Transforming HR Systems and Mindsets at Lenovo

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1 Transforming HR Systems and Mindsets at Lenovo At a Glance Challenge Integrate the HR operations of Lenovo China with those of the global Lenovo organization to improve operational excellence and prepare the company for continued growth. Approach Focus on changing mindsets as well as systems in a complex HR transformation involving the rollout of Workday Human Capital Management and the consolidation of multiple payroll systems. Results Lenovo China now has a world-class HR service delivery system that enables employees to work with improved agility and effectiveness as part of the global organization.

2 While never easy, HR service delivery can be particularly challenging in a global organization that s grown rapidly through acquisitions and whose continued growth depends on efficiency, speed and innovation. In 2012, Lenovo, a US$39 billion personal technology company and the world s largest PC vendor, faced just such a challenge. Lenovo had not only made a series of acquisitions that included IBM s PC division, the German PC maker Medion and the cloud-computing company Stoneware, but also entered a joint venture with NEC to create Japan s largest PC group. At the same time, Lenovo wanted to move beyond the PC market into new product categories such as smartphones and mobile devices, as well as cloud-based technology management. To operate effectively as a global company and be prepared for the anticipated growth from our PC+ strategy, it was critical to drive HR operational excellence and globalize the HR function, said Yolanda Conyers, Lenovo s HR vice president of worldwide functions and chief diversity officer. For help with this large-scale HR transformation, Lenovo turned to Towers Watson. Lenovo had previously partnered with Towers Watson to implement Workday, the cloud-based human capital management software, and to implement an HR service delivery model and accompanying service centers across 59 countries outside of China. Many had warned us about the complexity of that implementation project, but Towers Watson worked with us to ensure we got it done. Based on that experience, we decided to go with Towers Watson again, said Bill Perez, Lenovo s director of global payroll, the global HR service center and the project office. 2 towerswatson.com Now Lenovo wanted to consolidate its HR technology platforms in China. Major parts of this work would be integrating the HR operations of Lenovo China with those of the rest of the organization and implementing a global HR service delivery model. A Myriad of Challenges Technical and Cultural As the project began, Lenovo s China operations accounted for roughly 50% of its revenues and head count. But the numerous HR and payroll systems, as well as multiple operations teams, posed challenges. Processes and policies weren t standardized, which contributed to a lack of clarity regarding roles and responsibilities. We needed one global HR system to drive common processes from head count reporting to merit increase cycles which would allow us to operate with more agility, Perez said. In addition, China s various payroll systems needed to be consolidated. And leaders wanted all of this to be accomplished on a demanding schedule. Beyond the technical challenges were the peoplerelated factors of the transformation. The various HR systems in China were homegrown, and many of the employees who d helped develop them were now being asked to move to a global operating platform. So an essential component of the transformation would be changing the mindsets and behaviors of the very dedicated, talented HR team members in China and helping them better appreciate the benefits of a global platform.

