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C-SUITE REPORT

“Peer learning is key for C-Suite executives and Winmark is simply brilliant at this”

Stephen Pierce, Chief HR Officer, Hitachi Europe

Q u a rter O n e 2 0 1 6


“At Winmark, we believe that knowledge and access are the keys to commercial success. With a fresh approach, this panoramic business report will add to your knowledge and make you reflect on organisational challenges with a new understanding. For access you should go to a world-beating company that offers a complete portfolio of C-Suite peer learning networks. That’s us, Winmark, and I have the privilege to be its chief executive. I would love to have the opportunity to introduce you to our brilliant members, partners and staff.”

Editor John Jeffcock, Chief Executive, Winmark on + 44 (0) 20 7605 8000 john.jeffcock@winmarkglobal.com


Co n t e n t s

Includes insights from:

D e finin g the C-Su ite

3

IBM,

Executive Summary

4

RB,

Pa n o r a mi c C-Su ite V ie w, The C-Su ite Che at S he e t

GE Capital, Roche,

T h e C h a i r s ’ Q u e s t i o n s

• Nomination Committee & Diversity

Xerox,

• FRC Codes & Standards Update

RBS,

C HIEF EXE C UTIVE OFFI C ER ( C EO ) & D IVI S IONA L C EO s

Caffè Nero,

• Seven Things Every Chief Executive Should Know

FRC, 30% Club,

6 –7

The Suite Reports NON - EXE C UTIVE D IRE C TOR S ( NE D s ) & THE B OAR D

BBC,

DLA Piper,

5

8–9

10–11

• Performance Management C HIEF FINAN C IA L OFFI C ER ( C FO ) & TAX D IRE C TOR

12–13

• Cybersecurity • Crowdfunding & Alternative Finance

Allen & Overy, the UK Government and other leading organisations

C HIEF L EGA L OFFI C ER ( C L O ) & C HIEF RI S K & C OM P L IAN C E OFFI C ER

14–15

• Embedding Legal into the Business • Legal Business Planning • Reputation & Crisis Management C HIEF MAR K ETING OFFI C ER ( C MO ) & S A L E S D IRE C TOR

16–17

• Big Data • Marketing KPIs • Sales Resourcing C HIEF INFORMATION OFFI C ER ( C IO ) & C HIEF D IGITA L & D ATA OFFI C ER

18–19

• Digital & the Board C HIEF HUMAN RE S OUR C E S OFFI C ER ( C HRO ) & L EARNING D IRE C TOR

2 0 –2 1

• Managing Change Under Pressure • Effective Training & Organisational Development Strategy • HR Analytics C HIEF O P ERATING OFFI C ER ( C OO ) & S U P P L Y & P RO C UREMENT D IRE C TOR • Process Improvement • Six Sigma, Lean, CAP & Agile

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2 2–2 3


W i n m a r k C - S u i t e R e p o r t is a unique report in the field of business leadership. It

is designed for time-poor, senior business leaders (C-Suite) of large organisations. Its focus changes in every issue and reflects the current challenges being addressed by over 2,000 C-Level executives today. Its aim is to address these key challenges through sharing key learnings, methods and ideas from the most prestigious and innovative organisations in the world. As a result, every issue should cause the reader to reflect, rethink and change. Ob j e c t i v e s : • To give board directors, the chief executive and senior business leaders a panoramic view of business, enabling them to ensure their own organisation stays ahead. • To enable key C-Suite leaders to add greater value to their organisations, through understanding how their area interacts and adds value to others. • To create a common understanding and vocabulary within the C-Suite, to reduce conflict and wastage, and increase performance and shareholder value.

Copyright © 2016 Winmark Limited All rights reserved. The information in this Report is confidential to Winmark Members, Clients and Partners. It is intended solely for them or the addressee. The views expressed in this Report are summaries of meeting notes from network meetings, and are therefore out of their original context. It is strongly recommended that before taking action on any of the enclosed you consult the Winmark network lead. Any opinions or advice contained in this Report are subject to the terms and conditions expressed in Winmark Terms & Conditions. Access to this Report by anyone else is unauthorised. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission.

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D e f i n i n g t h e C-S u i t e

F i r s t , let us start by defining what a CxO, or a member of

the C-Suite, does:

EXPERTISE

C for Chief – a function or strategic business unit chief

(Technical Skill e.g. Marketing, Finance, Technology, People, Legal, Operations)

typically responsible for a geographic or business stream area. This role can be quite similar across different functions and business streams. This is where Winmark role networks engage and add value.

OFFICER

CHIEF

Function & SBU Chief (Geographic or Business Stream)

X for Expertise – this is their area of technical skill and is

often the route they have taken to join the C-Suite. It is what they learned as part of their professional qualification and at business school, but its value is reduced at this level. This is where the Big 4 and the Magic Circle help in keeping the C-Suite technically up to date.

X

Company Officer (Board, Executive Committee & C-Suite)

C

O for Officer – as a company officer on the board or ExCo

(executive committee), there is an expectation that they will provide a significant strategic contribution not only within their area of expertise but, most importantly, outside it. This is why a C-Suite solution is critical and is exactly where the Winmark C-Suite solution engages.

O

SBU: Strategic Business Unit

Pa r t n e r s

With special thanks to the following organisations who partner Winmark Networks, Research & Academies:

30% Club B a k e r & Mc K e n z i e B l e n h e i m C h a lc o t G r o u p C a ps t i cks Chartered Institute of Ta x ation C IO C o n n e c t C M S C a m e r o n Mc K e n n a E v e r s h e ds

Gowling WLG Investec L e w i s S i lk i n M acfarl anes Mercer MHA M a cI n t y r e H u ds o n Omobono PA Consulting G roup P u n t e r S o u t h a ll

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Roth e s ay Li fe RSM R u ss e ll I n v e s t m e n t s S a ck e r s Saunderson House Sovereign Ta x Autom ation Warren Partners


Executive Summ ary

M a c r o T r e n ds i n t h i s Q u a r t e r • Changing Business Models – higher-quality information, and increased access to it, is having a fundamental impact on business models and associated value chains. This takes the form of ‘alternative funding models’ for finance, ‘new web-based customer experiences’ for marketing and ‘predictive analytics’ for human resources. • Traversing the C-Suite – cyber exposure, reputation and engagement are issues that traverse the C-Suite. Any lingering ‘silo mentality’ needs to be ditched as members of the C-Suite need to have a far greater understanding of each other and to perform better as a team. External networks are a key means to address this. The Bad News • Cyber Exposure – these new models are information- and communications-based and therefore increase corporate exposure to cybercrime. • Regulators & Law – these changes in business models are happening more rapidly than legislation can cope with. To stay ahead in the long term, legislators will need to focus on principles that can cover current and future issues.

Harvard says that a role of management in business services is to make average people exceptional ... but you must have the information to know what exceptional looks like in your customers’ eyes.

