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D O O G T A to

E R G

Leaders talk HR

INSIGHTS FROM: L’ORÉAL | NESTLÉ | HOOTSUITE | HALOGEN SOFTWARE

BUSINESS WITHOUT BORDERS Global M&A failures

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THE KEY TO RETENTION? Flexible benefits in the spotlight

WHEN THINGS GO WRONG CEO succession do’s and don’ts

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UPFRONT

EDITORIAL www.hrmonline.ca SUMMER 2015 EDITORIAL Editorial Director Vernon Clement Jones Editor Iain Hopkins Senior Writer Nicola Middlemiss Contributor Jill Gregorie Copy Editor Clare Alexander

ART & PRODUCTION Design Manager Daniel Williams Designer Marla Morelos Production Manager Alicia Salvati

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Human Resources Director is part of an international family of B2B publications and websites for the human resources industry HUMAN RESOURCES DIRECTOR AUSTRALIA iain.hopkins@keymedia.com.au T +61 2 8437 4703 HRD SINGAPORE hrdmag.com.sg

Leadership 2015: challenge or opportunity?

I HEAR IT time and time again. The number one challenge facing HR professionals today is ensuring their organization has a pipeline of potential leadership talent. What’s going on? Have companies simply taken their eye off the ball and not invested enough in leadership development? Have the leadership ranks been cut too deeply due to economic hardship? Or are we not employing the right people to start with? In all likelihood, it’s a combination of all these factors – and more.

Who would want to be a leader today? The megatrends are almost too daunting to consider. As highlighted in a recent Hay Group report, leaders of tomorrow will need to grapple with: Globalization 2.0: Rapid urbanization and a burgeoning middle class in emerging markets are opening up new commercial opportunities for Western firms. However, this is also creating new competitors with extensive and ambitious workforces, money to invest and large domestic markets to sustain overseas expansion.

Individualisation and value pluralism: Changing values, expecta-

Who would want to be a leader today? The megatrends are almost too daunting to consider tions and motivations mean that customers and employees demand a more individualized approach. They expect systems to flex to meet their needs and are happy to switch between brands or employers that don’t adapt.

Demographic change: The working population is changing rapidly. Increased life expectancy means people can work for longer, changing traditional career paths. Smart, young talent is coming into the employment market and pushing the boundaries of organizational structures.

And that’s before we get started on technological convergence, the booming digital era and a renewed focus on triple bottom line reporting – but where some might see these as challenges, others will see opportunity.

It’ll be up to HR to ensure the right people are capitalizing on these opportunities as they groom the next generation of leaders.

Iain Hopkins, editor

HC AUSTRALIA ONLINE hcamag.com HRM NEW ZEALAND hrmonline.co.nz Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as HRD magazine can accept no responsibility for loss.

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MIR full pag

ISSUE 3.03

CONNECT WITH US Got a story, suggestion or just want to find out some more information? twitter.com/HRMCanada

CONTENTS

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UPFRONT 01 Editorial

The challenges facing the corporate leaders of today are almost too daunting to consider – but to the brave go the spoils

04 Head to head

Is it time to retire traditional notions about performance management?

06 Statistics

The latest research on leadership development

08 News analysis

COVER STORY

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LEADERSHIP 2015

FEATURES

INNOVATION BY STEALTH

A veteran of GE, Samsung, Philips and Pfizer, Paddy Miller explains why stealth innovation is the wave of the future

HRD talks to two leaders of multinational organizations for their views on HR challenges, leadership in a complex world and what it takes to succeed

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PEOPLE

IN PERSON

Ambrosia Humphrey, Hootsuite’s VP of talent, talks about the challenges of managing hyper-growth

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There are countless ways that CEO succession can fail. What is best practice in 2015, and how can HR assist?

PEOPLE 10 Profile

Halogen Software’s Dominique Jones reveals how she stays on top of culture and development in a rapidly changing environment

FEATURES 12 Business without borders Mergers and acquisitions soared in 2014 – but without an effective cultural integration plan, many of these mergers could be in peril

FEATURES

BENEFITS THAT WORK

Can small businesses compete with the bigger players in the quest to retain talent? They can – with flexible benefits

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UPFRONT

HEAD TO HEAD

GOT AN OPINION THAT COUNTS? Email editor@hrmonline.ca

Should annual performance reviews be abolished?

More and more companies are doing away with the traditional performance review – and it appears the trend is here to stay

Michelle Moore

John Francois

Senior director, leadership and business solutions Global Knowledge Canada “Absolutely! In today’s accelerated and ever-changing environment, traditional appraisal methods have become outdated.

Setting work standards, assessing performance and providing feedback are still critical – but doing them once a year in a very traditional way no longer makes sense.

In today’s digital world, strategies and priorities shift faster and more dramatically. An employee’s tasks at yearend may look completely different than at the beginning of the year.

We also live and work in a time when people are used to instant feedback. We have become a hyper-connected and fluid society, and processes at work need to reflect that reality.”

Senior director of human resources, Asia Pacific and Japan McAfee “I think performance management is like all facets of HR – it continues to evolve with leadership skills and competencies.

Ideally, if all leaders in an organization were appropriately skilled at having meaningful conversations and providing constructive feedback to employees, then a move away from the traditional performance management system would be warranted.

I believe we still need a performance management system in place that provides some level of consistency in ratings and process to guide managers and leaders. The system must be simple and clear so that it does what it is supposed to do: help leaders provide consistent and constructive feedback to allow people to succeed.”

Gina O’Reilly COO Nitro

“At Nitro, instead of using performance review meetings as a way to scrutinize past behaviour, managers take advantage of the yearly opportunity to explore future possibilities for each employee and discuss new avenues of growth together.

I like to view it almost as a celebration, discussing where employees envision themselves, whether that’s in a more advanced position or a new department.

Each employee agrees to a 90-day contract detailing three to five specific objectives for the quarter. Each goal is pegged to a quantifiable outcome, which ranges from product sales to bug fixes.

The contracts are visible to everyone in the organization, and supervisors have weekly one-on-one meetings to discuss.”

PERFORMANCE MANAGEMENT According to research from PwC, although the majority of employers retain the key process steps associated with traditional performance management systems, others are taking radical steps to overhaul their performance processes. Changes include removing performance ratings altogether, removing the link to reward and abandoning the annual review cycle. Some employers are moving to a more fluid approach to monitoring employee performance, which is being met with enthusiasm from employees who want instant feedback. While such extreme steps might not work in every organization, it’s perhaps time to reconsider how employee performance is being tracked.

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UPFRONT

STATISTICS

The leadership development roadmap Global leaders have responded to key questions about their priorities, challenges and professional development WITH UNCERTAIN economic conditions seemingly the new norm, research from global consultancy DDI, in conjunction with The Conference Board, has revealed insights into the key challenges leaders are facing.

The overarching theme to emerge from The Global Leadership Forecast 2014/15 was just how critical leadership development is to ensuring positive business outcomes. But the findings also revealed that time-honoured development practices might not be adequately preparing leaders for what DDI and The Conference

Board refer to as a VUCA (volatile, uncertain, complex, ambiguous) world.

Many CEOs revealed that they feel unprepared to meet challenges such as innovation and cross-cultural adaptation, while a majority of others feel that there’s a dearth of leadership talent within their organizations.

Leaders also provided feedback on which development methods were most effective in meeting these modern challenges, turning the long-held 70:20:10 learning model on its head.

HOW DO THEY IMPROVE?

WHAT’S KEEPING CEOs UP AT NIGHT? (% of leaders who described themselves as “very prepared” to meet top CEO challenges)

26% Innovation

27%

Human capital

ARE LEADERS READY TO DELIVER? Respondents gave mixed to poor reviews of the strength of leadership within their own organizations. Only 25% of organizations report their leaders are ready for a VUCA (volatile, uncertain, complex, ambiguous) world

25% of HR professionals view their organization’s leaders as high-quality 40% of leaders say the overall quality of their organization’s leadership is high 15% of organizations have a strong bench 46% of critical positions can be filled immediately by internal candidates

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33%

Operational excellence

45%

Customer relationships

WHO DO LEADERS SAY IS NOT INVOLVED ENOUGH IN THEIR DEVELOPMENT?

