Cases

Ad 1. Have you considered the positive impact that effective personnel and management structures can have on your business?

A few years ago, the global market of fossil power generation changed dramatically. Singular events (e.g. Fukushima) and the decision on nuclear phase-out of the German government changed market conditions over night. In order to handle this volatility properly for the respective unit of a large international enterprise, I established an annual review of the business strategy to assure alignment of all personnel resources globally. While this was met initially with quite some resistance, it soon became clear that the approach enabled us to respond much more quickly to changing markets. This intensive annual reflection of the market, the environment and its impact on our personnel became increasingly valued not only by our leadership, but the management team as well.

The process, while led by HR, was done in close collaboration with other constituent groups such as the Strategy Department. The process was relatively lean and was targeted to anticipate the complexities of the future market without becoming burdened by overly complex scenarios.

The annual content discussion as indicated above was integrated into the organizational framework by the business leaders. While it was supported by a few standards from HR and Strategy, it was not an “HR Program.” Instead, it became a tool for the business where each leader accepted the responsibility to drive the discussions, content and focus-wise, according to their specific business needs.

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Ad 2.Does your company long-term succession planning to or would like your future leaders generally better demand and promote?

Years ago, a study was conducted at a technical service provider of an international enterprise in Germany; its goal was to significantly improve performance management along with its subsequent analysis. Roughly 10.000 employees were organized in a dozen regional entities in all major cities of Germany. Each entity had ~800-1200 employees with a department structure of 80-200 employees per department and a group structure underneath (~10-25 employees each). At the beginning of the exercise, there was no meaningful linkage to our IT systems, so it was not possible to apply effective management oversight for the people planning process, nor identify “who can be in charge of what in the future and additionally who is willing to do so”? This led to many inefficiencies, including filling vacant positions in a high pressure environment with insufficient information to assure that the proper skillsets were being recruited.

After initially updating and maintaining the IT system with reliable data related to all management positions, the next step was to interview all managers in the first two levels as well as the currently known potential candidates for these levels. In doing so, the company gained tremendous insight into more than 250 individuals, including their achievements, strengths and weaknesses. After interviewing these individuals, observations were discussed with the respective managers in order to arrive at common conclusions on developmental needs and opportunities. Employees’ intentions as well as company expectations were openly addressed and aligned as much as possible. Requirements for future placements were clearly defined and transparently communicated.

A significant outcome of this process was a decision to select candidates at the department or regional levels from outside the given location; this helped to ensure the generation of fresh ideas and a strong degree of knowledge transfer. It was recognized that this may only be a temporary decision since strategies like this need to adapt to changing market conditions.

A crucial element was also the straightforward communication that occurred in both directions. With this approach, changes in management positions were no longer a challenging situation with high risks attached; they became a core process that was planned, defined and effective.

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Ad 3. Are you challenged through a volatile market with significantly varying business volumes?

In recent years, the market of power generation has gone through a significant change resulting in high volatility in the amount of spending towards infrastructure. Approximately 10 years ago, the expectations on the gas turbine market development increased significantly. Since then, through global events such as Fukushima and the German nuclear phase-out, the market has been struggling heavily with overcapacities of ~100%. When heading HR for the fossil power generation group of a large international enterprise, I had the responsibility to manage large swings in capacity. The most significant of these was a period of ~20% growth followed by a large contraction of demand which resulted in major capacity adjustments.

To effectively manage the impact of personnel structures, I created a diagnostic tool that helped us track the impact on our bottom line. This was done in close cooperation with the financial community. The approach included the identification of Key Performance Indicators related to our expected business volumes and capacities, for example: development of order entry, own/foreign workforce, flextime wage records, leave accounts, contractual types, expected hires and leavings, and so on. This new tool was positively received by the business since it provided increased transparency and enabled quick data-driven decisions. In times of overcapacity, it helped the business to understand where it should make very selective hires in order to maintain and enhance competition related know how.

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Ad 4. Are you confronted with the challenge of effectively supporting key individuals in your enterprise to assure their development and success, and having sufficient time to do so?

Through almost 30 years of professional life, I focused on the development of strong partnerships throughout the organization, both at the business and individual levels. This led me to the role of partner and coach for many executives, managers and individuals throughout the organization. This role developed not just through the nature of my position, but again and again due to personal requests from individuals not only in my division, but throughout the company. In almost all cases, I was able to help these people, first by analyzing the current situation critically, then helping them to develop options and priorities for action. Throughout all these interactions, I made it a priority to empower these individuals into making their own decisions in the end.

