FORD: CO-OWNERSHIP OF EVP DEVELOPMENT

1

© 2012 The Corporate Executive Board Company. All Rights Reserved. CLC3844812PRO

FORD: CO-OWNERSHIP OF EVP DEVELOPMENTCONTEXT

Ford’s talent-focused corporate strategy —which drove its significant turnaround and return to profitability following the recession—created a conducive environment for developing the company’s employment value proposition (EVP). While HR had the benefit of working with line executives who value talent, true co-ownership of the EVP development efforts with those executives was critical to a successful EVP.

SOLUTION

Ford alters the traditional EVP development process to ensure co-ownership between HR and line executives.

RESULTS

■ Significant line leader representation and contribution to the EVP development process

■ Improved EVP strength and employee outcomes

PRIMARY COMPONENTS

■ Comparison of EVP Expectations —Contrast and discuss the differences between what employees and line executives want in an EVP.

■ Business Process Repurposing—Choose EVP attributes using a prioritization process that line executives have expertise in implementing.

■ EVP Attribute Matching—Ask line executives to lead improvement efforts for the EVP attributes that are most relevant to their business challenges.

■ EVP Index—Simplify EVP trending into a dashboard measure.

COMPANY SNAPSHOT

Ford Motor CompanyIndustry: Automotive2012 Sales: US$134.3 B2012 Employees: 171,000Headquarters: Dearborn, Michigan,

USA

2


PEOPLE-DRIVEN TURNAROUND CONDUCIVE TO EVP DEVELOPMENT

With Ford’s talent-focused corporate strategy driving its unprecedented turnaround, line executives were enthusiastic about EVP development.

■ Ford’s “One Ford” plan, which focuses on working together and key behaviors of Ford’s workforce, helped bring Ford back to profitability, creating momentum for talent initiatives in the company.

■ While the idea of an EVP was new as part of HR’s “Great Place to Work” initiative, Ford’s line executives wholeheartedly bought in based on the importance of talent to business outcomes.

Ford’s Talent-Focused Corporate Strategy

Objectives of Ford’s New EVP

Ford Company Net IncomeIn Billions

Line Executive Buy-In to EVP

2008 2009 2010 2011 2012

($14.76)

$2.72

$6.56 $5.97 $5.67

■ Positively impact employee morale, engagement, and retention.

■ Guide senior leadership decisions concerning various employee initiatives.

■ Ensure alignment with Brand Promise and Corporate Reputation initiatives.

Agree to budget expenditures for EVP development

Sit on the EVP Development Team

Endorse EVP messages to their departments

Line executives:

SITUATION OVERVIEW DATA COMPARISON

PROCESS REPURPOSING

EVP ATTRIBUTE MATCHING EVP INDEX RESULTS APPENDIX

1 Ford reported $20.21 billion of net income including the impact of 2011 changes in its valuation allowance against deferred tax assets.

1

3


Ford’s HR team must lead line executives to co-own, not just buy into, EVP development.

■ Ford’s EVP Development Team, assembled by its head of HR, includes approximately 30 HR and line executives tasked with developing Ford’s EVP.

■ Line executives are a valuable asset for the EVP Development Team, as they bring the business expertise, employee influence, and strategic influence required for the EVP to be successful.

■ Ford HR effectively managed through the challenges of working with line executives on the EVP.

LINE/HR CO-OWNERSHIP OF EVP IS CRITICAL, BUT CHALLENGING

Ford’s EVP Development Team

Mission: Develop Ford’s EVP to impact employee outcomes, guide leadership decisions, and align with corporate and brand identities

Advantages of EVP Co-Ownership with Line Executives

Challenges of EVP Co-Ownership with Line Executives

■ Business Expertise—Line executives can advise on how to inflect business outcomes with EVP decisions.

■ Employee Influence—Line executives’ priorities influence employee behaviors and outcomes of their departments.

■ Strategic Influence—Line executives are intimately involved in creating and managing Ford’s corporate and brand identities, which the EVP must align with.

■ How do we develop a shared understanding of employee perspectives?

■ How do we quickly build shared capability to select the right EVP attributes?

■ How do we engage line executives in executing detailed work to identify specific improvements to the EVP?

■ How do we ensure EVP continues to be a top business priority once developed?

Line Executives


PROCESS REPURPOSING


HR

4


INTEGRATE COLLABORATION ENHANCERS INTO EVP DEVELOPMENT PROCESS

How Ford HR Encourages Co-Ownership of EVP Development with Line Executives

Ford incorporates activities into its EVP development process to foster co-ownership between HR and line executives.

