HR

SHRM Webcast
Characteristics of
World Class
HR Organizations
Carey Ellinghaus
Valmont International
October 17, 2008
Discussion Topics
Background
About the speaker
> About Valmont and its international operations
>
Valmonts current state
World Class HR Organizations, according to Hackett

>
>
>
>
>
Overall cost structure(s)

Staffing levels
Technology utilization
Degree of outsourcing
Summary view
Valmonts road to world class
Actual data is used to define the WC population

World Class HR Organizations, According to Hackett
Hackett Value Grid

EFFECTIVENESS
EFFICIENCY
HR linkage to business strategy

Sourcing utilization
Workforce management alignment
Quality metrics (HR transactions)
Linkages between employee
development and business strategy
Percent internal promotions
HR partnering on organizational
issues
HR Generalist allocation of time
Use of organizational metrics in
HR-managed projects
Retention plans for key employees
Termination rates
Ratio of strategic workforce
planning process costs to Total HR
process costs
Skills & education of HR staff
Total HR cost per employee

Total HR staffing
Staffing levels by process
Technology allocation
Degree of application integration
Process automation
Automation of reports
HR self-service utilization
Resource allocation
Integration of HR systems
Productivity per FTE
Days to fill positions
Ratio of technology cost to
transaction process labor cost
Overall HR span of control
Company
ABC Co.
Where would you place yourself?
Structural factors are the primary performance

differentiators between organizations
Used to determine worldclass performing companies
Used to define peer group

companies for additional
comparison
Used to identify HackettCertifiedSM Practices
WC HR organizations come in various sizes

< 1B
< 4K
One
1B - 2B
4K 10K
2-4
< 20
None
None
2B - 7B
7B - 14B
10K 20K
20K 45K
> 45K
5-20
21 - 45
> 45
31- 50
51 - 125
125 - 300
> 300
1 1K
1K 2.5K
1 10
10 100
2.5K 10K
100 500
World-Class Population
> 10K
> 500
Standard Hackett peer groupings are based

upon size and complexity
High
Global Giants
Complexity ranking
Small Diverse
Large Consolidated
Small Consolidated
Low
Small
Size ranking
Large
WC HR organizations have lower cost structures

Quartile Breakdown per Employee
HR Cost per Employee
$5,697
$1,864
224
$1,679
172
$1,614
247
170
391
Quartile 4
207
261
298
228
$2,206
Quartile 3
1,077
964
$1,679
919
Quartile 2
$1,539
Quartile 1
DB Median
Labor
Global Peer Group
Outsourcing
World-Class
Technology
Other
Historical growth in HR costs

$2,200
$2,109
Annual HR Cost / Employee
$2,100
DB Median
y = 36.327x + 1600.5
$1,995
$2,000
$1,906
World
$1,900
$1,892
$1,864
$1,822
$1,895
$1,757
$1,800
$1,737
$1,735
$1,700
$1,600
$1,614
$1,556
$1,557
y = 41.5x + 1168.7
$1,485
$1,500
$1,400
$1,300
$1,425
$1,351
$1,422
$1,390
$1,351
$1,237
$1,262
$1,236
$1,200
1996
1998
1999
2000
2001
2002
Year
2003
2004
2005
2006
2007
HR cost components, per employee

9% Lower Total Cost,

Continued Tech Investment
$121
$182
Technology
ien
cy
Ef
fi c
es
s
C
W
on
s
$282
ti v
en
ive
eD
eC
EE Life Cycle
fe c
rse
d
a te
Sm
Transactional
$511
$481
$357
La
rg
Co
all
La
rg
se
ve
r
Di
Ef
fic
C
W
Other
$623
las
$493
ien
cy
ss
ne
tiv
e
Ef
fe
c
W
or
ld
-C
las
ian
Outsourcing
$324
$741
$557
Me
d
DB
La
rg
eC
on
s
ol
ida
te
d
rs
e
ive
eD
La
rg
all
Co
ns
ol
id
at
ed
se
ve
r
Di
all
Sm
Sm
Labor
30%
Ef
$739
$749 $761
$75
$80
$567
$415
$204
$1,022
$650
$658
-C
$1,162
$1,121
$1,330
$152
$228
$1,287
$878
$54
$653
$52
$187
$120
16%
$1,064
14%
$1,321
$145
$818
$714
$299
$152
33%
$139
or
ld
$274
$127
$271
$156
$1,430
d ia
$398
$1,151
$122
$150
$1,323
$156
$180
$187
$309
$230
$204
all
$555
$470
$365
Me
$275
$1,822
$1,604
$1,560
$255
Sm
$176
$220
$151
DB
$1,892
$131
$136
ns
ol i
d
$261
$1,995
$2,124
$283
Process Costs
$1,793 $1,842
ol i
da
te
Total Costs
$2,297 $2,279
18% Lower
Process Costs
Strategic
HR Mgmt
HR costs do by geographic region

