5/11/2015 A G E N D A

H E A L T H W E A L T H C A R E E R H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N ( O R : W H A T I W I S H I K N E W B E F O R E W E S I G N E D T H E C O N T R A C T ) APRIL 2015

Darrell Cira, Mercer Rob Heir, Cargill Steve Seykora, Mercer Patrick Bostrom, Cargill

A G E N D A

• Our Sources

• The Big Picture

• The “Ask” of Total Rewards

• Expected Outcomes

© M E R C E R 2 0 1 5 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N

O U R S O U R C E S

Hidden Challenges:

Understanding the Impact of a New HRIS

on a Total Rewards Organization

© M E R C E R 2 0 1 5

T H E P E O P L E

4

Nearly half of respondents have implemented a new HRIS system in the past 5 years

Implemented in the

past 5 years

Plan to implement

in 2015

Have not

implemented and

do not plan to in

2015

111

21

94

226

© M E R C E R 2 0 1 5 28% 15% 12% 12% 8% 6% 6% 3% 10% 0% 5% 10% 15% 20% 25% 30% Workday Oracle ADP Ultimate SuccessFactors Ceridian SAP Infor Lawson Other Workday 5,150 Oracle 4,500 ADP 740 Ultimate 1,550 2,800 SuccessFactors 450 Ceridian 4,103 SAP 12,000 Infor Lawson 3,800 Other HRIS System Implemented Median Employees O U R S O U R C E S : T H E D A T A 6

Others include: API, Avanti, Desjardins, EnterpriseOne, Kronos time and attendance, JD Edwards EnterpriseOne 9.1, NuViewHR, PDS Vista, PeopleSoft, and UltiPro

H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N

© M E R C E R 2 0 1 5 8

SaaS CLOUD MOBILE BIG DATA SOCIAL

SOCIAL GLOCAL HOSTED SaaS SOCIAL

ANALYTICS METRICS GAMIFICATION CLOUD

ION SaaS CLOUD MOBILE BIG DATA ION

MOBILE SOCIAL GLOCAL HOSTED SaaS

CLOUD ANALYTICS METRICS GAMIFICATION

SaaS CLOUD MOBILE BIG DATA METRICS

SOCIAL GLOCAL HOSTED SaaS GAMIFICATION

DATA ANALYTICS METRICS GAMIFICATION

ICATION SaaS CLOUD MOBILE BIG DATA

MOBILE SOCIAL GLOCAL HOSTED SaaS

CLOUD ANALYTICS METRICS GAMIFICATION

BIG DATA

SaaS

CLOUD

MOBILE

ANA

L

YTICS

METRICS

GAMIFICATION

SOCIAL

GLOCAL

HOSTED

Business Models Subscribed

Licensed

Deployment Models Cloud

On-premise

Architectural Models Configured multi-tenant Customized single tenant

User Experience Embedded analytics and mobile Transactional PC data-entry

Configuration Model Configurable

Customized

Buyer Responsibility Lead by HR

Lead by IT

Buyer Influencers Blogs, webinars, etc. Organizations, analyst firms, etc.

T H E W O R L D O F P U R C H A S I N G T E C H N O L O G Y H A S C H A N G E D

© M E R C E R 2 0 1 5

W H Y T H I S M A T T E R S T O Y O U

• Companies want integrated data about their employees • Globalizing of talent markets requires technology intervention

• Business leaders want better tools to reward and assess employee performance

• Social, user-friendly applications facilitate engagement • Access to HR information moving to mobile

1 0

• Typical costs depend on the size of the organization and can range from $250k to $10mil+

• HR Technology market is a $10.8bil market

• Typical implementation timelines can range from 6 – 18 months depending on the size and scope of the engagement

• Major HRIS providers include: T H E H R I S M A R K E T

© M E R C E R 2 0 1 5 0% 10% 20% 30% 40% Very Dissatisfied Dissatisfied Somewhat Dissatisfied Neither Satisfied or Dissatisfied Somewhat Satisfied Satisfied Extremely Satisfied, Exceeded all Expectations

Total Rewards Overall Org. O T H E R S A R E L I K E L Y T O B E M O R E S A T I S F I E D T H A N Y O U 1 2 Satisfied • Compared to legacy system, increased functionality, flexibility, and standardized processes.