The 70:20:10 learning model, whereby 70% of learning effectiveness is from on-the-job training, 20% is learning from others and 10% is from formal learning, is not reflected in the development methods deemed most effective by leaders

70% 60%

48%

33%

52% 43%

46%

22%

40%

While it’s a myth that all development must be driven by HR, clearly business leaders would like more input from this group

HR

senior management

managers

employees

Developmental assignments Formal workshops, training courses, seminars Coaching received from current manager Coaching received from external coaches/ mentors Coaching received from internal coaches/ mentors (other than manager)

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WHAT DO LEADERS STRUGGLE WITH? Undertaking global business operations is where leaders struggle the most. Leading across countries and cultures, followed closely by inter-cultural communication, are key areas of concern. Below is the percentage of leaders who consider themselves “highly effective� in certain areas:

34% 39% 45% 54% 56%

leading across countries and cultures

inter-cultural communication within international business environments integrating oneself into inter-cultural or foreign environments leading across generations

fostering employee creativity and innovation

WHAT HAPPENS WHEN ORGANIZATIONS GET IT RIGHT?

20%

higher than average leadership quality and bench strength

26%

more critical positions can be filled immediately

2.3

times more likely to outperform other companies on financial metrics

WHAT HAPPENS WHEN ORGANIZATIONS GET IT WRONG?

67%

lower than average leadership quality and bench strength

21%

fewer critical positions can be filled immediately

LEADER EXPERIENCE The research provided insights into how leaders view their own roles and the impact their role has on organizational success

100 90 80 70 60 50 40 30 20 10 0

92%

97% 64%

of leaders are engaged with their role

feel accountable to be an effective leader

would nominate theirs as a top company for leaders

12%

15%

intend to leave their organization within the year

say intentions to leave have increased in the past year

Source: The Global Leadership Forecast 2014/15, DDI and The Conference Board

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UPFRONT

NEWS ANALYSIS

Aiming for the top spot It’s one of the more critical factors for ensuring business sustainability, yet there are countless ways that CEO succession can fail. What is best practice in 2015, and how can HR assist?

DO’S AND DON’TS FOR A SMOOTH CEO SUCCESSION DON’T dust off the old CEO’s job description – it contains attributes that were required in the past that may not be relevant in the future DO start with a blank page and discuss the experiences and attributes a leader will need to drive the future strategy DO have conversations on succession planning early and frequently in a CEO’s tenure DON’T allow discussions about succession planning to be confused with discussions on tenure DON’T have a CEO and chairman depart at the same time DO stagger their retirements at least 12 months apart DON’T be caught out by an unplanned CEO succession DO have a ‘safe pair of hands’ identified who can take over in an emergency DON’T underestimate the impact of a CEO’s departure on an executive team DO communicate frequently and respectfully to internal candidates and their C-level colleagues Source: Korn Ferry Institute, “The risky business of CEO succession”

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RECENT CANADIAN corporate history is littered with both good and bad examples of CEO succession. Of the latter, the selection of a new CEO at CIBC in 2014 shook investor confidence due to the retirement of current CEO Gerry McCaughey just one quarter of the way into a four-year contract. Equally jarring was CIBC’s failure to immediately name McCaughey’s successor – unlike rivals TD, Scotiabank and Royal Bank, each of which of undertook a similar change in the past year.

and his or her team to get things done on a regular basis, so when it comes to CEO succession, some boards rely on the current CEO or HRD to manage the process.

“We see examples of directors assuming candidates are being developed and getting clear development feedback, but in reality, candidates have been promoted beyond these normal company processes,” Campbell says.

There also can be a temptation to ‘walk on eggshells’ when it comes to CEO succession.

People are loathe to upset the incumbent CEO, candidates tend to think they are ready now, and the board fears their involvement will indicate lack of confidence in the CEO. As for direct CEO involvement in choosing and grooming a successor, this too has some pitfalls. While many great CEOs spend quality time in developing good successors because they want to see ‘their’ business continue to develop in good hands after they leave, other CEOs are less interested – perhaps holding the opinion that no one is good enough to replace them.

This leads to the perception from many that it’s easier to leave it alone or work on just the frameworks and process, says Campbell, who adds that in his experience, it should be a board responsibility, usually through the nomination

“We see this is a board-driven process, using the nom and rem committee, with whom the HRD works” Geoff Campbell, Adelante Group While CEO succession is undeniably one of the most important processes an organization can go through, it also can be a potential minefield.

What goes wrong?

Research from Korn Ferry indicates there are key risk factors to be wary of (see graph on the next page).

Geoff Campbell, managing principal at the Adelante Group, suggests a lack of clarity about who is responsible to ensure development of internal successors is perhaps the greatest risk factor. The board generally relies on the CEO

and remuneration committee, but the HR executive should play a key role.

A better process So what is best practice for CEO succession in 2015? There are several key steps to follow: 1. Make sure the board is very clear that it is their responsibility to ensure they are developing internal candidates as an ongoing process. This is a very different mindset than treating CEO succession as an event.

2. Develop an annual process of direct board

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and candidate interaction to ensure candidate aspirations are understood and development areas are clarified for the candidates to work on.

3. Separate the successor development program from current CEO timing. Make development of C-Suite executives part of the norm (with succession being just one benefit).

4. Keep the focus on encouraging candidates to be the best they can be, rather than focusing on winning the CEO race.

Combined with a fair and transparent process, this helps with retention for the unsuccessful candidates.

5. Allow time for successor candidates to make behavioural changes and to develop further, with supporting input if possible.

6. Ensure that the process is fair and proactive. Use separate service providers for development, assessment and search so there are no perceived conflicts of interest favoring internal candidates versus external ones.

In the year the CEO transition occurs, additional steps should happen. For example, the board needs to challenge and approve the strategy for the next five years or so, which will help develop the CEO selection criteria. This criteria should then be used to assess both internal and external candidates.

“The issue we see is that people focus on approving the strategy, CEO criteria and assessment close to the time of the transition and force-fit successor candidate development into this late stage of the formal process,” Campbell says.

Developing the next in line It’s ironic that in many companies, direct reports to the CEO often have less performance feedback and fewer development programs than more junior leaders. However, they still need development programs to enable them to grow as leaders. Campbell likens it to elite athletes who get more intensive coaching as they compete at higher levels.

“Our experience is that the more progressive companies identify their potential CEO successors and then seek ways to help them develop key capabilities and improve their short­comings, often by providing them with

a mentor to work with,” he says. “This, in our experience, really helps individuals to broaden their thinking, get and respond to feedback, and hone their behaviours and style. They perform better and are more prepared for the next step.”

HR does have a critical role to play in CEO succession, although Campbell concedes it’s unusual for HR to drive the process by themselves. “We see this is a board-driven process, using the nom and rem committee, with whom the HRD works,” he says. “The HR leader can

nal. Among companies ranked 400 to 500 in size, however, the proportion drops to 50%.

Outside the private sector, it drops to 35%.

Peter Boyden, principal at Adelante Group, says that in some instances, the board will decide they need a different type of individual because the strategy they’re going to follow for the next few years is going to be different from previous years – and they may need an external candidate with relevant experience.

However, this comes back to having a larger pool of internal candidates. “If all companies

“It’s about increasing the quality of as many people as we can in the C-suite so we’ve got good senior teams” Peter Boyden, Adelante Group play a key role ensuring the board knows what is or is not happening to develop successors, and by offering options the board can request action on.”

A broader perspective Adelante Group strongly supports the development of internal candidates, which also means these candidates perform better in the roles they have today.

In Canada, research indicates that the percentage of CEOs who had been internal candidates varies widely. In the private sector, among the largest 50 companies ranked by revenue, 80% of CEO appointments are inter-

are taking this more holistic development approach, one company may have groomed someone who can become a CEO in another organization,” he says. “If we get this program working across enough organizations, and we do create this pool, everyone benefits. It’s about increasing the quality in as many people as we can in the C-suite so we’ve got good senior teams.”

Fundamentally, experts like Campbell suggest there needs to be a subtle shift from succession being seen as a process to being ingrained into ‘how things are done’, with a particular emphasis on the ‘action phase’, or concentrating on successor development.