Process Costs
Total Costs
$1,712
$139
$2,167
$1,886
$1,799
$339
$194
$1,361
$145
$144
$114
$377
$813
$309
$1,052
$732
$612
$88
$108
$807
$1,070
$681
$481
$100
$207
$44
$145
$196
$74
$90
$537
$1,231
$58
$59
$378
$485
$668
$447
Asia
$176
$84
$338
$100
$1,064
$1,447
$260
Australia and
Oceania
Labor
Europe
Outsourcing
Latin America
Technology
$491
$239
North America
Other
Asia
$244
$717
$176
Australia and
Oceania
Transactional
Europe
EE Life Cycle
Latin America North America
Strategic
HR Mgmt
FTE and cost differentials can be seen at the

process level
HR FTEs / 1000 Employees

2.1
2.1
1.9
1.7
1.6
1.8
1.5 1.5
1.3
1.6
1.2
1.0
1.0 1.0
0.8
0.5 0.6
0.6 0.5
0.5
0.7
0.2
Total Rewards
Time and
Payroll
Data Mgmt,
Administration
Attendance
Administration
Reporting and
Staffing Services
Workforce
Development
Labor Relations Organizational

Administration
Effectiveness
Compliance
$285
233
Total Rewards
Strategic
Management
Planning
Workforce
and
Planning
Administration
Services
Process Cost per Employee

$233
$233
$183
$165
$136
$126
$28
$134
$183
$163
$139
$127
$81
$58
$46 $53
$64
$71 $79
$93
$26
Total Rewards
Time and
Payroll
Data Mgmt,
Staffing
Workforce
Administration
Attendance
Administration
Reporting and
Services
Development
Labor Relations Organizational

Administration
Effectiveness
Compliance
DB Median
Services
World-Class
Total Rewards
Strategic
Planning
Workforce
and
Planning
Administration
Management
WC HR organizations are staffed differently

HR Staff Time Allocation
Average HR Manager Experience & Tenure

(Years)
22.0
7%
8%
25.2
9%
10%
41%
49%
44%
DB Median
World-Class
32%
DB Median
Average, Fully-Loaded HR Labor Costs / FTE

$82,977
HR FTE staff mix
$88,822
World-Class
DB Median
DB Median
World-Class
World-Class
22%
29%
Manager
53%
43%
Professional
25%
28%
Clerical
..are more productive

World Class organizations:

process 150% more paychecks per payroll employee
(26,660 vs.10,649 per employee)
process 97% more paychecks per payroll administrative
employee
(31,122 vs.15,807 per
employee)
handle 11% more internal placements per staffing services EE
(23.3 vs. 21.1)
handle 32% fewer external placements per staffing services EE
(43 vs. 63)
.and less administrative

11%
A - Routine HR administration
14%
A - Employee info to external sources
2%
12%
3%
A - Other administrative tasks

R - Employee problem solving
R - Handling performance management issues
23%
11%
R - Crisis employee relations

P - Developing HR plans with line management
8%
P - Facilitating org. & leadership development
16%
P - Employee selection and interviewing
WC HR organizations have standards

have fewer HR systems (2 vs. 5 per 1000 EEs); total HR

labor increases by $18,900 for each incremental HR system
use a common HR application globally

HR applications per 1000 EEs
100%
75%
50%
85%
51%
Employee Life
Cycle
0%
World
Class
World-class
Peer Group
0.5
66%
25%
DB
Median
0.2
Strategic
0.7
1.6
1.3
Transactional
3.3
0.0
1.0
2.0
3.0
4.0
use data standards to a high degree in all of their systems

(50% vs. 17%)
have fewer compensation plans per 1000 employees (.8 vs. 3.0)
have fewer benefits plans

