Online Seminar Series: The Future of Work is Humaninfokf.kornferry.com/rs/494-VUC-482/images/KornFerry-Planning-Your... · The Future of Work is Human Tuesday, ... Online Seminar

The Future of Work is Human

Tuesday, 4 April 2017

Seminar 2:

Strategic Workforce Planning

The right workforce, today and tomorrow, at the right cost

Online Seminar Series:

© 2017 Korn Ferry. All rights reserved 2

Your moderator

David Pang

Senior Principal

Korn Ferry Hay Group, Singapore


A total approach to leadership and talent

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– developing, engaging, and

rewarding them to reach

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SEMINAR 3 - HOW TO ASSESS AND ACQUIRE YOUR FUTURE WORKFORCE

Wednesday, 19 April

SEMINAR 4 - THE FUTURE OF EMPLOYEE MOTIVATION AND RETENTION

Wednesday, 3 May

SEMINAR 5 - LEADING THE WORKFORCE OF THE FUTURE

Wednesday, 17 May

Online Seminar Series:The Future of Work is Human


Housekeeping

• All lines are muted.

• Please submit your questions via

the Q&A panel at any time.

• The session will be recorded.

• Your feedback is important:

Please take our 1-minute

survey which will open in your

browser after this session


Our presenter and panellists

Eric PelletierSenior Client Partner

Global Director of Strategic Workforce Planning

Tonny LohSenior Client Partner


Tomás SalomãoPrincipal, Work Design Delivery Lead

Korn Ferry Hay Group, ANZ


People are the stewards of technology – we have the power to accelerate or limit its impact. We can’t control it but we can shape it.

People are the champions of technology – it is created to allow us to do things faster, better and easier.


Establishing the conditions for success to maximize performance and results.

Korn Ferry’s Superior Performance Framework:

LEADERSHI P

D I S C R E T I O N A R Y E N E R G Y

organizat ion PURPOSE & VISION・ CHOICE & FOCUS・ ACCOUNTABILITY & FAIRNESS

PEOPLE CLARITY ・ CAPABILITY ・ COMMITMENT

SUPERIORPERFORMANCE

At the organizational level, it’s all about aligning

Talent to Strategy.


The challenge is people with the right skills and competencies are in short supply.

Top talent skills shortage

1. A track record of formative experience

2. Self-awareness

3. Leadership traits

4. Drive to be a leader

5. Aptitude for logic and reasoning

6. Managed derailment risks

7. Agility

“

Seminar 2:


The right workforce, today and tomorrow, at the right cost


Global Director of



A perfect storm is brewing in APAC

Accelerated drive

towards

digitization

Rapid shifts in

required people

profiles, in

Emerging and

Developed

Countries

(new

technologies,

digital,

collaboration…)

Increased

business volatility

Massive Talent

war leading to

significant people

costs inflation

No more

Population

Dividend in

China


The Great China Wall

YoY increase rate 2018 2019 2020 2021 CAGR

People system cost 16.4% 13.8% 12.8% 11.8% 13.7%

Sales 14.0% 12.3% 12.0% 11.9% 12.6%

Horizon 21 personnel cost 8.0% 11.1% 8.3% 10.0% 9.4%

Revized people system cost 8.0% 9.3% 8.5% 7.0% 8.2%

People system cost per FTE 7.5% 8.5% 8.2% 7.6% 8.0%

# of FTEs 8.3% 4.8% 4.2% 3.9% 5.3%

114128

143

160

108 120

130

143

108

114

118123

107

117

126

136116

133

156

175

100

108 118

128137

2017 2018 2019 2020 2021

100

120

140

160

180

Ind

ex

-1.1% CAGR

Margin squeeze

People system cost

Sales

Horizon 21 personnel cost

Revised people system cost

People system cost per FTE

# of FTEs


China – more jobs than job hunters

2015 Q1-2016 Q3 job market condition of China –through public employment service organizations

The ratio of jobs available to job hunters

remains superior to 1, creating people cost

inflationary pressure

Year Labor participation

2005 76%

2014 71.4%

Labour participation rate in China has

decreased from 76% to 71.4%

between 2005 and 2014

Labour participation rate = economically-active population (employed and unemployed)/working-aged people. The index is to measure the degree of people get into economy activity.

