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PEOPLE & CHANGE ADVISORY

Practical Tools for Linking HR


Strategy to Business
January 2008
Strategy
Presented at the 2 HR Forum
nd

Jeddah
May 3, 2010
ADVISORY

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are registered trademarks of KPMG International, a Swiss cooperative.

AGENDA
1. So What is Strategic Planning?
2. Why Align Human Resources with Business
Strategy?
3. Barriers to Alignment
4. Practical Tools

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are registered trademarks of KPMG International, a Swiss cooperative.

So What is Strategic Planning?

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are registered trademarks of KPMG International, a Swiss cooperative.

The process of ensuring that todays


activities help to achieve tomorrows goals.

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are registered trademarks of KPMG International, a Swiss cooperative.

Strategic planning is an organization's process of


defining its strategy, or direction, and making
decisions on allocating its resources to pursue this
strategy, including its capital and people.

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are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

Gain
Clarity and
Insight

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are registered trademarks of KPMG International, a Swiss cooperative.

For What Purpose?

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are registered trademarks of KPMG International, a Swiss cooperative.

So What is Strategic Planning?

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are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

So What is Strategic Planning?

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are registered trademarks of KPMG International, a Swiss cooperative.

So What is Human Resource


Strategic Planning?

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are registered trademarks of KPMG International, a Swiss cooperative.

Defines how the organizations goals


will be achieved through people, by
means of HR strategies and integrated
HR policies and practices.

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are registered trademarks of KPMG International, a Swiss cooperative.

Having the right people in the right


place at the right time, suitably
rewarded and engaged, to meet or
exceed the standards of the job and the
needs of the customer.

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are registered trademarks of KPMG International, a Swiss cooperative.

The HR Value Proposition


People Management Solutions
Tailored to Fit
The Needs of Your Organization

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are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

Why Align HR Strategy


with Business Strategy?

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are registered trademarks of KPMG International, a Swiss cooperative.

Contribution
Competition
Cost

Contribution

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are registered trademarks of KPMG International, a Swiss cooperative.

People are our most


important asset.
- Jon Calhoun,
Director, Producer

Get the right


people in the
right jobs it is
more important
than developing
a strategy.
- Jack Welch
CEO

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are registered trademarks of KPMG International, a Swiss cooperative.

Productivity Drives Profits

+18%

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are registered trademarks of KPMG International, a Swiss cooperative.

Competition

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are registered trademarks of KPMG International, a Swiss cooperative.

You Do
Business
in a Global
World

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are registered trademarks of KPMG International, a Swiss cooperative.

The world of
business is
changing
radically and
fast!

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are registered trademarks of KPMG International, a Swiss cooperative.

Did You Know?

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are registered trademarks of KPMG International, a Swiss cooperative.

Bank back office transactions are


being outsourced from Europe to
Saudi Arabia.
- European Bank Executive, 2010

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are registered trademarks of KPMG International, a Swiss cooperative.

The most important corporate


resource over the next 20
years will be talent. It's also
the resource in the shortest
supply. Are you ready to fight
for your fair share?
- Fast Company

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are registered trademarks of KPMG International, a Swiss cooperative.

Did You Know?

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

there are 1,500 people just like


you.
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are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

Yet China will


have a severe
labour shortage
by 2020.

Chinese labour shortage


drives up wages
Published: 4 March 2010

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are registered trademarks of KPMG International, a Swiss cooperative.

Emerging markets with high


population growth are not
immune to the talent shortage.
India, for example, has a
growing population but lacks
skilled professionals.
-

Boston Consulting Group

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are registered trademarks of KPMG International, a Swiss cooperative.

Malaysia must send out the message


that they want skilled foreigners to come.
-

Hewitt Associates

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are registered trademarks of KPMG International, a Swiss cooperative.

Did You Know?

2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.

The Saudization of the oil and gas, and


transportation industries has reached
roughly 70-100 percent of the
workforce.

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are registered trademarks of KPMG International, a Swiss cooperative.

50 million
population
by 2050
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are registered trademarks of KPMG International, a Swiss cooperative.

Saudi hospitals need


100,000 nurses, but there are
currently only 1,000 Saudi
nurses and around 53,000
expatriate nurses recruited
from Asia, Africa, and the
West.
- Migration Policy Institute, 2004

The World Bank anticipates that unmet


demand for nurses will more than triple
[worldwide] during the next 15 years.

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are registered trademarks of KPMG International, a Swiss cooperative.

Brain Drain
California recruits Filipino nurses
California needs 108,000 new nurses
by 2020

California nursing starting wages in 2008


were $75,000 plus benefits and perks
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are registered trademarks of KPMG International, a Swiss cooperative.

Cost

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are registered trademarks of KPMG International, a Swiss cooperative.

Effective people management can


reduce costs
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are registered trademarks of KPMG International, a Swiss cooperative.

Did You Know?

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are registered trademarks of KPMG International, a Swiss cooperative.

The Cost of Human Capital


(wages, benefits,
transportation, visas,
subsidies, training)
typically represents 77% of
a typical Saudi
organizations annual
operating budget.

Hiring mistakes can be


costly!
Middle manager = 6 month
wages
Executive = 18 month
wages

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are registered trademarks of KPMG International, a Swiss cooperative.

Remittances by foreign workers cost


the Saudi Arabian economy more
than 60 billion riyal per year.

Thats 20% of GDP


not spent inside the country!
- Migration Policy Institute, 2004
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are registered trademarks of KPMG International, a Swiss cooperative.