• The solution has basic rewards functionality – not elegant.

• System functionality meets our needs.

• Much better than what existed – i.e., Excel spreadsheets, Word documents, etc.

O U R C O U N S E L : D O N ’ T S E T T H E B A R T O O H I G H Not Satisfied

• Significant gap between the approach to compensation inherent in the system and our approach.

• Buggy and difficult to administer.

• The functions available are rudimentary and not very customizable.

• The compensation module is not designed to support our global processes.

• It houses only minimal information and provides no analytics.

• We have a very bare bones system until our next upgrade with little to no customization available to us. All we can really say is that it works to the minimum specifications.

• We had to do several workarounds.

• Core HRIS and Benefits = Satisfied but Compensation is Dissatisfied; Talent Management Goals = Dissatisfied.

© M E R C E R 2 0 1 5 H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N

T H E “ AS K ” O F T O T AL

R E W A R D S

© M E R C E R 2 0 1 5

• “More involvement in prioritization of functionality would have been desirable. …it would have saved a lot of communication achieved greater ownership of the solution."

• "They should have involved Total Rewards more in the decision making, configuration and functionality."

• "We relied very heavily on outside consultants or new hires who didn't fully understand our current processes."

• "The Compensation team, Recruitment team and Performance management teams were handed the tool."

• "It would have been better to weigh in on the short-comings that Total Rewards would face to better help manage the implementation timeline more accurately."

C O U L D I T B E : T O O L I T T L E T O O L A T E ?

Key areas were brought to the table late in the

process which caused a delay 1 6 6% 25% 29% 38% 46% 94% 0% 20% 40% 60% 80% 100%

Learning and Development Recruitment and Hiring Talent Management Workforce Management Compensation and Rewards HRM Core

Percent of Organizations

T O T A L R E W A R D S M O D U L E S W I L L B E A P R I O R I T Y

© M E R C E R 2 0 1 5 22% 19% 21% 11% 21% 3%4% Contracts/vendor/consultant Lack of business buy-in, readiness, or coordination Insufficient staffing/resources Difficulting with defining scope of project Difficulty integrating with previous system Deliberately slow roll-out Other E X P E C T S I G N I F I C A N T D E L A Y S A N D R E S O U R C E L I M I T A T I O N S Scope was underestimated Scoping and blueprinting taking longer than expected. We are evaluating current processes to fully take advantage of efficiencies and best practice going

forward. Poor implementation partner Lack of understanding of the complexity of moving from a highly

customized version platform to…

1 8

H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N

© M E R C E R 2 0 1 5 0 10 20 30 40 50 60 70 After During Before T H E H R I S W I L L O N L Y B E Y O U R F I R S T A N D M A Y B E N O T Y O U R B I G G E S T C H A N G E 2 0 E X P E C T E D O U T C O M E S : N E W J O B C A T A L O G M A Y N E E D T O B E D E V E L O P E D

JOB FUNCTION CAREER STREAM

Legal Engineering Hardware Design Chemical Firmware Admin Management P6 P5 P4 P2 P1 R e s p e c ti v e J o b F a m il y Professional JOB CATALOG

JOB FAMILY JOB LEVEL

JOB CATALOG

The organization-wide scheme according to which jobs are categorized. Includes

Function, Family, Career Stream, and Career Levels.

Software

P3 Human Resources

JOB: The connection of job function, job family, career stream, and job level

JOB FAMILY:

Professional discipline within a specific job function similar with respect to nature of work and knowledge requirements.

CAREER STREAM:

Career type within the organization characterized by unique responsibilities.

JOB LEVEL:

Represents the hierarchical position of a job within a career stream and is used to differentiate career steps based on predefined criteria. The definitions for each of the job levels is consistent across job families.