I’m deeply convinced that a prerequisite for success in any challenge is a very honest assessment of the current situation. To ensure that this happens, there must be an opportunity for critical thoughts and considerations to be openly addressed. Quite often, all aspects are not considered openly and frankly because it’s perceived as a possible weakness in front of the hierarchy. There is often a concern of not being professional enough, or being labeled as “thinking not in solutions but problems.” I truly believe the opposite is right, because a real professional should think about all aspects in order to be prepared (e.g. when starting an expedition). In this regard, I regularly confronted these individuals with worst case scenarios as well.

While the end-results belong to the individuals through their ultimate decisions, I can say that the individuals who worked with me using this process had a more coherent and sustainable framework upon which to make their decisions. The result was usually a more positive outcome than might have been achieved with no intervention. This leads not only to greater employee satisfaction and effectiveness for the individual, but also to higher company performance over time. In short, if you take your employees’ interests seriously as much as possible, it will pay off for all parties involved.

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Ad 5a. Are you planning to reorganize your business to better adapt to current market conditions? (and consequently increase efficiency and effectiveness)

In the past, a decision was made to integrate the formerly independent global gas turbine and steam turbine businesses of an international enterprise into one organization called “Products”. The global power plant market was characterized by a high degree of so-called combined cycle power plants (CCPP), i.e. the combination of gas turbines and steam turbines with an increased degree of efficiency that allows more electricity production from the same volume of raw material gas. The motivation for the reorganization was the opportunity for synergies between both products, the need for enhanced sales coordination, as well as the planned optimization of project management.

The new structure was planned, negotiated, communicated and implemented after a prompt selection and confirmation of future key players. We achieved an excellent balance between the application of binding central requirements and allowing flexibility of scope for the different entities. We also utilized a transparent and target group oriented communication plan that acknowledged former achievements directly and honestly.

Through this structured approach, we successfully integrated approximately 8.500 employees globally into a single organization and were able to focus their efforts quickly to the future, where we successfully grew our market share to roughly 40% of the world market.

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Ad 5b. Are you planning to reorganize your business to better adapt to current market conditions (and consequently increase efficiency and effectiveness)?

Some years ago, a decision was made to systematically update the personnel structures and systems in the rapidly growing regional company of a global enterprise in Saudi-Arabia. At the time, major systems and processes were still related to the historical setup of the first branch that was established 25 years ago. Upon review, it was clear that the structures were not viable or sustainable for this business of ~850 employees. Major issues were evident in their Human Resource structure and approach, for example: recruiting and integration of new staff, performance-oriented pay, analysis of employee potential and succession planning, management and employee training, in- and outbound delegations. These were handled either on an ad hoc basis, an individual basis or not at all. As you might expect, this led to marginal company performance with excessive overhead costs. It also led to very low employee satisfaction due to the significant perception of unfairness on the part of the company in allowing such a casual and non-productive atmosphere to exist. The employee relations climate became so severe that even highly overpaid people felt themselves underpaid! There is no question that the constant internal challenges significantly impacted the morale of the workforce; so much so that it was felt by the customers as well.

I was selected by the company’s leadership to address these challenges. For a period of approximately 18 months, I served as the lead of the strategic HR project in Saudi. After that, I continued to serve the Saudi organization as a coach for another 12 months. My first step was to introduce a reliable, lean and professional personnel structure complete with functional areas (e.g. management, engineering, sales, production, commercial) and functional types (e.g. Junior Engineer, Engineer, Senior Engineer). This served as the framework to enable the following improvements to be made. All the positions and roles were clearly described in terms of responsibilities and related capabilities. All other processes were consistently redefined according to the new personnel structure. In particular, the new compensation and benefits system was redefined to establish a performance-oriented pay program, instead of the formerly applied “Habibie business” (i.e. Arabic word for darling and means more or less arbitrariness). All the new systems were documented using a lean approach, and were transparent and highly visible to all parties on the company’s web. Promising candidates for leadership roles were chosen professionally from the current workforce, then provided with the guidance, training and development to help them develop towards these roles.

The key to success was of course a new leadership and collaboration culture based on openness and trust. This was worked out in detail with the management in advance, then was followed by intensive training before we began full implementation and performance analysis. Due to the strong support of top management, we were able to successfully implement these major changes in a period of only 12 to 18 months. The results followed quickly: company performance increased significantly in terms of order entry, business volume and project volume, and the metrics for employee satisfaction significantly improved. In addition, the public presentation and perception of the company was optimized.

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Ad 6. Are you planning to acquire another enterprise in order to grow your market share and/or competencies?

A few years ago, a decision was made to merge the formerly very independent, international businesses “Fossil Energy” and “Oil and Gas” of an international enterprise, in order to create a new common organization called “Power and Gas”.

