Smartsizing

Empowering Organizations to Empowering Organizations to

Achieve Extraordinary ResultsAchieve Extraordinary Results

SmartSizing The Employment Law

Conference

September 21, 2009

• What is the business scenario?

• How can HR contribute to the bottom-line?

Outline

• SmartSizing process

• Tangible next steps

Copyright © 2009, Corporate Performance Strategies, All Rights Reserved

� Reduce all the discretionary expenses� Contractors/consultants/temps

� Training

� T & E

� Advertising

� Search fees

� Capital spending

� Overtime

Typical actions in a downturn

� Temporary actions hoping for market recovery• Bonuses

• Promotions

• Hiring freeze

• Merits

• Furloughs

• Pay cuts

• 401(k) match

• Headcount reductions


WHAT’S NEXT?


Deep Cuts for Today’s EPS

$

P

R

O


F

I

T

S

Today Future

� The “tipping point” where actions taken preserve the

company’s future potential

� Strategy and core competencies are preserved in your

market space

� Key customer service levels are maintained

SmartSizing

� Key customer service levels are maintained

� Bold actions are taken instead of a series of minor actions

over time

� Senior leaders are committed to the actions

� Employees fully understand and embrace the direction


� Assess the business situation

� Ensure strategic alignment and executive commitment

� Challenge historic business mechanisms

SmartSizing process

� Build business strategy consensus

� Develop go-forward plans/Implement/Monitor

� Risk management


High Value Short Sale Foreclosure

What is your business scenario?

High Value Short Sale Foreclosure


Growth Decline

� Key business metrics and cost drivers

� Current organization structure

� Employee concerns

Assess the business situation

� Business opportunities and risks

� Sacred cows

� Senior leadership competency

� Resources required


� Updated strategy and financial goals

� Senior leadership commitment levels

� Organization effectiveness criteria

Ensure Strategic Alignment

� Must do’s at all costs

� Data requirements

� Project organization and staffing


� New and different processes and approaches

� What can you outsource, divest, consolidate, improve

efficiencies, find alternative distribution channels, reduce

layers, reduce costs, etc. while preserving the future

potential?

Challenge historic business mechanisms

potential?

� Review the organization structures

� Bring in external benchmarks for key functions, processes

and the business

� Survey your customers – Value, Need, Satisfaction?


Organization structure for targeted discussions

VP

Director Research

Director Production

Director Quality

Director Purchasing

Administrative Assistant

There’s always

a story!


Director Research

Director Production

Supervisors

Leads

Director Quality

Managers

Managers

Director Purchasing

Managers

Supervisors

HR Functional Benchmarking

HR Functional Ratios 2005 2006 2007

HR FTE ratio 89 89 94

Recruiting/staffing FTE ratio 463 441 543

Business Partner FTE ratio 941 974 1,016

HR leadership & strategy FTE 1,092 1,180 1,282

Source: PwC Saratoga US Human Capital Effectiveness Report


HR leadership & strategy FTE

ratio

1,092 1,180 1,282

Compensation FTE ratio 1,157 1,254 1,635

Benefits FTE ratio 879 771 746

HR spend per employee $1,400 $1,611 $1,610

Revenue per employee $284k $330k $355k

Metric Current

Industry

(2000 companies)

Net New Business 23.4% 36.5%

Forecast Acc. - Wins 60% 57%

Quota per Rep $1.6m $0.92m

Start-up Ramp 4 mos 6 mos

Attrition - Sales Force 12.6% 29.7%

Sales Rep to Manager 4.4 5.3

Reps > 100% Quota 40.5% 62%

Average Deal Size 16k Bottom 42.1%

Sales Channel

Direct 87% 70%

Sales Functional Benchmarking

Copyright 2009 Revenue Governance

Direct 87% 70%

Indirect 13% 19%

Telesales 0% 11%

SG&A 27.3% 33.2%

Sales to SE Ratio 2.2 n/a

Average Sales Cycle 4 mos Top 10%

Variable Compensation 53% 42%

Targeted Comp to Plan 178K Top 40%

Lead Generation Unknown 52% marketing

Revenue/Quota Rep $1.1m $0.81m

Attainment 69.5% 88.2%

Source: CSO Insights 2009 Survey Results

� Base pay/merit

� Headcount

� Spans of control and

layers

� Vendors and contracts

� Human capital metrics

� Annual and Long-Term

incentives

� Benefits

� Promotions

� Learning

What’s in your line of sight for ROI?