Source: Ministry of Human Resources and Social Security of China

5,2505,600

5,050

4,390

5,200 4,9704,7504,690

5,280

4,620

4,000

4,870 4,7204,320

0

1,000

2,000

3,000

4,000

5,000

6,000

2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3

Thousand

Year

No. of jobs provided No. of people hunt for job


China strategy: from fast to smart growth – more with less

Sales

Costs

Time

RMB

▪ Wider and deeper

▪ Range expansion

▪ Drive to solutions

Resourcing plan (SWP)

▪ Quantity

▪ Quality

▪ Improving productivity ratios

▪ Organically

▪ Digitalization

▪ Lowering system costs

▪ Energy/mineral consumption

▪ Pollution

▪ Congestion

Strategic Workforce Planning (SWP)

How can SWP help…


SWP – matching workforce supply to workforce demand

Activity and productivity

Workforce data

Workforcesupply

Workforcedemand

Business levers HR levers

Businesscycle

Peoplecycle

Key:InputsOutputsLevers

Gap


Describing the workforce through the five rightS

Right Site

Right Skills

Right Size

Right Shape

Right Spend

Right composition of workforce

– from enabling vs. operational,

in-sourcing vs. outsourcing,

staff vs. management,

distribution across grades.

Availability of capable staff at

the right locations – to be

able to meet changing

requirements in the future.

Clarity regarding needed and

pivotal capabilities to meet

future goals and actual gaps.

All of this needs to be done at

the right cost for the business.

Required number of staff for the

jobs, that are needed to achieved

the strategic goals efficiently and

effectively.

1.

2.

3.

4.

5.


Heatmap – hiring needs over time by function/position

L JF 2021 2022 2023 2024 2025

Europe Operation

Development 44 61 72 80 89

Production 98 98 98 98 98

Sales 224 224 224 224 224

Service 107 107 107 107 107

Support 62 62 62 62 62

Management 42 53 55 55 55

USA Operation

Development 68 85 94 99 106

Production 98 98 98 98 98

Sales 227 227 227 227 227

Service 107 107 107 107 107

Support 62 62 62 62 62

Management 39 56 59 62 70

250

200

150

100

50

0

FTE

Capacity analysis

Heatmap for the net demand over time


Highlighting the people flow in a business unit


Million RMB

Sales (Ref.) Total people system Staff cost Recruitment Development Attrition Contractor

CAGR 17-21 12.6% 14.9% 15.1% 6.6% 4.2% 22.0% 8.0%

8.4

13.415.3

4.5

10.8

15.9

33.9

6.1

0

5

10

15

20

25

30

35

40

Recruitment Development Attrition Contractor

Million RMB

892 850.4

41.6

1557.41490.7

66.7

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Total peoplesystem cost

Staff cost Other costs

2017 2021

Other costs include:

People cost perspective over time


Best case

▪ All positive factors combined (reasonably)

HR optimization

▪ Better salary cost control

▪ Improved onboarding: Faster/cheaper recruiting – improved onboarding

Incremental fixes

▪ Optimized used of CSOs and distributors

▪ Attrition reduction (from 25% down to 12% p.a.)

Sales increase

▪ Increased geographical coverage

▪ Higher ‘same hospital sales’ through higher diagnostics

Aggressive digitalization (+70% productivity gains over

5 years)

▪ Ramp up of new digital Business Models

▪ Increased Patient Compliance (higher, cheaper sales)

Downside scenario

▪ Salary Harmonization

▪ Higher price erosion (from 3% to 5% p.a.)

Simulating scenarios to plan for the future

Validated

baseline 1

2

3

4

5

6

Simulation

ROI

Margin

Improvement

FTE

Dashboard


Integrated implications for the business and HR plans

▪ Move to virtual sales reps

▪ Chronic care – increase patient compliance

▪ Chronic care – push devices to increase diagnoses

Accelerateddigitalization

▪ Switch to CSOs (contract salesforce organizations) in lower-tier cities

▪ Simplify interfaces with distributors

Salesforce optimization

▪ Actively switch to retail pharmacy chains

▪ Promote safe on-line dispensing

Cheaper drug dispensing

▪ New employee profiles

▪ Improved employee value proposition

▪ Assess and upskill existing employees

Workforce planning

▪ Improved leadership capability development

▪ Further develop succession plan for critical positions

Talent development

▪ Step increase in recruitment efficiency

▪ Enhance onboarding efficiency

Operational excellence

Business plan HR plan

Created a 70% jump in productivity


Panel Discussion


Global Director of Strategic Workforce Planning

Tonny LohSenior Client Partner


Tomás SalomãoPrincipal, Work Design Delivery Lead

Korn Ferry Hay Group, ANZ

What’s so difficult about Strategic Workforce Planning that stops many organizations from tackling it?

