March 2002 Motorola Confidential Proprietary HR Strategy Agenda

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March, 2002 Motorola Confidential Proprietary

March, 2002 Motorola Confidential Proprietary

HR Strategy Agenda ▲ Introduction ▲ HR Contributions to Speed Our Return to Health

HR Strategy Agenda ▲ Introduction ▲ HR Contributions to Speed Our Return to Health ▲ HR - Transition and Orientation - Strategic Intent, Drivers, Contribution - Business Alignment ▲ The HR Strategy - 5 Focal Areas/ Strategic Thrusts Motorola Confidential Proprietary Financial

Introduction ▲ 2002 – 2004 Strategy “FIRST TO RECOVER & PLAY TO WIN” Transactional

Introduction ▲ 2002 – 2004 Strategy “FIRST TO RECOVER & PLAY TO WIN” Transactional Excellence, HR Strategy & Planning, Attract & Retain, Leadership Supply, Performance Management ▲ Strong Operational Focus for 2002 in the Face of: - Economic Uncertainty Flat Revenues Dramatic Cost Reduction Improved Profitability ▲ Underlying Themes: - Simplification and Integration - Cost Competitiveness - Focus (through fierce prioritization) and High Impact Motorola Confidential Proprietary

HR Contributions to Speed Our Return to Financial Health Global HR Costs ($000) Total

HR Contributions to Speed Our Return to Financial Health Global HR Costs ($000) Total Decrease ($192, 561) – 40. 5% Source: HR Finance, 03/2002 Definitions: • IBHR - In-Business HR - LLP Business Learning Teams • G&A • Variable - Immigration - LLP Tuition - Global Assignment Centers - GTS-Tactical • Services - Security Rewards Benefits Child Care LLP Core . Government Compliance AP Regional Services EMEA Regional Services LA Regional Services HR Strategy - GTS Strategic - GECS - HRIS - Service Center - Core Process Redesign Motorola Confidential Proprietary

HR Contributions to Speed Our Return to Financial Health 19. 4% Higher Than 2000

HR Contributions to Speed Our Return to Financial Health 19. 4% Higher Than 2000 Mkt 13. 3% Lower Than 2000 Mkt 26. 9% Lower Than 2000 Mkt 2001 Saratoga Institute Average HR Cost per Employee – Technology Sector = $2475 20. 8% Lower Than 2000 Mkt 2001 Saratoga Institute Average HR Expense as a Percent of Operating Expense – Tech / Mfg Sector = 0. 72% ▲ We Continue to Benchmark “HR Value” ▲ We Significantly Cut Cost & Continue to Contribute to the Bottom Line. Motorola Confidential Proprietary

HR Contributions to Speed Our Return to Financial Health ▲ Helped Increase the Cash

HR Contributions to Speed Our Return to Financial Health ▲ Helped Increase the Cash Reserve of the Corporation Through Significant Contributions: – Discontinuation of Milestones: $14 M reduction in 2001 Fringe Cost plus a liability reversal of $80 M – Restructuring of Officers Life Insurance Plan: One time cash inflow of $62 M – Asset sale: $15 M of guaranteed payments within 1 year of sale plus future potential payments Motorola Confidential Proprietary

HR Contributions to Speed Our Return to Financial Health Total Decrease = 41, 367

HR Contributions to Speed Our Return to Financial Health Total Decrease = 41, 367 (28. 1%) Total Decrease = 2, 163 (46. 7%) 1/2001 8/2001 12/2001 2/2002 Note: 0. 15% Have Resulted in Administrative Charges or Litigation Matters; 0. 00% with Adverse Results Sources: TWIN; Corporate Law Dept. 3/2002 Motorola Confidential Proprietary

Other Key 2001 HR Contributions ▲ Human Asset Strategy Planning System ▲ Leadership Supply

Other Key 2001 HR Contributions ▲ Human Asset Strategy Planning System ▲ Leadership Supply ▲ Dramatic Paperless Transactions ▲ Mergers & Acquisitions ▲ HR Global Data System ▲ One. Motorola Functional Strategy ▲ Shareholder & Performance Focused Rewards ▲ Relative Performance Assessment ▲ Exemplary demonstration of treating employees with dignity and respect during downsizing Motorola Confidential Proprietary

Transition Integrated Core/ Integrated Services Centralized Shared Services Centers of Excellence HR NO ENTRY

Transition Integrated Core/ Integrated Services Centralized Shared Services Centers of Excellence HR NO ENTRY Decentralized HR Origins Independent Motorola Confidential Proprietary

