Rethinking Human Capital: The People Strategy Lou Rabaut June 2018 Rethinking Human Capital: The People Strategy
The Service Profit Chain Internal Services Quality Employee Satisfaction Customer Value Customer Satisfaction Customer Loyalty Employee Retention Revenue Investment Employee Productivity Profit The Service Profit Chain is a theory and business model evolved by a group of researchers from Harvard University in the 1990s (among others, James L. Heskett and Leonard Schlesinger).
The Customer Experience
Customer Experience = Value Proposition + Product/Service Differentiation
In an age of online banking . . . Why Us? In an age of online banking . . . Why should I come to this Bank? Why should I recommend this Bank to others?
What Is Our Customer Value Proposition? Promise of value to be delivered and a belief by the customer that the value will be experienced. wnj.com
Why not another bank? But I have choices! There are many banks available. Why should I choose this bank over another bank for my needs?
Value Proposition/Product Differentiation vs vs vs
How to Differentiate Price Service Reliability/Availability Value-Add Reputation Performance (Outcomes)
Customer Loyalty I give you my business and I recommend you to others. You will not have my loyalty unless you deliver on your value proposition and your product differentiation.
Value Proposition + Differentiation What is your value proposition? How do you differentiate?
Business Strategy + People Strategy
So, what is your business strategy?
Operating Model Product Leadership Operational Excellence Customer Intimacy
A Common Bank Value Proposition It’s our PEOPLE who make the difference!
Actual Bank Value Propositions “Our employees are dedicated to meeting the highest standards of customer service. We like to call it ‘family-style customer service.’”
Actual Bank Value Propositions “[W]e know there’s no substitute for having a face-to-face conversation with an experienced banker dedicated to helping you prosper.”
Actual Bank Value Propositions “As a customer, you will have the unique opportunity to develop a relationship with banking professionals who really care about you.”
Actual Bank Value Propositions “[We] attract and retain the most caring, collaborative, and competent people in the community banking industry.”
The Role of HR Risk Management People Strategy Compliance
The Role of HR - Examples Compliance Payroll Hiring Paperwork Benefits Paperwork Risk Management Workers’ Compensation Unemployment Compensation Managing Discipline & Discharge Drug Testing People Strategy Recruitment Training & Development Performance Management Talent Mapping Promotion and Succession Planning
The People Strategy Cycle Recruitment and Selection Development and Training Performance Management Compensation and Rewards Talent Review Promotion and Succession
People Strategy Definition A strategic document that outlines the Bank’s approach to and relationship with its employees. Helps in times of scarce resources. A good People Strategy can help inform tradeoffs necessary without jeopardizing key employee relationships. High-level enough to provide broad guidance, but more than simple platitudes.
People Strategy Elements Staffing Strategy Do we staff or do we recruit? Do we staff skinny? Do we use temp agencies? Do we contract out for help? Do we “post and pray” or do we have an established pipeline of candidates?
People Strategy Elements Hiring Standards/Process Do we have established hiring standards?
People Strategy Elements Compensation Strategy Do we pay at the top, mid or bottom of the market? Do we really know the market?
People Strategy Elements Benefit Strategy Do we favor wages over benefits? Do we provide benefits at the top, mid or bottom of the market? Do we really know the market? Do we have a retirement plan strategy?
People Strategy Elements Reward Strategy Do we share profits? Is there a formula? Is it discretionary? Are we transparent? Does it actually motivate?
People Strategy Elements Performance and Behavior Standards Do we establish both the What (gets done) and the How (it gets done)? Do we have a robust performance management system? Is it honest? Is it fully executed? Does it measure the right things? What culture of expected behavior do we establish? Do we enforce the culture without regard to business consequences? Do we weigh culture against business impact?
People Strategy Elements Turnover Strategy Do we measure it? Do we have a target? Do we know when it is regrettable versus non- regrettable?
People Strategy Elements Training/Development Strategy Do we rely on OJT? Do we partner with educational organizations? Do we use certification programs?
People Strategy Elements Promotion and Succession Strategy Do we promote from within? Do we have a virtual bench? Do we use interns and co-ops? Have we identified key positions for which we need succession plans? Do we have a succession plan? Are we engaged in succession preparation?
People Strategy Elements Risk Management Do we aggressively terminate people? Do we take a belt-and-suspender approach? Do we carefully monitor legal compliance with employment laws?
People Strategy – Differentiation We do not need a one-size-fits-all approach for every employee. In fact, there should be a different people strategy with respect to employees who significantly influence the Banks’s Key Performance Indicators. This can be especially true in the areas of recruitment, development, compensation, promotion and succession planning.
Differentiating around KPIs What are the Key Performance Indicators? What positions most influence the Key Performance Indicators?
Who Delivers the Customer Experience? Who (what people) will actually deliver on our Value Proposition and our Product Differentiation? What does it look like when they don’t deliver on the Customer Experience? How do we get them to deliver?
Employee Value Proposition
Employee Value Proposition If our employees are critical to our customer’s value proposition, then what is our employee value proposition? wnj.com
The Service Profit Chain Internal Services Quality Employee Satisfaction Customer Value Customer Satisfaction Customer Loyalty Employee Retention Revenue Investment Employee Productivity Probability The Service Profit Chain is a theory and business model evolved by a group of researchers from Harvard University in the 1990s (among others, James L. Heskett and Leonard Schlesinger).
Gallup Survey on Employee Engagement Disengaged Engaged Not Engaged
People Strategy Examples Performance Review Calibration Talent Mapping
Performance Review Calibration One manager’s “great” is another manager’s “meets expectations.” We must get alignment on expectations and current performance.
Talent Mapping Typically follows the performance review cycle and after calibration. Talent Mapping identifies an employee’s potential for growth within the organization. The Talent Map plots the employee’s performance (x axis) against the employee’s potential (y axis). Talent Mapping also identifies gaps in key positions, as well as gaps in succession.
Talent Map Enigma Growth Employee Future Leader Dilemma Core Employee Potential Enigma Growth Employee Future Leader Dilemma Core Employee High Impact Performer Under Performer Effective Trusted Professional Performance
Talent Map – Working the Edges Potential Enigma Growth Employee Future Leader Dilemma Core Employee High Impact Performer Under Performer Effective Trusted Professional Performance
Warner Norcross + Judd lrabaut@wnj.com Thank you! Louis C. Rabaut Warner Norcross + Judd lrabaut@wnj.com 616.752.2147 17211787