The two businesses were significantly different in terms of company history, organizational and regional setup as well as leadership culture. Large and small gas and steam turbines were developed and produced almost independently, in separate structures, although the products were (technically) very closely related.

In addition, the classical market boundaries were changing more and more, because the oil and gas industry was increasingly using larger systems, while the power generation industry had an increasing interest in smaller systems, usable for “distributed (power) generation” with less need for power distribution and transmission. So, the decision was made to integrate the two businesses in order to avoid duplication of work, to reduce complexity, to enhance product quality and to reduce procurement costs through bundling. At the same time, there was a need to enhance the effectiveness and customer orientation of the sales organization in order to be faster and more successful in the high volatile market. In short, the complete value chain was addressed.

We established challenging targets which involved first setting core principles related to the merger; these needed to be defined, communicated and realized in a very short time globally. In addition, it was necessary to enhance research and development, sales, procurement, production and project management, as well as to improve leadership and collaboration.

We were quite successful as a multidisciplinary team in creating all prerequisites for the above described change within just 6 months. After an additional six months, the integration team completed its work and was able to be dissolved.

The establishment of the small integration team (including HR) and the consequent delegation of power to the team were crucial for the success that was achieved, in addition to the strong focus and support of CEO and CFO. The analysis of candidates for the new top management roles was done commonly, and the related appointments made quickly. The process was considered by top management to be benchmark in terms of results. A key element contributing to our success was the transparent and continuous communication of targets towards all parties involved.

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Ad 7. Are you planning a complex (strategic) project with significant importance for your enterprise’ future?

Some years ago, a decision was made at a large global power generation enterprise to sustainably enhance collaboration with defined professorships at selected technical (key) universities. At that time, approximately 6.000 engineers were working in R&D and engineering, and it was challenging to continuously attract sufficient numbers of highly talented graduates to our business.

Part of the reason for the challenge was that decisions regarding technology projects and partnerships with universities were made mostly at lower management levels. Program structure, reliability and sustainability were compromised to a large degree because the financial backing and ownership of these programs did not reside at a high enough level in the organization.

To address this issue, I led a change initiative to establish a new “university liaison management” program; this was done in close collaboration with the Chief Technology Officer (CTO), the engineering heads and of course the overall business management team.

Due to my applied role as a team coach and mentor, I was successful in working with multiple executives in different organizations to arrive at a common business approach for the program. Thus, individual interests that did not align with the common vision were able to be minimized. In addition, I was able to ensure that critical topics from each organization were escalated to me openly so that all viewpoints were considered and commonly solved afterwards.

After only two short years, the company was known again among 18 universities across the globe (Germany, USA, China and Russia) as a reliable partner for technology cooperation, as well as an employer of choice. One of the keys to success was the decision to install a company representative at each university. These “university liaison managers” served as key account managers and were empowered to represent our company to the universities in all aspects of our partnership. We also identified key success factors prior to the selection of these managers so that the program had a much greater chance of success. These included having a PhD in highly relevant technology, being an alumnus of the university, and working currently in a management function in our company.

We also defined a common set of measures to be (selectively) used across the program, for example, collaboration on seminars, lectures, and workshops; site visits at our production sites; and company donations of product samples or technical models. This enabled us to compare activities across individual universities, and served as the basis for internal discussion and collaboration. As a result, we were able to further optimize our relationships across the entire university framework.

The empowerment of these key account managers was absolutely crucial for success. They were considered by our company as the single point of contact to harmonize all joint activities. This served to significantly reduce the level of complexity for the universities in dealing with a large global company and all its related infrastructure. Since this role was done in addition to their regular full-time job, it was important to ensure that the role was given priority by the individuals and was shown to be important by the company. To do this, we made it a priority to provide regular exposure of these individuals to top management. This made the role quite valued and very much appreciated by the individuals.

The topic of “university liaison management” was further enhanced through an annual exchange of experiences by company and university representatives. This helped to position the company, not only as a partner, but also a desirable company to work for. During our times of expansion, we were able to roughly double the number of hires with key know how. Even during periods of contraction, we were still able to continue selected hiring.

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Ad 8a. Are you planning to introduce a significant change to your business that will influence not only the roles of your employees, but also their way of collaborating?

Some years ago, I had the great opportunity to “rebuild” the regional company of a large global enterprise in the Kingdom of Saudi Arabia. The crucial factor in making all newly implemented management structures really work was the (r)evolution of the corresponding leadership and collaboration culture, a topic with its distinctive features in the Middle East in general and in Saudi in particular.

