee value proposition. Use
•• Connect to the company strategy. Learning consistent “one face to the customer”
objectives should support the corporate branding internally and externally.
strategy by building needed capabilities.
Development programs for top talent
Note
should prepare employees to forge new 1. See Corporate Universities: An Engine for Human
strategic pathways. Capital, BCG Focus, July 2013.
The Four Main Roles of Corporate Universities

Target Strategy
audience platform
Senior
executives Lafarge
Leadership Bertelsmann
accelerator GDF SUEZ
Top AXA Unilever
management General
Mills Total
Learning
Top UniCredit network
Training Petronas
talent Novartis
center Credit Suisse
GE
Leaders Daimler
Veolia Eni
Luhansa
All
employees Air Liquide
ArcelorMittal
OCP
External
audience
Operational Leadership Strategy Content
excellence focus
Strategic role
The extent of integration across roles varies, but most corporate universities have a primary focus
Sources: Expert interviews; BCG analysis.

Diversity and Generation Tap the senior talent pool. Best-in-class com-
Management panies do not just attract and develop young
Diversity and generation management includes talent: they also systematically invest in build-
managing employee differences in gender ing senior employees’ capabilities. The ex-
and age as well as, for example, social, cultur- tremely high rate of early retirement in Eu-
al, and religious disparities. Globalization and rope—in some countries more than one out
demographic shifts have increased the rele- of two employees retire before the statutory
vance of this topic in HR, and that trend is age—shows that most companies are neglect-
likely to continue for the foreseeable future. ing the potentially high value of senior em-
ployees. Because they have critical expertise,
The surprisingly low rating of the future im- they are a valuable resource. This is especially
portance of diversity and generation manage- important given current demographic shifts:
ment—in fact the lowest of all ten HR top- people are living longer, and the talent short-
ics—shows that many companies do not age is growing. Companies that foster lifelong
grasp a core aspect of diversity. Such meas- learning and take steps to attract, develop,
ures are not about being “nice” or complying and motivate senior talent will turn this demo-
with regulations. Instead, they are tools for graphic change into a competitive advantage.
generating better business results and will be
even more important as the workforce ages Build on your differences. It is not enough to
and Europe’s talent supply decreases. The build a diverse workforce: in order to connect
high return on invested effort that we identi- a company’s cultural diversity to real produc-
fied in our analysis should motivate compa- tivity gains, HR leaders should systematically
nies to intensify their comparatively weak ef- apply cross-cultural team-building activities
forts. and cultural-awareness training. This is how
best-in-class companies create a spirit of
Looking at the subcomponents of diversity collaboration. Companies should tap into this
and generation management, we identified le- wellspring of ideas and insights to boost
vers that companies should focus on for im- company operations. In addition, promoting
proving their capabilities. (See Exhibit 12.) diversity in recruiting processes can dramati-
Exhibit 12 | Root Causes of Success in Diversity and Generation Management
Diversity and Degree of agreement of highly capable

generation management versus low-capability companies (%)
We systematically invest in building senior employees’ capabilities 30
We systematically apply cross-cultural team-building activities and

30
cultural-awareness trainings in diverse teams
We have established processes that encourage junior employees to share
28
their thoughts and opinions (in, for example, roundtables with management)
We encourage cooperation and knowledge transfer between experienced
28
and junior employees in both directions
We have specific programs that support women’s development into
27
leadership positions (for example, mentoring)
We have a dedicated team and manager responsible for diversity
25
and generation management
We invest in childcare facilities (for example, a kindergarten) 19


cally increase the size of recruiting pools: Listen to your junior employees. Best-in-class
some 50 percent of potential future leaders companies have established processes that
are women, who need the same opportunities encourage junior employees to present their
as men to succeed within the company. opinions. In this way, these companies make
sure that their younger employees under-
stand that their opinions matter, and this
“We have overcome the tradi- encourages them to actively think about
tional thinking about perfor- strategic options and present their ideas for
consideration.
mance, and today we are proud
to promote and support career A good means of establishing such an ex-
change is to regularly host management
advancement whether the em- roundtables, which also help company lead-
ployee is a 60-year-old cashier or ers establish contact with the companies’ fu-
ture leaders.
a 30-year-old manager. People
see that meritocracy pays off, and As Exhibit 13 demonstrates, most European
they do their best because they countries will face a profound workforce
shortage in the future. This underscores the
know it will be recognized.” need for companies to attract the largest po-
Gianfilippo Pandolfini, chief operating tential workforce by focusing on untapped
pools through diversity initiatives. (See the
officer, Banco Nazionale del Lavoro sidebar “Key Drivers in Diversity and Genera-
tion Management.”)
Exhibit 13 | The Labor Supply in Most European Countries Will Decrease Sharply
in the Next Decade
Labor supply,
2012 (millions) Labor supply CAGR, 2012–2020 (%) Labor supply CAGR, 2020–2030 (%)
4.4 Austria 0.10 –0.49

