Talent Our Greatest Asset ICCO, New Delhi

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Talent Our Greatest AssetICCO, New Delhi

• 6th October 2006

Jeffrey Fuller Mumbai
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Contents

• Part I A quick introduction
• Part II Talent context Whats happening in
  the region?
• Part III Talent context PR industry in this
  environment
• Part IV Meeting the key talent challenges

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Mercer Human Resource Consulting is an operating
company of Marsh and McLennan Companies

• Global professional services firm
• Annual revenues exceed 12 billion
• Approximately 60,000 employees in over 100
  countries
• MMC is listed on the New York, Chicago, Pacific,
  and London stock exchanges
• MMC's web address is www.mmc.com

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Mercer in India Lines of Business
MERCER INDIA
Human Capital Advisory Services
Human Capital Product Solutions
Retirement Benefits Consulting
Employee Benefits Consulting

• Compensation Co-Sourcing
• Compensation Surveys
• Benefits Surveys
• Corporate Benchmarking
• Employee Mobility Services
• Global Insights Publications

• Plan Design
• Funding
• Accounting Standards
• Legal Compliance
• Vendor Management
• Mergers, Acquisitions and Restructuring

• Benefit Design
• Financial Analysis Plan Funding
• Risk Carrier Selection
• Benefits Broking
• Communication Administration

• Broad Based Rewards
• Executive Remuneration
• HR Effectiveness
• Global Clients
• Performance Measurement
• Sales Effectiveness
• Workforce Strategies

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Whats Happening Out There?...

• Economic Overview

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GDP Growth Rates Comparison over the years

• Perspective
• Growth expected to continue in the near future
• China might decelerate in the coming years yet
  it will exceed the growth of most countries
• 2006 projections China approx. 8 India at
  approx 7
• Services comprises more than 50 of the Indian
  economy
• Industrial sector constitutes more than 50 of
  the Chinese economy
• Chinas GDP per capita, is more than twice that
  of India.

Source Mercer Human Resource Consulting, Global
Compensation Planning Report, 2002-2006 editions
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Internet Users(per 1,000 people)

• Perspective
• Investment on Information and Communication
  Technology
• China 5.3 of GDP
• India 3.7 of GDP

Source World Bank, World Development
Indicators, 2005
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DemographicsAge Distribution (as a of total
population)

• Perspective
• Findings indicate that India is a much younger
  country than China
• China will grow old before it gets rich

Source Asian Development Bank 2003
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Economically Active Population( of working
population)

• Perspective
• Though the labor participation in India and China
  are almost the same, Indian labor participation
  growth rate is exceeding the Chinese rate
• Every year India graduates 14 million graduates
• 1.5 times that of China 2 times that of US
• 2.5 million graduates enter the Indian labor
  market each year
• 25 of these graduates have skills to work for
  foreign companies
• compared to 10 in China
• - Micknsey Report

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Human Development IndexGrowth over the Years

• Perspective
• Both China and India fall in the Medium Human
  Development
• Ranking 94th and 127th respectively out of 177
  countries
• Both countries significantly lag behind
  developed nations but continue to make
  improvements although China outpaces India.

Source UNDP, Human Development Index 2004
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Labor Cost Comparisonper hour in USD

• Perspective
• Labor costs are monitored closely by MNCs to
  determine worldwide investments
• Chinas labor costs have had a steep climb
  whereas India has had a slower increase.

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Salary Increase Trends

• Perspective
• Mostly linear increases, indicative of a stable
  and growing economy.
• However, Indias average annual salary increases
  were more sizeable over the recent five year
  period than were Chinas
• At 11.5 and 7.5 respectively.

Source Mercer Human Resource Consulting, Global
Compensation Planning Report, 2002-2006 editions
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Pay ProgressionManagement compensation in
proportion to line worker

• Perspective
• The analysis reveals that India places a higher
  relative value on management compared to China
• But this is changing. Managerial pay in China is
  increasing at much faster rates than
  non-management pay

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SWOT Analysis China
Strengths
Weaknesses

• Strong manufacturing base
• Low manpower cost
• Government support
• Fastest growing economy in the world
• Large expatriate pool of talent