■ Ford’s EVP development process, executed by the EVP Development Team, included four major steps over the span of two years.

■ To foster co-ownership of the EVP development between HR and line executives, Ford inserted four activities into the development process to enhance the level of collaboration between the two parties.


PROCESS REPURPOSING


Ford’s EVP Development Process

Key Challenges to Co-Ownership with Line Executives

Ford’s Solution

Comparison of EVP Expectations

Contrast and discuss the differences between what employees and line executives want in an EVP.

Business Process Repurposing

Choose EVP attributes using a prioritization process that line executives have expertise in implementing.

EVP Attribute Matching

Ask line executives to lead improvement efforts for EVP attributes most relevant to their business challenges.

EVP Index

Simplify EVP trending into a dashboard measure.

How do we develop a shared understanding of employee perspectives?

How do we quickly build shared capability to select the right EVP attributes?

How do we engage line executives in executing detailed work to identify specific improvements to the EVP?

How do we ensure EVP continues to be a top business priority once developed?

Data CollectionUnderstand

employee and candidate

preferences and perceptions.

EVP DesignDefine the

competitive EVP

EVP DeliveryIdentify and

implement the highest-return investments to

reinforce the EVP.

EVP MonitoringEnsure EVP

investments have real impact on

talent attraction and retention.

5


HELP LEADERS INCORPORATE EMPLOYEE VIEWS IN CHOOSING EVP ATTRIBUTES

Meeting of Ford’s EVP Development Team

Ford’s HR team builds a common understanding of workplace realities by contrasting and discussing employee preferences with line executives.

■ During a meeting of the EVP Development Team, Ford HR reinforces the need to select EVP attributes that employees and candidates, not necessarily the line executives in the meeting, find attractive.

■ HR presents and discusses findings from the data gathering process depicting a significant difference between what employees and candidates prefer and what executives, such as those with responsibility to develop the EVP, prefer.

■ The data and discussion build shared capability between HR and line executives regarding employee perspectives.

Data-Driven Comparison of Employees’ and Line Executives’ Top EVP PreferencesPresented to Line Executives in EVP Development Team

Questions for EVP Development Team Discussion

■ Why do you think this difference exists?

■ What are the business risks of developing an EVP around this group’s preferences alone?

■ How can we incorporate employees’ views in a way that still aligns with strategic priorities?

Employees’ and Candidates’ EVP

Preferences

Line Executives’ EVP Preferences

Attribute A Attribute F

Attribute B Attribute G

Attribute C Attribute H

Attribute D Attribute I

Attribute E Attribute J

Discussing implications of the data without judgment helps line executives envision and agree on how to use employee and candidate input when selecting EVP attributes.

Presenting data makes line leaders more receptive to reevaluating their approach to selecting EVP attributes.

HR

Line Executives


PROCESS REPURPOSING


6


EVALUATE EVP ATTRIBUTES WITH A PROCESS SOURCED FROM THE BUSINESS

Ford repurposes a prioritization process used in the business to evaluate potential EVP attributes against HR-identified criteria.

■ Ford evaluates potential EVP attributes based on their importance to employees and candidates, relevance to business strategy, and opportunity for competitive differentiation.

■ To determine the opportunity for competitive differentiation in each potential EVP attribute, Ford’s line executives suggested using its PALS process.

■ The process helps the EVP Development Team use line executive expertise to execute on HR-driven criteria for EVP attributes.

■ The EVP Development Team further refines the continuum for EVP attributes that are ultimately selected.


PROCESS REPURPOSING


Business Process to Evaluate Opportunity for Competitive Advantage in Vehicle Design

Translation to Evaluate Opportunity for Competitive Advantage for EVP1

Define the continuum of practice for each potential vehicle attribute (e.g., gas mileage) from uncompetitive to leadership.

Assess Ford’s current state on the continuum.

Determine desired state on the continuum and prioritize vehicle attributes with leadership targets.

Define the continuum of practice for each potential EVP attribute (e.g., employee development) from uncompetitive to leadership.

Assess Ford’s current state on the continuum.

Determine desired state on the continuum and prioritize vehicle attributes with leadership targets.

1 See the Appendix for an illustration of the PALS process for EVP attribute evaluation

Product Attribute Leadership Strategy (PALS)Ford’s patented method for determining in which attributes of the vehicle the company targets to lead the market.