5.0 Belgium 0.13 –0.35
3.4 Bulgaria –0.82 –1.38
5.4 Czech Republic 0.39 –0.23
3.0 Denmark 0.33 –0.02
2.7 Finland –0.07 –0.20
29.3 France 0.34 –0.04
42.6 Germany –0.40 –1.21
5.2 Greece 0.05 –0.66
2.2 Ireland 1.18 0.59
25.3 Italy 0.07 –0.89
0.2 Malta 0.16 –0.48
8.9 Netherlands 0.25 –0.51
2.7 Norway 1.24 0.45
18.1 Poland –0.41 –0.75
5.6 Portugal 0.11 –0.48
10.5 Romania 0.12 –0.80
76.0 Russia –0.58 –0.81
23.5 Spain –0.05 –0.62
5.0 Sweden 0.52 0.33
4.6 Switzerland 0.82 0.38
26.8 Turkey 1.39 0.74
23.3 Ukraine –0.61 –1.05
32.0 United Kingdom 0.50 0.08
Sources: U.N. population database; ILO Laborsta database; BCG analysis.

Note: The figures for 2030 assume the same participation rate by sex and age groups as for 2020. Labor supply = forecast of the total population
(age 15 and over; five-year age groups) × labor force participation rate (per five-year age group).

Key Drivers in Diversity and Generation
Management
Companies still have a long way to go to actions, and it must make itself ac-
ensure that the best talent—regardless countable by ensuring that progress is
of gender, ethnicity, or any other measure visible and measurable.
of diversity—makes it into leadership
positions. In a recent benchmark study •• Diversity is local and global. For most
based on interviews with roughly 100 HR major initiatives, it’s important to
managers in 44 international companies, integrate international staff from
BCG identified a number of best prac- various units. Initiatives that have a
tices that drive success in diversity global reach must always take unique
initiatives.1 local factors into account.
•• Diversity by itself is not the main objective. •• Diversity is not just for women or minori-
Instead, it is a means of bringing new ties. Men and majorities must be equal-
perspectives and insights to the way a ly represented on any diversity project
company or business unit operates, ulti- team. The goal is not the promotion of
mately leading to better performance. a specific group but a balance that re-
flects society at large—in the initiative
•• Diversity must be a top priority for leaders. and throughout the business units.
A company’s CEO and senior managers
must have the primary responsibility •• Diversity is cross-divisional. Successful
for establishing and achieving diversity initiatives do not get handed down from
objectives, and they must act as role HR to the business units. Rather, involv-
models. ing representatives from units outside
of HR at an early stage can ensure
•• Diversity does not mean preferential broader acceptance, help structure
treatment for women or minorities. Busi- change initiatives correctly, and guaran-
ness leaders must communicate that tee a companywide shift in mindset.
diversity is about hiring and promot-
ing the best employees—not through
Note
preferences or quotas but through fair, 1. See Shattering the Glass Ceiling: An Analytical
open, and transparent processes for ap- Approach to Advancing Women into Leadership Roles,
plicants and employees. BCG Focus, August 2012.
•• Diversity is not a PR gimmick. For diversity

initiatives to be credible, the company
must back up its communications with
Recruiting: Branding, Hiring, and “Deutsche Bahn Revamps Its Employer

Onboarding Brand to Win New Talent.”) As Exhibit 14
Recruiting includes the complete process of shows, our survey clearly identified some
people sourcing—from employer branding measures that companies should take.
to recruiting strategy, recruiting process, on-
boarding, and retention. As our results show, Adapt recruiting strategies to target audienc-
on average, companies rate their capability es. Highly capable companies know there is
comparatively high in recruiting. Given the no one-size-fits-all approach. Rather, each
growing talent shortage in most European category of hiring and job function is akin to
companies however, companies should be a subpopulation, complete with its own
more than merely good at recruiting: they priorities, requirements, and incentives. For
must be better than others. (See the sidebar example, although career opportunity is the