Orientation Our Evolution from the administrative “Personnel” of the’ 80 s, through “Human Resources”

Orientation Our Evolution from the administrative “Personnel” of the’ 80 s, through “Human Resources” in the ’ 90’s to the focus on Management and Optimization of Human Talent Today Change Agent Implement Strategy Organization Renewal Transactional Expert Efficient Infrastructure Employee Champion Increase Employee Commitment & Capability Strong Operational Focus Motorola Confidential Proprietary Activities Process Strategic Partner People Activities Future Strategic Focus - D. Ulrich

Strategic Intent HR Solutions Create a High Performance Culture which Optimizes Employee Contributions and

Strategic Intent HR Solutions Create a High Performance Culture which Optimizes Employee Contributions and Maximizes Shareholder Value Motorola Confidential Proprietary

An Integrated Strategy With 5 Critical Thrusts Transactional Excellence Simplify/ Integrate HR Strategy And

An Integrated Strategy With 5 Critical Thrusts Transactional Excellence Simplify/ Integrate HR Strategy And Planning Leader. Supply Performance Management Recover First: IBHR Cost Competitiveness, Focus , Impact Attract & Retain COE’s Regions Core Services/ Play to Win Strategic Needs of the Corporation Business Strategies of Record Human Asset Plans Motorola Confidential Proprietary

Areas of Focus Transactional HR Strategy Excellence & Planning Attract & Retain Leadership Supply

Areas of Focus Transactional HR Strategy Excellence & Planning Attract & Retain Leadership Supply Performance Management Themes Simplification & Integration Cost Competitiveness Increase Operating Effectiveness : - Continue Internal Paperless Initiative - Improve Quality, Speed & Performance of all HR Base Transactions Globally Determine Viability of a “For Profit” Business: - Global Partner for HR Services / Transactions Focus & High Impact Motorola Confidential Proprietary

Transactional Excellence – Key Gaps ▲ Funding Constraints (Expense and Capital) ▲ Alternate (Competing)

Transactional Excellence – Key Gaps ▲ Funding Constraints (Expense and Capital) ▲ Alternate (Competing) Systems ▲ Lack of Integration ▲ Systems Sub-optimized Due to Limited / Inconsistent Use of Core Process Redesign ▲ Transactions Centers Are Ahead of Manager / Employee Willingness ▲ Limited Applications to Leverage Infrastructure Motorola Confidential Proprietary

Transactional Excellence Improve Operational Effectiveness: ▲ Complete Global Consolidation of HR Transactions Global Employee

Transactional Excellence Improve Operational Effectiveness: ▲ Complete Global Consolidation of HR Transactions Global Employee Solutions Center ▲ Purchase/Develop System to Cover ALL Compensation Transactions ▲ Create Infrastructure/ Integration of Paperless HR Transactions ▲ Use CPR Methodology to Achieve Trans. Excellence ( Integration, Cost Competitiveness) Motorola Confidential Proprietary

Transactional Excellence Outsourcing has Proven to NOT be the Panacea Once Imagined. While Initial

Transactional Excellence Outsourcing has Proven to NOT be the Panacea Once Imagined. While Initial Costs do Appear to go Down, Future Changes Drive Costs Upward While Strategic Course Correction Ability & Flexibility Suffer Dramatically. Ability to Influence Future Strategy, Change Cost Projections Time High Cost Acceptable Levels $’s Acceptable Cost Low Time High of Influence No - - - Changes- - - -Many Internal Ownership External Ownership Low -R. Charan Motorola Confidential Proprietary Year One Internal Ownership Flexibility Future External Ownership

Transactional Excellence Business Partnerships May Offer Rewarding Solutions: - Efficiency & Lower Cost -

Transactional Excellence Business Partnerships May Offer Rewarding Solutions: - Efficiency & Lower Cost - Retain Control & Strategic Focus - Possible Revenue Streams Preliminary Partnership Discussion Indicates That There Is a Significant Market Opportunity That Could Result in a Savings From Reduced Fixed Costs Longer Term Motorola Confidential Proprietary

Areas of Focus Transactional HR Strategy Excellence & Planning Themes Simplification & Integration Cost

Areas of Focus Transactional HR Strategy Excellence & Planning Themes Simplification & Integration Cost Competitiveness Focus & High Impact Attract & Retain Leadership Supply Maximize Human Assets & Potential Via the Art & Science of : ▲ Creating Human Strategy, ▲ Planning (at World Class Levels), ▲ Deploying and ▲ Measuring - Our Workforce in a Way that Provides True, Sustainable, Competitive Advantage. Motorola Confidential Proprietary Performance Management

