Strategic Use of Human Capital Management Practices SEEP Global Network Summit 5 November 2008 Workshop Objectives • By the end of the workshop, you should understand: – The strategic imperative of aligning HCM practices with business strategy – How MF networks and other organizations are using HCM strategically – What you can do in your own organization to strengthen HCM practices and support strategy Why Begin With Strategy? • Strategy and execution are two of the most critical components of organizational success • When people understand how they personally contribute to strategy, they choose to bring their whole selves to work—both minds and hearts Develop Your Strategy • Work with your senior team to clarify your strategy • Make sure it differentiates you • Keep it simple • Communicate it to all your stakeholders, every chance you get Where To Start? • Communicate your strategy – Drive this understanding through your organization • Evaluate your current HCM practices – Do they support or hinder your strategy? – Identify those that will have the biggest impact • Assess your culture – Does your leadership team believe HCM is a differentiator? – Does your culture support your brand and strategy? Link HCM To Strategy • Process steps: – Define your overall strategy – Assess current HCM practices – Assess current culture – Identify the gaps – Develop plan to address the gaps – Redesign critical HCM practices – Implement Elements of HCM • HR Planning • Recruitment and Selection • Learning & Development • Performance Planning & Management • Retention & Engagement • Rewards • Culture Performance Planning & Learning & Management Development Retention & Engagement Human Capital Recruitment Management & Selection System Rewards HR Planning Culture Critical HCM Practices • Your organization must identify those practices critical to success, to: – Ensure a strong foundation – Allocate the right resources • Determine the design of HCM practices necessary to drive strategy • Each HCM practice must support the others; it’s a system A new remuneration system based on KPI By Halida Khusainova, Executive Director, RMC KPI - is a key efficiency indicator showing how well the company/employee is achieving current and strategic goals or fulfilling tasks that are critical for the current and future success of your company… Key principles of remuneration system based on KPI • Fairness • Transparency What is KPI? • It is just figures, percents, points, etc. to monitor the activity, quality and performance results of employees and company. KPI key parameters: • Name • Target function (minimization, maximization, maintenance of the set value or range of values) • Criteria • Type of parameter • Target and actual values, etc. KPI important attribute Each KPI shall “belong” to a certain employee (or group) who is responsible for specific results and who knows what to do in case the parameter is lowering. Without this responsibility any measurements are useless. KPI development: Strategic thinking Strategic goals KPI KPI Examples• ROI • Income Finance • Profit • Cash Flow •… • Quality • Prices Clients • Relations •… • Service Internal processes • Quality Control •… • Personnel T&D • Knowledge • Best practices •… Next steps: • Assessment process • Adjustment of KPIs due to new Strategic plan • Assessment process on a monthly/quarterly basis Focusing on Human Capital Development and Retention Strategies By Jhale Hajiyeva, Executive Director Azerbaijan Micro-finance Association (AMFA) 19 Laying a Sound Foundation for Growth AMFA Is In the Growth Stage AMFA’s Life Cycle Curve Introduction Growth Maturity Decline 2008 Strategy: Sustainability Risk 2007 Strategy 2007 Strategy: Gain Credibility & Visibility While Building a Foundation Time 20 Challenges and Strategy 2007 Challenges 2008 Strategic Plan Retention -- foundation for Doubled staff from 3 to 6 AMFA’s sustainability Turnover of over 45% Performance metrics -- to ensure employees are efficient Additional training needed and effective – to enhance already strong and skilled employees Incentive structure – to help develop and motivate employees Detailed job descriptions -- to ensure efficient and optimized 21 staff Why Focus on Staff Performance? AMFA is strong, but needs to develop: •Advocacy •Reporting •Transparency •Financial management •Leverage visibility and credibility to connect investors to Board of network members Directors •Segmentation should remain focused on larger banks, and a Feedback tiered membership model should be introduced •Employee growth and roles/responsibilities must be optimized 22 Focus on Talent Management and Retention AMFA Efforts HR Company • Overview of generated • Analyse: income from fee based • Organisational structure services • Job descriptions • HR policies/procedures • Performance appraisal form • Meeting with in-country • Staff KPIs HR service providers • Survey staff, Board and Audit • Development of concept Committee paper. • Report outcomes/recommendations • Approached Eurasia • Develop incentive plan structure Foundation, ICCO, based on external survey findings USAID, Oxfam GB, Norwegian Embassy • Recommend HR management plan 23 Strategic Planning Is The Key AMFA strategy development was driven by: • Flexibility • Sustainability • Realistic and actionable • All Board of Directors’ comments were fully integrated • Leveraged prior workgroups • An annual exercise • Breaking even (revenues = expenses) is not a sustainable strategy 24 Are You There Yet? • Are your HCM practices hard-wired to your overall strategy? • Who’s first in your industry? • Where are you? Questions To Consider Within the context of your strategy: – Consider 1-2 HCM practices that are critical to strategy attainment – Do these need to be redesigned? • Why? • Where will you start? Summary • Keys to success – Communicate the strategy – Link individual efforts to it – Align HCM practices with it Questions/Comments? Thank you!