IBM Business Consulting Services Human Capital Management and the Telecommunications Sector A sector insight from the Global Human Capital Study 2005 HCM in Telecoms
Introduction New technologies, competitive pressures and rising customer expectations are driving change in all industries. The telecommunications sector is no different. Pricing for traditional services is becoming increasingly competitive while technological innovations are leading to a focus on greater convergence to win future market share. As part of this change process, human capital is moving up the business agenda and is increasingly being perceived as a strategic asset rather than a cost. Organisations need to ensure that traditional satellite and wireless services are run efficiently and that the workforce is appropriately trained and motivated. At the same time, however, telecoms companies must also ensure that the right human capital and leadership is in place for the organisation of the future. This new focus on talent means that Chief Human Resources Officers (CHROs) are well placed to play a leading role in driving change. They need to improve processes to boost operating efficiencies, develop models to ensure the organisation continues to have the human capital it needs to prosper, plan for successful executive leadership and ensure learning and performance are effectively managed. They must also ensure that the HR function measures its performance against key metrics so that it can demonstrate its contribution to the business s bottom line. Most importantly of all, the CHRO needs to focus on the workforce as well as the HR function, ensure the talent agenda is properly represented at board level and focus on driving people strategies that support the business for the years ahead not just the next quarter.
Key trends in the telecommunications industry The telecommunications industry faces a dilemma. Rapid developments in technology have meant that the race for market share is now focused on convergence the most efficient and effective delivery of voice, data, and media content through an integrated service provider. Existing telecoms businesses that focus solely on traditional wireless and satellite services with their decreasing margins will not survive. But at the same time they need to ensure these cash cows are run efficiently in order to fund significant investment in the technological research and development needed to support greater convergence. And to complicate matters, organisations must tackle these twin challenges against a backdrop of competitive pricing. In this environment of business change and uncertainty, the operational and HR organisation is under significant pressure to retain a portfolio of talent focused on the traditional business while ensuring that appropriate human capital is in place to fuel and sustain future business growth. The mature telecoms business finds itself asking several fundamental questions. How do we keep older employees committed to existing wireless and satellite businesses? How can we make the most of technology to ensure business continuity and efficiency? And what organisational models from shared services to outsourcing will offer the most effective deployment of people and processes in the delivery of our traditional services? We are thin in skills so turnover is a risk... The critical issue is can we increase employee satisfaction and loyalty before the labour market tightens? Telecommunications company, North America
But telecoms companies that are focused on the development and commercialisation of new technology must ask themselves different questions. What knowledge, skills, aptitudes and competencies will the organisation of the future need? How do we predict the correct number and type of people to hire for future business requirements? And what will the leaders need to be like in the middle of this chaos? However, these two competing demands must both be tackled, since the existing element of the telecoms business must fuel the cash requirements of convergence exploration, discovery, innovation and development. Cost control and integrated functional process delivery are as important in strengthening the vitality of telecoms today as they have ever been. The flurry of mergers and acquisitions (M&A) among major industry players is indicative of recent efforts to become more cost-effective and harness the best of current and emerging practices and technologies in telecoms. It also reflects the challenges that the sector faces in general. This M&A activity has made effective change management key to future success, bringing competitive advantage to those companies that can most quickly get the workforce to accept a new culture and recognise the benefits of change.
Average tenure of telecoms workforce compared with other industries 40% 35 30 25 20 15 10 5 0 Less than 1 year 1-4 years 5-9 years 10-14 years 15-19 years 20-24 years Over 25 years Source: IBM Global Human Capital Study 2005 Telecommunications All other industries The impact of staff turnover and fluctuating staffing levels at contact centres remain a cause for concern for many telecommunications businesses. Downtime in contact-centre environments or inadequate staffing to fulfil demand causes inflexibility, high costs and higherthan-average employee turnover. A key challenge is to expand resources to deal with the new cell telephony business. This market is growing sharply, so we must ensure the company has all the resources and skills required. The IBM Global Human Capital Survey revealed that telecoms companies faced higher employee turnover than other industries though the importance of this issue for companies varies from region to region. Globally 37 per cent of telecoms survey respondents had been with their companies for more than one year and less than four years compared with only 28 per cent of respondents in all other industries. And just eight per cent of telecoms employees had been with their company for 10 to 14 years, while the figure across all other industries was 14 per cent. Leveraged staffing is neither science nor art it is a combination of the two. Telecoms companies that invest in efforts to bring more predictability through modelling, process improvement and technology (e.g. targeted skill previewing and testing for contact-centre specialists) will reap the benefits. Telecommunications company, South America
The implications for Human Capital Management Existing telecommunications businesses are turning to a number of solutions to enhance operational efficiencies: Workforce management integration staff forecasting based on consumer trends in service, sales and product and promotion introduction. Automatic skills-based call routing in call centres. Automated time and labour management systems, particularly in retail environments. Optimising labour resources by integrating labour supply and demand and finding the best value labour for service delivery. Forming partnerships with service providers to achieve the most efficient and effective delivery of administrative, operational and higherend consultative services. This may include service providers running: HR; financial and IT shared services; training; sourcing and selection. Telecoms companies that recognise the value in keeping their mature businesses functioning efficiently have pursued some or all of these programmes. Indeed, they are essential for competitive success. Planning for executive leadership However, while focusing on business as usual, companies also need to ensure they have the technology, finance and human assets in place to prosper in the marketplace of the future. Short-term concerns must be balanced with longerterm requirements for commercialised innovation, nimbleness and confident leadership. In particular the need to drive future growth and development in an increasingly complex technology and partnership environment has placed identifying and planning for successful executive leadership firmly at the forefront of the organisation s human capital planning.