The Good News • Back to Basics – the volume of information had become unmanageable and the C-Suite has had to identify what is really important. This has led to a fundamental review in many departments, leading to a new and relevant focus. • Simplicity based on Complexity – it is easier to drive a business with a smaller number of objectives, and it is now possible to build complexity into systems. Corporates are therefore moving towards fewer, but more effective, key performance indicators (KPIs). • Evidence-based Wisdom – decision-making is increasingly based on evidence. We are rapidly learning wisdom from the evidence, such as the fact that diversity works. What historically the few knew, the majority now have evidence for. Managers are becoming wiser and making better decisions, and the bluffers are exposed. • Intellectual Robustness – evidence gives us confidence and an increased rigour in management. Difficult issues are addressed with more immediacy, owing to information that cannot be ignored, and this convergence is causing corporate cultures to become more honest.

• ROI of Management – if our marketing is getting more accurate, our investments better placed and our management achieving more, this must result in a higher return on our management investment and greater long-term profit. However, the competition has done the same and therefore corporates will need to continue to innovate and invest at a higher rate than before, simply to stay in the game. So the savings are offset by the investments, and the weighting of your finances has just shifted towards the ‘three Is’ – information, investment and innovation. • Information. What do we need to know? • Investment. Where should we invest? • Innovation. Where can we lead or leapfrog the market? So what ? Corporates need to collect more information, understand the entire customer experience and refine KPIs with this new knowledge. Harvard says that a role of management in business services is to make average people exceptional ... but you must have the information to know what exceptional looks like in your customers’ eyes. 4

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The Chairs’ Questions Strategy S TRATEGY – do we have the right strategy? RI S K – have we considered the risks and developed appropriate mitigation? C OM P ETITION – what are our competitors doing? John Nicholas N on - E x ecuti v e C hairman, D iploma plc , N E D and the

D I S RU P TION – are we vulnerable to digital disruptors? Is there anything we should do first? C A P ITA L – do we have the right capital structure and should our future funding methods include alternative finance models? If so, which ones?

C hair of Audit Committee of M ondi plc &

People

H untin g plc ,

NON - EXE C UTIVE D IRE C TOR S – do our NEDs bring relevant experience and insight?

S enior I ndependent D irector of R otork plc

MANAGEMENT – do we have the right management with appropriate skills to implement the strategy? P O L ITI C A L C A P ITA L – is the ExCo often surprised and firefighting, or is it achieving its objectives and winning its battles? P UR P O S E – how do we judge whether everyone knows what our purpose is and whether they feel their work matters as part of that? S U C C E S S ION – do we have succession plans for senior and middle management? D IVER S ITY – do we have diversity KPIs at every level of management to ensure we have a sustainable pipeline? Do we report on this in our annual report? HUMAN C A P ITA L METRI C S – do we have them and are they telling us what we need to know? Have they evolved yet to predictive analytics? Do they support our desired culture?

Governance S TRU C TURE – do we have the right organisation structure with appropriate controls in place? P O L I C IE S – have we embedded relevant policies and procedures throughout the organisation? GOING C ON C ERN – do our statements now include short-term ‘going concern’ and ‘long-term viability’ as required by the Financial Reporting Council? C Y B ER C RIME – is our focus on how much we should spend or on what should we be doing to protect our assets and ability to operate? Is this a cultural or a compliance issue? D ATA MANAGEMENT – what data do we own? What can we do with it? Where does it sit? Where does it go? Who has access to it? How long do we keep it for?

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Pa n o r a m i c C-S u i t e V i e w

The C-Suite Cheat Sheet T h e F i v e Ac t o r s o f

Diversity To have three different groups on a board represents diversity. To parachute in a single woman is to consign her to martyrdom. The key is to have a diversity pipeline at each layer of management.

THE BOARD

“Apply one law of applicability on your site: ‘Don’t make me think’!” Al i s o n O r s i , V P , I B M

“The question is not ‘How much should we be spending on cybercrime?’ but rather ‘How much should we be spending to protect our assets and ability to operate?’”

BUSINESS

Financial Reporting Council Things to watch for: • Short-term & long-term going concern statements • Directors’ remuneration & long-term success • Audit change for smaller companies • FRC culture guidance

UK government

FINANCE

LEGAL & RISK COMMERCIAL

Clients are Demanding • Self-directed Journeys Self-directed buying experiences • Personalisation Unique and personalised web experiences • Speed Timely interactions

CLO & Crisis Remember: • Disasters are normal • Instincts are generally wrong • Conspiracies are truth • Risks are understated 6

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T h e C EO S e v e n 1. Political capital 2. Personal brand 3. Communication 4. Delegation 5. Difficult conversations 6. Visibility 7. Emotional quotient

The 30% Club Women now form 26% of FTSE 100 boards, more than double the level of five years ago (but they still number only about 150).

“I have built a lot of my success off finding these truly gifted people and not settling for B and C players, but really going for the A players.” S t e v e J o bs

“Diversity is about competitive advantage, not social justice.” K e n Ol i s a , O B E

“Too many boards are impressed by the ‘row of smarties’, some app or tech thing, that makes a good talking point but they don’t understand how it creates value.”

BUSINESS

D r S t e p h e n P a g e , NE D , B S I G r o u p

OPERATIONS

PEOPLE TECHNOLOGY

the Cyber Ap o c a l y ps e • The insider threat • Hacktivists • Criminals • State-on-state cyberwarfare • Terrorists

Digital Le adership S k i lls • Strategy skills • Technology skills • Digital marketing • Commercial skills • Data science • Control skills 7

Performance Management • Purpose – my work matters • Challenge – appropriate • Attention – feedback • Growth – from people • Recognition – rating & money • Choice – perseverance

C h a n g e i n B a n ks • ‘Why?’ wins more hearts Source: than ‘What?’ • Be more human • Clarity delivers more trust • Maintain a wide business focus • Change requires personal resilience • High-pressure environment can encourage short-termism

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Mind Gym


NON - EXE C UTIVE D IRE C TOR S (NE D s) & THE B OAR D

With special thanks to Baroness Goudie, Founder, the 30% Club; Ken Olisa, OBE, Lord-Lieutenant of Greater London; and David Styles, Director of Corporate Governance, Codes & Standards Division, Financial Reporting Council (FRC), for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Nomination Committee & Diversity

• Governance Lessons from the Co-op

• FRC Codes & Standards Update

• Investment & Investor Relations • Board Reviews & Behaviours

Non-Executive Directors

Diversity is about C o m p e t i t i v e Ad v a n t a g e This issue is often presented as one of social justice. For business, however, it is one of competitive advantage. The arbitrary exclusion from management of gifted parts of half of the workforce can only be commercially disastrous. Good and Bad News for Women Women now make up 26% of the membership of FTSE 100 boards, up from 12.5% five years ago. However, even now, only about 150 women hold such positions. In Norway, they refer to a small group of women who sit on multiple boards as the ‘golden skirts’; this centralisation, with a few women accumulating many directorships, is not uncommon across Europe. Parachuting in a solitary woman on to a board is the worst way of ‘addressing diversity’, as the female ‘token’ is often condemned to years of martyrdom, with no chance of changing the culture. Quotas similarly are nothing but short-term tokenism. Either the prescribed percentage of women is discarded as soon as the media’s back is turned, or the female presence withers away as there is no ‘pipeline’ of up-and-coming talented women. T h r e e G r o u ps a c h i e v e S u s t a i n a bl e D i v e r s i t y For diversity to be achieved at both board and executive levels, thinking has moved on to the ‘theory of three’. Three different groups need to be represented at these levels. They must be groups, not individuals, so they have support and are not a lone voice. One group can act as an intermediary between the other two; three creates more balanced decision-making.

