towerswatson.com Staying Power Kruger Products Limited integrates HR strategy to support attraction and retention Photo by Jason Hawkes/Getty Images

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1 towerswatson.com Staying Power Kruger Products Limited integrates HR strategy to support attraction and retention Photo by Jason Hawkes/Getty Images

2 Staying Power Kruger Products Limited integrates HR strategy to support attraction and retention By Jennifer S. Arapoff A few years ago, Canada-based tissue manufacturer Kruger Products Limited was going through a period of turmoil. While sales were good, there were challenges to employee engagement. Competition for talent in the Toronto area, where the company is based, was intense. And as employees prepared to say goodbye to the name Scott Paper Limited a company that parent company Kruger Inc. had acquired many of them were uncertain about the company brand and their role in the newly formed Kruger Products. As a result, turnover was at its highest in the firm s history: more than 14%. Mario Gosselin, chief operating officer, Kruger Products Limited Kruger Products was dealing with an unprecedented level of change, says Debra Horsfield, Towers Watson senior consultant. The Toronto market had been luring away its highly trained people. Employees simply didn t feel incented to stay, and they were confused about the company s brand identity after the Scott integration. The director of human resources and legal counsel, Alex Teijeira, realized the company needed to clarify its brand and solidify its standing as an employer of choice in order to improve employee engagement and retain talent. He set a goal of creating an HR strategy that would align with the overall business strategy and address the attraction and retention problems. The first step? A comprehensive employee survey to identify areas of concern and opportunity. After reaching out to several vendors regarding the design and implementation of a survey, Teijeira ultimately selected then- Watson Wyatt, 1 a longtime partner. 1 In January 2010, after the Kruger Products project had been completed, Watson Wyatt merged with Towers Perrin to form Towers Watson. 2 towerswatson.com

3 About Kruger Products Limited Leading Canadian manufacturer and distributor of tissue products, including Cashmere, Purex, Scotties, SpongeTowels, White Swan and White Cloud brands Private company with more than $1B in sales 2,300 employees in Canada, the United States and Mexico Parent company Kruger Inc. produces pulp and paper and leads the industry in sustainable forestry and recycling Photo by Patrick Fordham

4 From turnover to engagement By conducting an employee survey, the leadership was looking for innovative ways to move the existing corporate mindset toward an engagement-focused HR strategy. It was a much-needed shift. There was a solid history of successful collective bargaining agreements for Kruger Products manufacturing entities, says Rick Bougie, Towers Watson account director. That was wonderful, but attraction and retention for a packaged goods company was a different animal altogether. Company leaders needed a road map to help them determine what would genuinely engage employees. They began by assessing employee attitudes about such issues as the firm s total compensation practices, professional development opportunities and performance measurements. The consulting team helped devise and implement a carefully crafted survey, using broad, deep data from Watson Wyatt s WorkCanada research and best practices experience. Within two weeks, the survey garnered an impressive 85% response rate. WorkCanada Research Part of the reason Kruger Products chose to partner with then-watson Wyatt was the company s research-based approach to HR strategy. Using recent data for benchmarking was an important part of Kruger Products survey approach. The WorkCanada research has found that employee engagement has a strong positive impact on productivity and financial performance. Analysis of the data collected provides insight into the primary drivers of engagement among Canadian workers. The WorkCanada report helps employers tackle the engagement challenge. The report looks at the top four drivers of engagement among Canadian employees: strategic direction and leadership, rewards, communication, and training and development. It also investigates conventional wisdom about employee attitudes and perceptions and debunks some common myths related to these drivers. The report suggests actions that will foster engagement and enable companies to tap the full potential of their employees. As soon as we saw such a strong response, we knew the voice of employees would be heard and we d have the guidance and information we needed to make some real changes, says Teijeira. From survey to action The initial survey was quite a wake-up call for Kruger Products, says Serge Reynaud, corporate vice president, human resources and legal. The results made evident what we needed to change if we were to meet our goals of improved retention and engagement. Among other things, it was clear we needed to alter the way we compensated our people. The survey results also exposed the need for improved communication regarding organizational changes and highlighted opportunities for more employee involvement in decision making. Company leaders swung into action to: Strengthen reward plans and clarify compensation goals Create a new set of accountability- and competency-based recruitment and assessment tools for managers Introduce a new intranet, as part of a revamped internal communication program Design an employee onboarding process Upgrade the performance management program, including a stronger link between performance and rewards Acquire and implement an integrated talent management information system 4 towerswatson.com