Does your organisation take steps to manage and measure learning? 80% 70 60 50 40 30 20 10 0 Measuring the business impact of learning programmes Using learning management systems (LMS) Source: IBM Global Human Capital Study 2005 Telecommunications All other industries Typically this is considered to be part of the succession-planning process but identifying the competencies required in the future is far more than this. HR needs to: continuously and actively assess future market requirements identify the executive competencies necessary to develop future market and business strategies in the telecoms industry be constantly on the lookout for talent that can deliver these strategies and reflects the need for a diverse and inclusive leadership develop a workforce strategy by employee portfolio that fulfils future staffing requirements identify and develop middle managers professional and technical skills and competencies.
Ensuring that an organisation s change agenda is led from the top is crucial if it is to get buy-in at all levels. Leadership must set an example by demonstrating awareness of and passion for the change process. As a result, HR needs to conduct a change-agent assessment and establish whether existing leadership has the resolve to implement change. Alternatively, does the solution lie in developing or buying in leadership that walks-the-talk on change and the change agenda? The importance of training Telecoms companies have long recognised that training is essential for learning and the acquistion of the skill sets necessary for successful operational performance. The IBM Global Human Capital Study 2005 reinforces this. It found that 43 per cent of telecommunications companies measured the business impact of learning, compared with just 22 per cent in all other industries combined. What s more, 78 per cent of telecoms companies employed a learning-management system to track and certify training, as against 52 per cent of all other respondents. More rigour is being brought to evaluating training. Training effort will only be retained if a clear correlation can be demonstrated between the training and business results. Telecommunications company, North America 7
Percentage of middle managers and staff receiving performance reviews 100% 80 60 40 20 0 Middle managers Staff Source: IBM Global Human Capital Study 2005 Telecommunications All other industries The study also indicates that telecoms companies are consistently better than other industries in measuring performance and monitoring the return on their training investment. They appear to make every effort in managing performance and tracking it against business profitability. Within the telecoms sector, 100 per cent of middle managers and 94 per cent of operational staff regularly received performance reviews as opposed to 91 per cent and 81 per cent respectively for all other industries combined. This focus on performance assessment and metrics is consistent with telecoms companies methodical approach to measuring operational performance such as value per call, average handle time and customer satisfaction. 8
Training by employee segment is crucial. Sales-force-effectiveness training ranks as one of the most important methods of increasing sales revenue and customer satisfaction. This type of training is key to providing agents with knowledge and confidence around new products, initiatives and features as well as building awareness about new regulations that affect in-store retail sales. Smart telecoms companies understand the value of just-in-time training that equips their sales force with bundled skills in business selling in managed accounts and service innovation. The need for telecoms businesses to keep the current labour force engaged and working efficiently while identifying and acquiring the competencies and leadership required for the future is clear and critical. Those companies that continue to perform well in both these areas will enjoy significant strategic and operational competitive advantages. Leadership is a key element of our transformation and strategy. We expect leadership involvement and inclusiveness in driving the success of the business at all levels. Telecommunications company, North America 9
The role of HR in telecoms An effective human capital strategy is essential if telecoms companies are to boost profitability successfully while also keeping employees committed and engaged. Smart organisations can achieve this through innovative improvements to operational and administrative technology and process delivery. Avoiding the menace of maturity: process development A key goal for CHROs in telecoms businesses must be to ensure that traditional wireless and satellite businesses operate with maximum efficiency. This requires consistent and planned work on process improvement to guard against the risk of becoming unresponsive to the needs of their workforce in a maturing market. Best-inclass metrics that contribute to overall operational performance need to be identified and performance against them measured and improved. Other operational metrics can be identified for areas such as customer retention, allowing programmes to be implemented for monitoring, measuring and enhancing the operational performance of call centres. In some areas the telecoms industry has already taken steps to enable the workforce to operate with greater efficiency. The IBM Global Human Capital Survey 2005 found that 66 per cent of managers had access to managerial self-service, compared with just 37 per cent in all other industries. And 70 per cent of non-managerial staff could access employee self-service, as against 38 per cent elsewhere. We need data, not anecdotes process data that reflects the contribution of a process to the business results rather than just how well run the process is. Telecommunications company, North America 10