JOB FUNCTION:

Generally recognized major professional area often requiring a unique set of technical competencies and within which most career development will occur.

JOB: The connection of job function, job family, career stream, and areer level

JOB FAMILY

Professional discipline within a specific job function similar with respect to nature of work and knowledge requirements.

CAREER STREAM:

Career type within the organization characterized by unique responsibilities.

CAREER LEVEL:

Represents the hierarchical position of a job within a career stream and is used to differentiate career steps based on predefined criteria. The definitions for each of the job levels is consistent across job families.

Function

Generally recognized major professional area often requiring a unique set of technical competencies and within which most career development will occur.

FUNCTION CAREER STREAM

Legal Finance Accounting Audit Credit FPA Admin Management P6 P5 P4 P2 P1 R e s p e c ti v e J o b F a m il y Professional

JOB FAMILY CAREER LEVEL

General Finance

P3 Human Resources

Tax & Treasury

Clearly defined job functions, job families, career levels and job

levels set the foundation for establishing a coherent and integrated HR infrastructure

© M E R C E R 2 0 1 5

W H Y S H O U L D Y O U C O N S I D E R A C O M M O N J O B C A T A L O G

•

Key to securing full functionality

from HRIS

•

Little value to Total Rewards

without it

•

You don’t get two bites at the

apple

2 2

M O S T P E O P L E S ’ E X P E C T A T I O N S A R E P R A G M A T I C

0 10 20 30 40 50 60 70

Align with Market Support Business Harmonize Levels Career Development Reduce Titles Harmonize Titles Get Most from HRIS

© M E R C E R 2 0 1 5 G E T T I N G I T R I G H T M A T T E R S JOB Product Chemist II Business Unit 1 JOB FAMILY R&D SUB-FAMILY

CHEMISTS Asia Pacific Location #1 ABC Company Location #2 Level within Sub-Function Chemist II POSITION Product A Chemist II JOB Research Chemist II Business Unit 2 United States Location #3 POSITION Product B Chemist II POSITION Research Chemist II JOB Chemist II Business Unit 1 Asia Pacific Location #1 ABC Company Location #2 POSITION Product A Chemist II JOB Biologist II Business Unit 2 United States Location #3 POSITION Product B Chemist II POSITION Research Chemist II POSITION Product A Biologist II POSITION Product B Biologist II POSITION Research Biologist II JOB FAMILY R&D SUB-FAMILY SCIENTISTS Level within Sub-Function Scientist II MORE GRANULAR 2 4 E X P E C T E D O U T C O M E S : A M O R E A L I G N E D H A R M O N I Z E D J O B C A T A L O G

© M E R C E R 2 0 1 5 6% 50% 50% 50% 69% 75%

To align the balance of the organization into our primary structure Take full advantage of the functionality of the

HRIS

Change the way we think about compensation in the organization Better align our pay with our pay philosophy Harmonize structures across the organization

(global consistency)

Better align pay structures with needs of the business

N E W G R A D E S T R U C T U R E O F T E N G O E S H A N D I N H A N D W I T H C H A N G E S T O J O B C A T A L O G

2 6

RE-ALIGN WITH

NEW GRADES NOT ALIGNED GRANDFATHER OTHER Base pay opportunity

(e.g., new grade

minimum, midpoint, maximum)

81% 6% 13% 0%

Short-term incentives 44% 31% 25% 0%

Long-term incentives 19% 44% 25% 13%

Health and welfare benefits 19% 69% 13% 0%

Retirement benefits 13% 63% 19% 6% Vacation 19% 56% 19% 6% Allowances _{25% 63% 13% 0%} Perquisites 38% 38% 19% 6% B A S E P A Y I S O F T E N C H A N G E D , B U T O T H E R G R A D E L I N K E D P R O G R A M S A R E I G N O R E D