3 Moreover, many managers in China weren t ready to take advantage of the self-service capabilities that a new HR system would provide and to assume a greater role in managing the employee life cycle. For example, up to this point, low-level managers hadn t been involved in managing employee compensation. The new system would enable them to review employees salaries, and make recommendations and adjustments. Consequently, these managers would need to become comfortable with the new system and to understand their changing role. Finally, while many understood conceptually the importance of change management in ensuring the success of the transformation, some managers and employees didn t fully appreciate what change management would mean in practice. For instance, in any change management program, it s important to surface resistance to change. Yet some Lenovo employees in China were hesitant to voice their concerns about the new service delivery model, reflecting a work culture in which employees tended to communicate in a somewhat indirect, reserved manner. The People+ Project From the outset, it was clear that changes were needed in the mindsets and behaviors of senior leaders, managers and HR staff, as well as rankand-file employees, before the company could successfully deploy the new system and processes. Accordingly, leaders branded the transformation project People+ to highlight the significance of the people component in Lenovo s PC+ business strategy. The following measures helped establish the right foundation for the People+ project: Securing buy-in from the leadership team. Senior leaders reviewed the business case for the transformation and approved the project. Obtaining high-level approval early on helped ensure ongoing support of the project. Establishing a project management office (PMO). To ensure the project would be completed on time and on budget, Towers Watson assigned senior consultant Nae Cho as a full-time, onsite project manager. The PMO was also responsible for change management, which would be crucial to the project s success. Assessing the current state. HR employees participated in a benchmark survey to determine the percentage of time they spent on various HR activities, and how their allocation of time and the associated costs per activity compared with the best practices of leading global organizations. The findings revealed that HR partners and centers of excellence staff weren t spending enough time on strategic activities because of the demands of their administrative workloads. The survey also uncovered many opportunities to standardize HR processes and provide more efficient service via self-service capabilities. Lastly, the findings pointed to opportunities to better align the operations of the Asia Pacific and China service centers. These measures helped ensure the project started off on a sound footing. Total Commitment and a Range of Interventions Major change requires a total commitment and a range of interventions throughout the project, Conyers said. Accordingly, the project team, composed of Lenovo employees and Towers Watson consultants including project manager Cho, participated in rigorous planning and project management sessions throughout the 20-monthlong project. Monday through Thursday, we had daily one-on-one meetings with members of our 13 work streams to check the status of each task, Cho said. We proactively escalated issues and solved problems to ensure we made our dates. These efforts were supported by a robust governance structure with clearly defined roles and responsibilities. It was also essential to understand where in the organization and along the timeline to begin the change management process. Before you can get the future users of a new system onboard, you need to change the mindset of the team that will be implementing the change, Conyers said. So the project team made it a top priority to engage the HR Information System team early and make sure members of that group were comfortable with the coming changes. 3 towerswatson.com

4 Next, the focus turned to other stakeholders, including business partners, managers and employees. The project team organized a range of carefully tailored activities to help ensure these employees understood and committed to the planned changes: Ambassador program. Early on in the project, a team of ambassadors HR partners representing the businesses and functional areas was put in place. These individuals, who were respected as leaders, played a significant role in supporting the changes needed to make the transformation a success, Conyers said. Manager focus group and training. A focus group with managers from the various China business units and functions provided insight into the learning curve many managers would face as they transitioned into their new roles. Guided by this information, the project team organized manager training sessions and developed messages to explain how the new system would empower managers to make decisions in people management areas, including compensation. Managers also needed to understand how the new service delivery system would provide multiple levels of support for their new responsibilities. For example, a knowledge base would include reference guides to help them answer policy- and process-related questions. Managers needing further assistance would have immediate access to HR service center agents. And HR partners were prepared to provide advice on strategic issues ranging from performance management to compensation. East Meets West sessions. The project team members coming from the East and the West needed to understand how cultural differences influence decision making and generally how work would get done after the transformation, Conyers said. So in sessions the team dubbed East Meets West, participants discussed their differing management styles and behaviors, and these sessions revealed opportunities for improvement. For example, the China team members had tended to work extensively on problems on their own instead of reaching out to colleagues in other countries whose experience might have helped them find solutions faster. Once we recognized these differences and discussed how we needed to work together as a team, the project moved even faster, Perez said. Change management workshops. To develop the new skills needed by the HR business partners, the project team created a series of two-day change management workshops. These gave participants a model and tools to create individual plans for their businesses. Ongoing targeted training. The team organized training sessions that included: Briefings for executives and their assistants Process and system training for managers Process and system training for employees Compensation management training for managers For continual learning, the team developed training sessions for not only the go-live stage of the transformation project but also the post-rollout stages. These sessions would ensure HR would be ready to explain the twice-yearly Workday updates when they occurred and to provide just-in-time training. Ready to Go Live Lenovo was now ready to roll out the systems and services at the heart of this complex HR transformation: Workday Human Capital Management. Lenovo replaced its multiple China HR systems with Workday Human Capital Management, which provides self-service capabilities and a global source of HR data, analytics and reporting. Workday Expense Management. Once the project was under way, Lenovo decided to also implement Workday s Expense Management applications, which standardize business travel approvals and the expense reimbursement process, making it easier to manage employees remotely. 4 towerswatson.com