Percentage of workers with access to employee and managerial self-service 80% 70 60 50 40 30 20 10 0 Access to employee self-service Access to managerial self-service Source: IBM Global Human Capital Study 2005 Telecommunications All other industries HR needs to review the labour skill requirements of the workforce, analyse existing work demand and find the best way of matching the two through the integration of strategic, process and technology initiatives. In the call-centre and retail environments this could involve the adoption of suitable workforce forecasting and scheduling tools. Another call-centre innovation is the gradual disappearance of queues or automatic call-routing based on next-in-line flow. It will be replaced by an automated skills-based process, which will route customer calls according to customer group and the availability of the most suitably skilled call-centre operative. Companies that are intent on harnessing the value of their human capital to maintain market share while pursuing longer-term market transformation are also exploiting new desktop applications for the call centre. Innovative technology allows customers direct access to company portal sites that are primarily self-service but are backed up by technologically savvy and well-trained customer service staff that can complete the customer transaction when the customer is unable to do so. 11
The quest for talent: addressing the build-buy balance Of course, the role of HR in the telecoms industry isn t just about improving current operational performance. A further priority is to ensure that the organisation is equipped with the talent it needs to thrive in the future, particularly with the problem of high employee turnover facing the industry and the need to focus on the development of converged services. So how can the HR organisation successfully identify the number and type of people that the company will require in future? How can it establish the skills, knowledge and competencies required? A systemic approach to talent management is essential. HR needs to develop a model that enables it to identify the global competencies and skill requirements of the organisation and match these to current and future staffing needs. This model must address the global acquisition of talent from internal, external and contingency sources and the way this talent is managed and deployed internally. One useful way of looking at this is through the concept of an integrated talent pool. This applies the fundamentals of supply-chain management to the HR needs of an organisation to create a single pool of global talent that optimises the acquisition and deployment of talent and enhances career development opportunities. Factors determining the availability and use of talent in the pool include demand, supply, balancing processes and organisational structures, management systems, sourcing strategies and alternate work models. 12
Improving recruitment practices IBM has worked with major telecoms to review and revamp their hiring and recruiting practices. For one client this involved conducting a specialised callcentre recruitment programme that included customised skill assessment, job previews and metric reporting for call-centre operatives. By understanding the skill requirements for inbound and outbound call-centre agents and introducing job-relevant screening processes as the basis for hiring staff and implementing innovative incentive packages, these centres were able to start attracting agents who performed better, demonstrated higher commitment to the company and provided longer service. As a result high turnover ceased to be the problem it had been previously. The supply side of this equation can be fulfilled through the development of a mapped database of job classifications that identifies jobs by the required knowledge and skills and identifies participants according to their managervalidated possession of these skills. By using predictive modelling to forecast future labour needs and using appropriate technology to interpret this database, individual skills inventories can be matched against current and future labour demand. This then enables the HR function to decide on the most suitable approach to meeting the organisation s labour needs: identifying and deploying suitable resources internally, developing existing employees or buying in talent from the external market. 13
The quest for talent: focusing on learning Successful talent management extends to a systemic approach to the way an organisation develops its own talent. As the IBM Global Human Capital Survey 2005 illustrates, the telecommunications industry already places strong emphasis on this area. The HR function should continue to build on the prowess already established in training and performance management, particularly in the operational arena. E-learning is becoming increasingly significant in this context. But for it to be effective, HR needs to identify business and performance objectives and link them with learning tools and technologies. It also needs to build a business case for e-learning and develop an overall e- learning roadmap. And it must carry out an assessment of current training operations, content and technology and ensure that e-learning programmes are integrated with these. 14
Using management development to build talent One telecommunications company decided to use a management development strategy to build its own talent. Its objective was to provide a management learning programme that was flexible enough to meet the needs of highly diverse work environments while providing a consistency of structure and content for fundamental management skills. To achieve this goal it developed a curriculum that blended learning from online reference materials, coaching simulations, teaming, online facilitation, collaboration and classroom learning. The company uses an outside provider to manage the learning infrastructure, which includes the management of face-toface learning events, an e-facilitation team to manage student enquiries and a team for overall programme administration and co-ordination. Learning occurs in the participants specific business environment, where it can be tested and applied. Because the programme delivers 75 per cent of training online and 25 per cent in a classroom, managers can devote more time to staff and customers compared with traditional classroom-based programmes. And the results have been notable. Since June 2002, more than 1,800 managers have participated in the programme. To date it has received highly satisfactory feedback from participants and there is evidence of a change in management approaches. 15