CEO SUCCESSION RISK FACTORS Commencing before agreeing on strategy Starting too late CEO involvement Unsuccessful internal candidates leave Choices made without professional advice Distracted senior executive team Lack of coordination of the chairman’s succession Considering only external candidates Board has little succession experience Lack of clarity between emergency and planned Considering only internal candidates Successors aren’t ready HR not involved Intervention of investors

35% 28% 24% 21% 21% 17% 14% 14% 10% 3% 3% 0% 0 10 20 30

72% 66%

40

50

60

70

80

90

100

Source: Korn Ferry Institute, “The risky business of CEO succession”

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PEOPLE

PROFILE

Shining a light on HR best practice Being at the helm of HR for a global talent management company means the spotlight is on Dominque Jones to deliver – and she doesn’t disappoint. Jones chats with Nicola Middlemiss about leadership development and maintaining culture in a rapidly growing company IN MORE than 15 years in HR, Dominque Jones has worked across scores of different industries in both Europe and North America.

From finance and retail to manufacturing and consulting, Jones has tried it all – but she says her latest role, as the VP of HR for Halogen Software, is unique because it finally lets her make a concrete connection to the bottom line.

“This is the only time so far in my career I’ve been able to draw a solid line – rather than a dotted one – from what I do to the bottom line,” Jones says. “To be honest, that’s partly what attracted me to this role.”

Jones has been heading up the HR department at Halogen Software, which provides more than 2,100 customers worldwide with a cloud-based talent management suite, for almost five years.

Leadership development Understanding the challenges employees are facing is essential if you want to build a strong leadership team, Jones insists.

“Organizations are getting much more complex,” she says. “We’ve added all of these complexities to what it means to be a leader that didn’t exist 30 years ago. So maintaining leadership strength without overwhelming them is a huge priority, and it’s something we dedicate a lot of time and attention to at Halogen.”

Now in its fifth year and with guidance

its future leaders?

“We’re three years into an emerging leader program,” Jones says, “and we’re having huge success.”

So far, more than 80% of the participants in the emerging leader program have secured leadership roles within the 12- to 18-month time frame projected.

“It has been really successful for us,” Jones says, “but it’s a never-ending challenge. As the business evolves, we’re asking more and more of our leaders, so we also do some things that are very tangible.”

“This is the only time so far in my career I’ve been able to draw a solid line – rather than a dotted one – from what I do to the bottom line”

Shared perspectives Jones prides herself on being immersed in the business, and is constantly looking to learn more about every facet of Halogen’s operations.

She notes that having an appreciation for what employees experience is an invaluable tool for HR teams in any industry.

“I stacked shelves with the midnight shift when I worked in retail. It was painful, but I wanted to understand what it’s really like,” Jones says. “I had to take phone calls from unhappy customers when I worked in a call centre environment – and that was painful, too – but it really gives you an appreciation of what it’s like to be that person on the end of the phone for eight hours a day.”

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from Jones, Halogen’s leader development program was recently recognized with a Leadership 500 Excellence Award. What makes it so successful?

“We have a multi-level leader development program that is routed in action learning and that puts leaders in peer learning groups together,” Jones says. “That, in turn, drives peer accountability and helps break down silos across the organization because we try and make them cross-functional.

“We also mix action learning and working on real business problems with more academic and classroom-based learning,” she adds.

So how does Halogen identify and develop

An eye on culture So which HR challenges are at the forefront for Halogen, and how are they adapting their strategy to address them?

“It’s about how we maintain our culture as we grow across multiple countries,” Jones says.

Unsurprisingly, there’s a plan in place.

“What we’re trying to do now is to make sure that those things that are anchors of our culture are generic enough that everybody understands them,” she says, “so that even if you put geographical and cultural nuances underneath them, they still make sense to everybody.”

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PROFILE Name: Dominique Jones Company: Halogen Software Title: VP of HR Years in the industry: 15 Previous roles: - Partner, AD Jones - Market vice president, Right Management - Vice president of career management consulting, Right Management - HR director, The Alcohol and Gaming Commission

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FEATURES

GLOBAL M&A

BUSINESS WITHOUT

BORDERS Last year has been branded the year of ‘merger mania’ – but without an effective cultural integration plan, many of these mergers and acquisitions will result in expensive and avoidable collapse. Jill Gregorie outlines how HR can smooth the process IT APPEARED TO be such a perfect coup­­ ling, analysts nicknamed it a “marriage made in heaven.”

Daimler-Benz was a market leader in lux­ ury vehicles. Chrysler had influence and an exem­ plary reputation in North America, where Daimler wanted to expand. Together, they were supposed to be invincible.

But as it turned out, their management styles contrasted wildly. The German company favoured a formal, authoritative approach, whereas the Americans appreciated leaders

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with dynamism and ‘cowboy bravado.’ The two companies also had very different values about the engi­neering and design process. Daimler empha­sized precision and impeccability, while Chrysler prioritized innovation and risk-taking.

These differences eventually deteriorated their union and delivered a cautionary tale to business leaders worldwide: No matter how good a merger or acquisition looks on paper, without a carefully designed plan for cultural integration, there’s a high probability that the entire exercise will fail.

In fact, 30% to 70% of mergers are unsuc­ cessful predominately as the result of culture and labour-related misalignment, according to the Society for Human Resource Man­ agement. These failures can cost organiza­ tions billions of dollars, not to mention tar­ nished reputations from the ensuing negative press coverage.

Fortunately, HR executives can guide a company through precautionary measures to dramatically increase the likelihood of M&A success.

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WHEN INTEGRATION FAILS: HISTORICAL M&A FLOPS yy Daimler and Chrysler Once dubbed a “merger of equals,” the two world-renowned automakers were expected to thrive after a $38 billion deal. However, due to differences in management styles and conflicting engineering practices, the merger ended up costing Daimler $650 million. yy HP and Compaq Although Hewlett-Packard remains in control of the brand it bought for $25 billion in 2002, the two technology manufacturers struggled for years to align HP’s focus on engineering precision with Compaq’s emphasis on sales and customer service. yy New York Central and Pennsylvania Railroad The largest merger in history at the time, these two railroads thought they could join forces and expand their market. It turns out that long-standing rivalries between the two prevented any collaborative efforts to be undertaken, and the then-sixth-largest corporation in the US was forced to declare bankruptcy.

First things first As soon as one company decides to acquire another, considerations, ranging from financial decisions to legal requirements, need to be examined from the get-go. It is during this time that forward-looking organizations also will begin the process of cultural assessment and evaluation in order to assimilate the two enti­ ties later.

Companies often assume that the target organization’s culture will naturally incorporate with the buyer organization’s larger or stronger

culture, causing management to forego any explicit cultural integration planning. This approach is highly likely to fail, as culture drives business processes, and alignment is needed to secure results.

“What I’ve seen work most effectively is companies taking the time to complete exer­ cises to formally understand what are the differences between the cultures, what are the similarities, and taking the time to define what the new culture will be,” says Laura Croucher, national lead partner of advisory services,

yy Coca-Cola and Huiyuan Juice While this bid was never finalized, critics argue that the time and money Coca-Cola spent trying to acquire the Chinese juice producer would have been better spent focusing on its own organic growth strategy for the region. yy Bank of America and Merrill Lynch These two financial institutions were incompatible at their core. Merrill Lynch enjoyed being fast-paced and Wall Streetdriven, whereas Bank of America was more commercial and customer-focused. Several Merrill Lynch executives fled, earning this merger the title of “a deal from hell.”

Source: Globoforce Limited, Forbes.com

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FEATURES

GLOBAL M&A people and change practice for KPMG Canada.

To accomplish this, companies should begin with a diagnostics phase that thoroughly assesses each organization’s formal and infor­ mal culture. This can include such activities as exploring company websites, interviewing management and leadership groups, and conducting surveys.

“The second step after research and analysis is to conduct a gap analysis,” says Chuck Moritt, North American corporate M&A consulting leader for Mercer. “Develop a risk profile that outlines where culture risks may exist between two organizations, from both the tangible side – such as business processes – and the intangi­ ble side, such as how leaders communicate and how work gets done.”

Empowering change Once this gap is identified, an important next step is educating the workforce on what changes will occur, and equipping managers with the knowledge and tools to bring them about with minimal resistance.

“The organizations that have not done this well, in my perspective, didn’t spend time thinking about what’s going to be required from a change management perspective or equipping managers and leaders to help people manage change,” Croucher says.

Employees often look to their direct super­ visors for answers during times of uncertainty, and it is HR’s job to ensure that these super­ visors are trained to lead them through any periods of upheaval. Even if managers can’t answer questions immediately, they can still provide security by reassuring workers that management is aware of their concerns and will supply a response shortly.