Deutsche Bahn Revamps Its EMPLOYER BRAND
to Win New Talent
Deutsche Bahn, Germany’s leading The results were astonishing: although
transportation and logistics company, with 99.7 percent of possible applicants knew
operations in more than 130 countries the Deutsche Bahn brand, only 5 percent
and about 300,000 employees, recently could imagine working for the company.
implemented a very successful employer- These findings revealed that the high
branding campaign. In the past several brand awareness did not lead to the right
years, employers have become subject to employer-brand perception. This needed
increasing numbers of requirements while to be addressed.
talent pools have become smaller, and
media connectivity has grown more Next, the company developed a compre-
pervasive. As a result, candidates’ expecta- hensive target-group segmentation in order
tions regarding potential future employers to identify applicants’ needs and define
are now higher, and competition for talent the criteria that applicants take into ac-
is far more intense. To meet its future count when choosing an employer. Specifi-
demands, Deutsche Bahn estimated it cally, Deutsche Bahn segmented its appli-
would need at least 70,000 new employ- cant base into four categories: high school
ees over a ten-year period. graduates, college graduates, professionals
with an academic background, and profes-
To address this challenge, Deutsche Bahn sionals from a nonacademic background.
began by analyzing the components of all
its talent-acquisition-related activities— In the next step, Deutsche Bahn devel-
from employer branding to recruiting oped an employer value proposition and
strategy, candidate recruiting, and on- tailored employer-branding and recruiting
boarding—and then launched a portfolio activities to each of the four target groups,
of measures to strengthen its image and using the key brand messages it had iden-
recruit new employees. The starting point tified. Besides aligning the employer value
was a thorough employer-brand audit, proposition for different target groups
which analyzed both internal and external with their requirements and preferences,
sources to develop an understanding of Deutsche Bahn also determined which
the current position and perception of the information channels the different target
company among potential job candidates. groups used. This allowed the company to
most important job criterion for employees in oped employer value proposition, both
most European countries, in China compen- internally and externally. Companies should
sation comes first. And while Generation Y systematically assess internal perceptions of
places high value on corporate social respon- the brand among employees and understand
sibility and personal development, the how those perceptions influence the expecta-
priorities of older generations in the work- tions of external job candidates. Next, they
force are different. Accordingly, companies should develop a credible employer-brand
should look below the surface, analyze positioning, with core attributes differentiat-
subcategories, and adapt their recruiting ed by target groups, and prioritize specific
strategies for different job positions, target steps to implement the new brand position-
groups, entry levels, and recruiting channels. ing. Although defining the brand’s key
This is especially important for attracting the messages and consistently promoting them is
best talent, who always have the greatest essential for a positive employer brand, it is
choice of suitors. not enough. Given today’s widespread
corporate transparency, leaders need to make
Promote the company from within. Best-in- sure that their employees are the organiza-
class companies have a systematically devel- tion’s best promoters. To achieve this, the

develop a media strategy and to adapt its well received. As Kerstin Wagner, Deutsche
cross-channel marketing campaign with Bahn’s head of talent acquisition, put it,
tailored messages. “Our employees are the essential part of
our campaign. They authentically trans-
In order to secure long-term success in port our image and tell potential em-
talent acquisition, Deutsche Bahn reorga- ployees why it’s worth working for DB. To
nized all talent-acquisition-related activi- become one of Germany’s top employers,
ties into one unit: employer branding, it was vital to continuously inform, involve,
social media, university relations, and stra- and inspire our employees—to take them
tegic recruiting are now bundled in the with us on the journey. We also created
corporate center, while local recruiting a ‘poster generator’ tool, providing them
activities are being carried out by seven with a great possibility to create posters
regional recruiting teams. for their individual jobs using predefined
elements from the campaign. All over
Within just one year, the effort had yielded Germany, more than 12,000 employees
strong results.1 The number of applica- decorated their workspaces to proudly
tions had increased by 40 percent on show their support for the campaign and
average (and as much as 80 percent in our DB 2020 objective.”
specific target groups), contributing to the
hiring of 11,000 new employees in 2012.
Note
Employer attractiveness improved signifi- 1. The material in this example comes from
cantly as well: in major employer rankings Deutsche Bahn campaign reporting, Trendence
such as the Trendence School Leavers School Leavers Barometer, Trendence Employer
Branding Innovation of the Year 2013, interviews with
Barometer, Deutsche Bahn climbed 21 Deutsche Bahn representatives, and BCG analysis.
places in one year, reaching the top 30.
Furthermore, Trendence recognized the
campaign as the “Employer Branding
Innovation of the Year.”
Internally, among Deutsche Bahn employ-

ees, the employer brand turnaround was
employer brand needs to resonate internally, contributing to the company’s success. As

and the day-to-day workplace experience abundant case experience shows, a system-
needs to match the brand’s internal promise. atic new-hire-onboarding process not only
The best employer value proposition is increases productivity but also leads to a
useless and can even lead to loss of reputa- reduction in “regretted attrition”—the loss
tion if it does not keep its promises. of employees that the company wants to
retain—in the first and second years of
Reduce early regretted attrition with employment. That reduction can be as
systematic onboarding. The third major great as 50 percent. Such a systematic
difference between highly capable- and process comprises not only administrative
low-capability-company recruiting is a and professional onboarding of new hires
systematic process for cultural onboarding but introduction to all relevant cultural
of new hires. The recruiting process does aspects of the organization as well. To
not stop on the employee’s first day, and ensure that they are factoring in culture,
HR must ensure that each new employee is companies should employ a set of specific
positioned and comfortable as quickly as programs, such as orientation events for
possible in order for him or her to begin new hires and mentors.

