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HD&IT Annual Report 2017

Human Development and Information Technology


TABLE OF CONTENTS 5 LETTER FROM HD & IT LEADERSHIP TEAM 5 CONTEXT & HD STRATEGY 2017-2020 6 HD TEAM STRENGTHENED 8 STRENGTHEN HD TEAM 10 HDGO! HD TRANSFORMATION PROJECT 11 CLOSED CRITICAL POSITIONS 12 MANAGING CHANGE IN KEY PROJECTS 14 NEW OFFICES 16 PROJECTS AND CHANGE MANAGEMENT OFFICE 17 LEADERSHIP SCHOOL

18 NEW ORGANIZATION DESIGN

20 TALENT MANAGEMENT PROCESSES 22 LABOR AFFAIRS 24 TOTAL REWARDS 25 HD KPI’S 26 INFORMATION TECHNOLOGY ACHIEVEMENTS 27 ADJUSTED HD STRATEGY 28 MEET THE HD & IT LEADERSHIP TEAM


LETTER FROM HD & IT LEADERSHIP TEAM

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Dear reader, Whether you are a Metalsa Board or Metalsa Leadership Team member or a Collaborator or Coordinator in Metalsa we are very glad to share with you our achievements made during 2017, as well as the exciting journey that we have been walking together, the challenges that are yet to come and the milestones that we still need to complete in order to keep improving the value that we provide to the business.

We want to recognize all and each one of the HD and IT Team Members globally whose daily eorts have made this possible. Last year was a breakthrough for our function. During 2016 we worked together in designing the organization, the processes and the technology we needed to transform HD globally and 2017 was the year we started to make it a reality. We are building the infrastructure that will make us more strategic, that will empower our people to take better talent decisions, to imagine their professional future and to build the path to get to were they want and to take accountability for their own development.

We still have a lot to do; but looking forward, our objective is very clear: To enable the organization and people to achieve business results. In order to accomplish this, we are rising the bar in everything we do in order to deliver Metalsa what it needs to achieve its goals, maintaining its humanistic culture, but at the same time becoming an innovative and high-performance oriented company. Metalsa is evolving and implementing the initiatives that will enable this evolution is what we are excited about. Thank you for your trust. HD & IT Leadership Team

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CONTEXT & HD STRATEGY 2017-2020

Growth

Identify and capture opportunities in adjacent markets where we can apply our strengthen and create new competitive advantages.

Global Enablers

Support and enable the organization through the digital transformation and standardization of global processes.

One Metalsa

Continue with our humanistic approach and introduce and deploy a culture of innovation to strengthen the engagement of our colleagues across the global organization.

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Innovation

Develop differentiated process, product and material capabilities to retain leadership in our markets.

Operational Excellence Drive long term performance improvement in our facilities to deliver service, quality and cost competitiveness.


HD STRATEGY 2017-2020

HD MISSION HD VISION 2020

This was the driver to align our function by developing the HD Strategy in March 2017, which integrates the following elements:

To enable metalsa organization and people to achieve business goals. Be a respected business partner

CENTRAL CHALLENGE

BUILDING A HD TEAM STRONG IDENTITY

2017- 2018

STRATEGIC PRIORITIES

INITIATIVES 2017 - 2018

PERFORMANCE INDICATORS

ENABLE THE ORGANIZATION TO ACHIEVE BUSINESS GOALS

BUILD LEADERSHIP BRAND “HIGHLY HUMAN & HIGH PERFORMANCE”

MEET TALENT DEMAND

FOSTER A RELIABLE HD IDENTITY “INFLUENCE & IMPACT”

· Adopt New Metalsa Vision 2025 · Facilitate MOS Global Deployment · Develop Change Management Capability · Strengthen Metalsa Image · Support M&A / Divestitures / Restructures

· Launch Leadership School · Build-Execute MLT Development Agenda · Business Strategy-Plan · Deployment Process: Input for Performance Management Process

· Launch Headcount · Planning Process; linked to budget · Close key open positions · Define-Imp. Global Talent Recruiting & Selection Tools · Implement Core Mfg Processes Development Solution · (Re)Define Global Comp & Benefits Policy & Implement. Re/Ex-Pats Management · Succession management for MLT & Key Positions

· Deploy HDGO! Successfully; including HD Structure & Governance · Strengthen Talent in HD Team · Enable Business Partner Role

