Next Generation

Human Resources:
Driving Organizational
Excellence

A bes t-practic e r epor t f r om

1 6 # - * $ " 5 * 0 / 4
Project Personnel

Project Personnel

Study Personnel
Darcy Lemons
Mike O’Kane
Angelica Wurth
APQC

Subject Matter Expert

Robert M. Fulmer
Academic director, Duke Corporate Education and Distinguished Visiting Professor of Strategy,
Pepperdine University

Editor
Krystl Campos

Designer
Fred Bobovnyk Jr

MEMBERSHIP INFORMATION
For information about how to become a member of APQC, and to receive publications and other benefits, call 800-776-9676 or
+1-713-681-4020, or visit our Web site at www.apqc.org.

COPYRIGHT
©2005 APQC, 123 North Post Oak Lane, Third Floor, Houston, Texas 77024-7797 USA. This report cannot be reproduced or
transmitted in any form or by any means electronic or mechanical, including photocopying, faxing, recording, or information storage
and retrieval.

Additional copies of this report may be purchased from the APQC Order Department at 800-776-9676 (U.S.) or +1-713-685-7281.
Quantity discounts are available.

ISBN 978-1-932546-59-0

STATEMENT OF PURPOSE
The purpose of publishing this report is to provide a reference point for and insight into the processes and practices associated with certain
issues. It should be used as an educational learning tool and is not a “recipe” or step-by-step procedure to be copied or duplicated in any way.
This report may not represent current organizational processes, policies, or practices because changes may have occurred since the completion of
the study.

2 Next Generation Human Resources: Driving Organizational Excellence

 Contents

Contents

Sponsor and Partner Organizations

A listing of the sponsor organizations in this study, as well as the best-practice (“partner”)
organizations that were benchmarked for their human resources activities. 4

Executive Summary
A bird’s-eye view of the study, presenting the study focus, the methodology used throughout
the course of the study, key findings, and a profile of participants. The findings are explored
in detail in the following sections. 7

Study Findings
An in-depth look at the findings of this study. The findings are supported by quantitative
data and qualitative examples of practices employed by the partner organizations. 13

Partner Organization Case Studies

Background information on the partner organizations, as well as their innovative
practices in project management. 51

Index 135

Next Generation Human Resources: Driving Organizational Excellence 3

Sponsor Organizations

Sponsor Organizations

Allstate Corp.

CITGO Petroleum

Maytag Corp.

Metaldyne Corp.

Occidental Petroleum Corp.

Panama Canal Authority

U.S. Army, ARDEC

4 Next Generation Human Resources: Driving Organizational Excellence

 Partner Organizations

Partner Organizations

General Mills Inc.

Genworth Financial Inc.

The MITRE Corporation

Solar Turbines Incorporated

Texas Instruments Incorporated

Next Generation Human Resources: Driving Organizational Excellence 5

 Executive Summary

Executive Summary

T he pressing need for organizations to maintain a diverse pool of talented leaders, capture
expertise from exiting employees, and outsource transactional activities to focus on core
capabilities has heightened the importance of the HR function. Those that want to remain relevant
will focus on strategically supporting their organizations and the customers they serve.
Many business leaders and HR professionals caution against an impending “perfect storm”—a
convergence of leadership departure, employee loyalty slippage, and knowledge capital loss—resulting
in higher customer churn and, ultimately, loss of revenue. This potential organizational shipwreck, if
not addressed, may leave unprepared HR leaders strategically adrift.
Although many HR functions have begun to play a strategic role in guiding succession
management, knowledge retention, and other enterprise-wide initiatives, there’s still opportunity for
them to improve and truly transform into key influencers and decision makers.
HR challenges begin with identifying customers’ needs and expectations. Whether it is to select
and develop people who serve the organization’s external customer, fill gaps in leadership roles, or
create a plan to reduce health care cost, important HR decisions must be kept close to the employees
and the customers they are meant to serve. Robust change and measurement processes are needed to
show success in achieving the desired outcomes from HR strategies and activities.

OVERVIEW OF STUDY FINDINGS

This section provides a brief overview of the study findings and organization of the report.