Exhibit 14 | Root Causes of Success in Recruiting
Recruiting: branding, Degree of agreement of highly capable
hiring, and onboarding versus low-capability companies (%)
We have a clearly defined recruiting strategy for different candidate

49
pools, entry levels, and channels
Our employer value proposition is systematically developed on the
37
basis of a thorough analysis (for example, interviews and surveys)
We have a systematic process for cultural onboarding of new hires
37
(for example, mentoring and special events)
We have a deep understanding of our target groups and
36
tailored communications
Our employer value proposition is regularly assessed against
32
the actual experiences of new hires
Our recruiting process is fast, efficient, and effective 31
We use social media effectively for employer branding 28

Labor Costs, Flexibility, and to scale up and down in dramatic fashion,

Restructuring adapting the workforce size and capability set
Labor costs, flexibility, and restructuring includes much more rapidly than in the past. Exhibit 15
the company’s ability to react to a changing shows areas of focus for improvement.
business environment. Our results indicate
that companies do not see a high need to act Facilitate change through workforce-planning
on their capabilities in labor costs, flexibility, transparency. Best-in-class companies have
and restructuring. However, given heightened full transparency on workforce supply and
economic volatility, organizations often have demand across regions, countries, locations,
Exhibit 15 | Root Causes of Success in Labor Costs, Flexibility, and Restructuring
Labor costs, flexibility, Degree of agreement of highly capable

and restructuring versus low-capability companies (%)
We have full transparency on workforce supply and demand 34
We maintain flexibility in the workforce by implementing tools

33
and methods (for example, reduced working hours)
We rely on employer-induced measures to reduce head count
23
(for example, termination agreements)
We have an efficient mobility process for transferring employees
20
from surplus to shortfall units
We rely on voluntary measures to reduce head count
12
(for example, fluctuation)


business units, and skill clusters. This infor- bank Baden-Württemberg demonstrated that
mation is not limited only to the company such transparency enables companies to have
leaders: it is communicated openly within the a well-framed transformation process with
company. When undergoing transformations a clear schedule and reduces resistance to
due to strategic changes, companies should implementation. (See the sidebar “Detailed
be transparent about workforce implications, Management of Reduction Helped Landes-
working openly with both employees and em- bank Baden-Württemberg Navigate a Restruc-
ployees’ representatives and unions. Landes- turing.”) Above all, this transparency not only
Detailed Management of Reduction Helps

Landesbank Baden-WUrttemberg Navigate
a Restructuring
Landesbank Baden-Württemberg (LBBW) validated the top-down targets and the
is among the leading federal-state banks in formulation of the concrete measures
Germany, with almost 12,000 employees. needed to realize the defined targets over
The bank was considerably affected by the a sustained period of time. To build on this
global financial crisis that began in 2008. progress, the bank generated standard con-
As part of a broader EU restructuring trolling and reporting tools for future
program, LBBW had to be subsidized with workforce supply-and-demand monitoring
about €5 billion in public funding. One processes.
precondition for receiving the funding was
that LBBW reduce its baseline workforce of Throughout the process, the open dialog
full-time employees by 2,500 in a four-year helped employees anticipate future
period. changes and reduced resistance among
the staff. It also helped manage employee
The bank began by creating an HR representative relations. Overall, LBBW
implementation plan to reduce positions was able to reach roughly 90 percent of its
across all functions. The massive downsiz- reduction goals by 2012—a year ahead of
ing required fundamental changes to the schedule—without enforced layoffs.
underlying business model. To achieve Furthermore, the process strengthened
this, the bank analyzed all business the role of HR within the organization and
segments of the current business model improved relations with the workers’
regarding revenue potential, risk, and cost representatives. HR became a strategic
impact and developed a new business plan hub for controlling the EU project, an
and medium-term plan. Subsequently, the interface to the work council and trade
bank put in place precise targets for each union, and a partner in negotiating new
function and department and communi- labor agreements. Most important,
cated the required changes throughout the through these measures, the bank was
company. This high level of transparency able to recover fully from the financial
was essential to restructuring the organiza- crisis.
tion successfully and reaching a quick,
fact-based agreement with the unions and
worker councils. In an open dialog with the
union, the bank negotiated new labor
agreements and set up a transparent
head-count-reduction process.
In the second phase, the bank executed