In addition to leadership training, this is an excellent opportunity for managers to be coached in cross-cultural awareness and what to expect from divergent social norms.

When Morritt worked on two complex cases, one involving a South Korean business expanding to the West, and the other bringing a US company into a joint venture with France, he took actions to ensure these preparations were a priority.

“What both of those organizations did was basically put their management teams under

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STEPS TO A SUCCESSFUL CULTURAL TRANSITION yy Before any official announcement is made, articulate a vision for the merger that outlines how the deal will benefit both companies. Create a communication plan that demonstrates this value to internal and external stakeholders. yy Determine what the shared cultural values for the merged organization will be, and formulate a road map that will help individuals understand how business will be conducted under the new entity. yy Since change can be disruptive, encourage employees to maintain focus and strive to reach shared objectives. Provide adequate resources and training to employees who may fear potential obstacles more than the change itself. yy Empower the transition team to be visible agents of collaboration, which influences others to follow suit. yy Celebrate integrative accomplishments with employees, clients and, when appropriate, the media.

Source: Lee Hecht Harrison

cultural assimilation programs to understand what the operating styles were in the country they were looking to go to, from the stand­ point of various cultural dimensions,” he says.

These operating styles included: • Time orientation • Whether the firm emphasised short- or long-term results • Business process orientation • Whether the goal is to generate an out­ come or be process-driven • The hierarchy of decision-making • Length of employee work days Winning over workers The last component for any successful mer­ ger or acquisition is ensuring that each employee base is willing to accept the new organizational culture. One employer that is especially renowned in this practice is HUB International, a top global insurance broker­ age that boasts more than 300 successful acquisitions since 1998.

As a starting point, HUB International provides acquired employees with the same onboarding process as it does its conventional new hires. This orientation provides a thor­ ough introduction to company leadership, the employee experience and benefits offered.

In addition, the brokerage has found that communicating to its workers how the merger will make their jobs easier is essential to gain­ ing support and encouraging assimilation.

“We make sure to create dialogue across offices and share with employees what addi­ tional resources HUB brings to the table,” says CHRO Deborah Deters. “We typically find that what employees care most about is what they can do for the customer. If they see that our resources will help them and their clients, we find that the transition goes very, very well.”

HUB has found that a key way to cascade this message down to individuals is by targeting ‘internal champions’ and leveraging their social influence to persuade other employees.

“These are the on-site communicators, the ones everyone goes to for information,” Deters says. “If you can identify and tap into those people, get them buying in and believing in it, that goes a long way in championing the change management piece of it.”

All about culture One of the greatest misconceptions Morritt encounters among business executives is the idea that a corporate culture is an untouchable phenomenon that cannot be influenced or managed in any way.

“Doing a cultural analysis is just as impor­ tant as doing a financial analysis, operational analysis, or critical talent and skills analysis,” he says. “If there’s a huge gap between what made a target company successful in how they operate and what makes the buyer successful along the same dimensions, it may look good independently, but it’ll probably be a train wreck when put together.”

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style your

FEATURES

COVER STORY: LEADERSHIP 2015

Leading from the front: L’Oréal Nicola Middlemiss chats with Frank Kollmar, president and CEO of L’Oréal Canada, about leadership challenges, lifechanging career advice and the invaluable relationship he has with his HRD AS THE world’s largest cosmetics company, L’Oréal’s presence is far-reaching, to say the least – from Nigeria to New Zealand. Its global workforce is made up of more than 70,000 employees spread across five continents and 130 countries.

Yet sheer size is not the beauty behemoth’s biggest achievement – L’Oréal is renowned for its dedication to corporate social responsi­bility [CSR] and has invested billions of dollars into becoming a more socially and environmentally sustainable organization.

L’Oréal’s most prevalent CSR mission is to empower 1 billion new consumers to make sustainable consumption choices by 2020. The company intends to cut its environmental footprint by 60% in that time and hopes to have 100% of its products provide an environmental or social benefit.

Frank Kollmar is the man at the helm of the company’s Canadian operations, where more than 1,000 employees from over 60 different countries come together to champion the four ethical principles of integrity, respect, courage and transparency.

Following early intern roles at IBM, Procter &

Gamble in Germany and France, and Mercedes-Benz Technology, where he worked on a master thesis on strategic decisions in project management, Kollmar moved to the beauty conglomerate in 1999. He entered the organization as a marketing director for the subsidiary brand Vichy. Since then, he’s worked in both North America and Europe, doing stints in Quebec, Dusseldorf and Vienna.

As president and CEO of Canadian operations since January 2014, Kollmar has large shoes to fill. His predecessor, Javier San Juan, spent eight years in the top job. Under his stewardship, the company witnessed remarkable growth in sales, from $750 million in 2006 to $1,030 million in 2013. The company also won a number of accolades, including being named one of Canada’s Top 100 Employers (2005-14), Canada’s Best Diversity Employers (2009-10), Canada’s Top Family Friendly Employers (2008-11), Montreal’s Top Employers (2006-13), Canada’s Top Employers for Young People (2007, 2009-13) and Top 50 Socially Responsible Corporations (2010-11). San Juan moved to the role of president of the Latin America Hispanic Zone and president of L’Oréal Mexico – a

“The HR team knows how to identify potential beyond market share or sales results and then put together the right career path to have everyone excel to their full potential”

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L’ORÉAL: A GLOBAL COMPANY AT A GLANCE L’Oréal Canada, headquartered in Montreal, is wholly owned

by L’Oréal Group, the world’s largest cosmetics company.

Operations include the manufacture, marketing, sales and distribution of its cosmetics, skin care, sun protection, hair care and hair colour products.

• A presence 130 countries • 2014 global sales: €22.5 billion (an increase of 3.7% from 2013) • 27 international brands • 78,600 employees globally • 1,200 employees work at L’Oréal Canada • 3,817 researchers and employees in research and innovation worldwide • 18,000 employees in Operations worldwide • 22 research centres and 17 evaluation centres worldwide • 42 factories and 145 logistic sites worldwide • 5 management development training centres worldwide • In 2014, was voted one of Canada’s Top 100 Employers for the 10th year running, and was also voted one of Canada’s Top Employers for Young People, as published by The Globe and Mail strategic decision to align with the group’s ambition to regroup management by geographic zones, in accordance with an era of globalization and universalization.

Kollmar will be aiming to capitalize on the main growth drivers of the past five years: the fast development of digital, growing the diversity of talent within the organization and continued innovation.

HRD: What would you say your greatest HR challenge is?

Frank Kollmar: As president and CEO of L’Oréal Canada, I manage a very diverse workforce of 1,200 employees, representing more than 60 nationalities, working in Montreal, Toronto, at our Ville Saint-Laurent plant and distribution centre or on the road all over Canada.

My HR team has to reconcile two key factors: They have to help each L’Oréal Canada employee to develop their skills to the maximum with the right career path, while supporting the company’s business goals.

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FEATURES

COVER STORY: LEADERSHIP 2015 The HR mission is to attract, identify, select, develop and reward the finest talents in all the group’s business units and divisions. Our competitors used to be other cosmetics companies; today they include global digital companies, and even smaller ‘love’ brands that are very attractive. We have to keep being innovative in what we have to offer as an employer of choice.

“Our competitors used to be other cosmetics companies; today they include global digital companies, and even smaller ‘love’ brands that are very attractive”

HRD: What are five ways you’re addressing this HR challenge?

FK: L’Oréal Canada has been recognized as one of Canada’s Top 100 Employers [for the 10th consecutive year] and Canada’s Top Employers for Young People [for the eighth consecutive year]. Some of the reasons why we were selected include: Several programs to help employees to be more flexible and effective with their work to help achieve a better work/life balance: L’Oréal Canada’s Worksmart program, for example, allows employees to work from home and enjoy a sabbatical leave, as well as onsite day care, compressed work weeks and early Friday closings in the winter and summer.

The launch of our global Share and Care program: With this program, the L’Oréal Group writes a new page of its social history and sets a new objective – by the end of 2015, we will offer all of our collaborators worldwide the best benefits in four areas: social protection, health, parenthood and quality of work/life balance.

Based on these four pillars, the program has built a common foundation of compulsory benefits that meet the expectations of all L’Oréal Group employees worldwide. In addition, the program allows each subsidiary the flexibility to develop initiatives based on local needs and requirements.

For L’Oréal Canada, it will mean improvements to initiatives already in place or the implementation of new programs aimed at improving our performance in one of the four pillars.