24© 2017 Korn Ferry. All rights reserved


How do I find out what skills are needed in the Future of Work and how do I uncover the talent gaps?



How does Strategic Workforce Planning work?



Overall Modeling Approach

Model Fundamentals

▪ Provinces entry

▪ Cities penetration

▪ Hospitals coverage

Model Hypotheses

▪ Expansion ‘Wider’

▪ Penetration ‘Deeper’

▪ Productivity ‘Smarter’

▪ New indications/ products

▪ Epidemiology studies

Model Fundamentals

▪ Workforce framework

Model Hypotheses

▪ Attrition rates

▪ Hiring rates

▪ Motion matrix –career paths

▪ Span of control

▪ People System Cost

Excel

basedSimulation

based

Key:InputsOutputsLevers

Activity and productivity

Workforce data

Workforcesupply

Workforcedemand

Business levers HR levers

Businesscycle

Peoplecycle

Gap


Workforce framework: 43 functions each with 4 levelsBU/Dept. Functions

Chronic Care 1

BU

Drug A Sales

Drug A rketing-Central

Drug A Marketing-Regional

Drug B Sales

Drug B Marketing-Central

Drug B Marketing-Regional

Chronic Care 2

BU

Drug C Sales

Drug C Marketing-Central

Drug C Marketing-Regional

Drug D Sales

Drug D Marketing-Central

Drug D Marketing-Regional

Chronic Care 2 BU Functions(Operation/Alliance Management and

Program Realization/Market Development and Access)

Specialty 1

BU

Sales

Marketing-Central

Marketing-Regional

Healthcare Education

Technology

Strategy and Portfolio

Specialty 2

BU

Sales

Strategy Marketing

Regional Marketing

Specialty 2 BU Function(Sales and Marketing Development/NPD

and Strategic Planning and Alliance)

Management Management

BU/Dept. Functions

Medical Affairs Medical Advisor

Medical Science Liaison

Medical Education/Medical Information/Medical Publication/PAP

Manufacturing

Plant

Admin and PMO

EHS

Engineering

Quality

Supply Chain

Production

SNO SNO (Planning, Logistic, Operations and System)

Commercial

Channel

Development

Commercial Channel

Commercial Operations(Data Order/Bidding/Project/Customer

Service/Planning)

Channel Development

Key Account Management

Government

AffairsRegional Government Affairs (North/South/East)

Central Government Affairs and Market Access

Business

Operations

SFE/BI/Commercial Learning

Admin

Digital


Analysis based on:

▪ 28000+ hospitals

▪ 340 cities

▪ 31 provinces

WF demand simulation of: Commercial BUs

▪ Chronic Care 1

▪ Chronic Care 2

▪ Specialty 1

▪ Specialty 2

Supporting dept.

▪ Government Affairs

▪ Medical Affairs

▪ Commercial Channel Development

▪ Business Operations

▪ Supply Chain

7 Key Workforce Demand Scenario Variables (excl. Epi)

Market Access

# of provinces to enter

and that granted

access

Footprint

# of cities to enter

# of hospitals to cover

Penetration rate by year

Productivity Ratio

# of hospitals covered per sales rep.

Sales revenue generated per sales rep.

Channel Strategy

Contribution of other distribution channels incl.

‒ Retail

‒ Digitalization

‒ Distribution partnership


City

Tier

2016

reference

Growth rate assumption Productivity Ratio 1 CAGR

2017-212017 2018 2019 2020 2021 2017 2018 2019 2020 2021

1 2.5 5% 5% 0% 0% 3% 2.7 2.8 2.8 2.8 2.9 2%

2 2.9 5% 5% 0% 0% 3% 3.0 3.2 3.2 3.2 3.3 2%

3 4.7 5% 5% 0% 0% 3% 4.9 5.2 5.2 5.2 5.3 2%

4 9.0 0% 3% -10% -10% -10% 9.0 9.3 8.4 7.5 6.8 -7%

5 14.8 0% 3% -14% -14% -14% 14.8 15.2 13.1 11.2 9.7 -10%

City

Tier

2016

reference

(KRMB)

