For Discussion Only-Do Not Duplicate-Do Not DistributeNCE HR Assessment Project Final Presentation December 199811/5/20221For Discussion Only-Do Not Duplicate-Do Not DistributeTable of ContentsProject background and approach .Page 3 Key Issues:Challenges facing NCE HR today.Page 11Overarching Issues,Benchmarks&Customer Satisfaction LevelsNCE Today:Function by function analysis/Strengths&Future Opportunities-Compensation Administration-Benefits Administration-Payroll/HRIC-Learning-Workforce relations-Staffing-Safety and Industrial Hygiene-Disability Management-Field ServicesHR Organization Model Recommendations.Page 44Recommended structure for the future Roles and ResponsibilitiesSkills,Competencies&Experience requirementsHR Transition Planning.Page 60Key Success FactorsTransition Plan:8 Quarter Transition Plan Time lineKey Project DescriptionsAppendix.Page 72Product/Service locations in the future Corporate Center/Business Unit/Shared Services modelDetailed HR Transition Plan(Excel file)Example Service Level Agreement and Service Level Agreement Development Approach11/5/20222For Discussion Only-Do Not Duplicate-Do Not DistributeProject Background&Approach11/5/20223For Discussion Only-Do Not Duplicate-Do Not DistributeProject Objectives-Confirming the“future state”vision for NCEs Human Resources organization,-Conducting a current state assessment of the HR processes,organization and technology,-Evaluating HRs customers needs and perceptions of current and desired service levels and competencies,-Conducting a benchmarking study based on similarly sized HR organizations,-*Developing a list of HR products and services currently offered,and determining with HR leaders the potential future location of HR products and services(Corporate Center,Business Unit,Shared Services)-Conducting a gap analysis between the current HR processes,organization and technology and the future model of Human Resources,-Developing a competency model for the Human Resources group that reflects the future state,and-Developing a transition plan to implement the future state design within a specified timeframe.Arthur Andersen was asked to work with NCEs Human Resources group with a project to assess HRs current state and to develop a transition plan for moving forward.Our primary objectives included:*Added to our original scope11/5/20224For Discussion Only-Do Not Duplicate-Do Not DistributeThe Human Resource functions included in Assessment project included:Compensation AdministrationBenefits AdministrationPayroll/HRICLearningWorkforce RelationsStaffingSafety and Industrial HygieneDisability ManagementField ServicesProject ScopeFor Discussion Only-Do Not Duplicate-Do Not DistributeProject Assumptions-The HR group needs to deliver products and services that meet customers needs in cost,quality and time.*The new NCE business unit structure will only increase this emphasis-The migration of HR into the new Corporate Center,Business Unit,Shared Service structure is evolutionary.*But HR cant wait until the dust settles and the picture is clear.The picture will continue to change.*Initially all HR functions will be in the Shared Services group.Beginning very soon,some HR personnel(and associated HR responsibility,products and services)will be dedicated to the Business Units.-Concentrate on what isnt working well,and focus on how to move forward in a positive way.*Some of our observations are“fact-based”,some“experienced-based”*The goal is to look for opportunities to change in order for HR to better serve customers,then determine how to systematically improve performance-Learn from the past,move forward*Weve used prior work(i.e.J Team,KBPI,Business Plans,etc.)in our analysis*If things arent working,lets set a new course-Analysis is important but implementation is where improvement occurs*Identify the“big things”,do enough analysis to confirm the opportunity,then move forward*Our team focused on prioritizing issues/opportunities and recommendations that can be implemented with measurable resultsOur team used some important assumptions as context for our work throughout the project:11/5/20226For Discussion Only-Do Not Duplicate-Do Not DistributeWe developed our analysis using a holistic model,looking at the following questions:HR Strategyv Does HR have an appropriate strategy given NCEs business strategy?v What is the best approach to implement HRs structure and service delivery objectives?Peoplev How does NCE HRs compare as an organization to other similar HR organizations?v How should HR be organized to best support the business units?v What skills/competencies model is required in order to execute your HR strategy?Business Processv How are HRs management and service delivery processes working?v How might our processes need to change under the new NCE Business Unit structure?v Do we understand our processes and are they support cost,quality and cycle time improvements?Technologyv Is HR using available technology appropriately?v Are there other