Chapter 1: Human Resources as a Strategic Partner in the Organization

1. Partnership is achieved on purpose. Strategic partnership in any business does not just evolve.
Typically, the CEO and senior HR person both see the potential of such an alliance and develop a
detailed plan to make it happen.
2. You’ve got to know the business to make HR strategic. Recognition in the external human
resource community may be the result of excellence in the business/HR partnership, but it is
never the purpose. Knowledge of the business, support for the strategy, and the ability to relate
every activity to strategic objectives undergird the success of our best-practice leaders.
3. The corporate HR function sets the strategic tone and provides specialized knowledge and
direction while HR generalists implement and adapt to fit the needs of specific business groups.

Next Generation Human Resources: Driving Organizational Excellence 7

Executive Summary

There is a healthy tension between the policy directives determined by corporate HR and the
diverse needs of various business units, but the best practitioners are able to achieve a healthy
balance because of their deep understanding of current HR practices, corporate strategy, and
divisional business objectives.

Chapter 2: HR and the Strategic Process

4. Reviewing performance and potential is a strategic key to the future. In best-practice firms, the
ability to deliver the results outlined in the strategic plan is balanced with an appreciation of a
person’s potential for further growth and development. A review of both these variables is a serious
and regular part of the strategy process.
5. HR is part of the corporate calendar. If HR is to be a true partner in the strategic process, it must
take strategy formulation and implementation as seriously as a line manager.

Chapter 3: Developing Leaders

6. Values and competencies are the foundation of leadership development. The best-practice partners
tended to begin the process of developing leaders with a foundation of key corporate values and
then focus on key competencies that grow out of the value base and the strategic mission.
7. Transition points are key moments for development. Specific developmental activities are often
tied to an impending need or to a new type of challenge. These are vital “teachable moments.”
8. Leadership development is a partnership between corporate, specific businesses, and the
individual.
9. The best do it all. The APQC team and study subject matter expert were a little surprised to find
that the best HR practitioners don’t have any “secret weapons.” They do little that isn’t widely
recognized as part of the basic HR cannon, but they do it all and do it well. This is especially true
in the arena of leadership development.

Chapter 4: Recruiting and Retaining Talent

10. Recruiting doesn’t start or end with hiring. Even in firms that outsource some of their
recruitment, the hiring decision is part of an integrated system.
11. High potentials get special attention but aren’t always told why. Best-practice firms identify from
5 percent to 20 percent (10 percent seems most common) of their managers as high potentials and
provide them with extra opportunities for development.

Chapter 5: Assessing Success

12. Measurement signals importance. Nothing reinforces strategic objectives more than measurement
and ties to incentive compensation. While some common measures are used by the best-practice
firms, the key assessment items vary significantly according to the strategic emphasis of the firm.
13. Measurements are compared historically, internally, and externally. Many of the study partners
want to see how they are doing on these measures relative to comparison firms.

Chapter 6: Critical Success Factors for the Present and the Future
14. Providing a pipeline of strategically aligned, competent leaders is THE primary job of human
resources. Without good leadership, quality and innovation will suffer and customers will
disappear.

8 Next Generation Human Resources: Driving Organizational Excellence

 Executive Summary

15. There is power in paradox and tension. Success in developing “best” human resource practices
requires that HR professionals be able to wear multiple hats and balance competing demands on
their time and loyalties.
16. Communication is critical. Not only does it keep the distributed HR team connected, but it is
also the foundation for any good change management strategy.

CONSORTIUM BENCHMARKING STUDY METHODOLOGY

Developed in 1993, APQC’s consortium benchmarking study methodology (Figure 1) serves
as one of the premier methods for successful benchmarking in the world. It was recognized by the
European Center for Total Quality Management in 1995 as first among 10 leading benchmarking
organizations’ models. It is an extremely powerful tool for identifying best and innovative practices
and for facilitating the actual transfer of these practices.
APQC’s Benchmarking Model:
Phase 1: Plan The Four-phased Methodology
The planning phase of the study began in the winter of 2005.
During this phase, secondary research conducted by APQC was
used to help identify innovative organizations to participate as
best-practice organizations (the partners). In addition to this
research, APQC staff members and the study’s subject matter
expert identified potential participants based on the research, their
own firsthand experiences, and sponsor recommendations. Each
recognized organization was invited to participate in a screening
process. Based on the results of the screening process, as well as
organization capacity or willingness to participate in the study, a
Figure 1
list of nine potential partner candidates was developed.
A kickoff meeting was held in February 2005, during which the sponsors refined the study
scope, gave input on the data collection tools, and indicated their preferences for site visits to partner
organizations. Five organizations were selected for site visits from the original list: General Mills Inc.,
Genworth Financial Inc., Solar Turbines Incorporated, Texas Instruments Incorporated, and the
MITRE Corporation.
Finalizing the data collection tools and piloting them within the sponsor group concluded the
planning phase.