The business process is proven successful and most line executives know how to implement it.

The business process is easily translated to EVP management and will improve EVP effectiveness.

7


ASSIGN EXECUTIVES TO EVP ATTRIBUTES THEIR BUSINESSES NEED MOST

Ford’s EVP Development Team Structure Once Attributes Are Selected1

Ford assigns ownership of delivering on EVP attributes to executives based on the attribute’s relevance to their business challenges.

■ For each attribute of Ford’s new EVP once developed, one line leader is assigned as the lead for defining the attribute and identifying the highest-return investments to reinforce the attribute.

■ The line executives feel accountable for delivering on the attribute, as its success ultimately impacts their business unit’s success.

Ford’s EVP Design CriteriaThe process of determining Ford’s EVP was driven by three principles:

1. Be relevant to our business strategy and aligned with our vision of the relationship with employees

2. Be based on what is important to employees and candidates (supported by real data)

3. Provide an opportunity for competitive advantage in hiring, engaging, and retaining employees

…and will be used by senior leadership to guide employee-related business decisions. 1 Ford’s EVP Development Team also includes roles for data collection and analysis, external benchmarking liaison, and change management and

communications, all filled by HR professionals..

Steering Committee and Executive Champions

Project Management

Worklife Flexibility Workstream

Lead: CIO

Comp. and Benefits Workstream

Lead: VP of Marketing

Leadership Quality Workstream

Lead: Regional VP

Working Together Workstream

Lead: VP of Manufacturing

Employee Development Workstream

Lead: Regional VP

Building leadership skills throughout the organization.

Building relationships across the organization by replicating the role model behaviors and strong teamwork demonstrated by senior executives.

Continuing to build individual, team, and organizational capabilities

Balancing productivity maximization while attending to morale.

Ensuring that the compensation and benefits package supports talent attraction and retention strategies.

Line Executive’s Stake in Attribute’s Success


PROCESS REPURPOSING


8


SIMPLIFY EVP PERFORMANCE METRICS TO HELP LEADERS MANAGE THE EVP ‘BY THE NUMBERS’

Ford’s EVP Measurement Strategy

Ford goes beyond identifying indicators of EVP success to filtering them into an index that fits into HR and line dashboards.

■ The workstreams for each EVP attribute identify a set of metrics that help gauge whether the attribute is being delivered successfully.

■ Rather than track an unwieldy list of metrics, Ford filters the list of indicators into a set of two metrics for each attribute to track on an ongoing basis.

■ Ford incorporates the selected metrics into an EVP Index, which is a single number that indicates the general trend of EVP success.

■ The EVP Index and its integration into performance dashboards ensures line executives are consistently aware of how their work on EVP delivery is trending, fostering an active sense of accountability.

Typ

ical

Sto

pp

ing

Po

int

for

EV

P M

easu

rem

ent

Identify Indicators of EVP Success

EVP attribute workstreams (see page 6) identify metrics from a variety of sources that together indicate successful delivery of the attribute.

Manage the EVP as a Business Metric

Ford integrates the EVP Index into other HR and line performance tracking.

Filter Indicators to Create EVP Index

Ford’s EVP Development Team selects metrics for the EVP Index from the list of indicators of EVP success.

EVP Index

■ Includes two metrics for each EVP attribute, rolled up into one numerical score

■ Includes metrics from existing sources that (1) align most closely with the philosophy of the EVP attribute workstreams, and (2) are easy to collect and trend over time

EVP Monitoring

■ Incorporate the EVP Index into the HR dashboard and HR and line executive MBOs

■ Track and goal the EVP Index bi-annually

■ Use the other indicators of EVP success as metrics-on-demand, to refer to when the EVP Index identifies a change that requires further analysis of root causes

Year 1 Year 3Year 2 Year 4

Indicators of EVP Success

By EVP Attribute

Employee Development ■ Retention of key talent ■ Employee satisfaction with

development opportunity ■ Percent IDPs completed ■ ...

Working Together ■ Management commitment

to diversity ■ Product launch success ■ Cross-functional teamwork ■ ...

Leadership Quality ■ Manager quality ■ Attrition due to manager quality ■ Participation in leadership

programs ■ _______________________

Compensation and Benefits ■ Employee satisfaction with comp. and benefits

■ Competitiveness of total rewards packages

■ Attrition due to compensation and benefits

■ … ■ Worklife Flexibility ■ Employee satisfaction with personal productivity

■ Usage of flexibility programs ■ Employee empowerment


PROCESS REPURPOSING


Employee Development (2 metrics) +

Working Together (2 metrics) +

Leadership Quality (2 metrics) +

Compensation and Benefits (2 metrics) +

Worklife Flexibility (2 metrics)

EVP Index (one number)

9


Ford’s line leaders are engaged in executing EVP development, improving EVP outcomes.