technologies available that HR can take advantage of to lower costs and/or improve quality and timeliness of service?Project AnalysisHR StrategyPeopleTechnologyBusinessProcessesNCE StrategyHR CustomersHR Customers Needsv Are HRs customers satisfied?If not,why not?v Do they understand what HR provides?v How will their needs change under the new Business Unit structure?NCE Strategyv How is HR supporting the current NCEs strategic objectives and guiding principles?v How will our HR strategy impact and be impacted by the new Business Unit model at NCE?June 12,19977For Discussion Only-Do Not Duplicate-Do Not DistributeHRs PerspectiveHR CustomerPerspectiveBestPracticesTeamPerspectiveRecommendationsWe used many points of analysis in order to get an integrated picture of how HR is working today,and to recommend areas for improvement that would help increase customer satisfaction,improve effectiveness and efficiency,improve quality,and improve cost performance HR Interviews HR Focus groups Customer survey Customer interviews Qualitative view Quantitativebenchmarks NCE experience HR specific experience Support functionResources Used11/5/20228For Discussion Only-Do Not Duplicate-Do Not DistributeA working philosophy for the future:The“Business-Within-A-Business”concept11/5/20229For Discussion Only-Do Not Duplicate-Do Not Distribute Determine what they do and do not need Have choices for sourcing support products/services“Make”in Business Unit and/or Purchase from NCE Shared Service and/or Purchase in the marketplace Will become more astute consumers,demanding value(the combination of cost&quality)and service(the combination of cost and timeliness of delivery)If their needs arent met,they will vote with their pocketbookCustomersDrive Strategy is about choices:what you will and will not offer to customers Some choices are really not“choices”i.e.regulatory,Corporate mandated It is difficult to concurrently work under 3“strategic models”:Lowest cost New product/service innovator Customer intimate Revised as customer needs change over timeStrategyDictates Focus on customer needs,translate into best delivery structure Organization built around skills,competency,experience as opposed to longevity,tenure,relationships“Process”orientation is important since organization structure and the people in the boxes will change over time-they always do!“Dynamic tension”between Shared Services HR and Business Unit HR personnel Business Unit personnel will“go native”,and in many ways they should!Revised as customer needs change over timeStructureSupports delivery of Mix of cyclical,planned deliverables(transactions,reports)and occasional needs(consultation)Must be managed accordingly One size doesnt fit all Need to be well defined,well understood by customers and“buyable”Not one big charge Understood in terms of cost and price(given regulatory mandates)Will come and go:new needs emerge,some will be outdated or not in demand Revised as customer needs change over timeProducts/ServicesMonitored by Contracts(or Service Level Agreements)are the market mechanism for buying services Service agreements facilitate resource planning-how many people and what skills are needed Measurable,accountable,meaningful,tied to individual and team rewards Cost Quality Time Have an“owner”Whos responsible If you cant measure it,you cant manage it Revised as customer needs change over timePerformanceMeasuresTo understand the context for our recommendations,it is important to understand our assumptions about the potential “future state”of HR at NCE.We assume that HR will need to operate as a“Business within a Business”,driven by the“market economy”that the Business Unit corporate structure is creating.That are used to manage business performance in serving Business-Within-A-Business11/5/202210For Discussion Only-Do Not Duplicate-Do Not DistributeKey Issues:Challenges facing NCE HR today11/5/202211For Discussion Only-Do Not Duplicate-Do Not DistributeNCE HR Benchmark OverviewSome key performance indicators our team gathered indicate that NCEs HR organization today doesnot compare favorably to other HR organizations in terms of headcount and cost,and has room for improvement in meeting the needs of customers in the current NCE organization.02 04 06 08 01 0 01 2 05,0 0 0 -1 0,0 0 0 e e sU t ilit yIn d u s t ryN C E00.511.522.53Work SafetyPayrollRecruitingBenefitsPerf MgmtEE RelationsCompensationHR MgmtTrainingRatio of HR employees to total employeesHR expense as a percent of operating expense0.0 0%0.1 0%0.2 0%0.3 0%0.4 0%0.5 0%0.6 0%0.7 0%0.8 0%S a ra t o g aN C ECustomer Satisfaction ResultsGoodGood=No GapGood11/5/202212For Discussion Only-Do Not Duplicate-Do Not DistributeKey NCE HR Issues Today Larger staff and higher cost in NCE HR compared to other similarly sized organizations Ratio of HR employees/total employees:Saratoga Institute*120:1-(5,000-10,000 employees)94:1-Utility Industry NCE*79:1Many NCE HR professionals indicate that they are short staffed.Reasons for NCEs ratio are inefficient structure,processes,use of technology,rework and error correction HR operating expense per employee:Watson Wyatt:$873 NCE:$2,086*HR expense as a percent of operating expense:Saratoga:.74%NCE:.53%*HR expense per HR FTEs:Watson Wyatt:$70,367NCE:$98,745*The ratio of management personnel to staff is 1:6.2;however,this ratio is unevenly distributed and there is opportunity to reduce costs by expanding the span of control in some areas(ex:compensation),and under the modified HR organizational structure to be discussed later in the presentation.