© M E R C E R 2 0 1 5 0 10 20 30 40 50 60 70 80 90 Governance Process Talent Structure Other Technology C O N S I D E R C H A N G E S T O P R O C E S S , G O V E R N A N C E , A N D S T R U C T U R E 2 8 0 10 20 30 40 50 60 70 80 Job Description Market Pricing Recruitment Performance Management Career Development H R I S W I L L N O T M E E T A L L Y O U R T E C H N O L O G Y N E E D S

© M E R C E R 2 0 1 5

17%

38% 46%

Process change

Streamlined all Total Rewards processes Streamlined most Total Rewards processes Streamlined some Total Rewards processes

N=24

48%

24% 24%

5%

Organizational structure change

Implemented aspects of Shared Services Implemented aspects of Centers of Expertise Increased number of positions

Decreased number of positions

N=21 L O O K F O R S T R E A M L I N E D P R O C E S S E S A N D S H A R E D S E R V I C E S 3 0 0% 20% 40% 60% 80% 100% No Formal Change Some Formal Change Ad hoc Change Some Proactive Change Proactive and Planful

Change Percent of organizations L E V E L O F S A T I S F A C T I O N W I T H C H A N G E D I R E C T L Y R E L A T E D T O R E S O U R C E S C O M M I T T E D 36% 27% 14% 15% 8%

© M E R C E R 2 0 1 5

John Kotter

Stage 1 Establish a sense of urgency

Stage 2 Create a guiding coalition

Stage 3 Develop a vision and a strategy

Stage 4 Communicate the change vision

Stage 5 Empower others to act

Stage 6 Generate short-term “wins”

Stage 7 Consolidate improvements

Stage 8 Anchor new approaches in the culture

William Bridges

Ending Acknowledge loss

Neutral Zone Manage emotions

New Beginning Replace what’s lost

Kurt Lewin

Unfreeze Overcome resistance

Move Design new systems and use change management techniques

Refreeze Stabilize and reach steady state

…And most agree that what people need in order to change behavior is fairly consistent

 A burning platform for change supported by

leadership

 A deep understanding of the changes impacting them

 To believe that there’s something in it for them as well

as for the organization

 To be involved and to have a voice in decisions

 To have some “skin in the game” in terms of a

personal stake in success

 To experience early successes and gain confidence in

the organization’s (and their own) ability to successfully execute

 To see a sustained effort and perseverance through

the inevitable obstacles and setbacks

However, turning theory into action has proven to be easier said than done T H E R E A R E S E V E R A L G O O D C H A N G E

M A N A G E M E N T M O D E L S

3 2

A C H I E V I N G S U C C E S S F U L C H A N G E

• The HR, manager and employee experience is at the heart of change strategy

• A successful change plan has the right mix of change solutions including leadership, engagement, communication, training and sustainability

• One size does not fit all. A change methodology should be consistent, but scalable, allowing for adaptability to meet the organization’s environment, needs and abilities.

• Clarify HR staff roles and responsibility throughout the change process – implementation, adoption and beyond.

• Provide ongoing education and training. Getting to go-live is just the beginning. Updates to the system, including the introduction of new modules and functionality require continual training.

Overcoming the potential

and significant “people”

barriers requires employers

be proactive to manage the

change and ensure

organizational alignment is

achieved.

© M E R C E R 2 0 1 5

H I D D E N C H A L L E N G E S O F I M P L E M E N T I N G A N E W H R I S O N T H E T O T A L R E W A R D S F U N C T I O N

Y O U R “ AS K ” F R O M T H E

O R G A N I Z A T I O N

3 4

 Get Involved Early

 Take a macro view

 Get Demonstration of C&B

Functionality

 Help set terms and conditions

 Secure support for concurrent

Total Rewards process changes

 Get Relief or Get Help

© M E R C E R 2 0 1 5 3 6 F O R M O R E I N F O R M A T I O N

•

Visit: www.mercer.com

•

Email: [email protected]

•

Twitter: @MercerInsights

•

LinkedIn: https://www.linkedin.com/company/mercer

•

Facebook: https://www.facebook.com/MercerInsights