HR Strategy and Planning – Key Gaps ▲ Differing Perceptions of Human Asset Planning,

HR Strategy and Planning – Key Gaps ▲ Differing Perceptions of Human Asset Planning, What It Covers, and What It Can Deliver ▲ HAP Not Recognized or Driven As a Core Business Process ▲ Workforce Planning Perceived As a Budget and Global Talent Supply Organization Exercise ▲ Costly and Unpredicted Variations Occurring in Talent Acquisition / Downsizing Motorola Confidential Proprietary

H R Strategy & Planning Why Human Asset Planning? – 1998 Downsized 15, 000

H R Strategy & Planning Why Human Asset Planning? – 1998 Downsized 15, 000 ($618 M Severance) – 1999 Hired 19, 700 ($90 M Hiring Cost) – 2000 Hired 26, 548 ($105 M Hiring Cost) – 2000 Downsized 3, 900 ($140 M Severance) – 2001 Hired 7, 908 YTD ($50 M Hiring Cost) – 2001 Downsized 36, 800 YTD ($643 M Severance) – 2002 Downsized 4, 567 YTD ($? ? ? Severance) Severance: $1, 401 M Hiring: $245 M Motorola Confidential Proprietary Does This Cycle Make Sense? Total Cost = $1, 646 M

Areas of Focus Transactional HR Strategy Excellence & Planning Attract & Retain Leadership Supply

Areas of Focus Transactional HR Strategy Excellence & Planning Attract & Retain Leadership Supply Performance Management Themes Simplification & Integration Cost Competitiveness • Retention (Simplification, Integration, Impact) • Redeployment and internal talent management (Cost Competitiveness) • Employment Promise that delivers against the Motorola Brand (Focus & Impact) Focus & High Impact Motorola Confidential Proprietary

Attract and Retain – Key Gaps ▲ Motorola Brand Promise Is Not Translated Into

Attract and Retain – Key Gaps ▲ Motorola Brand Promise Is Not Translated Into a Powerful Employment Promise ▲ Lack of Clearly Identified and Developed Candidates to Feed Leadership Supply Pipeline (E 09 – E 14) ▲ Most Effective / Critical Skills Losses Are Not Currently a Managed Source of Future Talent to Motorola ▲ Most Effective Talent at Risk Where Development and Rewards Don’t Match Performance Motorola Confidential Proprietary

Retention and Redeployment 2002 Ø Refocus on retention & redeployment of most effective 20%

Retention and Redeployment 2002 Ø Refocus on retention & redeployment of most effective 20% and critical skills employees in E 12 – E 14 Ø Apply leadership supply processes Ø Develop retention strategies Ø Retain 95% of specific target population Ø Ensure rewards programs support retention of specific target population Ø Create alumni tracking capability for most effective talent & critical skills employees who leave the company 2003 Ø Expand pool to include E 09 – E 11 Ø Most effective 20% (E 09 – E 14) used as the feeder pool for open positions E 12 – E 15 Ø Institutionalize a Center of Excellence for Talent Management across Motorola. Build a bridge to Leadership Supply & Learning processes. Motorola Confidential Proprietary 2004 Ø Continued use of feeder pool as next generation candidates for Leadership Supply positions

Employment Promise 2002 Ø Integrate our efforts to translate the Motorola brand into an

Employment Promise 2002 Ø Integrate our efforts to translate the Motorola brand into an employment promise Ø Define concept & rationale Ø Develop informational material Ø Secure Sr. management support (office of CEO, CMO, Corporate Strategy, Kitchen Cabinet etc. ) Ø Develop project plan & obtain sponsorship, including funding, for 2003 implementation 2003 Ø Implement project plan Motorola Confidential Proprietary 2004 Ø Continue implementation & evaluate. Conduct internal & external discovery of desired employment promise vs. perceived employment promise

Areas of Focus Transactional HR Strategy Excellence & Planning Attract & Retain Leadership Performance

Areas of Focus Transactional HR Strategy Excellence & Planning Attract & Retain Leadership Performance Supply Management Themes Simplification & Integration Cost Competitiveness • Additional “Extraordinary Apps” • Investigate External Business Focus & High Impact Motorola Confidential Proprietary