� Learning

� HR administration

� HR service delivery

� Talent development

� Workforce planning

� Leadership development

� Succession planning

� Executive retreats

� Holiday functions

� Food subsidies

� Vacation carryover

� Executive compensation

practices

� Perquisites


1 – Increase Medical Contributions-low

2 – Increase Medical Contributions-moderate

3 – Increase Medical Contributions -severe

4 – Medical Plan Design Changes - low

5– Migrate PPO Participants to HMO/POS - moderate

6 – Medical Plan Single Option High

Deductible - severe

7 – Medical Spousal Surcharge - low

8 – Medical Tobacco Surcharge -moderate

9 – Increase Waiting Period New Hires -severe

10 – Increase Dental Contributions - low

11 – Increase Dental Contributions -

MAXIMUM

ABC Company

Cost Savings

5

6

1

129

3

4

2

20

21

22

$148k

$169k

$51k

$385k

$30k

$81k

$41k$39k

$48k

$65k

$131k

2010 plan design options - Impact

11 – Increase Dental Contributions -moderate

12 – Increase Dental Contributions –severe

13 – Life – Reduce Executive Benefit to that of All Other - low

14 –Reduce amount of life insurance to flat $50k – moderate

15 – Reduce amount of life insurance to flat $25k - severe

16 – LTD Employee Contribution 25% - low

17 – LTD Employee Contribution 50% -moderate

18 – LTD Voluntary Plan – severe

19 - Vision Employee Contributions to 99% - low

20 – 401(k) – Reduce Match to 50%

21 - 401 (k) Eliminate Match

22 – Freeze salariesMI�IMUM �egative

Employee Relations Impact

MAXIMUM �egative

Employee Relations Impact

15

5

7

13

14

16

17

18

8

10

19

11

$7k

$14k

$30k

$13k

$7k

$16k

$1k

$26k

$3k $3k

$28k

MI�IMUM

ABC

Company

Cost Savings

$4k

Copyright © 2009 The McCart Group. All rights reserved. Use, duplication, or sale of this illustration or data contained herein, is prohibited.

� Senior team review and approvals

� Finalize plans and budgets

� Develop rollout strategy and tactics

Build Business Strategy Consensus

� Deploy effective change management


� Develop master plan that is led and coordinated across

the functions and businesses

� Includes restructuring, strategic use of performance

coaching, and outplacement

Develop Go-Forward Plan/Implement/Monitor

� Create oversight group to monitor progress

� Resource the project management function


� Most actions need to be scrutinized for unintended

consequences and risk mitigation

� This mindset helps you with downsizing, terms and

conditions, vendor management, severance agreements,

etc.

Risk Managment

etc.

� Use strategic outplacement services to help mitigate your

risks and coaching to increase productivity

� The last thing you need are large penalties, poor PR, and

employee ill-will in the community


� New reality of planning and reaction to outplacement

� Helps mitigate your risks, productivity of remaining

employees, and outgoing employee goodwill

Risk Management – Strategic Outplacement

� Prevents costly litigation

� Identify key employee issues and proactively address

issues


� Right people in right seats

� Align organization goals with individual skills and

expectations

� Increases productivity

Risk Management - Coaching

� Increases productivity

� Prevents costly turnover at the top (6x to 9x annual

compensation)


� Conduct a customer satisfaction and value survey

� Develop ways to replace talent pools as demand increases

� Scrutinize the big cost drivers and figure out how to improve efficiencies

and drive costs out of the business – LEAN, Work-Out, etc.

� Help your customers deal with the problems – especially sales

Tangible steps to model the way

� Help your customers deal with the problems – especially sales

effectiveness

� Identify and deploy external benchmarks for the various functions – HR,

IT, Marketing, Sales, etc.

� Every vendor and vendor contract reviewed for services, pricing, SLA’s,

and bundling


� If you were given a clean slate

and could re-design HR:

� What would you want to do?

� What does the business need?

� What does the business value today?

Starting Over Scenarios

� What does the business value today?

� What can the business afford?

� What are your big gaps?

� How can you transform?

� Who will lead the transformation?

� How will your stakeholders participate and provide feedback?

� How will you sell this internally?


Contact Dave Brookmire with any comments:

404-593.5001

www.cpstrat.com

[email protected]@cpstrat.com

Whit Blakley

OI Partners/Career Management Resources

678-393-3330

www.cmresources.net

[email protected]


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