the implementation plan in conjunction
with respective HR departments in
individual business units. It regularly

helps managers and HR leaders anticipate Notes
and meet future needs, it also allows employ- 1. Disagreement corresponds to an agreement value of
0 percent, while a value of 100 percent reflects full
ees to manage their career proactively. agreement. For more details, see the Methodology in
Appendix I.
2. See “Make Talent, Not War: Building a Strong
Leadership Advantage” in Creating People Advantage
“HR challenges have changed in 2011: Time to Act; HR Certainties in Uncertain Times, BCG
recent years, following the evolu- report, September 2011. See also “Building Up Your
Critical Assets: Talent and Leadership Development” in
tion of the business and of the Creating People Advantage 2012: Mastering HR Challenges
in a Two-Speed World, BCG report, October 2012.
external environment. Today, 3. See High-Performance Culture: Getting It, Keeping It,
BCG Focus, June 2013.
companies require far greater 4. See “HR Governance: Global or Local?” in Creating
People Advantage 2012: Mastering HR Challenges in a
flexibility in the workforce.” Two-Speed World, BCG report, October 2012.
5. See “Reduce and Retain: Adjusting Workforces for the
Senior HR executive, New Reality,” BCG article, December 2012.
European utility company
Make sure you have high flexibility within

your workforce. Highly capable companies
have a two-layer workforce: a core group that
covers capabilities and knowledge of high
strategic importance and a second layer
consisting of external providers and freelanc-
ers. This second layer allows for flexible
workforce adjustments and enables compa-
nies to stay ahead of shifting business priori-
ties. To maximize flexibility, companies
should establish clear processes and requisite
control mechanisms to handle workers in
these relationships. Other tools that compa-
nies should use include annual working-time
accounts, leaves of absence, and transfers
among locations and business units. This
ability is increasingly important and also
helps companies retain key employees.5

APPENDIX I
METHODOLOGY
In the years since 2006, when we started our merged these topics into 10 broader topics for
Creating People Advantage research, we have this year’s survey. (See Exhibit 1.)
added new topics and removed others on the
basis of changing trends and shifting priori- Respondents rated each topic on a five-point
ties. Last year’s global report covered 22 top- scale regarding future importance, current ca-
ics. To concentrate on the most relevant areas pability of the company, and effort invested in
and allow for a deeper analysis, we have this topic in terms of time, money, and full-
Exhibit 1 | This Year’s Report Consolidates the 22 HR Topics of the 2012 Report into
10 Broader Topics
2012: 22 HR topics 2013: 10 HR topics
• Managing talent
Talent management and leadership
• Improving leadership development
• Strategic workforce planning HR analytics: strategic workforce planning and reporting
• Managing corporate social responsibility

• Managing work-life balance
• Enhancing employee engagement Engagement, behavior, and culture management
• Managing change and cultural transformation
• Managing health and security
• Improving performance management and rewards Performance management and rewards
• Actively using Web 2.0 for HR HR communications and social media
• Transforming HR into a strategic partner
• Mastering HR processes HR target operating model
• Providing shared services and outsourcing HR
• Delivering critical learning programs
Training and people development
• Integrating global people management and expansion
• Managing diversity and inclusion
Diversity and generation management
• Managing an aging workforce
• Improving employer branding
• Delivering on recruiting Recruiting: branding, hiring, and onboarding
• Onboarding and retaining employees
• Managing flexibility and labor costs
Labor costs, flexibility, and restructuring
• Restructuring the organization
Source: BCG analysis.