B a r o n e ss G o u d i e

K e n Ol i s a , OBE

D e u t sc h e T e l e k o m ’ s Pipeline Deutsche Telekom has been cited as a company that has entrenched a sustainable reform through ensuring the continuing vigour of its ‘pipeline’. It has set its own targets for female inclusion at every level of the C-Suite and across every link in its management chain. In its annual reports, Deutsche Telekom holds itself to account by publishing its level of success in hitting each target. Adoption of this strategy by other companies could revolutionise the outlook for women. Recent intentions in this regard announced by the UK government have been welcomed.

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Financial Reporting C o u n c i l ( FR C ) The FRC is not a government organisation, but an independent regulator. It employs 160 people and is funded by the Department for Business, and by listed companies and the professions. Its Codes & Standards team sets (but does not enforce) accounting, actuarial, auditing and corporate governance standards.


P o l i t i cs a n d t h e FR C Since the May 2015 general election, there has been a strong deregulatory push by the Conservative government and its Secretary of State for Business. This is a doubleedged sword: governments find it more politically expedient to reform by amending business codes than by introducing new legislation. The Corporate Governance Code could therefore become longer and more complicated. The press criticism of the Code, that it should ‘return to principles’, would require an explanation of these principles that would amplify and not simplify it. The FRC has resisted government and media pressure and has kept the Code itself at 26 pages (although the full document is 36 pages).

G i ll i a n W i l m o t C hairman of S ports coach U K , N E D and C hair of R emuneration Committees of N I S A R etail & E L E XO N . B oard M ember of I ndustrial D e v elopment A dv isory B oard. C hair , W inmark N on - E x ecuti v e D irector N etwork

Since the May 2015 general election, there has been a strong deregulatory push by the Conservative government and its Secretary of State for Business. This is a double-edged sword... Going Concern Following the credit crunch and the Royal Bank of Scotland (RBS) ‘going concern’ scandal, Lord Sharman was appointed to look into the handling of ‘going concern’ and risk-reporting issues. As a result, the Code was changed so that a company is now obliged to give statements on its short-term future as a ‘going concern’ and also its longterm liabilities.

T h e S t e w a r ds h i p C o d e & t h e FC A’ s ‘ Co n d u c t o f B u s i n e ss ’ R u l e s The five-year-old Stewardship Code requires financial reporting by investors regulated by the Financial Conduct Authority (FCA), through its ‘Conduct of Business’ rules. It is for large companies, and investors are not obliged to sign up to it. Investors regulated by the FCA’s ‘Conduct of Business’ rules that do not sign up to the Stewardship Code must by law provide details on their website of their alternative business model. About 300 leading investors (asset managers, retail owners etc) have signed up to the Stewardship Code. Culture The FRC has identified a healthy business culture as a key factor in the attainment of satisfactory rates of compliance and good governance. Following consultation, the FRC expects to issue a guidance paper on good cultural business practice in early 2016. The advice will focus on:

Direc tors’ Remuner ation A 2014 amendment to the Corporate Governance Code required larger (premier listed) companies to define how directors’ remuneration would contribute to their longterm viability and success.

• Internal themes (relating to employees) – training and remuneration. • External themes (relating to a company’s relationship with its suppliers) – are clients inculcating by their own good example the right attitudes and behaviours? • Embedding and assurance – embedding behaviours rather than processes. Once a company devises a strategy, does it have the culture that will help to deliver it?

June 2016 Audit Committee Change The European Audit Regulation and Directive, which comes into effect in June 2016, extends the requirement to have an audit committee to ‘all public-interest entities’ (PIEs). This will include even small firms, for which the FRC will have to draw up regulations. The Regulation and Directive also defines what an audit committee should do and who should be a member of it. The FRC will have to amend the Corporate Governance Code so that it is compliant in these respects with European law.

S u cc e ss i o n P l a n n i n g Four years ago, the Corporate Governance Code was amended to stipulate that all FTSE 350 companies should have an independent board evaluation every three years. This raised the problem of succession planning, and particularly the role of the board’s nomination committee for both executive and non-executive members. 9

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C HIEF EXE C UTIVE OFFI C ER (C EO) & D IVI S IONA L C EO s

With special thanks to Octavius Black, CEO, Mind Gym; and David Morley, Global Senior Partner, Allen & Overy, for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Seven Things Every Chief Executive

• Business Seduction

Should Know • Performance Management

• GE Capital & Six Sigma • Cap Gemini on Profitable Growth

Chief Executive Officer

Seven things every chief executive should know 1. Politic al C apital • Pick your battles – every battle leaves a scar and the scars can overwhelm you. • Stand your ground, but listen to concerns – make sure people know you mean what you say, but show that you have listened or risk being labelled a dictator. 2. Personal Brand • Think about the image you project – if your people get only one email from you each month, make sure it portrays the right focus and interests. • Your style has to be authentic – people can smell, feel and sense insincerity. • Don’t issue threats/ultimatums you won’t follow through on – you risk losing credibility. • A good PA is essential – you need a good ambassador who is adept at spotting things and creates an impression of accessibility and openness.

3. Communic ation • You aren’t an effective decision-maker if you can’t communicate effectively – dry corporate memos are not read. Communicate on a human basis – try updates via postcards. • Immediacy is important – summarise meetings by lunchtime the day after they happen. 4. Deleg ation • If you don’t have a strategy for delegating, you don’t stand a chance – as a leader, you get to the point when all you do is through others, otherwise you risk creating a bottleneck. • There is a real premium on having quality staff working for you – trust is key.

Divisional CEOs

5. Difficult Conversations • Don’t sugar-coat the message – highperformance relationships are not harmonious. In a difficult conversation tell it like it is, then shut up. • Deal with it sooner rather than later – problems don’t get better the longer they go on; the sooner you deal with them, the better. • People around the individual have to be dealt with too – a difficult conversation will have ripple effects. • Never be surprised – sit and prepare with people whose advice you value and get the facts right. Rehearse the argument.

You aren’t an effective decision-maker if you can’t communicate effectively – dry corporate memos are not read. Communicate on a human basis ...

Dav id Mo rle y

6 . V i s i b i l i t y • Be visible – leaders can be low-profile and judged by their actions, rather than their words. Do a walkabout regularly. • It’s show time! – attending functions is often a bit of theatre, but it is a key part of the job. • Be authentic as well as visible – spend time understanding the machinations and culture of external offices. A single visit doesn’t reveal all the chinks in the armour. 7 . E m o t i o n a l Q u o t i e n t • To get the message across, appeal to partners’ emotions – avoid extremes (anger or tears), but a bit of emotion goes a long way in the art of persuasion. • People respond to being treated as a person – remember names.

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The sense that whatever comes, all the shocks, all the disruptions and all the changes make us stronger and better and more capable because we have made choices regarding them.