An exceptional training program: We are committed to ongoing employee development and provide a variety of in-house and online training programs, subsidies for tuition and professional accreditation, as well as opportunities for international training in Paris and New York.

Training is essential for helping our employees evolve within their functions. The world of beauty

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THE ULTIMATE RETENTION TOOL? WHY TRANSPARENCY MATTERS HR departments that don’t have a big budget to roll out impressive retention-improving policies are at a major disadvantage – right? Wrong. The VP of HR for beauty conglomerate L’Oreal Canada says there’s one simple way companies can improve retention rates for very little cost.

Of course, L’Oréal Canada has a string of attractive benefits that appeal to employees, including: • child care facilities • work-from-home options • BYOD However, Catherine Bédard feels that real improvements to retention can only be seen when organizations adopt a transparent approach to doing business.

“I always advise [HR professionals] to demonstrate integrity and transparency – with both candidates and employees,” Bédard says. “The talent war is so present everywhere, but you have to be truthful and say to candidates, ‘Here’s our culture, and here’s what we have to offer by way of roles and responsibilities.’ We’re transparent enough so that they can make a wise decision, and the same goes for our employees. If you’re upfront and demonstrate transparency on how you’re going to manage their career, they will stay because it fits with their values and their goals.” products is constantly and rapidly evolving, driven by changes in society.

While this dynamic environment encourages internal promotion and long-term career evolution, we offer our people permanent development opportunities.

MAP annual review of talent: In a world that is always on the move, we know that our young talent wants to move fast, take responsibility, be autonomous, accumulate experience and show what they can do.

My HR team knows that a professional career has to be followed through and built long term.

We believe that each of our employees should play an active part in their career path. We have therefore constructed a simple and efficient career development process [MAP] based on an annual review of talent, which enables us to identify and

Y YO

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develop potential.

Each person’s role in this process, from the immediate manager to the HR team and the employee him or herself, is clearly defined. What’s more, the process is based on the use of simple tools that are shared by the entire group.

Innovative employee incentive program: The Beauty Shakers program is designed to entice the entrepreneurial motivation and engagement of our teams at their highest levels.

The Beauty Shakers Awards, launched with great success in 2014, is open to all L’Oréal Canada employees in order to, on one hand, recognize teams that excel in their jobs, and on the other hand, incentivize individuals to think out of the box, dare and be creative by presenting a new idea to our executive committee.

Three categories are open with the Innovation Award, the Excellence Award and the Sharing Beauty with All Award. We are looking for ideas that will allow us to attain excellence and imagine the beauty of tomorrow.

Again, employees can win a cash prize of $10,000. The first edition in 2014 was a great success, and the participation rate has far surpassed our expectations. A sign that L’Oréal Canada is made of movers and shakers!

HRD: Is there anything you have learned from your HR director? What’s the most valuable thing you feel they have brought to the business?

FK: I’ve learned plenty, and I keep learning from her each day; in fact, her role is to help me and the business managers to avoid any blind spots on the universal evaluation of our talent.

L’Oréal Group has been a leader in its industry for more than 100 years, and that’s because it has always

been a company where human beings are more important than structures or processes. HR is crucial on our business development model.

My vice president of HR works very closely with me. It’s a role that is part of my executive committee and that is included in business decisions. We hold regularly ‘talent management’ meetings where the employees’ development needs – not just the organization’s needs – are put forward and discussed.

The HR team knows how to identify potential beyond market share or sales results and then put together the right career path to have everyone excel to their full potential. I work with the HR team and the business division to make sure that when we stretch someone in their development, each employee has the right support to succeed and that there is no risk to the business. This way, employees at L’Oréal can experience local and even international careers at a very fast pace.

HRD: Have you always been a natural leader, or is it something you have had to learn and develop over time?

FK: At L’Oréal, we empower people who are ready to take bets, think out of the box, defend their convictions, be resilient and leave their own mark. I believe these are all great qualities for leaders to have, and I believe that even though you can be a natural-born leader, [leaders] can be developed through time and experience. I think I’ve always been a natural leader, but my life experiences, for example, having lived both in Europe and North America, have helped me become a more complete leader.

HRD: Do you have any leadership tips or careerchanging advice?

FK: Don’t take anything for granted, be daring, create win-win situations and seize the moment!

YOUPROBABLY PROBABLYDON’T DON’T OBJECT YOU OBJECTENOUGH. ENOUGH. WE WILL. WILL. WE Winning for employers in WSIB matters.

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FEATURES

COVER STORY: LEADERSHIP 2015

Leader of the pack: Nestlé With operations in 197 countries and a presence in every nation on the globe, Nestlé is the world’s largest food and beverage company. HRD talks to Trevor Clayton, CEO of Nestlé Oceania, about leading 5,500 Australian employees HRD: What do you believe your number one leadership challenge is?

Trevor Clayton: When you are leading a business as large as Nestlé, you must always ensure that it is growing and evolving to be one step ahead. You need to know what the consumer wants before they do. But it’s how you face this evolution that defines you as a leader.

Nestlé will be 150 years old in 2016, and in that time the company has operated through two world wars, the Great Depression and civil unrest.

In the 21st century, we are now embracing the digital age along with cutting-edge technology and research, to help us make products that are tastier and healthier for our consumers. But in order to do this, we must be flexible, agile, fast to market and be listening to our consumer – and that means constantly changing and realigning our business in the societies in which we operate.

different cultures and backgrounds and across many different countries. I’ve worked in diverse markets such as Pakistan, Turkey and Indo­ china, so my leadership style has adapted to the different cultures.

But there is one thing that has remained constant and consistent, and that’s my collaborative style as a leader. If you ask employees, I think they’d say I like teamwork, I’m inclusive, and I encourage people to move out of their silos and work as one unified team – this is what we call ‘One Nestlé.’

I like to work in highperformance teams and believe that through alignment and close collaboration, we can achieve great things together. Part of my management philosophy is to encourage teams to be creative and think outside the box to find the most innovative solution or the next big idea. This allows us to stay one step ahead and provide the tastiest and healthiest products for our consumer – which is our top priority.

I’d say I’m also a leader who is very visible within the business. Instead of always sending emails or making telephone calls, I make a point of regularly getting out of my office to go and speak to people at their desk or in their offices. As a leader, you are only as good as your team, and at Nestlé, I have a great one.

“You need to know what the consumer wants before they do”

HRD: How would you describe your style of leadership, and do you believe that it has evolved over time?

TC: Working at Nestlé is something that has kept me motivated over many years – 26, in fact. What I appreciate about it is that I get to work with wonderful people from many

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TREVOR CLAYTON’S TOP TIPS FOR UPCOMING LEADERS

1 2

Be able to delegate and trust your team to execute the vision and strategy of the business.

Adjust your style to different teams. My role covers Oceania, which includes countries such as New Zealand, Papua New Guinea, Fiji and Pacific Island nations. It’s important that as a leader, I can be flexible and understand the nuances and complexities of such a diverse region.

3

Remove obstacles. It’s important to streamline bureaucracy to encourage innovation and creativity.

4

Get out of your office and talk to employees.

This helps to build engagement and brings us all closer together as a team. Don’t be too internally focused.

5

Encourage people to think outside the box – no matter how crazy an idea is, always encourage people to share their ideas, from the factory floor up to senior management.

Constant improvement is something we should continuously strive for. Make sure you deliver in the short term, but spend enough time looking to the future, because this is where leaders can have the greatest impact.

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Professional Development for the Ambitious Leadership in Administration Program September 16-17, 2015 For women in assistant, coordinator and executive roles striving to achieve administrative excellence.

HRD: What sort of professional development do you personally undertake?

TC: At Nestlé we have a comprehensive global training program with a strong emphasis on leadership development, and I have been fortunate to go on a number of the courses. I read a lot – a diverse range of publications from the Harvard Business Review, financial and news magazines, leadership articles, as well as popular culture websites. To be a successful leader, you have to know what your consumers like, buy and read. I keep abreast of the latest health and wellness trends and research – an interest that’s both professional and personal for me.

HRD: Nestlé was voted the most attractive employer in the FMCG category at Randstad’s recent employer awards. What do you chalk that result up to?

TC: I’m really proud of our employees and the company and culture we have built together to win this award, including the fact that we came first in the FMCG category. Nestlé is an attractive place to work, and there are many reasons

for that. We care for our employees through a range of initiatives, from health and wellness programs such as meditation to help with financial planning, walking clubs and volunteer opportunities.