· ESS results · Business results · Project scorecard

· Project scorecard · Business results · Training assistance and 360° evaluations

· Project scorecard · Business results · Training assistance and 360° evaluations

· Project scorecard · HD Team 9 Box & Development Ratings

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URGENT AND IMPORTANT

HD TEAM STRENGTHENED!HUMAN DEVELOPMENT ORG STRUCTURE (JANUARY 2017)

Human Development & IT Co. CENTERS OF EXPERTISE

Liliana Durán

HD BUSINESS PARTNERS

CV SBU and Central Functions

Daniela Villarreal (acting)

Talent Planning & Succession Mgmt

TBD Talent Acquisition

Talía Hernández Learning & Development

Alejandra Martínez Total Rewards

John Carleton Communication & Culture

Samantha Martínez Projects & Change Management

TBD

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HD Transformation Project

LV SBU

Operations & Procurement

Juan Huerta

James Taigman

José Trujillo


Great things happen when the team is strong and complete. Reorganizing the structure and covering the open positions with experienced and talented professionals was the first step. HUMAN DEVELOPMENT ORG STRUCTURE (DECEMBER 2017)

CENTERS OF EXPERTISE

Human Development & IT Co.

HD BUSINESS PARTNERS

Liliana Durán

Talent Planning & Succession Mgmt

Óscar Fuentes Talent Acquisition

Talía Hernández

B&C SBU HD Transformation Project & Share Service Center

Juan Huerta

James Taigman Frames SBU

Angélica Pineda Learning & Development

Alejandra Martínez

Operations & Procurement

CV SBU

Angélica Pineda Central Functions: CD-F | I&T | HD

Beatriz Sotres

José Trujillo

Total Rewards

John Carleton Communication & Culture

Samantha Martínez Projects & Change Management

Munira Hassanille

· Talent Diversity strengthened: Centers of Expertise (CoEs) and HD Business Partners: International experience in different industries and companies with mature HD processes and global presence (FMCGs, consulting, Telecom). · Organizational Structure: IT-HD split · Changes in organizational structure: - Less than 12 months in current position: 72% - Internal moves: 36% - New acquisitions: 36% - Involuntary leaves: 18%

New HD organizational structure OVERVIEW

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URGENT AND IMPORTANT

HD TRANSFORMATION PROJECT The significant growth that Metalsa has had in the last years, triggered the implementation of this challenging project with the objective of redesigning the way HD is organized and provides service to the business and the collaborators, increasing the efficiency of our processes and empowering the people through digitalization.

IN 2017 WE HAD THE GO-LIVE IN ALL MEXICO LOCATIONS, AND THESE ARE THE RESULTS WE HAVE HAD: Kiosks efficiency translated in FTE’s: Average time spent in kiosk: 2 minutes. Average time spent before in HD offices: 40 minutes. It is equivalent to 70 additional hourly workers, which equals to $1.26 MUSD annually. Talent Acquisition: Lead time to close hourly positions improved 60%, which equals 16 additional recruiters that are not being hired , with an annuallized effect of $0.317 MUSD Shared Services Center Efficiencies traslated to FTE’s: Due to Data People Management we have 1 Labor Affairs FTE available.

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Other benefits: All Latin America HD Business Partners are being enabled through a special training program to develop the skills they need in their new role. We now have a Performance Management process in place with 95% Mexico employees with objectives defined and uploaded in system. Mexico employees (6,720) had just one first-contact option before (local HD Team), now everyone has

access to MyHD through 4 different channels: Web portal, Mobile APP, 20 Kiosks and a Call Center.

88% people satisfied with the service provided.

MyHD Mobile APP

WHAT’S NEXT IN

2018?

· Go live South America and USA · Go live Digital Floor Shop project in Mexico (hourly workers time and attendance · Skills Matrix · Business Intelligence and Big Data) · Complete training for all new HD Business Partners about their new role.

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URGENT AND IMPORTANT

TALENT ACQUISITION EVOLUTION We defined 2017 as the beginning of Talent Acquisition’s evolution. We started with over hundreds of vacancies without visibility and standardization. In March 2017, with the CoE’s creation and the Talent Acquisition team centralization, we focused our energy in the process and tools redesign that ensured Quality and Speed with the following results:

CLOSED CRITICAL POSITIONS 2016 critical 100% ofpositions closed

75%

of 2017 critical positions closed

Lead time reduced in

60% for salary positions

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265

CRITICAL POSITIONS CLOSED WITH DIRECT IMPACT IN BUSINESS STRATEGIES.