The Power of Choice can Transform Performance Recent research by Deloitte showed that 85% of companies have either changed their performance management systems in the last 18 months or intend to do so in the next 18 months. This indicates a significant level of dissatisfaction with existing systems. The Yerkes-Dodson law is an empirical relationship between arousal and performance. Ac h i e v i n g a H i g h e r , L o n g e r C u r v e • Purpose: I feel my work matters. • Feeling appropriately challenged. • Being noticed: descriptive praise is key. • Getting better at something that matters to me. • It’s worth the effort: this comes down to recognition. • Choice: we choose how we think far more than we realise.

Angela Duckworth’s study on ‘Grit’ measured two things: consistency of interest and consistency of effort. Grit makes the performance-arousal curve higher and longer. The most effective mind-set is flexible between pessimism (or realism, when assessing options) and optimism (when implementing). Optimum performance

PE RF OR MANC E

High

Low Low

Eustress Coasting

Top performer

F i v e T h i n g s t o H e lp u s B u i ld o u r S e n s e of Resilience 1. People with strong social networks at work are more resilient, achieve more growth and are more likely to persevere. 2. Adopting a growth mind-set – believing that skills are not fixed, that you can learn and adapt, and that anyone can become good at a specific task. This has a huge impact on performance. 3. ‘Emotional self-regulation’ supersedes ‘smart’ – our ability to regulate emotions has a very strong correlation with the performance of people around us and the performance of the firm. 4. Self-efficacy: I believe I can succeed. Higher expectations lead to an increase in performance. Biased expectations can affect reality and create self-fulfilling prophecies. 5. Adapting to low-turbulence and high-turbulence environments. In a low-turbulence environment, focusing on knowledge and understanding is good. In a high-turbulence one, we may need to address our instinctive reactions to dramatic change.

In conclusion: the concept of Antifragile: Things That Gain From Disorder, expounded in the book of that title by Nassim Nicholas Taleb. • Fragile: if something is hit by a shock and it breaks. • Resilience: if something is hit by a shock and it goes back to what it was before. • Antifragile: some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder and stressors, and love adventure, risk and uncertainty.

Overstretched performer Underperformer

High

The sense that whatever comes, all the shocks, all the disruptions and all the changes make us stronger and better and more capable because we have made choices regarding them. That’s where we start to flourish.

AROUSA L

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C HIEF FINAN C IA L OFFI C ER (C FO) & TAX D IRE C TOR

With special thanks to Nicola Horlick, CEO, Money&Co; and Richard Bach, Assistant Director of Cyber Security, Department for Culture, Media & Sport, for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Cybersecurity

• Base Erosion & Profit Shifting (BEPS)

• Crowdfunding & Alternative

• Future of Tax Function

Finance

• Stakeholders

Chief Financial Officer

Cybersecurity – No Longer J u s t a n IT Iss u e The UK government considers cybercrime to be a ‘Tier 1’ threat to UK plc, and the Confederation of British Industry (CBI) views it as the greatest danger to business today. Customers’ lack of online trust is beginning to undermine the growth of the digital economy. The issue is typically framed as: ‘How much should we be spending on cybersecurity?’, but the question ought to be: ‘How much should we be spending to protect our assets and ability to operate?’. A serious attack, such as that on Saudi Aramco, could render a business impotent in a matter of minutes. Cybersecurity needs to be a matter of culture rather than compliance – you need a positive security approach throughout the business, present in the attitudes and behaviour of your employees. Central Tenets of Inform ation Securit y Central to information security is what the industry knows as the triad of ‘CIA’. Confidentiality: as provided by encryption. Integrity: as in the protection of data accuracy – for instance, the blood types against named individuals in a spreadsheet must not be reassigned. Availability: your internet or intranet system has to work and it has to provide the right information at the desired time. Appropriate defences must be put in place to protect this triad and hence the ability to operate.

Tax Director

N i c o l a H o r l i ck

T h e F i v e T h r e a t Ac t o r s The Insider Threat: a malicious ex- or

current employee; or a well-intentioned current employee who innocently activates a hostile external cyber missile. Hacktivists: groups such as ‘Anonymous’, whose attacks are politically motivated. These activists can be very young, but they are very proficient. Criminals: The Daily Telegraph revealed in 2013 that cybercrime in the UK is worth more than the illicit drug trade. State-on-State Cyberwarfare: conducted by nation states for geopolitical or economic gain. The UK does not engage in such activity. Terrorists: in addition to disabling online systems that control infrastructure, they can use virtual online instruments to deliver a physical attack. Nation-state and organised crime actors have the highest level of proficiency and resources and can carry out the most specific and bespoke attacks. In the case of nation states, the threat is mitigated by the relatively low number that have the capacity or desire to mount such an offensive.

The UK government considers cybercrime to be a ‘Tier 1’ threat to UK plc, and the Confederation of British Industry (CBI) views it as the greatest danger to business today. 12

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The threat presented by non-criminal and non-nation-state actors is called ‘commodity threat’ as the instruments that can deliver it are so widely available; there is a package to suit every budget. Commodity threat accounts for 80–90% of cybercrime in the UK. M a n a g i n g R i sk It is essential to remember that cybersecurity is about managing risk, not eliminating it. It is impossible to provide a total security solution, but it is imperative that organisations devise a plan for handling an attack and practise its implementation. C o m pl i a n c e The EU is finalising the wording and implementation of the General Data Protection Regulation (GDPR) – a strict data protection compliance regime, with severe penalties (of up to 2% of worldwide turnover). This will require a full data audit alongside a requirement to handle sensitive data appropriately (including supply chains) and will apply universally.


In a typical fund, 70% of the money lent comes from wealthy individuals, 24.5% from the man on the street, and 5.5% from financial institutions.

Grace Stevens C hief Ta x O fficer , L e g al & General Group plc , C hair , W inmark Ta x D irector N etwork

Al t e r n a t i v e F i n a n c e i n Brief • Rewards-based Crowdfunding. This relates to services such as Kickstarter and Indiegogo. • Equity Crowdfunding. Despite all the fanfare, equity funding sites generated only £85m in the UK last year, mostly to support smaller firms, often start-ups. This sort of crowdfunding makes extensive use of the EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme). The SEIS is highly attractive to lenders as it guarantees 50% tax relief. Moreover, if the company prospers after three years, the investor pays no capital gains tax. • Debt Crowdfunding. This is significant. Last year, crowdfunded debt in the UK amounted to £1.7bn, mostly from ‘P to P’: individuals lending to individuals. The ‘crowd’ can lend at an interest rate of 11% to an individual who would otherwise pay 35% on credit-card debt. • Business Crowdfunded Debt. This is now outstripping P to P lending. Companies such as Money&Co are lending, for instance, to small and medium-sized enterprises (SMEs), many of which now find themselves unable to access bank lending. Post-crash legislation means that banks find it hard to lend to bodies that lack the ‘right’ collateral. These can include SMEs, even if they are not only profitable, but valuable.