Phase 2: Collect
Three tools were used to collect information for this study:
1. a screening questionnaire—qualitative and quantitative questions designed to identify best
practices within the partner organizations;
2. a detailed questionnaire—quantitative questions designed to collect objective, quantitative data
across all participating organizations; and
3. a site visit guide—qualitative questions that parallel the areas of inquiry in the detailed
questionnaire, which serves as the structured discussion framework for all site visits.

Next Generation Human Resources: Driving Organizational Excellence 9

Executive Summary

The five partner organizations selected for continued participation in the study responded to the
screening questionnaire as well as the detailed questionnaire. Additionally, the five selected partner
organizations hosted day-long site visits attended by sponsors, other partners, the study’s subject
matter expert, and members of the APQC study team. The study team prepared a written report (case
study) of each site visit and submitted it to the partner organization for approval or clarification. The
case studies are located at the end of the report.

Phase 3: Analyze
The subject matter expert and APQC analyzed both the quantitative and qualitative information
gained from the data collection tools. The analysis concentrated on examining the challenges
organizations face in the five study focus areas.
1. HR and operations/Business unit partnerships
2. Leadership development
3. Strategic planning
4. Recruiting and retaining talent
5. Measurement

The analysis of the data and case examples based on the site visits are contained in this report.

Phase 4: Adapt
Adaptation and improvement, stemming from identified best practices, occur after readers apply
key findings to their own operations. APQC staff members are available to help create action plans
appropriate for readers’ organizations based on the study.

PARTICIPANT INFORMATION
The industries represented by the 12 organizations participating in this study are listed here:
• aerospace/defense,
• automotive,
• banking/financial,
• chemical/petroleum,
• consumer goods,
• insurance,
• manufacturing,
• electronics/semiconductor,
• professional services, and
• shipping.

Four of the five partners reported data for their entire organization: The remaining organization
reported data for a single division or business unit. The partner organizations reported a median of
5,700 employees, 17.5 countries of operations, and 44 locations.

10 Next Generation Human Resources: Driving Organizational Excellence

 Executive Summary

ABOUT APQC
A recognized leader in benchmarking, knowledge management, measurement, and quality
programs, APQC helps organizations adapt to rapidly changing environments, build new and better
ways to work, and succeed in a competitive marketplace. For more than 25 years, APQC has been
identifying best practices, discovering effective methods of improvement, broadly disseminating
findings, and connecting individuals with one another and with the knowledge, training, and tools
they need to succeed. APQC is a member-based nonprofit serving more than 500 organizations
around the world in all sectors of business, education, and government. Learn more about APQC by
visiting www.apqc.org or calling 800-776-9676 or 713-681-4020.

SUBJECT MATTER EXPERTISE

Robert M. Fulmer, academic director, Duke Corporate Education and distinguished visiting professor,
Pepperdine University, The George K. Graziadio School of Business and Management
Currently academic director with Duke Corporate Education and distinguished visiting professor
of Strategy at Pepperdine University, Robert M. Fulmer was previously the W. Brooks George Professor
at William & Mary and a visiting scholar at the Center for Organizational Learning at MIT and
taught organization and management at Columbia University’s Graduate Business School. Fulmer
was also director of executive education at Emory University. He held an endowed chair at Trinity
University and had worldwide responsibility for management development at Allied-Signal. He has
also served as president of two management consulting firms specializing in human resource issues
and has developed and delivered executive programs in 24 countries. He has written or co-authored
12 business books, including Growing Your Company’s Leaders (2004) with Jay Conger of the London
Business School.

Next Generation Human Resources: Driving Organizational Excellence 11

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