> .5 pension, retirement &/or savings plan per 1000 (vs. 1.3)
> 2 health & welfare plan per 1000 employees (vs. 3)
SHRM 2007
World Class HR organizations

find the application with the closest fit to their requirements then map their
business processes to the delivered application. Customizations are only
done when a business case can be made for doing so
leverage their HR technology to obtain efficiencies and increase their
effectiveness
utilize a high degree of their HR application functionality (75% vs. 55%)
use automatic triggers to notify TPAs of terminations, to at least a medium
degree (77% vs. 58%)
fully automate manager and EE staffing services transactions (50% vs. 16%)
have a higher degree of process integration
> between payroll and:
>
between time & attendance and:
compensation administration (85% vs. 64%)
employee info. mgmt. (36% vs. 29%)
general accounting (77% vs. 68%)
security (18% vs. 8%)
project accounting (38% vs. 16%)
attendance point tracking (37% vs. 15%)
payroll (87% vs. 78%)
project accounting (29% vs. 18%)
project billing (25% vs. 16%)
The HR technology investment differential is

significant
HR Technology Cost as a % of Total HR Cost
HR Technology Cost per HR FTE

$21,882
91%
85%
9%
15%
DB Median
World-Class
Technology
$12,862
Labor, Outsourcing and Other
HR Technology Cost per Employee

$271
300.00
250.00
200.00
DB Median
World-Class
World Class organizations allocate a greater %

of IT FTEs to HR applications
7% of development FTEs (vs. 5.2%)
$180
7% of maintenance FTEs (vs. 5.8%)
150.00
100.00
50.00
0.00
DB Median
World-Class
HR Selfleverage
Service Comparison
WC HR organizations
self service
Self Service Utilization

70%
Payroll
31%
Time &
attendance
Peer Group
71%
32%
Compensation
Adm.
World-class
50%
19%
Health & Welfare

Adm.
83%
24%
40%
Staffing Services
12%
0%
25%
50%
75%
100%
World Class HR organizations:

have direct access to EE life event changes
deployed @ an enterprise level (54% vs. 39%)
provide self service for payroll administration (70%
vs. 31%)
use self service for time & attendance (71% vs.
32%)
utilize paperless payroll advices to a high extent
(67% vs. 23%)
leverage self service for learning & development
> 69% make on-line course description, scheduling and
tracking available to employees (vs. 48%)
WC HR orgs. have better metrics & reporting

World Class HR organizations:

provide self-service for data management, compliance &
reporting (53% vs. 24%)
dont consider their HR applications to be primarily a means of
data capture & transaction processing; they use their HR
application(s) for a) information delivery and most importantly,
b) management decision-making & planning (25% vs. 9%)
generate 75% of their HR reports from a centralized repository
to a high extent (vs. 41%)
automate their HR reports to at least a medium extent
(77% vs. 27%)
spend less time collecting & compiling data, and more time
analyzing data
> for standard reporting (79% vs. 62%)
> for ad-hoc reporting (85% vs. 76%)
HR Outsourcing Cost [Component] Comparison

DB
Median
World
Class
WC HR Organizations Outsource on a Targeted

Basis..They
outsource 19% of data management (vs. 12%).

to fewer suppliers (11 admin. suppliers per 1000 EEs vs. 22)
leverage outsourcing (75% vs. 47%) and shared services (12%
vs. 14%) for compensation administration
leverage outsourcing and shared services for benefits
administration
62% and 38% for pension, retirement &/or savings administration
(vs. 37% and 45%)
>
> 50% and 50% utilization for health & welfare administration (vs.
32% and 45%)

vs. 25%) for payroll administration; on average, outsourcing 17%
of the process(es) (vs. 27%)
leverage outsourcing (50% vs. 22%) for recruiting
vs. 17%) for L&D
leverage outsourcing (37% vs. 14%) for ER, LR, and exit
management
WC HR Organizations Reap Lots of Benefits

They
have lower compensation administration error rates (1.4% vs. 2%)

process fewer (1.07) adjustments per employee
have lower benefits administration error rates:
> 1.3% pension, retirement &/or savings admin. error rates (vs. 2%)
> 1.4% health & welfare administration error rates (vs. 1.7%)
have lower payroll administration error rates (1.2% vs. 2.69%)

fill manager, professional, and clerical positions more quickly in 60,
51, and 30 days respectively (vs. 67, 54, and 30 days respectively)
more frequently evaluate the quality of candidate channels; 100%
evaluate @ least annually and 67% evaluate quarterly
(vs. 67% and 22%)
And they
have turnover rates of .7%, 2.1%, and 5.5% for managers,

professionals & clericals respectively (vs. .9%, 2.9%, and 6.6%)
have 47% fewer voluntary terminations (38 per 1000 vs. 72)
have 70% fewer involuntary terminations (16 per 1000 vs. 51)
have formal retention plans for key employees, to at least a medium

extent (77% vs. 56%)
The WC Service Delivery Model

Customer Group
Customer Group
Customer Group
Customer Group
Field Support: HR Generalists