Light-touch regulation in the sector is allowing these businesses to lend where banks either cannot or will not. For instance, a business with an EBITDA of £500k and underlying physical assets of £5m was unable to secure an £800k bank loan even with a personal guarantee. Coupled with this is an agility and modern technological outlook unmatched by the banks at present – algorithms and largely automated account management allow for rapid investment decisions and a low cost base. Three years of accounts and being in profit are basic requirements. These companies are providing a vital service because, in the private economy of the UK, 60% of employment is provided by SMEs. Pre-crash, these were almost exclusively dependent on lending by high-street banks. These firms now often find themselves stranded, especially if they want to grow. Crowdfunding fills the gap. In a typical fund, 70% of the money lent comes from wealthy individuals, 24.5% from the man on the street, and 5.5% from financial institutions. Nicola Horlick predicts that the figure from the stockmarket will eventually predominate, as investment from these operators is increasing. Two notes of caution – the FCA is likely to review its regulation of the sector, and there is a widely held belief that many of these companies will be hit hard if interest rates rise.

13

W i n m a r k C-S u i t e

Q1


C HIEF L EGA L OFFI C ER (C LO) & C HIEF RI S K & COM P L IAN C E OFFI C ER

With special thanks to Bill Mordan, former Senior Vice-President & Group General Counsel, RB (Reckitt Benckiser); Joel Hanson, former GC & Company Secretary, Thames Water; and Funke Abimbola, General Counsel & Company Secretary, Roche, for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Embedding Legal into the Business

• Operational Excellence

• Legal Business Planning

• Generation Y and Z

• Reputation & Crisis Management

(also iGen & Post-Millennials) • Cybersecurity

Chief Legal Officer

Chief Risk & Compliance Officer

E m b e dd i n g L e g a l i n t o t h e B u s i n e ss Every CLO should do the following five things to embed the legal function into the business.

• Communicate and network – with the C-Suite, business unit leads and key stakeholders. Ensure you are invited early into strategic conversations. • Take a ‘helicopter view’ – ensure you have a panoramic view of the business, which requires good sources and multiple areas that you can influence. • Expand in-house counsel remit and skills – so they can act as an internal consult and remove legal risk from business processes. • Evolve the role of in-house counsel – into a function and business leader, adding value to the board and executive committee. • Increase commerciality and skill sets – across the team, ensuring that they understand how the businesses they serve create value and make money. L e g a l F u n c t i o n B u s i n e ss P l a n n i n g

BU SIN ES S LEV EL Ensures strategic objectives align.

FU NC T ION LEV EL Aligns to business, includes risks & opportunities.

I N T E R N AL AUDIT of key stakeholders.

L AUN CH & IMP LE M E N TATIO N

CO M PAN Y TE MP L ATE

Launch only when ready.

Adopt standard or another functions template.

Transition it slowly, don’t go for a big bang.

E N SU R E B UY-IN from

Establish a clear line between old and new.

all stakeholders before going for sign-off.

Make it necessary and regularly monitor. Seek independent assurance and revise as necessary.

F u n k e Ab i m b o l a 14

Reputation M anagement Ke y Thoughts • Reputation stems from a corporate’s own values and should be embedded in its culture. It should focus on behaviour rather than process. • CLOs and general counsels (GCs) should know which issues demand attention and which to leave. As always, this is a question of judgement and experience. CLOs/GCs are very strong in such areas; this strength represents real value to their boards. • Remember, something is bound to go wrong! Prepare and train the senior management and legal teams accordingly. Always have a plan, but remember that this is just the starting point. • A key part of the CLO/GC role is to be the ‘critical friend’ to the board. The CLOs/GCs should ask themselves: ‘Do we always need to be commercial in everything?’ Remember that the car with the best brakes can drive the fastest. W i n m a r k C-S u i t e

Q1


Remember, something is bound to go wrong! Prepare and train the senior management and legal teams accordingly. Always have a plan, but remember that this is just the starting point. Legal Function in Crisis Management • Aim: protect and enhance corporate value. • Action: mitigate potentially terminal damage deriving from unforeseen threats in order to contain their impact on the position of the enterprise and all stakeholders involved. Theory and Methodology Theory: all corporate crises have three distinguishing

characteristics that must be recognised early. • Level of threat: establish whether the event is significant in relation to the business and the possibility of financial collapse, lawsuits or serious/large-scale injuries, and its effect on senior executives from across the company. • Time pressure: be aware that in a true crisis, decision-making is conditioned by tight time constraints that may preclude detailed legal analysis or deliberative thought. • Stress: recognise that the perception of threat and the awareness of finite response time create high levels of anxiety, and that this affects the emotional and cognitive reactions of the ‘players’ involved.

Methodology: corporates will look to CLOs and GCs for guidance to ensure that the crisis is addressed properly. CLOs and GCs will have to step outside their usual perceived institutional role in order to obtain a real appreciation of the threats involved and the strategic steps needed to minimise the legal, economic and reputational implications. This will require an analysis of the situation from a social science perspective. In turn, this requires recognition of the following. • Disasters are normal: embrace this. Instead of looking for a single ‘malfeasance’ responsible for the crisis, it is best to adopt a more holistic analytical perspective. • Instincts are generally wrong: given the emotional pressures and cognitive biases affecting ‘players’, CLOs and GCs may need to avoid relying on their usual instincts as these could inhibit objectivity, prejudice the collection of information and lead to erroneous conclusions. • Conspiracies are truth: do not dismiss conspiracy hypotheses as a useful diagnostic tool. Just as law enforcement agencies focus on the elements of the crime of conspiracy to leverage evidence against other members of the targeted criminal organisation, CLOs and GCs may need to interpret the facts through a systemic lens. • Risks are understated: when fact-gathering amid chaos, recognise people’s natural proclivity to loss aversion – a tendency to prefer avoiding losses rather than accruing gains. In a crisis situation, this psychological disposition holds the potential to alter the CLOs’ and GCs’ usual value equation, thereby profoundly affecting the quality of their decisionmaking and, consequently, their course of action.

... when fact-gathering amid chaos, recognise people’s natural proclivity to loss aversion – a tendency to prefer avoiding losses rather than accruing gains. C o n cl u s i o n : pl a n n i n g i s k e y . ‘ I f y o u f a i l t o pl a n , t h e n pl a n t o f a i l . . . ’ • Build capacity for effective crisis management to include preparing crisis management plans, simulations and social media training. Pay special attention to the composition of the anti-crisis committee to ensure that it includes individuals with high emotional intelligence to facilitate sensitive problemsolving and enactment of the change process. • Focus on gender balance and social diversity, as these have been found to correlate directly with effective decision-making in the face of unexpected events. • When managing the internal players in a crisis situation, it is often advisable to avoid relying solely on PR external consultants to gather case-specific information. Create a separate work stream to conduct internal research and organically work towards a judicious solution.

15

W i n m a r k C-S u i t e

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C HIEF MAR K ETING OFFI C ER (C MO) & S A L E S D IRE C TOR

With special thanks to Alison Orsi, VP, UK & Ireland, IBM; Zelinda Bennett, Marketing Director, DLA Piper; Will Edwards, European Sales Director, Domino Printing; Michael Bayston, Global Account Director, BBC; and Cheryl Hopes, Business Manager, Xerox, for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Big Data

• Lloyds on Customer Experience

• Marketing KPIs

• Strategic Partnerships

• Sales Resourcing

• War on Talent & Effective On-boarding

Chief Marketing Officer

Big Data ‘Big Data’ enables customers to help marketers and firms to co-create products, such as the new range of bigger baby clothes that the parents of the disabled have arranged for Marks & Spencer to produce for older but disabled children.