As part of our Talent Acquisition Intelligence, we implemented a new strategy: Talent Mapping. Now, we identified key talents (names, structure and salary ranges) within our main competitors for the Technology areas.

ELECTRONIC CAREER PAGE AND TESTIMONIAL VIDEOS LAUNCHED IN MEXICO.

We designed the Image and Branding Strategy: “Your future is here”. Starting as a pilot in Mexico, USA and China.

Strategy Supported

Asia

Global Growth

México

South America

USA

GRAND TOTAL

60

2

22

87

Operative Excellence

4

50

13

65

133

Global Enablers

6

23

6

10

45

Grand Total

10

133

21

97

265

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URGENT AND IMPORTANT

MANAGING CHANGE IN KEY PROJECTS As the Change Management purpose is promote a successful change adoption, the change management team provide support and tools to Metalsa's current key projects, generating an integral solution with holistic perspective (Organization, sponsorship, communication and training) that minimizes resistance to change in impacted audiences and maximizes the benefits of transformation by accelerating adoption for a long term sustainability.

PARTICIPATION IN FOUR ONGOING PROJECTS

8 TRAINING & ENABLEMENT

Train the trainers sessions

803

Enable salary collaborators

248

Training sessions

537

Training hours

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· HDGO! (April 2017) · Vision el Talar (August 2017) · Digital Shop Floor (October 2017) · Organizational Design (December 2017)

Enablement support materials developed


Welcoming the change implementation with a sense of celebration.

Isidro Limon, a 73-years old collaborator, adopting the new technology after 24 years being part of Metalsa.

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URGENT AND IMPORTANT

NEW OFFICES

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As Metalsa grew globally, more central positions were created in order to support the planning, commercial, technology and staff processes and this led to the need of more work spaces and infrastructure. Due to this situation, Metalsa took the decision to undergo a greenfield, centralizing its central offices in Pabellón M, located in Monterrey, Mexico that will host 400 collaborators.


IMPACT · A new know-how was generated. We learned and defined the guidelines for designing workplaces to transmit our culture in every Metalsa facility. · Increased employee engagement, creativity, productivity, teamwork and cross department collaboration through this innovative work-space design.

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IMPORTANT FOR THE FUTURE

PROJECTS AND CHANGE MANAGEMENT OFFICE Beyond attending urgent projects, the purpose of this Office is to develop a centralized Projects and Change Management capability to drive increased sponsorship, engagement, and involvement from the business; and develop an organizational capacity to provide the right methodology, processes, and people to help future programs effectively manage and absorb change. The Projects and Change Management Office (PCMO) will support both Metalsa as organization and Metalsa high impact projects.

PCMO Team Consolidation 100% complete. Team credentials

· Average Experience: 15 years · Experienced in following industries: - Retail - Financial Services Technology - Comm & Media - Education services - Cosumer goods · 18 years in consulting and coaching Change Management Methodology Definition 100% Complete. Project & Change Management Framework 100%

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IMPORTANT FOR THE FUTUTRE

LEADERSHIP SCHOOL The need of a common leadership framework to align efforts and obtain business results through leaders triggered the design and implementation of this initiative, which is our institutional Leadership Development program for all collaborators around the world and was launched in August 2017.

IMPACT 240 participants from USA, Mexico, Brasil, Argentina, Germany, China, Thailand and India

4.8 out of 5 in initial reaction evaluation

96% attendance 8

Metalsa´s issues identified & 8 projects proposed

112 training hours 180

competency self-evaluation applied

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360° evaluations applied to leaders

2 business simulators applied. 15 on-line programs on a new virtual platform with a record of 85% of participation.

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2018

WHAT’S COMING IN 2018?

· Expansion of Leadership School · Global Offer (online and face-to-face) Integration of Learning Communities · Virtual platform for Metalsa and employees to share knowledge and practices and enrich the learning process.