• Low English speaking population
• Lack of IT Talent
• Lack of experience in managing technology based
  business
• Delivering quality output
• Talent gaps in senior technical levels and middle
  management levels
• Relative lack muti-national skills and mindset
• Ageing population
• Talent scarcity high in the 40-50 years bracket

Threats
Opportunities

• Competition from other low cost countries
• Public opposition to off-shoring by higher wage
  countries
• China perception

• Being a part of WTO
• Hardware market

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SWOT Analysis India
Strengths
Weaknesses

• Large talent pool, with English proficiency
• Low labor cost
• Expertise in technologies and managing technology
  based businesses
• Rapid growth of domestic market
• Blue chip companies in India

• Poor infrastructure
• Delay in peace process with Pakistan
• Poor legal system
• Brand India
• Language skills other than English

Opportunities
Threats

• Competition from other low cost countries
• Public opposition to off-shoring in higher wage
  countries

• Increased off-shoring
• New markets in geographies verticals

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The PR Industry in this environment
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SWOT Analysis PR Industry in the region
Strengths
Weaknesses

• PR has gained a foothold
• MNC presence rising
• Technology adoption is high
• Creativity and Innovation is high
• Demand for PR is growing cuts across all sectors

• Small Industry size
• Not enough trained manpower driving salary
  costs
• Service offerings yet to evolve to developed
  nations standards
• Industry largely fragmented into small companies
• Investment in people low by industry and
  organizations
• Industry not well represented

Threats
Opportunities

• Attrition is high
• Scarcity of quality talent in middle and junior
  levels
• Work-life imbalance causing people to look at
  corporate jobs
• Consolidation and churn in the industry likely to
  increase in the near future
• May not become a strategic function extended
  arm of the Corporate Communication dept

• Need for more evolved offerings growing
• Corporate increasingly knowledgeable about PR
• Demand for communication consulting opportunities
  rising

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Meeting the Challenges
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Case Study

• Acme Inc is a 7 year old PR agency. It has a
  talented set of senior people who have grown with
  the firm over the last few years. While the firm
  enjoys a fairly good reputation it is facing
  several challenges
• High end work being given to competition
• New client acquisition has reached a plateau
• Needs to increase revenues from existing
  relationships
• The existing scenario of under-cutting on pricing
  is putting pressure on revenues.
• It is losing middle level talent to the corporate
  sector. Exiting employees have stated pay,
  learning and lack of growth as key reasons for
  leaving

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Case Study

• Among other solutions that Acme is exploring, one
  is to increase its ability to offer innovative
  solutions and thus move higher in the value
  chain.
• The purpose is to get higher revenues from
  existing clients rather than spending on
  acquiring new clients. Also, by creating a high
  differential in value of services offered Acme
  believes it can operate in a space where the
  smaller price-cutting firms cannot operate.
• What people management processes should Acme
  focus on to meet its business needs?

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Conceptual Design
Business Results
Definition of Winning
Organization Behaviours
Organization Design
HR Action Plans
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Analysis of Business Needs

• Business Challenges
• Existing opportunities for improvement
• Existing performance gaps
• Future performance requirements

• Business Challenges
• Manage growth of the business in an environment
  of talent scarcity
• Innovate to increase repertoire of services
• Increase organisation capability in existing
  offerings
• Enhance visibility and credibility in the eyes
  of the client

Stake Holders
Top Management
Markets / Customers
Business Associates
Employees
Community
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The Two Challenges
Business Challenge
Talent Challenge
Manage growth Innovate Increase organisation
capability Enhance visibility and credibility
Get Talent Retain Talent Engage Talent Manage
Talent Grow Talent
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Every business model has a unique human capital
strategy
People

• Capabilities
• Experience
• Training education
• Demographics

Rewards
Work processes

• Monetary/non-monetary
• Long/short term
• Career progression

• Work flows
• Sequencing of activities
• Division of labor
• Unit (inter)dependencies

Managerial structure

• Roles and responsibilities
• Job design
• Reporting relationships and requirements
• Goal specification
• Performance management

Decision-making

• Vision/strategy
• Decision-making accountability
• Speed and quality of decision-making
• Participation
• Decentralization

Information and knowledge

• Communication mechanisms and flows
• Information exchange
• Intellectual capital use/creation
• Information systems