Sales Director

‘Big Data’ enables customers to help marketers and firms to co-create products, such as the new range of bigger baby clothes that the parents of the disabled have arranged for Marks & Spencer to produce for older but disabled children.

The Three Key IBM Marketing Tenets 1. Everyone in the business should be Big Data-driven – everyone should get as much data from as many sources as possible. 2. Everything must start with the customer. Marketing must be driven by the market, not by what products you have to sell. 3. Be outcome-focused. The Seven Truths Big Data-dependent marketing is informed at IBM by what are known as ‘the Seven Truths’.

1. Targeting – make it more focused. In a recent European campaign, focusing led IBM’s marketers to reduce ‘touches’ by 78%, yet this increased responses by 9%. In addition, there was a decrease in the ‘unsubscribe’ rate. Achieving a reduction in unsubscribers means that people see value in the campaigns you are involved with. 2. Make sure there is an offer in every communication you send out, and make sure it is the best offer it can be. Almost 90% of IBM’s offers last year drove just 1% of its total responses. Only 2% of offers drove almost all its responses. This successful minority contained accessible information such as online demos. 3. Paid media (advertising). Find where you get the biggest bang for your buck. IBM got the greatest response from paid virtual media, which drove buyers into its own website. 4. Clarify and simplify your website . The fact that visitors were led to the site meant that IBM had to make it clearer. According to some estimates, you have only eight seconds and 24 words to make an impression on your potential customers.

5. Gating – a ‘gating’ strategy is where you ask the website visitor to give their job title and other details before you share content with them. IBM found that fewer than 15% completed this stage. You should ‘gate’ only when visitors are further down the funnel, at the ‘try/buy’ stage, otherwise you drive potential customers away early. 6. Response quality. From a marketing point of view, the responses of website visitors differ in value. IBM has therefore applied analytics to gauge the worth of each enquirer. If the analytics identify them as high-value enquirers, IBM can send their details to its lead conversion teams, who will contact them. 7. The need to cross-sell . If a customer has bought a piece of hardware, try to interest them, for example, in the accompanying software. Look for the cross-sell patterns in your business.

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M arke ting & Big Data MARKETE RS HAVE ALWAY S BEEN RES PONSIBLE FOR KN OWI N G THE C U STOMER

MA R KE T E R S H AV E A LWAY S B E E N R ESP ON SIB LE F O R D E F INING WH AT TO MA R KET A ND H OW TO M A R KE T IT

M A R KE T E R S H AV E A LWAY S P R OT EC T E D T H E B R A ND P R O MISE

Understand each customer as an individual and in context

Create a system of engagement that can innovate and scale personally relevant and rewarding experiences

Design your culture and brand so they are authentically one, co-creating brand experiences

Use advanced analytics for deep customer insight

Use data to design rewarding customer experiences

Use data to effectively execute on the customer promise

Source: IBM

Marketing KPIs Marketing key performance indicators (KPIs) should be monitored monthly and updated quarterly, with actions and outcomes rated (on a red-amber-green, or RAG, basis) and KPIs measured by percentage change in year-on-year revenue for key sectors. Brand and directory rankings and win rates should also be rated, both on a year-on-year basis and competitively by sector.

• • • • • • • • • •

Brand metrics Market metrics Client metrics Business development metrics Worktype metrics Pricing strategy PR metrics Advertising metrics Web metrics Marketing function

Sales Resourcing at the BBC The BBC has developed five areas as solutions to the problem of retention.

• Opportunity – the BBC works with leading global companies such as UBS, Credit Suisse, Microsoft and Rolex, and so can offer great opportunities to those who stay. • Benefits – for example, the BBC provides season travel tickets. • Structure and Titles – it has flattened its structures and its staff have fewer titles. It is phasing out ‘senior’ titles as these are seen as intimidating. • Responsibility – more responsibility is given to junior people. • Targets – the BBC has moved away from setting individual targets and towards joint targets. This forces teams to gel, promoting interdependence and co-operation between their members: bonding can prevent people from leaving.

17

One prominent recommendation is ‘injecting innovation’. For instance, use social media to advertise – this is seldom done, even though many companies have a Facebook and YouTube presence.

In j ec tin g Inn ovatio n A recent Deloitte report outlined how you can make your company attractive to talent. One prominent recommendation is ‘injecting innovation’. For instance, use social media to advertise – this is seldom done, even though many companies have a Facebook and YouTube presence. One example of ‘injecting innovation’ was when Red Five Studios selected 100 ‘dream candidates’ who were employed by other companies. Using social media, the background of each one was carefully researched before Red Five’s CEO sent a personalised iPod to each of them, with a message that eulogised his or her career. It asked each candidate to come and work at Red Five. Ninety of the 100 responded and Red Five was able to fill all the gaps in its workforce from among them.

W i n m a r k C-S u i t e

Q1


C HIEF INFORMATION OFFI C ER (C IO) & C HIEF D IGITA L & DATA OFFI C ER

With special thanks to Dr Stephen Page, NED, BSI Group, for his contribution and support.

T h i s Iss u e

N e x t Iss u e

• Digital & the Board

• Tullow Oil & Investment Decision-Making

Chief Information Officer

Chief Digital & Data Officer

T h e C h a ll e n g e F a c i n g t h e B o a r d

D EEP digital-driven change

BUS IN E S S models changing and rapidly becoming ecosystems of interconnected entities

T R AN SF O R ME D behaviours & expectations (real-time) of consumers

Portable home-office devices have transformed employee lifestyles, allowing flexible and other new ways of working. This has driven new ways of creating insight for companies, with the emergence of ‘Rich Data’ and ‘Big Data’. Digital has also driven new ways of sourcing, such as crowdsourcing.

Board Challenges

Business Impact

• Lack of expertise at board level and/or lack of a framework by which to make decisions. • Consultant access allows boards to think they are up to speed, leading to misplaced confidence. • Concerns over costs, buying the wrong thing and not knowing when is enough. • Tendency to be attracted to the bestlooking tech, rather than the most commercially important. • Empowered cybercriminals are more entrepreneurial than companies and have better access and tools.

• Lack of awareness and ability to address the transformational impact. • Not having the data (rich or big) to make the best decision. • Danger of innovating and investing in the wrong areas. • Lack of investment in the right areas, hence falling behind competitors.