Growth rate assumption Productivity Ratio 2CAGR

2017-212017 2018 2019 2020 2021 2017 2018 2019 2020 2021

1 5 288 1% -15% 10% 10% 12% 5341 4540 4994 5493 6153 4%

2 3 918 2% -15% 10% 10% 12% 3997 3397 3737 4110 4604 4%

3 4 465 2% -15% 10% 10% 12% 4554 3871 4258 4684 5246 4%

4 3 624 0% -5% 2% 2% 2% 3624 3443 3512 3582 3654 0%

5 4 487 0% -5% 2% 2% 2% 4487 4263 4348 4435 4524 0%

Productivity Ratio 1: Number of hospitals served/sales rep.

Productivity Ratio 2: Expected sales revenue/sales rep.

Productivity Ratio check:

Expected sales revenue/team size:

Rationales:

▪ From 2018 forward, 22 provinces list Drug X, sales reps number boost to maximize sales but the actual peak sales will happen in at least six months later after reimbursement implementation, that’s why productivity in 2018 shows decreasing trend.

▪ In 2019, the launch of 1st line YYY indication will limit the hospital expansion capability of sales force, as well as the launch of ZZZ in 2020.

4664 3933 4281 4685 5193 3%

Productivity ratios are key components of the model


HR levers assumptions are applied to simulate workforce supply

*25% and 28% for professional level-10 of Drugs A and B sales in tier 1 city respectively

** 10% for professional level-10 of Drug B sales in tier 1 city

95% represents the fact that the replacer could be found within 3 months

92% represents within 5 months

DA sales DB sales Marketing

Entry level 15% 20% 10%

Level 10 20%* 20%* 10%

Level 11 5%** 5% 10%

Middle level 5% 5% 10%

Attrition rates Hiring rates

Chronic Care 1

Entry level 95%

Level 10 95%

Level 11 92%

Middle level 92%

Motion matrix Tenure period – best case and usual case


Items Definition

Staff cost Total cost of salary and benefits for Merck

China FTEs

Recruitment

cost

Recruitment fees for RPO, headhunters and

hiring related costs

Development

cost

Talent development cost from training, on-

boarding programs and

Attrition

penalty

Estimation of the opportunity cost due to

vacancy, disruption and on-boarding period

(from 3 month a 1 year salary)

Attrition cost Including attrition penalty and severance fee

Contractor fee Salary and benefits for contractors (incl.

interns)

People

System cost

Including staff cost, recruitment,

development, attrition and contractor fees

Components and key variables of the total people system cost

▪ Merit increase rate

▪ New hire salary increase rate

▪ AIP and SIP guidelines

▪ Allowance guidelines

▪ RPO budget matrix and increase rate

▪ MT headhunter fee increase rate

▪ Development budget matrix and increase rate

Key variables

▪ Workforce demand

▪ Attrition rate (Voluntary /Involuntary/Total)

▪ Internal motion vs. external hiring rate


LAVA: our proprietary tool to model the workforce supply


Conclusion

SWP is a business exercise

Converting the strategy into the job framework

and identifying the demand drivers, are the

keystones to the SWP process

01

02

03

SWP can become the corporate strategic backbone

It gradually improves the quality of HR data and integrates

relevant HR analytics.

Productivity ratios exercise

It engages the business into thinking about the future.

04 Impossible to model on Excel

The workforce supply is a bottom-up exercise, and has to be modelled

through a simulation engine.


Can organizations do

SWP themselves?

Questions?

SEMINAR 3 - HOW TO ASSESS AND ACQUIRE YOUR FUTURE WORKFORCE

Wednesday, 19 April

SEMINAR 4 - THE FUTURE OF EMPLOYEE MOTIVATION AND RETENTION

Wednesday, 3 May

SEMINAR 5 - LEADING THE WORKFORCE OF THE FUTURE

Wednesday, 17 May

Online Seminar Series:The Future of Work is Human

Please complete the brief survey that will be on your screen after this webinar.

Thank you for joining us today!

Documents

Online Seminar Series: The Future of Work is Humaninfokf.kornferry.com/rs/494-VUC-482/images/KornFerry-Planning-Your... · The Future of Work is Human Tuesday, ... Online Seminar