Leadership Supply – Key Gaps ▲ Top 100 Most Leveraged Jobs Not All Filled

Leadership Supply – Key Gaps ▲ Top 100 Most Leveraged Jobs Not All Filled by Most Effective Performers ▲ Most Effective Talent at Risk Where Development and Rewards Don’t Match Performance ▲ Lack of Diversity in Leadership Supply and Pipeline ▲ Leadership Supply Process Is Attracting External Attention Creating a Potential Revenue Opportunity Motorola Confidential Proprietary

Leadership Supply - 2001 • Motorola Leadership Supply metrics were tracked on 2001 Global

Leadership Supply - 2001 • Motorola Leadership Supply metrics were tracked on 2001 Global HR Scorecard and achieved the following: 2001 Goals 80% of Top 50 positions held by Most Effective Performers 95% retention of Most Effective Performers (200) 80% transition of Least Effective Performers (100) Motorola Confidential Proprietary

Execute “Theme of the 100’s” with “Extraordinary Applications" Strategic Intent: 100% Match Between: 100

Execute “Theme of the 100’s” with “Extraordinary Applications" Strategic Intent: 100% Match Between: 100 Most Effective Leaders 100 Most Leveraged Positions & Reward to ensure 100% Retention & Exceptional Performance ▲ Personal Development 100 -Ensure Advanced Development needs are Met. -Top 100 Attendees from the Initial Executive Institute to be Invited to Phase II. ▲ The “Diverse Next 100” Pipeline Identify a Pipeline for the Next 100 Future Leaders, Including Diversity Candidates from Across the Company. ▲ Internal Talent Agent Develop the Business Case for Implementation of an Internal Talent Agent ▲ Leader Supply as a Business Build a Business Case for Sale of Leadership Supply Process Motorola Confidential Proprietary

Areas of Focus Transactional HR Strategy Excellence & Planning Themes Simplification & Integration Cost

Areas of Focus Transactional HR Strategy Excellence & Planning Themes Simplification & Integration Cost Competitiveness Focus & High Impact Attract & Retain Leadership Performance Management Supply ▲Create Intensely Personal Performance Management Experience for ALL Employees ▲Integrate Fact-Based Tools for Mgrs. / Emps. to Discuss, Celebrate, & Confront Individual Performance ▲Energize Tools by Holding Sr. Level Execs. Accountable for Re-building the Performance Culture Motorola Confidential Proprietary

Performance Management – Key Gaps ▲ Lack of a Consistent High Performance Culture ▲

Performance Management – Key Gaps ▲ Lack of a Consistent High Performance Culture ▲ Personal Commitment Viewed As More Developmental Than Performance Management Orientated ▲ Consequences Not Aligned / Consistent ▲ Insufficient Management Tools and Training on Effective Behaviors ▲ Rewards Do Not Differentiate Sufficiently Between Organizational and Individual Performance ▲ Current System Largely Employee Driven Motorola Confidential Proprietary

Performance Management Integrate/ Refine Existing Tools ▲ Define & Agree: Components of Performance Management.

Performance Management Integrate/ Refine Existing Tools ▲ Define & Agree: Components of Performance Management. Conduct Best Practices Study, Baseline Motorola System to Findings ▲ Clear Goal Setting – Linked to Next Layer ▲ Target Training: Employees & Managers ▲ Integrate: PC, Relative Performance, 360 Feedback ▲ Tighten Linkage to Rewards & Development (Simplification, Integration, Impact) Motorola Confidential Proprietary

Summary Areas of Focus Transactional HR Strategy Excellence & Planning Themes Simplification & Integration

Summary Areas of Focus Transactional HR Strategy Excellence & Planning Themes Simplification & Integration Cost Competitiveness Focus & High Impact -Increase Effectiveness/ -Short Term Strategy -“For Profit” Business/ -Long Term Strategy Attract & Retain -HAP Process Strategy -Employment Promise/ CMO -HAP Process Strategy -Retain -HAP Content/ Process / Future Strategies -Redeploy -Employment Promise/ CMO Brand Promise Motorola Confidential Proprietary Leadership Supply Performance Management -Integrated Tools/ -Simplified Goal Setting -Leadership -Develop. Supply As Biz -New Apps. -100’s ment -Sr. Mgmt Accountability -Rewards -Exec. Ownership

Human Resource Value Proposition Drives Shareholder Value. an t e s As an l

Human Resource Value Proposition Drives Shareholder Value. an t e s As an l P um H Att rac t/D eve lop Transactional Excellence /Re tain ds ar ew s/R e nc Leadership ue eq ns Co Cost Effectiveness Performance Mgt. -and Creates “For Profit” Business Opportunities Motorola Confidential Proprietary