Dr Stephen Page

Portable home-office devices have transformed employee lifestyles, allowing flexible and other new ways of working. 18

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Is Y o u r B o a r d A t t u n e d t o the Digital Age? You will know if your board is leading and running with the digital age if it asks the following questions. • How do we engage with customers, rather than just imposing products on them? • What data do we use to find how to empower customers and how/where do we access it? • What are our competitors doing? • What is the team at Google, whose job is to disrupt us, doing this week? • Do we have the right culture as a company to embrace digital? The Path to Digital Leadership How, then, can the board ascend to digital competence, and even leadership? There are three essential steps. • The board needs to have a well-thoughtout appetite for countering cyber risk. It must define the areas in which it wants the company to be digital. It needs to have the management information necessary to show where the company is today. • The next level of expertise is to be able to manage the digital area, even if the board does not fully understand it. • The level after that is for the board to master cyber risk and innovation for itself and apply digital strategy to the company directly, rather than farming it out or down to ‘experts’.

When sourcing digital advisers, the board should ask itself what sort of specialist it needs. Does it want an ‘agitator’ ... Or does it want an ‘integrator’ ...

The secret of progression from one level to the next is to move from awareness to understanding. To make this move, to embrace innovation and to mitigate risk, the board needs the following. • A grip on what data the company owns. The board must ask: ‘What data do we own? What can we do with it? Where does it sit? Where does it go? Who has access to it? How long do we keep it for?’ • Enterprise-level management information, not IT management information. You don’t need to know about ‘files’, but about things that matter. Is encryption of data a problem? Then you need to know what access levels you have. Do you know everyone who works in the organisation? If you don’t know, how can you manage risk? • A proper internal audit function, which can make sure that what you are being told by your managers is true. • A fact-based survey of suppliers, who have access to part of your data and hence are partly responsible for your cyber risk. • Policies that comply with data protection laws. • A practised crisis plan, so that you don’t end up ‘winging it’ when crises emerge. This should include an ‘escalation plan’, which should define the time periods in which the various responses to the crisis will be made. Agitate or Integr ate? When sourcing digital advisers, the board should ask itself what sort of specialist it needs. Does it want an ‘agitator’, a self-focused expert who will prioritise the company’s newsworthy and fashionable digital skills? Or does it want an ‘integrator’ who will be self-effacing and who will align and assimilate his skills with those of the company? D i g i t a l L e a d e r s h i p S k i lls For digital leadership, the following skills need to exist within the board. • Strategy – the ability to envisage where the business should be and map the path. • Technology – either honed in commercial procurement or via an in-house expert. • Digital Marketing . • Commercial – the ability to master relationships and partners. • Data Science . • Control .

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C HIEF HUMAN RE S OUR C E S OFFI C ER (C HRO) & L EARNING D IRE C TOR

With special thanks to Tony Williams, former Director of HR, RBS Corporate & Institutional Banking; Paul Kennedy, former HR Director, Caffè Nero, New Balance, ebookers.com; and Max Blumberg, Research Fellow, Goldsmiths, University of London, for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Managing Change Under Pressure

• Mental Capital & Wellbeing

• Effective Training & Organisational

• War for Talent

Development Strategy

• Apprenticeship Levy

• HR Analytics

Chief HR Officer

M a n a g i n g C h a n g e U n d e r P r e ss u r e (Banking) • The ‘why’ wins more hearts and minds than the ‘what’ in change management – take the time to explain the reasons for change. • Many executives are under huge pressure to gain large bonuses in a highly competitive environment. • Be more human – allow managers to show emotion/encourage acknowledgement of pressures. • HR needs to maintain a wide focus to avoid being disconnected from the wider workforce and being seen as a tool of management. • Rebuilding customer trust in banking requires greater concentration on clarity (simplicity, getting the basics right and a return to fairness). • Greater understanding and more open-minded thinking are needed towards investment banking culture – although a no-risk culture is not feasible, there should be an emphasis on preventing bad behaviour even when it is technically legal, keeping achievement and bonuses in context. • Instituting meaningful change requires personal resilience – not everyone will be on board with change and so hard decisions may need to be made about people you otherwise like and respect (support leaders but do not lose objectivity). • Flexibility – have a plan B/C and engage in scenario-based planning, rather than talking around models. • Managing sustainable change involves investing in the HR department running the change (which is often part of a continuous, rather than a single, process). • Not everyone will be prepared to embrace change in the organisation and culture – they may need to leave. • People in high-pressure environments such as investment banking may initially be less interested in sustainability – it is more difficult to engage those who are focused on short-term achievements.

Effective Training & Org anisational De velopment Str ategy (Caffè Nero) Across Caffè Nero outlets, there were 3,200 staff and a high rate of turnover, instigating a push to hire in large numbers. Customer experience was varied and there was no performance framework.

The ‘why’ wins more hearts and minds than the ‘what’ in change management – take the time to explain the reasons for change.

Across Caffè Nero outlets, there were 3,200 staff and a high rate of turnover, instigating a push to hire in large numbers. Customer experience was varied and there was no performance framework.

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Learning Director

Q1

Ac h i e v e d i n T h r e e Y e a r s Over 100% attrition was reduced to 50%. 85% of store managers were internally promoted – building an army of entrepreneurs and providing even more reasons to come to work at Caffè Nero and gain skills for their futures.


H o w d i d C a f f è N e r o Ac h i e v e T h i s ? • Learning and development (L&D) was positioned from the start as ‘hand in glove’ with the rest of the HR function, with a focus on the career paths: barista – shift leader – assistant manager – manager-in-training – manager – area manager – regional manager. • Inductions were designed to motivate people at all levels, offering advancement with fixed timescales (nine months to shift leader; nine months to assistant manager). • Great career development opportunities inform the type of people you want to employ – in this case, ambitious entrepreneurs who are on a career development journey. • Simple targets – 80% of store managers to be promoted from baristas, and 500-600 employees identified at any time who have the capacity and desire to become store managers. • Centralised training – delivering great training experience, with the knowledge that store managers would be responsible for large-scale revenues. • Retail is often cash-strapped – £250,000 was asked for to build a world-class area management training programme, with an emphasis on entrepreneurial drive. • Key to success – communication that L&D is the reason to work at Caffè Nero (helping greatly with costs associated with hiring and retention).

A Balanced Scorecard The scorecard covered metrics such as stability and the proportion of staff that went through training programmes. Better and more consistent delivery of training was seen to increase staff retention. More stable teams resulted in better customer feedback and increased customer intentions to return to Caffè Nero, and hence a direct financial benefit. T y p e s o f H u m a n C a p i t a l M e t r i cs HR efficiency metrics (generally more input/non-financial)

• HR efficiency – ratio of HR employees to total headcount, total number of HR employees, variance in HR expenditure (budget vs actual). • People management – employee engagement, dissatisfied termination and supervisor ratios. Effectiveness metrics (generally more outcome/financially

orientated) • Organisation – contribution per employee, overtime amount, employee benefit cost. • Individual – as per organisation, but for individual employees.

I m pl e m e n t i n g P r e d i c t i v e A n a l y t i cs i n HR

P H AS E I I:

P HASE I:

Step 1: Articulate your objectives • Establish your vision • Define analytics scope

Step 2: Define your governance model • Identify stakeholders and their key metrics • Data privacy & protection • Plan for action

Step 3: Get a quick win

P H A S E III:

D EF I N E YOUR A P P ROACH

S ET YOU R D I REC TION

GR OW YO U R C A PA B ILIT Y

P H A S E I V: O NGO IN G J O U R NEY

Step 4: Know your data

Step 7: Identify roles & skills

Step 10: Implement

• Data quality • Data management

• Leader role • Analytics team: Generalists, specialists, or blended skill sets?