I personally organized workshops for all managers over a period of several days to be sure their viewpoints could be verbalized and understood, and also to begin to guide them towards the planned change. Appropriate expectation management was highly important. We wanted individuals to understand the intended change, but also be in the best possible position to buy in to that change. We started with a lot of openness and understanding for deviating interests and opinions, but at the end of an intense information session and subsequent discussions, we made the direction crystal clear to all. There’s a certain moment of truth that is reached where individuals need to understand and be able to move on with the decision, or in other words, “who doesn’t go with the times will go in the course of time”.

This process was definitely a real challenge in the Saudi regional company with its 33 different nationalities. But the straightforward communication and the reflection of expectations by the company, its individuals and executive management led to successfully driving the desired changes. Of course, we had certain conflicts of interests and cultures, but we managed them based on mutual respect amongst partners and the willingness to learn from and with each other. In the end, the change was successfully implemented, with very few individuals choosing to leave the organization.

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Ad 8b. Are you planning to introduce a significant change to your business that will influence not only the roles of your employees, but also their way of collaborating?

Due to severe market changes, the power plant business of an international entrepreneur began to experience problems some years ago. We as management concluded that the traditional structures where the vast majority of people were located in Germany and the US wouldn’t work any longer, and that we needed a third regional presence in Korea. The increase of personnel in Korea required a down-sizing of business in Germany for a period of several years. A major challenge that we needed to address was the harmonization of growth in one region and contraction in another, while avoiding competency losses for the organization.

We in HR worked with the responsible management to ensure that there was maximum sensitivity to keep people informed, to get agreements with the works councils in particular in Germany, and to assure that all activities were realized in accordance with our organizational plan. The overall process faced certain challenges of course, but the plan was effectively implemented and the solution provider is acting today from three bases on three continents to tackle markets in the new distributed manner.

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Ad 9. Before taking the first steps towards a significant change in your enterprise, would it be helpful to have input from an experienced external professional?

Some years ago, the power generation business of a large global enterprise decided to move forward with a majority joint venture (JV) with a Russian partner. The goal was to create the required setup to provide complete value chains for selected gas turbine models out of St. Petersburg, Russia. This enabled the JV partners to realize significant competitive advantages while modernizing the Russian energy sector including the required high local content. The initial staffing level included ~150 employees, mainly engineers of the Russian partner, plus a number of delegates. The business subsequently grew through hiring to a magnitude of ~ 400 employees.

The local kick off for this project was done with the newly appointed CEO and CFO plus myself. Our first step was to develop a common plan for the professional handling of major management and HR issues for the future. We hired a local HR head right away with support from the Russian HR organization. We were faced with numerous operational challenges that put pressure on the management team, but we addressed that by bringing structure to the situation. We developed ambitious but realistic plans to initiate strategic HR topics, for example, recruiting, performance management, potential analysis, succession planning, and upward feedback. I travelled a number of times to St. Petersburg to support fruitful and open discussions, and also to model our intended way of collaboration on stage with the executive management.

The close and fair alignment of business and HR management, as well as headquarter and region, enabled us to successfully inform, motivate and realize significant changes for all parties involved. Local management was empowered to drive the change while enabling them to play their new roles. An early accomplishment was the new succession planning process, which helped to facilitate a number of management changes without major friction.

The joint venture evolved successfully over the following years, and repeatedly exceeded expectations on business results.

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Ad 10. Do you want to enhance transparency in your business, and as a result, improve accountability, evaluation of performance and learning from each other?

The creation, installation and use of a business specific personnel structure are extremely important once a company has reached a certain size. The description and monitoring of specific measures enables the business to track what is occurring, then take quick action when needed. Examples include planned market share, regional presence, R&D efforts, vertical ranges of manufacturing, etc. The analysis of these measures empowers a business to identify needs for action, and to anticipate change at its best. Additionally, such measures usually end up being quite valued by the business since they address aspects of the business that often go unmeasured.

When I was appointed HR executive for the gas turbine business of a large global enterprise with ~4.000 employees, we were unable to complete certain structural reporting that would help us to effectively manage the global enterprise. For example, we did not know the number of department heads we were employing globally, or even where they were all located.

In addition, it was impossible to effectively analyze our core competencies, such as those related to our 2.000 engineers, since the mapping of employees to their individual tasks was not possible. Unfortunately, the required data was not tracked or kept up to date. To address this challenge, I worked with the responsible managers (e.g. heads of engineering and manufacturing) to define a meaningful, reliable and lean structure that mirrored the major value chains in the organization and the related roles.

The change process was driven and supported by HR, but the responsibility for business specific content remained with the business unit heads. This balanced approach led to an effective solution that helped to drive more competitive business results.

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