VIDEO 21


IMPORTANT FOR THE FUTURE

ALIGNING METALSA ORGANIZATION WITH VISION 2025 BUSINESS NEED Two primary forces drive the need for realignment of the Metalsa organization design: a) The re-calibration of Proeza and Metalsa corporate roles b) The implications of Vision 2025 at the SBU, Functional and enterprise level. The strategic intent of Vision 2025 calls for autonomous SBUs that build competitive advantage through market driven technologies. That intent and the need for improvements in the passenger cars segment, underpinned three SBU operating model comprised of Commercial Vehicles, Frames & Body and Chassis. Central Finance and Technology organizations are key enablers of future SBU growth or portfolio expansion. The Metalsa Operations & Systems team will improve and ensure customer satisfaction increases in terms of delivery, quality, service and cost competitiveness.

PROGRAM SCOPE Every Function-Enabler, SBU and employee will be touched by this Program. The Scope is comprised of multiple work streams at the enterprise (program) or SBU and Function levels. Enterprise (program) level work streams are a result of macro process and structure choices that will enable Metalsa’s global strategy deployment and matrix eectiveness. These include; metrics, culture, key macro processes.

SBU and Functional workstreams include more detailed micro design choices including work process, structure, roles, decision making, metrics and support systems: Structure & Governance Work Progress

Roles

SYSTEM DESIGN CHOICES

Technical & Social Capabilities Support System

Decision Authority Metrics

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Linking Mechanisms

P


Progress During 2017 we worked with several Metalsa and Proeza Senior Executives to explore, select and refine a new macro structure for Metalsa. The new structure has been approved and communicated. Throughout the fourth quarter, the PMO and governance structure has been defined and all transition, communications and leadership preparation has been completed.

PROGRESS

Three key steps will take place in January and February: i) HDBPs and Change Management specialists will receive methodology and role training ii) WS leaders and team members will be recruited and aligned with the charters iii) current and future state exercises will be completed

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EXPECTED BENEFITS Expected benefits fall into three broad categories: MLT and Strategy; SBU performance; and Functional enablers. 1. Growth will be driven by more effective strategic planning and execution at the portfolio and SBU levels as well as more effective M&A sourcing, analysis, due diligence and integration. 2. SBU performance is expected to exceed results versus their relative performance metrics; protect CV leadership and market share; sustain and grow

Frames; turnaround and aggressively grow revenue in B&C through M&A 3. Functional capability should increase significantly through the use of global process excellence and alignment with COE best practices. The most significant capability improvements will come in the areas of M&A; Strategic Planning, HD Systems; Operational Standards; Technology and Innovation; Digital Strategy and Insights; and Procurement strategy.

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BUSINESS AS USUAL

There are other initiatives running in HD, that were part or our regular operations in 2017 but that stand out from the rest and are important to mention:

TALENT MANAGEMENT PROCESSES a) Performance Management: · We evolved from Focus Document to a more integrated Talent Management process in MyHD! and the inclusion of Competencies and Values in the evaluation. · Impact: Around 800 employees enabled and 500 hours of training. Above 845 Administrative employees (95% of total) with aligned and approved objectives. All through MyHD!. Annual Performance Evaluation process: using MyHD! for all administrative employees in Mexico. b) Workforce Planning: · Headcount Planning 100% defined and deployed and Strategic Workforce Planning 75% progress. c) Career and Succession: · Talent Review in Talent Talking Sessions (from · March to June) · 2nd & 3rd Level: 13 Sessions · 4th Level: 12 Sessions LEVEL

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SESSIONS

COLLABORATORS DISCUSSED

DEVELOPMENT PLAN DEFINED (%)

FEEDBACK SESSION (%)

2nd & 3rd

13

368

88

82

4th

12

249

94

90


LABOR AFFAIRS a) Unions negotiations: · Negotiated in 14 facilities in 6 different countries (Mexico, USA, Argentina, Brazil, Germany and Thailand) saving 10.3% of approved budget ($85.7 MUSD actual vs $95.6 MUSD budget) b) Bergneustadt Transformation: · Due to substantial financial loses and shrinking business over the next 2-3 years the company set up a team to “right-size” this facility. · Savings target for December 2018: € 3.2 Million Total · Real Savings captured as of January 2018: € 3.5 Million (111% vs target for 2018)

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BUSINESS AS USUAL

TOTAL REWARDS

a) Total Rewards Strategy: Developed holistic approach to increase attraction of talent required to implement and drive Metalsa´s new strategic direction. This strategy continues under review and is aligned to enable the new high-performance culture and key talent retention and attraction that the company seeks. It will be further discussed with Proeza.