*Benchmarks exclude Safety,IH,Payroll and Learning*FTE count excluding current temporary employees*NCE data is based on HR budgeted operating expense in the 1998 business plan.These numbers may contain or exclude cost components that are excluded or contained in the benchmarks from Watson Wyatt and Saratoga.*This number is based only on the HR employees who responded,i.e.it is not extrapolated,and includes the 12 FTEs detailed in the HR functional group analyses&recommendations.Several NCE HR employees reported significant amounts of rework caused by reasons such as duplication/uncertainty of responsibility and maintaining standalone spreadsheets to work outside of HRizon.By eliminating only the rework reported,NCE HR could free up roughly 14 FTEs*to devote to other more value-added work,(or reduce overtime).11/5/202213For Discussion Only-Do Not Duplicate-Do Not Distribute Inconsistent Daily Management and Performance Management Lack of responsibility,accountability and ownership for results Lack of sound performance expectations and measurable results(individual and departmental)Lack of performance management process to identify,track and measure key performance indicators and business results This“fire fighting”mode does not allow HR to focus on strategic business initiatives and improvement opportunities to support the organizations future goals Ineffective HR organizational structure The current organization structure does not afford customers optimal service.Customers often contact both Field Services consultants and Core group representatives to resolve the same issue/problem.Quality of information provided may vary between the two groups.Activity analyses indicates significant rework(upwards of 40%in some areas)primarily stemming from this organizational issue There is confusion about roles,responsibilities and boundary issues between HR organizational units.There will be significant challenges in transition management When HR and the entire organization move through this transition,there should be a focus on the following:Ensuring on-going service Developing service level agreements Identifying and managing process improvements in each functional area,using prior work(i.e.MSI)Managing the people change(selection,termination,knowledge management,backfill,etc.)Managing the financial implications of the transition Identifying a forum to share best practices across business units in all HR areas Identifying and retaining key employees Ensuring proper and timely communication to assist with change enablementKey NCE HR Issues continued11/5/202214For Discussion Only-Do Not Duplicate-Do Not Distribute The HR skills,competencies and experience may not match current and future customer requirements The Field Service organization was staffed with individuals ranging from subject matter experts to support personnel.This resulted in a Field Service organization composed of consultants who may not possess the skills normally associated with an HR generalist.An adequate skills/competencies model does not exist to assist with recruiting qualified applicants and determining developmental needs of current staff.A strategic direction needs to be defined as it relates to Human Resources under the new NCE Business Unit operating model,for example:Determining if benefit plans can be divided by business units Determining the impact of such a decision(pliance,legal,plan asset distribution,etc.)HRIS is not integrated for all areas of HR and current technology is not fully utilized and understood Several HRizon modules were successfully implemented and are processing transactions,however:There are still instances where calculations are developed outside of HRizon(i.e.Excel)and uploaded into HRizon Tape transfers to vendors are not error free HRizon data are routed through the IBM mainframe system which adds an additional technical processing step in delivering HR information to users HR users are/were not consistently trained in HRizon,some admittedly by choice Key NCE HR Issues continued11/5/202215For Discussion Only-Do Not Duplicate-Do Not DistributeCorporate CenterCommodityDeliveryRetailInternationalNCE HR Today Customers are not consistently satisfied NCE HR has more people serving the lineemployees than comparative benchmarkcompanies HR roles and responsibilities unclear Duplication/overlap of effort between Core,FS Multiple contact points between HR and