■ Ford’s line executives co-own the EVP development efforts with HR, accounting for almost half of the EVP Development Team and contributing meaningfully.

■ Due in part to line executive contribution, Ford’s EVP is steadily improving and is driving significant improvements in talent outcomes.

■ A 5% increase in the EVP Index indicates a statistically significant improvement in Ford’s EVP as a whole.

■ Ford has retained 100% of its key senior talent, which is imperative to support business continuity during a time of market turnaround.

DRIVING EVP SUCCESS

High-Quality Line Executive Contribution to EVPMakeup of Ford’s EVP Development Team

EVP Success

Trajectory of Ford’s EVP Index

Value of Line Leaders to EVP Development Process

Employee Net Promoter Score1

Retention of Key Talent

54% HR or OD Staff

46% Line

Executives

“The development of our EVP was truly a joint effort between our HR team and our line executives. HR brought much-needed structure and data to the process, but it was our line executives who drove a significant amount of the work, very effectively: discussing data, presenting proposals, determining action, and monitoring results.”

HR Executive and Co-SponsorFord Motor Company


PROCESS REPURPOSING


2010 2012

10%

2010 2012

5%

1 Percentage of employees selecting 9 or 10 on a 10-point scale on how likely they are to recommend working at Ford to a friend.

100% of key talent retained as of 2012.


10

FORD’S EVP DEVELOPMENT PROCESS

EVP Chartering

Clarify the business case and objectives for EVP development.

EVP Monitoring

Ensure EVP investments have real impact on talent attraction and retention.

EVP Delivery

Identify and implement the highest-return investments to reinforce the EVP.

EVP Design

Define the competitive EVP

Data Collection

Understand employee and candidate preferences and perceptions.

EVP Objectives

■ Positively impact employee morale, engagement, and retention.

■ Guide senior leadership decisions concerning various employee initiatives.

■ Ensure alignment with Brand Promise and Corporate Reputation initiatives.

EVP Design Criteria

■ Importance to employees and candidates

■ Relevance to business strategy and alignment with vision of the relationship with employees

■ Opportunity for competitive advantage in hiring, engaging, and retaining employees

Sample Measures of Success

■ Employee satisfaction

■ Employee net promoter

■ Retention of key leaders

■ Diversity commitment

■ Candidate acceptance ratio

■ Voluntary attrition

■ Employer brand image

Data Sources

■ Internal pulse survey

■ CEB (Ford results and benchmarks)

■ Data from Corporate Reputation and Brand Promise initiatives

■ Universum

Define Terms and Underlying Philosophy and Principles

Prioritize Actions and Agree on Next Steps

Recommend Actions and Potential Implications

Identify and Prioritize Gaps and Determine Root Causes

Set Target for Desired State on Continuum

Assess Ford’s Current State on Continuum

Describe Attribute Continuum1 and Key Metrics

Sub-Process for Each EVP Attribute Workstream

1 Ford’s workstream teams repeat the exercise seen on page 5 for chosen attributes to provide a more in-depth analysis.


PROCESS REPURPOSING



11

1 EVP Attribute: Employee Development

Elements of Attribute

Uncompetitive Competitive Leadership

Competencies No competency models. Competency models are in place for critical skills.

Competency models are in place for all teams.

Individual Development Planning

Development processes are fragmented or disjointed.

Development plans/discussions are available to employees.

One hundred percent of employees receive IDPs and developmental discussions.

Manager Commitment to Development

Supervisors focus on filling positions.

Supervisors focus on building individual and team capability.

Supervisors focus on development ensuring that the organization has the capability for success.

Define the continuum of practice for each potential EVP attribute.

2 Assess Ford’s current state on the continuum.

3 Set target for desired state on the continuum and prioritize attributes with leadership targets.

How Ford Uses It’s Product Attribute Leadership Strategy (PALS) to Evaluate Competitive Potential of Potential EVP AttributesIllustrative Example

Current State Desired State

“PALS” PROCESS FOR EVP ATTRIBUTE EVALUATION


PROCESS REPURPOSING


Documents

FORD: CO-OWNERSHIP OF EVP DEVELOPMENT