At Nestlé, we are very clear about how we can contribute to society while still meeting the expectations of our shareholders. Our Creating Shared Value program runs many global programs, from addressing child labour in cocoa-growing communities and helping farmers grow sustainable coffee in Papua New Guinea to sourcing sustainable and traceable palm oil.

HRD: What do you look for from your HR head?

TC: It’s imperative that the HR director is part of the decision-making process at senior management level – as part of the evolution of an idea, not at the final stages. I also believe your HR director needs to be a trusted advisor to the business, and open communication is a must. They also must stay ahead of the game in terms of sourcing, developing and retaining the best talent in order for the organization to continue to grow and innovate. It doesn’t matter where you are working in the world – people are your business.

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The Initiative forWomen in Business provides professional women with leadership development opportunities, new ways of thinking and vital connections that help them advance and succeed in their careers.

For a full list of networks and programs, visit www.rotman.utoronto.ca/women Contact info: For more information, call 416.978.5036

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FEATURES

INNOVATION

Innovation by stealth Having worked with GE, Samsung, Philips and Pfizer, Paddy Miller knows a thing or two about innovation. He chats with Iain Hopkins about innovation blockers and why stealth innovation may be the answer KODAK’S STORY could act as the ultimate cautionary tale for any multinational corporation. Prior to the digital revolution, which rendered anything non-digital almost redundant, Kodak invented the digital camera. It even had it patented. Yet it failed to get off the ground due to a significant chasm between senior management and employees – and all this occurred even when those same senior leaders knew something was seriously wrong with the company.

“It’s the ultimate in flawed thinking: We know something is wrong, but we can’t or won’t do anything about it. We can’t turn the Titanic around,” says Professor Paddy Miller of Barcelona’s IESE Business School and co-author of the book Innovation as Usual.

Fortunately, the story is not over. Kodak has been turned around – but only just. Antonio Perez took over as chairman and CEO in 2005. He pushed the company into Chapter 11 bankruptcy and ended up laying off 50,000 people. The company has since reinvented itself, and today it has transformed into a profitable high-end imaging business. Kodak showed its first profit in many years in the first quarter of 2014.

A burning question remains: Why did

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senior leaders not listen to their workers?

“People at the top hadn’t done their job, and that includes the HR people,” Miller says. “Kodak had the potential to be a great business, but they weren’t doing what they had to do, which was closing that disconnect between the people who invented the digital camera and had a view of where the world was going, and the people at the top.”

For Miller, this disconnect is central to why innovation is stifled in so many organizations – but it’s not the sole reason. There are some fundamentals that quash innovation.

The wrong approach First and foremost, organizations take the wrong action in relation to innovation: They are top-down instead of bottom-up. The statements from CEOs in their annual reports will invariably state: “We’re into innovation.”

Then it’s left to the HR department to facilitate that process.

“My philosophy is quite different,” Miller says. “HR people need to be thinking about driving this from the bottom up. How do you build nodules, groups and teams of excellence in innovation? This runs counter to the culture of many organizations, where it’s top-down.”

1

2

Entrepreneurship is not innovation

Another key problem is the obsession many HR teams have with competency lists: In order to make it within an organization, people need to demonstrate at least a few key competencies. Innovation might exist on that list, but it’s usually a subset of entrepreneur-

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“How do you build nodules, groups and teams of excellence in innovation? This runs counter to the culture of many organizations where it’s top-down” ‘threshold for failure.’ The cliché that ‘we learn from our mistakes’ is simply not true in large organizations, Miller says. Instead, mistakes are punished.

3

Sheer size

Monster organizations used to only exist in government or the military, but today, Samsung employs 425,000 people, and IBM employs 400,000. These organizations, by their sheer size and complex organizational structures, are not conducive to innovative thinking. ”These organizations are searching for is stability. What they want to do is stabilize, control behaviour and not have any outliers,” Miller says.

Turning ideas into action

ship. But that’s the wrong connection, Miller says. “I know a lot of people who are amazingly innovative but who are not entrepreneurs. They think wildly, they come up with wild ideas, but they don’t know how to package it up – it’s not a subset of entrepreneurial behaviour.”

This confusion also can be seen in the

For too long, discussions around innovation have focused on idea generation. Ideation and brainstorming are easy; turning those ideas into viable business solutions is more challenging. Here are Miller’s tips: 1. Teach people political skills. You need to understand the politics of your organization. Who are the stakeholders in your project? Who are the people who can block you? What buttons do you need to press to get it through? These political skills can and should be taught.

2. Don’t over-regulate. You’ve run the innovation course; you’ve provided the case studies; you’ve educated employees on how to be politically astute. Now it’s time to ‘scaffold innovation.’ Let people come up with their own terminology, their own solutions. Don’t even mention ‘innovation.’ Reframe it by first presenting the problem that needs to be resolved (see below).

REFRAMING A PROBLEM Problem: In the pharmaceutical industry, it’s critical for sales reps to get ‘face time’ with physicians. But because physicians are time-poor and exposed to countless sales reps, all with similar products, getting cut-through is a constant battle.

Solution: Rethink what you are offering.

Instead of concentrating solely on the physician, become patient-focused. Talk about how your product can help the patient and how you, as a company and as a sales rep, can help to do that. HR can help outline the problem, but the sales team themselves have come up with a solution. HR then helps create a whole new sales behaviour through appropriate support and training, if required.

3. Don’t dismiss incremental innovation. Big organizations don’t want their boats to be rocked. Remember, Kodak had a solution, but it was so disruptive, it was dismissed as being untenable. At the same time, organizations like Apple and Google got to where they are by being hugely disruptive.

Is there a middle ground? Yes, and it may lie in permeating the organization with the concept of innovation; the continuous improvement program might in fact masquerade as an innovation program. “We’ve got the wrong message: It should be disruptive, and it should be incremental,” Miller says.

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FEATURES

INNOVATION

4. Don’t reinvent the wheel every time. “We’ve passed over and haven’t fully developed all the existing technologies, systems and know-how that already exists in organizations,” Miller says. “So we keep moving to the next best thing instead of looking around and saying, ‘Here’s something we can easily build on’.” (See example below.)

INNOVATION LEADERS Boston Consulting Group produces an annual list of the world’s most innovative companies. Here’s who made the grade in 2015 (2014 rank in parentheses):

Microsoft (4) Toyota (14)

Apple (1)

USE WHAT ALREADY EXISTS Globally, the issuing of passports is fairly standardized. One government department handles it, the citizen fills out forms and submits a photo, and the citizen then waits for up to three weeks for that passport to be delivered to them.

The Spanish passport-issuing agency asked itself a series of simple questions: Why do we do it this way? What do we do with all these forms? Where are the photographs? Has anyone ever looked at the form after it’s filled out? With people taking selfies all the time, why do we require them to have a professional photograph taken?

“The Spaniards quickly realized they could do it all much faster,” Miller says. “By making simple changes, they realized they could cut waiting times back from two weeks to one week. Then from one week to two days. And then two days to one day. Now in Spain, you get your passport in 15 minutes. By taking a look at their operations with fresh eyes, they came up with a better solution.”

Stealth innovation Given the above challenges, it’s not surprising that ‘stealth-storming’ has blossomed.

Miller points to 3M’s Post-It note and Pfizer’s Viagra as classic examples of stealthstorming.

“What you see is people stealthily moving to get their innovation into an organization,” he says. “The best thing to do in many organizations is to fly below the radar, see if you have traction, and when you have traction, reveal your innovation. Then you say, ‘I need

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IBM (7) Google (8)

Facebook (n/a) Amazon (17)

Samsung (11)

Sony (5)

Tesla Motors (n/a)

$1 million to help this fly’. Nobody says to you, ‘Where did you get the $20,000 to get the trial up and running?’ People manage to hide it in the budget. They’ve done it by stealth. You get a lot of counterintuitive behaviour. You also get a fair amount of corporate disobedience – but it’s usually with good intentions.”

The size of an organization also can be bypassed – but this requires re-examining and potentially restructuring the systems in place.

“Global organizations that have very strong decentralized country management, perhaps along product lines, with local CEOs and GMs, are often better at innovation.

These local leaders are able to convey the values and the principles of the business, and if those values include innovation, you will start to see innovation occurring. So it’s country-level, bottom-up innovation.”