5 Debora Horsfield, Towers Watson senior consultant, with Alex Teijeira, director, human resources and legal counsel, Kruger Products Photo by Patrick Fordham

6 Beyond Surveys Kruger Products Alex Teijeira, Mario Gosselin and Serge Reynaud offer some advice for other organizations developing an integrated HR strategy: Use employee surveys to establish baseline engagement levels, but consider the survey work as only the first step in making changes to meet the organization s evolving needs. Partner with a large, well-regarded consulting firm that has experience helping clients accomplish things after an employee survey. Towers Watson wouldn t crunch numbers for us and then back out of the picture, says Gosselin. They re in it with us for the long haul. Take decisive action up-front, and continue to be responsive to employees needs down the line. We ll monitor our employees mindset and level of engagement, says Teijeira. But, more important, we ll continue to devise programs and provide tools designed to support high levels of engagement. Phase two Using the results of the first survey as a baseline measure for the level of employee engagement, HR decided to do similar employee surveys every other year. The second survey had equally positive results: an 85% response rate and employee feedback in unprecedented detail. After the second survey, company leaders saw opportunities to further enhance the succession planning and talent management programs. When the third survey is conducted next year, the company will include questions related to those initiatives so that executives can track progress and clarify employee perceptions of the changes that have been made. Keys to success Three years ago, Kruger Products employee engagement stood at 65%. In 2008, after the company s second employee survey plus enhancements to communication, talent management and succession programs, as well as other HR strategic initiatives engagement had risen to 72%, a number well above the norm for Canadian companies. Turnover had dropped from a high of more than 14% to 5%, then had moved to 4.8%, and now sits comfortably at a remarkable 2%. In the end, I believe the surveys and the subsequent actions we took were essential to retention, says Mario Gosselin, Kruger Products chief operating officer. I m more than happy with the results. Teijeira points out that employees were involved in every decision made and saw immediate, significant actions being taken. When we changed the incentive plan, we launched a road show, going to every office and speaking to every employee about the survey results and the new bonus system, he says. That built up a great deal of trust. With that trust, we ve been rewarded with employees who perform better. Teaming with a trusted partner and involving senior leadership at all stages of the process were also key to success, says Reynaud. We kept senior management updated every step of the way, he says. Also, leaders of our parent company, Kruger Inc., saw our success. They re now facing their own retention challenges, so they re taking cues from what we ve learned. Our company served as a beta site of sorts, where we discovered things that can be leveraged across the entire organization. Teijeira agrees. Our unique challenges required unique actions. Our attraction, retention and recruitment situation was a burning platform at the time we decided to adopt a new HR strategy. We learned a lot, and so did the larger organization. Moving forward When Kruger Products set out to create its HR strategy, high employee engagement was a goal, but the broader objective was to be a world-class employer of choice. Today, Kruger Products has what it needs to bolster its employee value proposition and compete in a dynamic labor market. Current and potential employees have a much clearer understanding of the employment deal what they can expect from their employer and what the company can expect from them in return. 6 towerswatson.com

7 Photo by Patrick Fordham Kruger Products now has a robust plan, says Horsfield. The company needs to be more innovative than its competitors. That means not only appropriate compensation, but also work/ life balance, unique and different rewards, and excellent succession planning something the mega companies won t provide. Having a COO who listens is another big differentiator, says Teijeira. Ours had a few bad experiences with surveys in the past, yet he had the guts to proceed anyway. It speaks volumes to employees about the firm s desire to listen and understand them. And it makes for more open, transparent interactions. That transparency is a fundamental element of the organization s new HR strategy. To me, one of the conditions of leadership is to be transparent, says COO Gosselin. I ve been with this organization for 31 years, and I can tell you that we enjoy an inherent sense of togetherness. Our open-door policy means exactly that: I meet with every single new employee personally. At the end of the day, I think that intimate environment is what will keep our people engaged. (Left to right) Richard Bougie, Towers Watson account director; Alex Teijeira, director, human resources and legal counsel, Kruger Products; Serge Reynaud, vice president, human resources and legal counsel, Kruger Products; and Towers Watson senior consultant Debra Horsfield Strategy at Work 7

8 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 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Copyright 2010 Towers Watson. All rights reserved. NA towerswatson.com