Conclusion: Towards a new kind of human resources The challenges posed to HR professionals by the developments in the telecoms industry are substantial. In particular HR needs to ensure that their human capital policies are not becoming unresponsive in traditional satellite and wireless businesses and that staff are motivated and have the tools and knowledge needed to work efficiently. They need to ensure that the organisation has the competencies and skills to meet both current and future demand. And they must ensure that the right leadership is either developed or bought in to deliver future strategy successfully and lead change across the organisation. Dynamic People Management To meet these objectives organisations are shifting the way they look at people seeing them as a strategic asset rather than a cost. People are the competitive difference the capability within. Companies need to take a systemic view of their workforce and examine the variety of levers that can improve organisational performance. They then need to manage people dynamically to make the most of their human capital. This involves: understanding the key drivers of workforce productivity designing jobs and organisation structures that improve productivity and manage labour costs acquiring the talent the organisation needs in a timely and cost-effective fashion ensuring that employees know how to do their jobs, can use available tools and knowledge and receive suitable training measuring staff performance and aligning it with appropriate rewards optimising staffing levels for both short-term work scheduling requirements and longer-term workforce planning objectives ensuring leaders at all levels have the skills, tools and values to perform to their best creating a workplace culture that encourages excellence, collaboration and staff retention. 16
Next Generation Human Resources In many organisations, however, the ability of the HR function to tackle these important strategic issues is hampered by an increasing lack of resources owing to cost pressures and an excessive administrative burden. In addition HR organisations often struggle to demonstrate the true contribution of the programmes they initiate to the bottom line. To be successful, HR leadership needs to find ways of reducing the administrative burden and develop a results-oriented focus. It must evolve into the Next Generation Human Resources of the future, ready to compete successfully in a global environment. It must: benchmark current operations and offer insight into best practices in HR service delivery redesign processes to leverage leading technologies and existing systems infrastructure create a measurements system that ensures HR is focused on the right tasks and can describe its contribution to the business review outsourcing as an alternative delivery mechanism. It is time for telecoms CHROs to develop a new human capital agenda that places people at the strategic heart of the organisation. They must connect the investments made in employees with performance outcomes and identify and deploy the optimal strategies to promote the retention of key people. In short, it is time for the HR function to migrate from a basic services provider to a strategic advisor that leads the people aspects of business transformation initiatives in their organisation. 17
About IBM Human Capital Management IBM Business Consulting Services Human Capital Management (HCM) focuses on helping clients improve the value of their human capital assets to the organisation. With more than 3,000 practitioners, Human Capital Management has a full suite of end-to-end capabilities to address client s challenges. Our approach looks at four key factors: More from People More from People focuses on getting the highest possible value from your workforce while controlling your human capital costs. We can assist you in assessing your strategy and examining your operations and then analysing how your workforce implements the initiatives that drive your business. Our analysis provides a methodical and measurable approach to determine the right people strategy for your organisation. The result is a unique combination that produces the behaviours that drive increased productivity and profits. 18
Better HR and HR Business Transformation Outsourcing Better HR is about transforming the way that human resources works and delivers value to the business by improving the quality and reducing the cost of HR processes and systems. We help clients to design, implement and adopt the most appropriate combination of HR service delivery portfolios, operating models, technologies and processes for their organisation, either internally or through an outsourced arrangement. This allows the HR function to move successfully from being a simple service provider to a strategic advisor that is capable of delivering Next Generation HR. Learning and Development This initiative inspires and equips people in business to improve their performance, skills and knowledge. It focuses on improving the effectiveness and reducing the cost of learning and development within the organisation by assessing the organisational approach, technology and methods used to deliver it. On Demand Workplace IBM On Demand Workplace brings together all the strands of information that run through an enterprise in ways that can radically change the way you work. It helps clients achieve dramatic improvements in efficiency, effectiveness and innovation by integrating and simplifying core employee work processes. 19
IBM contacts Further information To learn more about IBM Business Consulting Human Capital Management, consult your IBM Sales Representative or visit ibm.com/bcs/humancapital To find out more about The Capability Within: The Global Human Capital Study 2005 visit ibm.com/bcs/humancapital2005 Global Mary Sue Rogers Global Leader mary-sue.s.rogers@uk.ibm.com +44 20 8832 5018 Americas Lisa Tondreau Americas and US Leader lisa.tondreau@us.ibm.com +1 703 653 7330 Asia Pacific Bill Farrell Asia Pacific and ANZ Leader bill.farrell@au1.ibm.com + 61 2 939 78717 20
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