CFOs admitted to Forbes


that roughly 65% of
restructuring activities
failed to meet their
financial targets during
the past two decades.

The lack of [alignment] between


human resource management and
strategic business planning is
increasingly acknowledged as a
major source of implementation
errors.
It is alleged that companies develop
plans based on extensive marketing
and financial data but neglect the
human resource requirements
necessary to successfully implement
them.
-

K. Golden and V. Ramanujam

The Strategy Disconnect


60% of typical organizations do
not link their strategic priorities to
their budgets
2/3rds of HR operations develop
strategic plans that are not linked
to their organizations strategy.

Prof. Robert
Kaplan

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are registered trademarks of KPMG International, a Swiss cooperative.

When
employees
are not
engaged
earnings per
share decline
11% on
average.

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are registered trademarks of KPMG International, a Swiss cooperative.

Barriers to Alignment

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are registered trademarks of KPMG International, a Swiss cooperative.

Poor Service
Lack of Competence
Lack of Credibility

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are registered trademarks of KPMG International, a Swiss cooperative.

Human Resources is our


weakest department.
- Saudi Arabian Petrochemical General Manager

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are registered trademarks of KPMG International, a Swiss cooperative.

Leaders Rely on their Best


60% of U.K. managers
view HR as
administrative
58% believe HR lacks
the capability to
develop talent
management and other
key strategies
- CIPD, 2009

HR is Overhead Cost
What is your ratio of HR staff to
full-time employees?

1:80

1:125

1:200

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are registered trademarks of KPMG International, a Swiss cooperative.

Capability Assessment
Micro Factors
Transformational
Sponsorship of HR Strong
Supportive
by the business
Perception of HR
by the business
Type of work done
Nature of Work

Transactional
Minimal
Sufficient

Efficient

Support function

Creative

Impediment

Indispensable

Inefficient

Strategic

Back office support

Problem solving

Administrative

Advisory

Enforcement

Integrated

Fragmented

Facilitative

Rule-bound
Four Groups, UK

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are registered trademarks of KPMG International, a Swiss cooperative.

Developing Capability
Listen to your internal customers
Meet their operational needs
Learn about the business
Grow competence

Faster, Better, Cheaper


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are registered trademarks of KPMG International, a Swiss cooperative.

If you cant
demonstrate
youre
effective,
youre invisible

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are registered trademarks of KPMG International, a Swiss cooperative.

Practical Linking Tools

If you are invited to


participate in
strategic planning

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are registered trademarks of KPMG International, a Swiss cooperative.

Be Prepared

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are registered trademarks of KPMG International, a Swiss cooperative.

If the only tool you


have is a hammer,
every problem will
look like a nail.
- Abraham Maslow,
Psychologist

Best Practices

Analyze
Understand
Innovate

Alignment Tools
1. Business Context
2. Outcomes
3. HR Redesign
4. Accountability

Please send an email for those techniques discussed but not


shown.
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are registered trademarks of KPMG International, a Swiss cooperative.

Business Context
Dialectic SWOT Analysis

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are registered trademarks of KPMG International, a Swiss cooperative.

Business Context

(continued)

SWOT-SF Analysis
This variation adds identification of Successes and Failures

Structured Interview
1. Top objectives for the year?
2. Problems or barriers that may hinder accomplishment?
3. Then determine whether there may be a strategic role HR could

play.
4. Ask if the manager would like assistance.
5. Negotiate performance outcomes, methods, timing and other

details.

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are registered trademarks of KPMG International, a Swiss cooperative.

Outcomes
Importance-Performance
Analysis Matrix

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are registered trademarks of KPMG International, a Swiss cooperative.

Outcomes

(continued)

HR Performance Benchmarking
Be prepared to look outside your industry and operational

unit

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are registered trademarks of KPMG International, a Swiss cooperative.

Outcomes

(continued)

HR Performance Benchmarking
Be prepared to look outside your industry and operational

unit
Be aware of current Best Practise concerns and use sound

methodology

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are registered trademarks of KPMG International, a Swiss cooperative.

Outcomes

(continued)

HR Performance Benchmarking
Be prepared to look outside your industry and operational

unit
Be aware of current Best Practise concerns and use sound

methodology
Be conscious of the need to adapt western HR methods to

Middle Eastern culture and business norms

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are registered trademarks of KPMG International, a Swiss cooperative.

HR Redesign
Linking Vision to Objectives

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are registered trademarks of KPMG International, a Swiss cooperative.

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are registered trademarks of KPMG International, a Swiss cooperative.

Accountability
Kirkpatrick 4-Level Evaluation Model
Level

Evaluation Type

Example

Who Conducts

Reaction

Post-session assessment

HR

Learning

Post-session testing of
knowledge gain, skill mastery,
behaviour or process
improvement

HR

Transfer

On-the-job assessment of skills,


knowledge, behaviour or process
improvement

HR and line
management

Impact

Evaluate impact on the firm

HR, line
management,
specialists

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are registered trademarks of KPMG International, a Swiss cooperative.

Accountability (continued)
Metrics
1.

Show line management where improvements in Human Capital


performance can enhance the bottom line.

2.

Use international benchmark standards and be your own


toughest critic.

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are registered trademarks of KPMG International, a Swiss cooperative.

&

Questions

Answers

phurly@kpmg.com

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are registered trademarks of KPMG International, a Swiss cooperative.