time employees over the past three years. A In these deep-dive questions, respondents
methodological advancement compared with were presented with HR activities within
our studies in prior years is that we weighted each topic and asked to specify the degree
the resulting values according to each coun- to which they agreed that their company
try’s real GDP for 2012. (Countries with fewer performed the activity or not—on a scale
than 20 respondents were subsumed, and their of 1 (disagree) to 5 (agree). Then, compar-
responses were weighted according to their av- ing the average degrees of agreement be-
erage GDP.) In this way, the resulting matrices tween highly capable and low-capability
shown in Exhibits 1 and 3 on pages 5 and 6 of companies, we were able to identify the key
this report more accurately represent Europe. drivers of high capability in the respective
HR topic. (We also converted the 5-point re-
In the next part of the survey, our aim was to sponse scale to a 100-point percentage scale,
identify the root causes of high capabilities with “disagree” corresponding to 0 and
among companies in each of the ten HR topics. “agree” corresponding to 100 percent, to
In order to differentiate between highly capa- make comparisons easier.)
ble and low-capability companies, we used a
filter mechanism in our online survey. Respon- This year 2,304 executives from 34 European
dents who had rated their company highly ca- countries responded to the online survey,
pable (with a maximum rating of 5) or as being which was conducted from February through
a low-capability company (with a rating of 1 or April 2013. (See Exhibit 2.) The respondents
2) in an HR topic were presented with more de- included primarily HR executives (87 per-
tailed questions regarding this specific topic. cent of the sample), with the remainder
(Furthermore, for low-capability companies, the comprising non-HR executives. Responses
rating of future importance for the topic under came from a broad range of industries: the
consideration had to be at least three points largest number of responses came from ser-
higher than the capability rating to make sure vices, the public sector, industrials, and con-
there really was a substantial capability gap.) sumer goods.
Exhibit 2 | Survey Results Include Responses from More Than 2,000 Executives
Across 34 European Countries
Finland 42
Estonia 14
Sweden 49 Latvia 2
Sample Size:
Norway 59
2,304 Denmark 39 Russia 585
Poland 3
Germany 133
Netherlands 38 Czech Republic 11
United Kingdom 142
Slovakia 14
Ireland 56
Ukraine 40
Luxembourg 2
Belgium 64
France 152
Spain 65
Portugal 82 Hungary 10
Romania 60
Bulgaria 34
Serbia 2
Fewer than 10
10–19 Switzerland 140 Turkey 26
20–49 Italy 88 Cyprus 7
Austria 35 Greece 67
50–99
Slovenia 34 Macedonia 33
100 or more Croatia 23 Malta 57
Note: Of the total, 74 respondents did not specify a country, and 22 respondents indicated that they work primarily outside of Europe.

APPENDIX II
EXECUTIVE INTERVIEWEES
The authors would like to thank the following Elke Strathmann

executives for their valuable contributions in Member of the Executive Board, Human Resources
discussing the findings of this report. (This Director of Labor Relations
list includes only those who have agreed to Continental
make their names public.)
Uwe Tigges
Belgium Chief Human Resources Officer and
Vinciane Verbiest Member of the Management Board
Group Head Human Resources RWE
MasterCard Europe
Bettina Volkens
France Member of the Executive Board
Ivana Bonnet Chief Officer Corporate Human Resources and
Human Resources Director Legal Affairs
Crédit Agricole CIB Deutsche Lufthansa
Edouard-Malo Henry Thomas Wessel

Head of Group HR Member of the Management Board
Société Générale Chief Human Resources Officer
Evonik Industries
Jean-Claude Le Grand
Director of International HR Development Greece
L’Oréal Anastasia Amvrosiadou
Human Resources & Public Relations Manager
Germany Southern Europe
Milagros Caiña-Andree S&B Industrial Minerals
Member of the Board of Management of BMW
Human Resources and Labour Relations Vassilis Gavroglou
BMW Executive Advisor to the CEO
National Bank of Greece
Kathrin Menges
Executive Vice President Elena Papadopoulou
Human Resources Chief Human Resources Officer
Henkel OTE Group

Vassilis Stavrou Olga Kruzhkova
Executive Vice President Head of Organization Development
Human Resources, Organization Development, Rosatom
and Sustainability
Delhaize Europe Andrey Zhvakin
Member of the Management Board and
Italy Managing Director, Organizational Development
Paolo Cornetta Sibur
Group Head of HR
UniCredit Spain
Xavier Coll
Alessandro Grimaldi HR Director
HR Manager Europe La Caixa
Mediterranean Shipping Company
Fernando Diaz
Roberto Maglione Strategy, Transformation and Control HR Director
Executive Vice President Banco Bilbao Vizcaya Argentaria
Human Resources
Finmeccanica Lope de Hoces
HR Director
Gianfilippo Pandolfini Endesa Gas T&D
Chief Operating Officer
Banca Nazionale del Lavoro Juan Majada
HR Director
Giacomo Piantoni Red Eléctrica de España
Human Resources Head
Nestlé Italia Teresa Manobens
Talent Management and
Fabrizio Rutschmann Corporate University Director
Human Resources and Organisation Director Gas Natural Fenosa
Prysmian
Jose Antonio Molleda
Toni Volpe Group Chief Executive Officer of Strategy and
Senior Vice President, HR Planning, Corporate Resources
Development and Enel University Multiasistencia
Enel
Marta Panzano
Norway HR Director
Håkan Hallén Orange Spain
Chief Human Resource Officer
Yara United Kingdom
Hugo Bague
Vuokko Hassel Group Executive
HR Director Organisational Resources
Coop Norge Rio Tinto
Kjetil Kristiansen Andy Doyle

Head of HR Group HR Director
Aker ASA ITV
Russia Gavin Howe

Albina Nash Executive Vice President
Senior HR Director Human Resources
PepsiCo Russia Elsevier