customers-customer confusion&frustration,HR frustration Although process maps exist for HR processes,they arent consistently used to drive continuous improvement,make comparisonsto other HR groups,measure performance,ormanage the business FS representatives trying to fill generalist roles but some lack experience,skills,training Lack of consistent tangible,measurable accountability for results HR products/services are not clearlydefined,communicated,costed,priced-(These are emerging but have a ways to go)HR customers cant purchase discrete,unbundled HR servicesIssues with current HR service deliveryIf you accept the business-within-a-business concept,demands on all NCE support organizations,including HR,will intensify in the future as Business Units become more demanding customers with freedomto choose their service providers.Customer demands will intensify the need to overcome the issues facing HR today.NCE HR TodayHR Issues SummaryWho do I contact?Whos workingon the issue?Risks of policy infraction?Whos accountable?VendorHR CoreHR Field Services11/5/202216For Discussion Only-Do Not Duplicate-Do Not DistributeLooking at HR today and tomorrow-Ideas about current and future state of NCE HRHR functional group analyses&recommendationsCompensation AdministrationBenefits AdministrationPayroll/HRICLearningWorkforce RelationsStaffingSafety and Industrial HygieneDisability ManagementField Services When reviewing the following information many observations may appear to be critical of current practices.The nature of these analysis projects focuses more on improvement opportunities than on what is really working well.The important questions to keep in mind are:“Can the way were currently working survive the test of customer choice?”“Are we operating as an effective,competitive Business-within-a business today?”HR Functional Group Analysis&Recommendations11/5/202217For Discussion Only-Do Not Duplicate-Do Not DistributeLooking at HR today and tomorrow-Ideas about current and future state of NCE HRHR functional group analyses&recommendationsCompensation AdministrationBenefits AdministrationPayroll/HRICLearningWorkforce RelationsStaffingSafety and Industrial HygieneDisability ManagementField ServicesCompensation11/5/202218For Discussion Only-Do Not Duplicate-Do Not DistributeCompensation AnalysisCustomer satisfaction results:Largest gaps today in meeting current customer needs according to those surveyed:Communicating compensation policies Effective and fair compensation system Employees not compensated for competencies that add organizational valueKey issues reported by department personnel include:Files are not complete and current regarding position descriptionsThere is a lack of communication and information sharing between HR departmentsThere is a lack of training for Field Service consultants which results in Field Service consultants giving managers“what they want instead of what they need”The job evaluation system is outdated and there are too many grades within salary structure causing hair splitting between gradesTechnology support is lacking;need automated job description,incentive plan administration automation,market pricing automation,etc.11/5/202219For Discussion Only-Do Not Duplicate-Do Not DistributeCompensation RecommendationsStrengths include:Good understanding of the company;the dimensions of the positions and how they inter-relateAccomplished technical abilitiesFuture Improvement Opportunities/Recommendations:Evaluate the risks and consequences of allowing the business units to own compensation practicesReview compensation grade structure:this may result in a simpler structure with fewer grades and ease of administrationMake use of automation to speed up processes:automate job descriptions and place them on the company intranet;automate incentive plan administration and market survey database which includes receiving market survey information electronically and tracking trends from year to year electronicallyDevelop,communicate and enforce NCE-wide policy/philosophies concerning pay,total compensation and base pay vs.incentive pay(below,at,or above market)across the Business UnitsBy eliminating rework reported in the group,Compensation should be able to eliminate over 1.5 FTEs of non-value-added rework,allowing Compensation personnel to work on other value-added activities11/5/202220For Discussion Only-Do Not Duplicate-Do Not DistributeLooking at HR today and tomorrow-Ideas about current and future state of NCE HRHR functional group analyses&recommendationsCompensation AdministrationBenefits AdministrationPayroll/HRICLearningWorkforce RelationsStaffingSafety and Industrial HygieneDisability ManagementField ServicesBenefits11/5/202221For Discussion Only-Do Not Duplicate-Do Not DistributeCustomer satisfaction results:Largest gaps today in meeting current customer needs according to those surveyed:Knowledgeable and timely response to benefit questions Access to simple and complete benefit information Fu。