That’s not to say a large organization can’t innovate – far from it. But there tend to be pockets of innovation rather than widespread innovation. Even at innovation leaders such as Samsung, it’s not the whole organization – all 28 divisions – being innovative. Rather it’s smaller pockets, such as the Galaxy phone division.

STEALTH TIPS Trying to get your own innovative idea off the ground, or attempting to kick-start a culture of innovation?

Here are four tips from Paddy Miller: STEALTH SPONSORS Appeal to managers one or two levels below the C-suite. They have enough power to get you started, and they’re easier to connect with.

STEALTH TESTING Create proof of concept to gather incontestable evidence of the value of your idea before presenting it to a jury of executives.

STEALTH RESOURCING Securing cash or employee hours for a stealth project is tricky, but it can be done. In large companies, many projects have more resources than they need. Operational budgets also often have spare capacity. It can sometimes be easier to attract investment from partners outside the organization. And don’t forget to barter: you might not have cash, but you probably have resources or capacity you don’t need that others do.

STEALTH BRANDING A credible cover story allows you to spend time on a project without having to field awkward questions from higher-ups.

First published in Harvard Business Review, March 2013

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17/06/2015 1:46:47 AM 16/06/2015 1:16:34 AM

FEATURES

BENEFITS

Benefits that work Can small businesses compete with the bigger players in the quest to retain talent? They can – and the solution applies to all employers regardless of size: flexible benefits

THERE IS an expectation among Canadian employ­ees that their employer will provide at least a life and health insurance plan, so a benefits package is a must if employers want to attract and retain good employees in a competitive industry.

For small employers, a benefits package shouldn’t be viewed as an unnecessary cost, but rather a powerful tool to attract and retain top talent while competing with the big dogs on the block – especially with flexible employee benefits packages.

Chris Presley, a regional vice president at Equitable Life who manages the company’s myFlex Benefits program, says they’ve found

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an ideal way for small businesses to stay competitive in the field of staff benefits.

“We started by talking to small businesses across the country about their frustrations with traditional product offerings,” he says.

“They told us they needed more flexibility to meet the diverse needs of their employees and compete for talent with larger organizations – without breaking the bank.”

That came in the form of a cafeteria-style flex plan called myFlex Benefits, which gives employees more input on what they want from their benefits package.

The plan, which launched in February, is designed for groups of between five and 35.

APPS TOO POPULAR? The trend of using mobile phone apps to drive benefit plan member engagement is growing in popularity, but it might be working too well for some employers, according to one financial advisor.

“Moving forward, it’s all about social media and social apps,” says Bill McElroy, a senior financial advisor at the William Douglas Group of Manulife Securities. “This whole new generation that’s coming into the workforce, that’s what they’re geared to. The insurance companies aren’t issuing paper or formatting employee booklets anymore; they’re PDF, they’re all online. It’s definitely trending

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THE ROI OF WELLNESS PROGRAMS

to the Internet.”

Now employees are taking full advantage of all the benefits they are entitled to, and employers are feeling the effects.

“It’s been a double-edged sword with employers as far as engaging the employees,” McElroy says, “because the more the employees are engaged about the plan, the more they use it, which ends up costing the employers more money.”

Of course, this is balanced by the benefits of the plan for employers. “Hopefully in the long term, it reduces absenteeism and saves the company money, but it’s difficult,” McElroy says.

Employers define their contribution and choose a selection of benefit options, and then the reins are handed over to the employees.

So far, the product has been going gangbusters, Presley reports.

“When you look at how you can structure your program, how you can engage your employees in the program, the way you show your appreciation to the employee is such a key element,” he says. “We’ve only had myFlex launched for not even a year – but the feedback we get all the time is that the employee satisfaction level is extremely high.”

The myFlex plan offers a way for employees to stay engaged and appreciate what the

First, the good news: A recent Sun Life Financial study found that 76% of organizations offer at least one wellness program. Now, the bad news: That same study found only 26% take strategic approach, including calculating ROI. The effect of wellness programs to the bottom line can be difficult to measure, not least because wellness programs can be wide-reaching – anything from simply offering healthy snacks in meetings to a targeted smoking cessation program.

A Harvard University Meta study estimates an ROI of $3.36 for every dollar spent, while a Canadian study puts it at $4 to $5.

Warren Shapell, president of EAP Specialists, says cause and effect is the bane of quality data on ROI. “It’s really difficult to show it conclusively,” he says. “For example, we could measure absenteeism before and after a wellness program is implemented, but the cause and effect is not necessarily the wellness program. It could be a change in management; it could be economic conditions; it could be all sorts of reasons – it’s difficult, but it’s also very important to show.”

It may be beneficial for HR to measure data for other reasons. Many insurance companies now guarantee a lower rate if an organization has a wellness program in place. But the company has to be able to show improvement to the health of their employees.

An intelligent diagnostic will evaluate organ­ izational health, organization and management factors, as well as the effect of wellness programs on employee health (through biometrics, absenteeism, participation and others) – all of which makes it important to look at engagement as well as participation, says Shapell.

“HR often concentrates on participation because it’s easy to measure,” he says, “but the thing that’s often overlooked is the measure of satisfaction with the wellness program – if a company listens carefully, employees will give valuable feedback on program design that will lead to further success.”

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FEATURES

BENEFITS employer is spending on them, Presley adds.

“The reality is, ‘flex’ is a broad term,” Presley says. “The idea of bringing flexibility to smaller employers has been around for a while – whether it is healthcare spending accounts or, more recently, the modular style flex plans that have come into play.”

A modular plan typically means employees have three health and dental packages, or

MOVING BEYOND PAPER Health benefits have become a standard part of most organizations’ compensation package, but are you falling behind in offering employees the latest benefit approaches?

“We’re finding more and more employees are looking to engagement with insurance carriers in an electronic manner. Gen Y are saying ‘I don’t do paper,’” says Wayne Millar, Sun Life’s AVP of product development for group benefits. “What we’ve seen is that those who leverage tech to interface are more satisfied with their plan design.”

Technology lets employees get faster access to healthcare providers, and get reimbursed quickly instead of mailing in a claim.

“A lot of studies highlight that many Canadians live paycheque to paycheque and can’t afford to be out of pocket, so they don’t get the treatment,” Millar says. “If we can make it really easy to submit the claims and process them quickly, they’re not out of pocket for a long time.”

The bottom line is healthier, happier employees who are more productive at work. Millar also stresses the importance of maintaining existing options, as not all employees will want to change over to electronic claims.

What’s next in benefit tech? Millar says it’s going to be all about mobile in the next three years.

“The notion is that mobile health leverages inherent smartphone capabilities such as GPS, barometric pressure, pedometers and near field communications,” he says. “I’m in Vancouver today, so if the barometric pressure was about to change the smartphone would know ‘Wayne’s in Vancouver; the barometric pressure is about to change; he’s at risk of a migraine’ and send an alert.

“I would project within the next three years we’ll see a wide range of these being used within group benefits to prevent problems instead of just reacting,” Millar says.

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modules, to choose from, and often they are priced equally, Presley says.

“It’s a more balanced approach to flex,” he says. “You will see one option with even dental and even health, whereas the other two will have more dental or more health and less of the other.”

Ricardo Barreiros, an associate with TRG Group Benefits & Pensions, says that a good company benefits plan can form the foundation of a family’s financial security, and this can bring an employee tremendous peace of mind.

“For a small company especially, a good flexible benefits program helps them change how their employees view them – from a job to a career,” Barreiros says. “A really robust

tive, HR departments shouldn’t dump all their eggs into one basket by hoping that only a flex plan will keep employees from leaving the nest.

“Especially for millennials, it’s not the provision of a flexible benefits program that is going to be the lever for engagement,” says Marilynne Madigan, managing partner of Ontario health and benefits consulting at Morneau Shepell.

“It’s going to be the organization, the culture, the brand of the organization. Having said that, organizations that provide total rewards with more flexibility are going to be far more appealing to that group of people.”

There are more opportunities today than there were historically, Madigan says, for small or mid-size employers to offer a flexible

“Millennials, more than any age group, view the benefits plan as table stakes. They question it more if you don’t have a benefits plan. And if you don’t have a benefits plan in place, it puts you at a disadvantage” Ricardo Barreiros, TRG Group Benefits & Pensions plan can make a small company look big.”

The real plus of flex benefits is that they can appeal across generations, Barreiros says.

