1. Rethinking Human Capital: The People Strategy
Lou Rabaut June 2018
Rethinking Human Capital: The People Strategy

2. 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).

3. The Customer Experience

4. Customer Experience =
Value Proposition + Product/Service Differentiation

5. 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?

6. 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

7. 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?

8. Value Proposition/Product Differentiationvs vs vs

9. How to Differentiate Price Service Reliability/Availability Value-Add
Reputation
Performance (Outcomes)

10. 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.

11. Value Proposition + Differentiation
What is your value proposition?
How do you differentiate?

12. Business Strategy + People Strategy

13. So, what is your business strategy?

14. Operating Model
Product Leadership
Operational Excellence
Customer Intimacy

15. A Common Bank Value Proposition
It’s our PEOPLE who make the difference!

16. 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.’”

17. 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.”

18. 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.”

19. Actual Bank Value Propositions
“[We] attract and retain the most caring, collaborative, and competent people in the community banking industry.”

20. The Role of HR
Risk
Management
People Strategy
Compliance

21. 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

22. The People Strategy Cycle
Recruitment and Selection
Development and Training
Performance Management
Compensation and Rewards
Talent Review
Promotion and Succession

23. 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.

24. 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?

25. People Strategy Elements
Hiring Standards/Process
Do we have established hiring standards?

26. People Strategy Elements
Compensation Strategy
Do we pay at the top, mid or bottom of the market? Do we really know the market?

27. 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?

28. People Strategy Elements
Reward Strategy
Do we share profits? Is there a formula? Is it discretionary? Are we transparent? Does it actually motivate?

29. 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?

30. People Strategy Elements
Turnover Strategy
Do we measure it? Do we have a target? Do we know when it is regrettable versus non- regrettable?

31. People Strategy Elements
Training/Development Strategy
Do we rely on OJT? Do we partner with educational organizations? Do we use certification programs?

32. 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?

33. 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?

34. 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.

35. Differentiating around KPIs
What are the Key Performance Indicators?
What positions most influence the Key Performance Indicators?

36. 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?

37. Employee Value Proposition

38. Employee Value Proposition
If our employees are critical to our customer’s value proposition, then what is our employee value proposition?
wnj.com

39. 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).

40. Gallup Survey on Employee Engagement
Disengaged
Engaged
Not Engaged

41. People Strategy Examples
Performance Review Calibration
Talent Mapping

42. Performance Review Calibration
One manager’s “great” is another manager’s “meets expectations.”
We must get alignment on expectations and current performance.

43. 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.

44. 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

45. Talent Map – Working the Edges
Potential
Enigma
Growth Employee
Future
Leader
Dilemma
Core
Employee
High
Impact Performer
Under Performer
Effective
Trusted
Professional
Performance

46. Warner Norcross + Judd lrabaut@wnj.com
Thank you!
Louis C. Rabaut
Warner Norcross + Judd