APPENDIX III
SUPPORTING ORGANIZATIONS
This report would not have been possible Greek People Management Association
without the support of the following member (GPMA), Greece
organizations of EAPM, which helped with
the preparation, distribution, and collection Hungarian Association for Human Resources
of the online survey. Management (OHE), Hungary
Österreichisches Produktivitäts- und Chartered Institute of Personnel and Devel-

Wirtschaftlichkeits-Zentrum (ÖPWZ), Austria opment (CIPD), Ireland
Personnel Managers Club (PM Club), Belgium Associazione Italiana per la Direzione del
Personale (AIDP), Italy
Bulgarian Human Resources and Develop-
ment Association (BHRMDA), Bulgaria Latvian Association for Personnel Manage-
ment (LAPM), Latvia
Cyprus Human Resource Management Asso-
ciation (CyHRMA), Cyprus Macedonian HR Association (MHRA),
Macedonia
People Management Forum (PMF),
Czech Republic Foundation for Human Resources Develop-
ment (FHRD), Malta
The Association of Human Resource Manag-
ers in Denmark (PID), Denmark Nederlandse Vereniging voor Personeelsman-
agement & Organisatieontwikkeling (NVP),
Estonian Association for Personnel Develop- Netherlands
ment (PARE), Estonia
HR Norge, Norway
Finnish Association for Human Resource
Management (HENRY), Finland Associação Portuguesa dos Gestores e Técni-
cos dos Recursos Humanos (AGP), Portugal
Association Nationale des Ressources Hu-
maines (ANDRH), France HR Management Club, Romania
Deutsche Gesellschaft für Personalführung National Personnel Managers’ Union

e.V. (DGFP), Germany (ARMC), Russia

Slovak Association for Human Resources HR Swiss - Schweizerische Gesellschaft für
Management and Development (ZRRLZ), Human Resources Management, Switzerland
Slovakia
İnsan Yönetimi Derneği (PERYÖN), Turkey
Slovenian HR Association (SHRA), Slovenia
Chartered Institute of Personnel and Devel-
Asociación Española de Dirección y Desarrol- opment (CIPD), United Kingdom
lo de Personas (AEDIPE), Spain
Sveriges HR Förening, Sweden

note to the reader
Acknowledgments Furthermore, we are grateful for the For Further Contact

We would like to thank the many support we received from various If you would like to discuss the ob-
executives who shared their BCG colleagues in coordinating and servations and conclusions of this
thoughts during interviews, as well conducting interviews and for their report, please contact one of the au-
as the executives who completed expert advice: Alfonso Abella, Alex- thors listed below:
the online survey. The insights and andre Amoukteh, Vassilis Antonia-
expertise of these individuals have des, Iosif Arouch, Bartolomeo Rainer Strack
greatly enriched this report. A list of Banche, Rolf Bixner, Fabio Canta- Senior Partner and Managing Director
interviewees who were willing to be tore, Gennaro Casale, Ugo Cotroneo, Central Europe, Middle East, and
named is provided in Appendix II. Leyre de Álvaro García, Filiep De- Africa Leader; People and
We thank Jacqueline Betz, Anne forche, Marco Di Luca, Camille Egl- Organization Practice
Burmeister, Angela Goldberg, June off, Erik Ekevall, Dominic Field, An- Global Topic Coleader; HR
Limberis, Cleo Race, Samuel drea Fiorani, Ketil Gjerstad, Katrin Coleader, Creating People Advantage
Schlunk, and other BCG colleagues Gruber, Adrian Hofer, Jens Jahn, Ma- Research
for their research and analysis, and ria Kartalou, Markus Klevenz, Frank BCG Düsseldorf
Jeff Garigliano for his help in writ- Klose, Philipp Kolo, Federico Lalatta +49 2 11 30 11 30
ing this report. Costerbosa, Andrey Lesnykh, Daniel strack.rainer@bcg.com
López, Riccardo Monti, Konstantin
The authors also thank the mem- Polunin, Knut Olav Rød, Fabrice Jean-Michel Caye
bers of the BCG and EAPM steering Roghé, Annette Rückert, Giacomo Senior Partner and Managing Director
committees for their help with this Silvestri, Stefano Siragusa, Nick Global Topic Coleader,
project. From BCG: Jens Baier, Vi- South, Sabine Stock, Deran Taski- Leadership and Talent
kram Bhalla, Grant Freeland, Thom- ran, Stefano Valvano, Gunnar Vest- Coleader, Creating People Advantage
as Gaissmaier, Christian Orglmeis- by, and Martin Wuest. Research
ter, Pappudu Sriram, Simon Targett, BCG Paris
Peter Tollman, and Roselinde Tor- Finally, we thank the editorial and +33 1 40 17 10 10
res. From EAPM: Stephanie Bird, production team that worked on caye.jean-michel@bcg.com
Max Becker, Izy Behar, Patrick Bel- this report: Katherine Andrews,
paire, Even Bolstad, Catherine Car- Gary Callahan, Oliver Dost, Elyse Carsten von der Linden
radot, Joe Gerada, Ute Graf, Soli Jo- Friedman, Kim Friedman, Abigail Project Leader
hansson, Roberto Luna, Leena Garland, and Sara Strassenreiter. BCG Munich
Malin, Kim Staack Nielsen, Vanda +49 89 231 740
Pecjak, and Svetla Stoeva. vonderlinden.carsten@bcg.com
We extend further thanks to the Pieter Haen