5 Because Lenovo made it a priority to change mindsets as well as systems, the project s ultimate result was a new way of working. SAP Payroll. With the SAP payroll application, Lenovo consolidated and upgraded its multiple China payroll systems. HR service center upgrade. The company upgraded the tools in the China HR service center. With the China and Asia Pacific HR service centers now reporting to the same manager, agents are cross-trained so that overflow calls from the China center can be transferred to the Asia Pacific center. This has dramatically decreased the call abandonment rate. Moreover, the team standardized and streamlined business processes to align them with global processes, giving line managers greater decisionmaking authority and simplifying approval processes. A Seamless Partnership Given the complexity of the transformation, it was crucial for Lenovo employees and Towers Watson consultants to work together as one team. We needed to quickly move beyond a client-vendor relationship and become true partners in problem solving, said Robert Zampetti, Towers Watson s director of HR service delivery. Having an onsite project manager helped bring team members together and continuously reinforce the team s shared goals and challenges. Nae kept us all connected. She brought strategic perspective and project management discipline, said Perez. The team was so aligned that when you walked into a team room, you couldn t tell the consultants from the Lenovo employees. Vital to the success of this partnership and the project overall was the support of Lenovo s project owner and executive sponsor, Yolanda Conyers. Yolanda was fully committed to this project and understood the importance of changing mindsets as well as systems, Zampetti said. A New Way of Working The combination of best-in-class technology with effective project and change management proved to be a winning formula. Lenovo succeeded in consolidating its HR technology platforms in China, resulting in one China payroll system and one global HR system: Workday, which provides self-service capabilities and a single, global source of HR metrics and analytics. And because Lenovo made it a priority to change mindsets as well as systems, the project s ultimate result was a new way of working, reflected in these project outcomes: Global HR service delivery model. The tools and support of Lenovo s world-class HR service centers have standardized and simplified HR decision making, thereby contributing to organizational efficiency and agility. Globalized processes. Eighty percent of all HR processes have been globalized across business units and among the countries in which Lenovo operates, resulting in more consistent employee experiences around HR tasks, as well as increased collaboration. Strong Workday usage among empowered managers. Within six months, over 90% of the China managers had used Workday, exceeding the initial goal of 85%. Ready access to essential employee and policy information empowers managers to make informed decisions in all people management areas, including compensation. More effective HR business partners. Thanks to the improved service delivery system and Workday implementation, HR business partners administrative workload has been reduced so they can sharpen their focus on strategically supporting the business leaders. Overall, the transformation has made Lenovo China more agile and better prepared for continued growth. The China team members who began this project with little or no experience using Workday, as well as few opportunities to work on a global team, have now developed a strong proficiency in the Workday product suite. Also, they now have the leadership muscle to manage global teams and projects, Conyers said. 5 towerswatson.com

6 Top Takeaways Lenovo executives shared the following guidance on transforming mindsets and systems: Establish a robust PMO. It s essential to have an onsite project manager for the duration of a large, complex transformation. An effective project manager will rigorously monitor the status of tasks in each work stream and escalate issues as they arise to ensure the project is completed on time and on budget. Integrate change management with project management. Don t underestimate the importance of addressing change management issues in the course of a technology implementation. Before employees will accept change, they need to understand why things are changing and how the changes will affect them. Align the right stakeholders. Secure buy-in from the senior leadership team and gain the full support of the executive sponsor. Then identify and engage employees further down the organization whose support is critical to the project s success. Know where to start change management efforts. Ensure that members of the operations team implementing a new system buy into the project s goals before presenting the change to the system s future users. About Lenovo US$39 billion global personal technology company #286 on the global Fortune 500 list 54,000 employees Customers in 160 plus countries About Towers Watson Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With 15,000 associates around the world, we offer consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Learn more at towerswatson.com. Copyright 2015 Towers Watson. All rights reserved. TW-NA towerswatson.com /towerswatson