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b) BMRA (Below Minimum Range Adjustments): Improved competitive positioning versus Q2 market salary structure: · All Employees: reduced population below minimum (80%) from more than half to one third (52% to 30%) · All EEs: increased population (134 cases) @ midpoint+ (25% vs 13%). · Key Talent: increased population (105 cases) @ midpoint+ (66% vs 13%)


HD KPI’S 6675

As we continue to implement and consolidate our HD operational model, the amount and quality of the data will be increased having a direct impact in all talent management processes.

Headcount

Headcount

32 Avg Age

Female

A very important outcome of the HDGO! Project are the KPI’s that are becoming available in the system for every Coordinator and HD member to analyze and take better talent decisions.

531

6144

Female

Male

8%

92%

Female

Male

turnover

male 6.40% Turnover

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INFORMATION TECHNOLOGY ACHIEVEMENTS An important Project was to implement and develop Metalsa Global Market Place (Purchasing system) in 8 Facilities USA, Mexico & South america during 2017.

Facts: 3642 users

requisitors

$ 521,898,518 USD Purchase in Mexico 2017

+1,425,355

Average Request per month

28

60

buyers working with SPX

425,355

OC México 2017

+1,500

Approvers


MODULES IMPLEMENTED

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IT OPERATIONS PROJECTS

HDGO! Enabling technological platform

DT Project 2017 Digital Shop Floor Project     

Next Generation Firewall to robust current information security platform

MAXIMO, MAINTENANCE MANAGEMENT SYSTEM IMPLEMENTATION Email migration to Microsoft

Cloud, overall 60% completed

MOS Global Collaboration Portal

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CONTINUOUS IMPROVEMENT 30


ADJUSTED HD STRATEGY

In alignment with the release of Metalsa Vision 2025, as well as the organizational and cultural challenges that its enablement implies, last December the HD & IT Leadership Team worked in adjusting the HD Strategy to this new reality. HD MISSION HD VISION 2020

To enable metalsa organization and people to achieve business goals. Be a respected business partner

CENTRAL CHALLENGE

BUILDING A HD TEAM STRONG IDENTITY

2018- 2020

STRATEGIC PRIORITIES

ENABLE THE ORGANIZATION TO ACHIEVE BUSINESS GOALS · Organization Design implementation · Facilitate MOS Global · Strengthen Metalsa Image · Support M&A / Divestitures / Restructures

INITIATIVES

· Business Process Digitalization

2018 - 2020

PERFORMANCE INDICATORS

· Business results · ESS results · Externally image measurement · MOS maturity level · Organizational performance disruption recovery

RESHAPE CULTURE “HUMANISTIC, INNOVATIVE, HIGH PERFORMANCE”

MEET TALENT DEMAND

FOSTER A RELIABLE HD IDENTITY “INFLUENCE & IMPACT”

· Cultural assessment and reshaping · Leadership assessment · Revamp Leadership School · Reinforce Performance Management · Build-Execute MLT development agenda · Communication Strategy to promote cultural reshape · Develop Change Management Capability

· Workforce Planning Process: identify talent demand and action plan accordingly. · Strengthen Performance Management: process & strategic alignment. · Talent Pipeline/Succession Management process 2018: MLT, and Key Positions · Accelerate Talent Pipeline Development (development programs) · (Re) Launch Core Mfg processes development. · (Re) Implement Global Comp & Benefits Policy. · Implement Talent Acquisition Intelligence · Define- Imp. Talent Assessment Tools · Define/deploy the technology to support talent demand process. · Define-Imp Employer Value Proposition

· Continue deployment of HD Transformation Project (HD Go!) - Drive clarity for the SDM · Strengthen HD Leadership Team - HDLT: act by example as a team and as an individuals · Reinforce HD Team · Strengthen HD Community - Forums / Communication - Define-Imp HD Summit · Enable the Business Partner Role - Role clarity - Skills building

· ESS, 360° · Cultural assessment · Successors pipeline · Performance and Business Results (formal KPI set to be defined)

· Project Scorecard · Talent Mgmt: Talent Demand GAP: Quantity & Quality, Costs / Time & Quality to fill · Talent Process KPIs

view more · Project scorecard · HD Team 9 Box & Development Ratings · HD Team Engagement

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We want to thank all of the HD & IT team members globally, because all of this was possible through their eort and contribution. We are very proud of the progress we all have made as a team and we invite you to continue collaborating in the years to come so together we can achieve amazing results in support of Metalsa success.

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