“It is great for multi-generational, because the Gen Y folks will value different benefits than your Baby Boomer employees,” he notes.

“A lot of Gen Y employees have grown up going to massage therapists or chiropractors, and because they are still fairly young, they don’t need big drug plans ... whereas your Baby Boomers might be on a cholesterol-lowering heart drug.”

For Generation Y, or millennials, benefits packages need to have that flexibility – and, of course, be available online.

“It’s similar to online shopping,” Barreiros says, “just add to your basket and checkout your personalized plan.”

A multi-faceted approach Although flexible benefits plans are attrac-

compensation arrangement.

“The insurers are receptive to it,” she says. “[Our organization has] developed a flexible benefits solution designed for the mid-size employer, who have historically not had such plan designs available for them.”

The flexible benefits are part of a total rewards program of performance-based compensation, Madigan adds.

“We’re linking flexible benefits to performance, so if you participate in a healthy lifestyle and complete a health-risk assessment, you could get more credits and get more dollars in your spending account,” she says. “It is impacting the culture, driving that healthy workplace – it is all of those levers that are going to help you retain millennials.”

According to Barreiros, millennials see a benefits package as a critical factor when determining job choice.

“Millennials, more than any age group,

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RETAINING MILLENNIAL WORKERS While millennials are often painted as fickle and financially insecure, it would be a mistake to assume they don’t care about employee benefits. A recent white paper from Colonial Life found that 60% of millennial workers list benefits and the second most important aspect of job satisfaction.

Wellness: A 2011 ‘bright paper’ from Sun Life Financial reported that millennial employees expressed a desire for benefits that prevent illness rather than treat it. Millennials respond well to programs that promote healthy eating, subsidize gym memberships or offer workplace fitness facilities.

Education: The Sun Life study also found millennials prefer educational benefits such as reimbursement for the cost of education and self-development courses (personal, professional and spiritual), which aren’t widely offered by employers.

Flexibility: Sharon Hogg, president of Nova Scotia-based Benefits Experts, says offering flexibility is the key to providing benefits for younger workers. “Flex plans are great for Gen Y,” she says.

“They don’t want to be told they have to take the full benefits package, and it’s important to them to pick and choose.”

Providing core benefits – health, dental, pension – along with ‘add on’ solutions, such as HSAs, might be a good way to offer flexibility to younger employees while maintaining the benefits older workers value.

Communication: Millennials are a communication-savvy bunch. According to the Sun Life paper, they want communication about their benefits minus the HR jargon; Hogg says the way benefits are communicated to millennials is as important as the benefits themselves.

“We find older generations would prefer to sit down and read something, while someone like my daughter, who is 24, would respond better to an email or text message – something she can go through quickly and respond to.”

Claims: According to Sun Life, millennials think paper claims are a time-waster and prefer a making healthcare claims online – or even better, via their smartphones.

“Smartphone delivery has been very successful with this age group,” Hogg says. “I’ve just implemented a plan for a new group that never had benefits before, whose average age is 23. One of the reasons the company chose the plan they did is so they could use the phone to submit claims. That was a big deal for them.”

“[Small businesses] told us they needed more flexibility to meet the diverse needs of their employees and compete for talent with larger organizations – without breaking the bank” Chris Presley, Equitable Life view the benefits plan as table stakes,” he says.

“They question it more if you don’t have a benefits plan. And if you don’t have a benefits plan in place, it puts you in a disadvantage.”

With almost eight million Canadians working for small businesses, a flexible benefits plan could not only spell an improvement for many employees, but could also make the issue of recruitment and retention a whole lot easier for HR professionals who work within small organizations.

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17/06/2015 1:56:38 AM

PEOPLE

IN PERSON

Ambrosia Humphrey Founded in 2008, the social media platform Hootsuite has grown rapidly, boasting more than 800 employees worldwide. The company’s VP of talent, Ambrosia Humphrey, talks to Hannah Norton about the HR challenges associated with a company undergoing hyper-growth

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2015-06-17 10:19:04 AM

HRD: What’s the number one people-related challenge for Hootsuite in 2015, and how are you navigating that challenge?

Ambrosia Humphrey: I would say our number-one challenge on the people front definitely comes from the hyper-growth that we are seeing. We are doubling our revenue.

We are now in 12 different countries, and so making sure that we are scaling our people side of the business along with the revenue trajectory, and hiring top talent in all of our regions – just like everybody else – I would say are the things that are top challenges.

HRD: To what extent is employee retention a problem at Hootsuite?

AH: We actually trend at under 5% turnover as an organization globally. We credit that with a) with a lot of hard work; and b) really building a partnership with our employees.

Social media as an industry is defining and maturing, and our organization is hypergrowing, so that creates a high ask on our employees to be able to cope with change and hyper-growth, and a lot of the challenges that come with that. And on the other side, we feel that it’s our responsibility to provide stability where we can, so we offer open, honest and transparent communication and an idea of what our vision is.

We’ve created a cultural manifesto that was partnered with former employees and social resources to put in some anchors and some guardrails around ‘this is who we are, and this is how we get things done.’

We make sure that as we are scaling and all this change is happening, we are providing frameworks for people to be able to hang on and know that the organization is a partner to them – not just an employer.

HRD: What does Hootsuite do around leader­ship development in your workforce?

AH: We’re just scratching the surface of leader­ship development.

“Our number one challenge on the people front definitely comes from the hypergrowth that we are seeing” Our organization is six years old – so we are at that point where we really need to look at career progression of our leadership team and our emerging leaders as well.

We’ve adopted programs like Workday, which bring real-time performance management and real-time training resources into the business so that we are able to mobilize our team and give them different resources that they can utilize ... or they can incorporate into their own practices. We also use gamification for recognition.

We feel strongly that as leaders, the larger your team gets, the harder it is to feel connected and know what’s going on. We’ve put in various 360 feedback surveys and pulse checks to make sure our leaders have the resources and insights required to lead their people more effectively.

HRD: Are there any particular skill sets that you focus on in hiring and managing your employees?

AH: We see social media as a core competency, rather than just an additional competency.

Much like Microsoft was able to make Excel a competency, where everybody around the world had to have it on their resume, we really believe that in five years’ time, social media is going to be like that.

So that’s something we screen for. It doesn’t have to mean that they are a social media ninja, but just aligned in the idea of thinking of it as a competency, and something they want to learn about and grow with us on.

The second one is really highly aligned to our value structure – on being entrepreneurial, demonstrating humility and having a really high drive for change and innovation. We are

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PEOPLE

IN PERSON AMBROSIA HUMPHREY’S CAREER TIMELINE Qualifications 2000–2005 Bachelor’s degree, Simon Fraser University 2009–2011 Human resources certificate, British Columbia Institute of Technology

2007–2010 Operations manager, Slant Six Games

2005–2007 Teacher, various locations

2007 Program coordination manager, Global Training Consulting

2010–2011 Support operations manager, Aritzia 2011–2012 Director of operations, Hootsuite 2012–2013 Director of human resources, Hootsuite

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2013–present VP of talent, Hootsuite

Hootsuite has more than 800 employees based in Vancouver, San Francisco, London, Singapore, New York, Hong Kong, Sydney and other global locations.

Pictured here are offices from their global network

constantly vetting on the competencies around the job, such as the social acumen, and also the values around entrepreneurialism, innovation and passion.

Finally, the ability to adapt to change – because in our world, the landscape is changing very heavily around us, as it is for everyone in the world. So that ability to move and adapt is something we see as a huge advantage for our workforce.

HRD: What do you think is the single biggest issue in the HR space this year?

AH: I think there are a lot of challenges that the HR global profession is confronting and coming up with some unique solutions on.

One of the challenges is finding the competencies associated with the technology sector – specifically finding that top talent with those competencies everybody is looking for.

On the recruitment side of things, we are seeing a lot of solutions around branding and a lot of HR software coming into play to help people find talent.

In terms of infrastructure, I think one of the big challenges that people are facing comes around the technology in the workplace, and how to adopt that and create infrastructure for that. So, thinking of things like the use of mobile devices in the workplace and how to incorporate that into business, the use of social media and how to bring that into business, and drawing on those different technologies to help provide people solutions.

The third one I would say is really learning how to engage and retain the workforce – finding a way to reach your people and making sure they are aligned with your organization and are going to stay with it.

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17/06/2015 1:47:59 AM

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