HR Centers of Excellence
HR Shared Services
HR Applications
Design, Planning, Specialist Services
Vendors
Total Rewards Planning

Benefits Planning
Compensation Planning
Vendors
Workforce Development
Learning and Development
Performance Management
Career Planning
Vendors
Workforce and Talent Planning

Sourcing, Recruiting, Selection Design
Succession Planning
Organizational Effectiveness
Labor and Employee Relations
Org. Design & Measurement
Employer of Choice
Diversity, Wellness, Family, Worksite
Communications
Recognition Programs
HR Portfolio Management
Service Request Management
Project Management
Continuous Process Improvement
SelfService
Contact Services
Reporting/
Analytics
Candidate &
Applicant,
Employee &
Retiree,
Manager, and
Vendor
Service
Representatives
Portal
KM
Case
Mgmt.
HCM
Operational Services
Total Rewards Administration
Report Administration
Time/Payroll Administration
Data Mgmt. / Event Admin.
Candidate Intake and Requisition
Management
Data Entry and Verification
Employee On-Boarding
HR Information Maintenance
Exit Management
Regulatory Reporting
Executive Management
Governance Process, Policy, Procedure, and Other Standards
Partnerships & Due Diligence
Service Levels & SLAs
Vendors
Vendors
Talent
Management
Impact
Lift & Shift
vs. Transform
& Shift
Talent
Management
Impact
Lift & Shift
vs. Transform
& Shift
Management
Impact
The Impact Talent
of Talent
Management
For every $10 billion in revenues, the EBITDA gap is $210

million and the net profit margin gap is $130 million
For every $10 billion in assets, the ROA gap is $180 million
For every $1 billion in equity, the ROE gap is $37 million
Questions or Comments?
?
?
Thank you for your attention!
?
?
Merci
Obrigada
Dankeschn
Kiitos
Tack
Gracias
Dank u
Grazie
Tesekkr ederim
Takk
Terimah Kasih Krop Kuhn Kah
Go Raibh Maith Agat Asante Sana
Arigato
Thank You!

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SHRM Webcast

Valmonts current state

World Class HR Organizations, according to Hackett

Overall cost structure(s)

Valmonts road to world class

Actual data is used to define the WC population

Hackett Value Grid

HR linkage to business strategy

Total HR cost per employee

Where would you place yourself?

Structural factors are the primary performance

Used to determine worldclass performing companies

Used to define peer group

Used to identify HackettCertifiedSM Practices

WC HR organizations come in various sizes

Standard Hackett peer groupings are based

WC HR organizations have lower cost structures

Quartile Breakdown per Employee

HR Cost per Employee

Global Peer Group

Historical growth in HR costs

Annual HR Cost / Employee

HR cost components, per employee

9% Lower Total Cost,

HR costs do by geographic region

Latin America North America

FTE and cost differentials can be seen at the

HR FTEs / 1000 Employees

Labor Relations Organizational

Process Cost per Employee

Labor Relations Organizational

WC HR organizations are staffed differently

HR Staff Time Allocation

Average HR Manager Experience & Tenure

Average, Fully-Loaded HR Labor Costs / FTE

HR FTE staff mix

..are more productive

World Class organizations:

.and less administrative

A - Employee info to external sources

A - Other administrative tasks

R - Crisis employee relations

P - Facilitating org. & leadership development

WC HR organizations have standards

have fewer HR systems (2 vs. 5 per 1000 EEs); total HR

use a common HR application globally

use data standards to a high degree in all of their systems

have fewer benefits plans

World Class HR organizations

between time & attendance and:

compensation administration (85% vs. 64%)

employee info. mgmt. (36% vs. 29%)

general accounting (77% vs. 68%)

security (18% vs. 8%)

project accounting (38% vs. 16%)

attendance point tracking (37% vs. 15%)

payroll (87% vs. 78%)

project accounting (29% vs. 18%)

project billing (25% vs. 16%)

The HR technology investment differential is

HR Technology Cost as a % of Total HR Cost

HR Technology Cost per HR FTE

Labor, Outsourcing and Other

HR Technology Cost per Employee