EAPM secretariat (Sam Paris) and President
the EAPM country organizations World Federation of People
that supported this study. A com- Management Associations
plete list of the supporting organi- Past President
zations is provided in Appendix III. European Association of People
Management
+31 343 578 140
pieterhaen@duurstedegroep.com
Filippo Abramo
President
European Association of People
Management
+39 02 67071293
presidente@aidp.it

© The Boston Consulting Group, Inc. 2013. All rights reserved.
For information or permission to reprint, please contact BCG at:

E-mail: bcg-info@bcg.com
Fax: +1 617 850 3901, attention BCG/Permissions
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Informe de La BCG. Creating People Advantage 2013

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Creating People

Rainer Strack Pieter Haen

Jean-Michel Caye Filippo Abramo

Carsten von der Linden

October 2013 | The Boston Consulting Group

4 EUROPEAN TRENDS IN MANAGING PEOPLE

7 ROOT CAUSES OF SUCCESS

3 5 APPENDIX II: EXECUTIVE INTERVIEWEES

3 7 APPENDIX III: SUPPORTING ORGANIZATIONS

3 9 NOTE TO THE READER

2 | Creating People Advantage 2013

T he benefits of best-in-class people management are indisput-

Furthermore, companies should continually monitor their HR activi-

The Boston Consulting Group • European Association for People Management | 3

S ince the publication of Creating People

4 | Creating People Advantage 2013

Labor costs, flexibility, HR communications Low Medium

Source: 2013 BCG/EAPM proprietary Web survey and analysis.

Exhibit 2 | Talent Management and Leadership, Followed by HR Analytics, Ranked Highest in

The Boston Consulting Group • European Association for People Management | 5

In two topics, companies’ capabilities clearly

Return on effort invested in HR topics

6 | Creating People Advantage 2013

A key difference in this year’s report is

people management success among highly

The Boston Consulting Group • European Association for People Management | 7

Performance Consistently apply performance criteria in the feedback and 3.3x

Source: BCG analysis.

8 | Creating People Advantage 2013

Talent management Degree of agreement of highly capable

Our talent-identification processes are transparent, efficient, and

Low-capability companies Highly capable companies 0 20 40 60 80 100

Source: 2013 BCG/EAPM proprietary Web survey and analysis.

International HR Development at Make talent, not war. Best-practice compa-

The Boston Consulting Group • European Association for People Management | 9

10 | Creating People Advantage 2013

Exhibit 6 | Root Causes of Success in HR Analytics

HR analytics: strategic workforce Degree of agreement of highly capable

We have a regular and clearly defined process for measuring HR

We derive initiatives and actions (for example, hiring, training, and

We measure the value added to the business by human capital

We have a consistent job-family structure across the entire organization 25

HR and workforce KPI results are discussed by the corporate board 23

Low-capability companies Highly capable companies 0 20 40 60 80 100

Source: 2013 BCG/EAPM proprietary Web survey and analysis.

The Boston Consulting Group • European Association for People Management | 11

12 | Creating People Advantage 2013

Exhibit 7 | Root Causes of Success in Engagement, Behavior, and Culture Management

Engagement, behavior, Degree of agreement of highly capable

We invest significantly in developing our company culture

We measure behavioral change and associated result improvement 38

We have a management cascade process to define actions to

Low-capability companies Highly capable companies 0 20 40 60 80 100

Source: 2013 BCG/EAPM proprietary Web survey and analysis.

The Boston Consulting Group • European Association for People Management | 13

14 | Creating People Advantage 2013

The Boston Consulting Group • European Association for People Management | 15

tablish a differentiated perfor- Reward both results and behaviors. In the

Exhibit 8 | Root Causes of Success in Performance Management and Rewards

Performance Degree of agreement of highly capable

Every job function has clearly defined performance criteria 61

We consistently apply our performance criteria in the feedback