• Get going • Analyse links between data sources • Take action based on insight • Evaluate interventions for impact

Step 5: Know your technology options • • • •

Step 8: Complete your business plan

Traditional solutions Cloud solutions Visualisation technology Cognitive computing

Step 6: Know your partner options • Insource/outsource/partner?

• Plan your approach to enablement • Adopt a consultancy model • Link analytics projects to business outcomes • Perspectives on the technology investment

Step 9: Build momentum • Communication and influence

Build on the IBM model

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W i n m a r k C-S u i t e

Q1


C HIEF O P ERATING OFFI C ER (COO) & S U P P LY & P RO C UREMENT D IRE C TOR

With special thanks to Sandy Lucas, Chief Operating Officer and Anna Hilding, Operations Service Excellence Leader, GE Capital UK for their contributions and support. T h i s Iss u e

N e x t Iss u e

• Process Improvement

• Supply Chain Management

• Six Sigma, Lean, CAP & Agile

• Procurement

Chief Operating Officer

Supply & Procurement Director

P r o c e ss I m p r o v e m e n t : a P i ll a r o f GE C a p i t a l Process improvement is an umbrella term that denotes the arsenal of tools that exist for removing the elements that are superfluous or injurious to creating wealth. As in an operating theatre, the secret lies in knowing how to identify which organs are redundant or diseased, and which instrument you should use to remove them.

C REATE A CULT UR E O F CO N T I N U O U S P R O C E S S IM P ROV E M E N T

In the first year ... TO P-DOWN A P P ROACH

Quality Team Deployment

E S TAB L I SH

CR E AT E metrics

1,0 0 0

employees trained

DE S IGN

lean processes

80 0

3 ,000

projects completed

CO N TIN UO US LY

communication rhythm

improve

54 ,000

steps removed

hours eliminated

B OT TO M-UP A P P R OACH

Training Programme, Mentoring and Goal Setting

At GE Capital, three features characterise process improvement. • Focusing on what the customer values, rather than what the company values. Apply a performance metric that is external rather than internal. • Continuous development. Refining methods and upgrading skills cannot be one-off events. The customer will always seek something better. Since launching its process improvement toolkit in 1989, GE has never ceased to upskill its staff. First, it trained them in basic process improvement methods. It took them from ‘WorkOut’ to ‘Facilitation Training’, from ‘Lean’ to ‘Change Acceleration Process’ (CAP) to ‘Six Sigma’, refining their sales efficiency at each stage. • Prioritising change, the creator of competitive advantage. A commitment to change is necessary so that a company’s product or service ends up being unique. A unique service represents a formidable competitive advantage. 22

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46%

average cycle time reduction per project


P r o c e ss I m p r o v e m e n t : a C u l t u r a l Revolution The entire organisation must make a cultural commitment to process improvement, or it will not take root. Above all, it must be endorsed by the most senior and strategic stakeholders, including the leading executives. Without their support, you cannot ensure that exactly the right methods, technologies and people are in place to help you to implement and measure process improvement. Six Sigma is a framework that can be used to reduce defects and variations in a process. It identifies the root causes of the variations and it eliminates them. It is called ‘Six Sigma’ because, statistically, only six standard deviations exist in the span of a frequency or normality curve. Lean is a much more rapid way of mapping processes and spotting

and stopping pointless or damaging activity, as its analysis method is much simpler. ‘Lean’ involves looking at process flow or information flow for signs of ‘waste’ and removing them. Statistically, only 15% of any process is necessary; the rest is waste.

The entire organisation must make a cultural commitment to process improvement, or it will not take root. Above all, it must be endorsed by the most senior and strategic stakeholders ... Agile project management is a tool used in the IT industry to reduce complexity in the construction of software products. ‘Agile’ involves constructing and testing small, usable segments of the product in manageable, two- to four-week stages. Applying ‘Agile’ has been found to reduce the overall time needed to create the finished product and also to improve performance.

CAP (Change Acceleration Process) – is a framework for making change last. ‘Once we have made this change, how do we make it sustainable and lasting? How do we stop reverting to our old ways? How do we make this change the new “business as usual”?’ CAP is about spending as much time embedding change as driving it.

?!

WORKOUT

SI X SI GMA

FAS TWOR KS

LE AN

Brings together people who KNOW THE PROCESS and issues best, challenges them to develop CREATIVE SOLUTIONS, makes DECISIONS ON THE SPOT, and empowers people to IMPLEMENT solutions.

DATA-DRIVEN PROBLEM SOLVING framework

Set of tools and principles and behaviours that will help us get

Make waste visible in order to eliminate it from the process and improve cycle time. OPTIMISE FLOW of products, services and information through entire process.

that reduces process variation by identifying key drivers of process performances and delivers PREDICTABLE RESULTS.

BETTER OUTCOMES FOR OUR CUSTOMERS, in a constantly

changing world. It’s about ENGAGING TEAMS in a new way, to CREATE GREATER IMPACT for our customers

CHAN G E ACCE LE RATI O N P R OCE SS (CA P) Framework and toolkit for successfully implementing the HUMAN SIDE OF CHANGE. CAP should be

leveraged/integrated when using other tools.

or internal processes.

WHE N IT ’ S USE D • • • •

Simplification Quick improvements Organisation changes Reduce bureaucracy

WHEN I T’S U S ED

• Obvious solutions already have been tried • Finds root cause • Reduce variation and risk

WHE N IT’ S U S E D

WHE N IT’ S U S E D

• High levels of uncertainty • Customer discover & iteration • Disruptive commercial or technical opportunity • Speed to learning

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W i n m a r k C-S u i t e

• Simplification • Reduced cycle time • Process and inventory flow

Q1

WHE N IT’ S USED

• Change management • Stakeholder alignment and buy-in • Culture shift • Implement human strategy


U n lo ck i n g C-S u i t e E xc e ll e n c e – K n o w l e d g e a n d a cc e ss i s p o w e r –

Substantially improve the effectiveness of your senior leadership team (your CxOs) t h r o u g h a c o m pl e t e p o r t f o l i o o f C-s u ite pe e r le a r n in g n e t w o r ks

Str ategic

C apital Cre ation

Al i g n m e n t

creates a unified C-Suite team with a common vocabulary and greater ability to cover for each other

Management

Hum an C apital

Innovatio n

multiplies value creation and reduces risk in own and other business areas

challenges thinking and presents new ideas from different roles, companies and sectors

develops key roles, improves transferability, supports succession planning and increases personal equity

If you would like access to a Winmark peer learning network or the full portfolio of networks please contact the editor John Jeffcock

24

W i n m a r k C-S u i t e

Q1


Editor John Jeffcock, Chief Executive, Winmark on + 44 (0) 20 7605 8000 john.jeffcock@winmarkglobal.com Winmark Global 7 Berghem Mews Blythe Road London W14 0HN United Kingdom


Winmark C-Suite Report  

This report sits alongside the Harvard Business Review (HBR) as essential management reading as it summarises on a quarterly basis the key l...

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