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1
Human capital planning
Oupa MagashulaGroup Executive: Human Resources
2
Employee efficiencies must improve
478
351
308329
142
PortugalTelecom
Matav TPSA Cesky Telkom
Lines per employee
1314 14
1718
22
Cesky PortugalTelecom
Matav TPSA TelkomGroup
TelkomFixed-line
only
Employees expenses as % of revenue
3
Fixed-line employee targets
Lines per employee
Number of employees
Employee costs to revenue
Outsourcing
Voluntary retrenchments
Natural attrition
2001 2004 2007
Human capital planning
Operational support systems
7–10% annual
reduction
< 20% of revenue
> 175113 142
43,758 33,828
23% 22%
4
Human capital strategiesQ
uan
tita
tive
fore
cast
ing
(His
tori
c tr
end
an
alys
is) Q
ualitative F
orecastin
g(S
cenario
Plan
nin
g)
Change management
Gap analysis per organizational capability
SHCP interventions
BuildBuild
BuyBuy
BorrowBorrow
BoundBound
BounceBounce
Status quoStatus quo
Shareowner Expectations
Customer needs + wants
Change drivers
Current human capital
supply
“As is”
Future human capital
demand
“To be”
5
Capabilities framework
Challenge: oss-skills
HCmanagement
capability
HCdevelopment
capability
Procurementcapability
Crime/fraudpreventioncapability
Businesssupport
capability
Businesssystem
capability
Financecapability
Telkom’sbrand
capability
Labour markets
Communication markets
Strategic planning capability (PESTIE)
SHCP capability
Ser
vice
m
anag
emen
t ca
pab
ility
Net
wo
rk
op
erat
ion
sca
pab
ility
Net
wo
rk
infr
astr
uct
ure
cap
abili
ty
Marketin
g /
sales infrastru
cture
capab
ility
Acco
un
t m
anag
emen
t cap
ability
Marketin
g
man
agem
ent
capab
ilityStr
ateg
ic
tech
no
log
yp
lan
nin
g c
apab
ility
Strateg
icM
arketing
/sales p
lann
ing
capab
ility
Co
mp
etitorsC
om
pet
itors
Lea
der
ship
& m
anag
emen
t cap
abili
ty
Telkomcustomers/ investors
Lead
ership
& m
anag
emen
t capab
ility
6
Planning example
Telkom’s brand capability
Strategic planning capability
Sales capability
Technical operations capability
Service management capability
Network operations capability
Marketing/sales infrastructure capability
Network infrastructure capability
Procurement capability
Direct customer interface capability
Account management capability
Marketing management capability
Finance capability
Business system capability
Human capital management capability
Human capital development capability
Crime/fraud prevention capability
Business support capability
Core organizational capabilitiesCore organizational capabilitiesLeadership & management capability
HC audit
Peoplecapability
Tophuman capital
prioritiesStaff cost
Key strategicorganizational
capabilities
Operationalefficiency
dashboard
QuantitativeHC forecasting
model
QualitativeHC forecasting
model
7
Costs against capabilities
Marketing management capability, 0.01%
Account management capability, 0.06%
HC management capability, 0.10%
HC development capability, 0.21%
Finance capability, 0.45%
Network operations capability, 0.50%
Procurement capability, 0.59%
Network infrastructure capability, 0.66%
Business system capability, 1.15%
Service managementcapability
Business supportcapability
Technicaloperationscapability
Employees mapped: 1269
22.85%
35.69%
Direct customerinterfacecapability
13.84%
Leadership andmanagement
capability
9.29%
14.60%
3.73%
Results of pilot project implemented at Data and special services
8
Guaranteed remuneration
Telkom Executive Guaranteed Package Versus Market at October 2004
250000
500000
750000
1000000
1250000
1500000
1750000
2000000
2250000
2500000
2750000
3000000
3250000
3500000
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Reward Level
An
nu
al R
and
Val
ue
PolicyMarket Q3Market MedianMarket Q1Your Trend Line
9
Performance remuneration
Telkom vs Market
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
M5 M4 M3
Grade
Ran
d
Market 25%tile Telkom Avg Market Avg Market 75%tile
10
Improved performance incentivisation
Team awardFixed percentage per grade allocated based on achieving 100% of all targetsNo bonuses are payable if individual performance targets are not meet
Performance targets
Financial 70%
Non-financial 30%
EBIT
ROA
BEE
Customer satisfaction
Service targets
Conditional share plan22 million shares available to be granted over next 5 years to management and employees Number of shares will depend on level and performanceGrants to management vest 100% in 3rd year of grant Grants to employees vest over 3 years from 2nd year after grant date
11
The challenge of Aids
9.6% prevalence in TelkomSouth Africa has estimated 22% prevalence rate Death ratio at Telkom of 3.8 per 1 000 employees in 2002 of which only 4% directly related to AidsProjections indicate prevalence ratio will increase to 11.4% in 2006
The reality Telkom’s strategy
Four pillars of strategy:education, awareness, prevention, support and care
Previous focus awareness and prevention (̃ 1.2 million condoms distributed annually)
Future focusenhanced education, voluntary counselling, testing and treatment
R7.7 million allocated for voluntary counsellingand treatment programme for 2004/05