Acmes talent challenges are addressed through
its human capital strategy
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Mercer Cultural Assessment Model
As-Is
Desired
Gap
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Understanding Employee Motivation
The extent to which employees like and get along
with others and feel their interests are
consistent with the organization's
The extent to which employees feel that they are
part of an organization that is special
The extent to which managers, specifically, and
the organization more generally, can be counted
on to do what is good, fair and right
The extent to which employees believe that they
are provided competitive wages and benefits
The extent to which employees are satisfied with
their jobs, career and development opportunities
and the quality of work life.
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What drives employee engagement in China?
Sense of personal accomplishment
Paid fairly, given performance
Comparable benefits to industry
Employee Engagement
Confidence in senior management
IT Systems support business needs
Opportunities for Training
Regular performance feedback
Mercers Whats Working in China Report
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What drives employee engagement in India?
Confidence in Senior Management
Paid fairly, given performance
Organisation reputation for customer service
Employee Engagement
Sense of personal accomplishment
Comparable benefits to industry
Regular performance feedback
Reasonable Workload
Mercers Whats Working in India Report
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Is human capital strategy aligned with talent
challenges?
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Gap analysis helps us set priorities
Work Processes
Rewarding
Grow
Engage
Retain
People
Information
Get
Decision Making
Manage
Structure
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Problem Definition

• How can we redesign
• Our Work Processes
• Our Talent mix and
• Our Reward Systems
• So that we create a unique culture that helps
• Retain
• Engage and
• Grow
• Our most needed Talent so that
• The capability of the organization to innovate is
  increased

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Putting it all together
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For further information and clarification, please
contactJeffrey Fuller (O) 91 22 647 29 043
jeff.fuller_at_mercer.com

• Thank You!

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Linked Slides
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SWOT China Strengths

• Strong manufacturing base
• Low manpower cost
• Government support
• Fastest growing economy in the world
• Large expatriate pool of talent

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SWOT China Weakness

• Low English speaking population
• Lack of IT Talent
• Lack of experience in managing technology based
  business
• Delivering quality output
• Talent gaps in senior technical levels and middle
  management levels
• Talent scarcity high in the 40-50 years bracket
• Relative lack muti-national skills and mindset
• Ageing population

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SWOT China Opportunities

• Being a part of WTO
• Hardware market

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SWOT China Threats

• Competition from other low cost countries
• Public opposition to off-shoring by higher wage
  countries
• China perception

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SWOT India Strengths

• Large talent pool, with English proficiency
• Low labor cost
• Expertise in technologies and managing technology
  based businesses
• Rapid growth of domestic market
• Blue chip companies in India

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SWOT India Weakness

• Poor infrastructure
• Delay in peace process with Pakistan
• Poor legal system
• Brand India
• Language skills other than English

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SWOT India Opportunities

• Increased off-shoring
• New markets in geographies verticals

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SWOT India Threats

• Competition from other low cost countries
• Public opposition to off-shoring in higher wage
  countries

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PR Industry in the region Strengths

• PR has gained a foothold
• MNC presence rising
• Technology adoption is high
• Realization among PR for more professional
  ethical way of doing business
• Developing consulting skills
• knowledge of clients business / industry etc
• Demand for PR is growing cuts across all
  sectors
• awareness of PRs role in managing company
  reputations rising

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PR Industry in the region Weakness

• Small Industry size
• Not enough trained manpower
• drives salary raises, poaching, attrition etc
• Service offerings yet to evolve to developed
  nations standards
• Industry largely fragmented into small companies
• Price-cutting and poaching hurting efficiencies
• Investment in people low by industry and
  organizations
• Industry not well represented
• data / information on PR industry scarce

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PR Industry in the region Opportunities

• Need for more evolved offerings growing
• Not just press-releases but investor relations
  etc
• Corporate increasingly knowledgeable about PR
• Demand for communication consulting opportunities
  rising
• reputation management
• Consolidation of MNC clients PR programmes under
  a universal global PR Programme
• global alliances and affiliations will play a
  greater role

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PR Industry in the region Threats

• Entry barriers are low
• Attrition is high
• Corporate offer better rewards, benefits, and
  work-life balance
• Scarcity of quality talent in middle and junior
  levels
• Work-life imbalance also driving attrition
• Consolidation and churn in the industry likely to
  increase in the near future
• May not become a strategic function
• extended arm of the Corporate Communication dept?