2006.12.01: December 1, 2006: Headlines: Figures: COS - Peru: Business: Human Resources: Society for Human Resource Management Online: RPCV Fred Poses, Chairman and CEO of American Standard believed in the business value of HR, and needed an HR partner who shared his strategic vision

Peace Corps Online: Directory: Peru: Special Report: Businessman and Peru RPCV Fred Poses: February 9, 2005: Index: PCOL Exclusive: RPCV Fred Poses (Peru) : 2006.12.01: December 1, 2006: Headlines: Figures: COS - Peru: Business: Human Resources: Society for Human Resource Management Online: RPCV Fred Poses, Chairman and CEO of American Standard believed in the business value of HR, and needed an HR partner who shared his strategic vision

By Admin1 (admin) (ppp-70-250-74-101.dsl.okcyok.swbell.net - on Friday, December 01, 2006 - 12:01 pm: Edit Post

RPCV Fred Poses, Chairman and CEO of American Standard believed in the business value of HR, and needed an HR partner who shared his strategic vision

RPCV Fred Poses, Chairman and CEO of American Standard believed in the business value of HR, and  needed an HR partner who shared his strategic vision

From an HR perspective, Poses and Costello had made significant strides. The company had top managers who prized HR, a management and planning system that incorporated HR strategy at the highest levels, and a talent-development system to guide assessment and development on a global level. But were the HR policies and practices really worth the time and effort? HR thought so, based on overall company performance. But Poses, who also had served as a financial analyst at AlliedSignal, wanted more. He wanted substantive proof, validation that his HR investments were paying off. Poses also wanted confirmation that employees appreciated what HR was doing for them. “He wanted to know how we know that someone in our businesses is experiencing or understanding the work we’re doing on their behalf,” Costello says.

RPCV Fred Poses, Chairman and CEO of American Standard believed in the business value of HR, and needed an HR partner who shared his strategic vision

Measuring the Value of HR
American Standard is taking big strides in showing the connection between good HR and a healthy bottom line.

By Robert J. Grossman

As head of HR at two different global companies—PepsiCo and Campbell Soup—Larry Costello seemed to have reached the pinnacle of the HR profession. Yet he wasn’t satisfied.

“I needed to find a place where I could prove the importance and power of people to the success of the business,” he says, “an environment where I could demonstrate the reality that you can differentiate people so they can influence stock price and performance.”

At about the same time, Fred Poses, formerly president and COO of AlliedSignal, became chairman and CEO of American Standard Cos. in Piscataway, N.J. The former Peace Corps volunteer believed in the business value of HR, and he needed an HR partner who shared his strategic vision.

Costello was just that person, and he joined American Standard as senior vice president for HR in July 2000. When he heard Poses discuss the key role HR needed to play at the company, Costello says, “it was music to my ears. He described the environment I wanted to create, and said he was prepared to put the resources and commit his own time to a journey that would get us there.”

It’s a journey still in progress. American Standard has not yet reached its final destination, but it has gone much further than most companies in quantifying the effects of HR and management practices on business performance. ›

Changes in the Wind

When Poses took the helm, American Standard was essentially a holding company that played a limited role in managing three very different lines of business:

* Bath and kitchen products (66 plants in 25 countries).
* Air-conditioning systems and services (29 plants in nine countries).
* Vehicle control systems (10 plants in seven countries).

While the company is best known for bath and kitchen products, 60 percent of its revenue comes from residential and commercial air-conditioning systems, sold under the American Standard and Trane brands, and braking and suspension systems for heavy trucks and buses, sold under the WABCO brand.

Bringing more centralized management of these disparate endeavors was a challenge, especially since American Standard is a vast organization: 61,200 employees in 28 countries. But it’s a challenge that Poses, with Costello’s help, attacked head-on by establishing new operationwide methods for managing key aspects of the business.

One of those new methods reflected a belief—shared by Poses and Costello—that to be competitive, a business must either develop or recruit the best possible talent. Thus, the duo quickly elevated strategic talent management to the top echelon of corporate planning and decision-making across all business units. As a result, American Standard now produces a strategic plan that looks out to the future, an annual operating plan that’s action-oriented and contains specific financial targets and metrics, and a human resource plan that includes talent assessments, forecasting and succession planning. All three plans are aligned and cascaded down throughout the organization so that every business unit and individual helps set goals that conform to the entire company’s mission and values.

What’s more, within HR, Costello worked to establish a state-of-the-art talent-development system that provides a one-stop, online location where employees and managers go to set goals, craft development plans, trade feedback, acquire skills and chart their progress.

Another key change was creating a matrix structure in which HR professionals in each business division report both to the corporate HR office and to the business’s top-line executive.

In Search of Proof

From an HR perspective, Poses and Costello had made significant strides. The company had top managers who prized HR, a management and planning system that incorporated HR strategy at the highest levels, and a talent-development system to guide assessment and development on a global level.

But were the HR policies and practices really worth the time and effort? HR thought so, based on overall company performance. But Poses, who also had served as a financial analyst at AlliedSignal, wanted more. He wanted substantive proof, validation that his HR investments were paying off.

Poses also wanted confirmation that employees appreciated what HR was doing for them. “He wanted to know how we know that someone in our businesses is experiencing or understanding the work we’re doing on their behalf,” Costello says.

In 2001, Costello’s search for a specialist who could help American Standard produce the proof it needed led him to Laurie Bassi, co-founder of McBassi and Co. in Boulder, Colo. Bassi held impressive credentials: economist, college professor, former vice president for research at the American Society for Training & Development, board chair of her own investment fund.

Bassi also had passion. She believes that for HR to be respected and accepted by top business leaders and the investment community, it must demonstrate the value of human capital in a language that such leaders understand.

In other words, numbers count.

“The business world is dominated by people who look at metrics, and the HR world needs to play in that space,” Bassi says. “If you can measure manufacturing efficiency with Six Sigma, why not use similar analytics to measure human capital performance?”

But measurement itself can take you only so far, Bassi says. “Getting on the scale does not make you lose weight, but it can give you incentive. Similarly, measurement can be a catalyst; it can point you in the right direction—help you zero in on the actions that can make the most difference.”

Weighing In—McBassi and the HCCS

To analyze the effectiveness of American Standard’s human capital management practices, McBassi prepared a customized 60-question employee survey designed to elicit responses that would reveal how effectively managers were performing core leadership and management functions.

Employees were asked to rate their manager’s performance on a scale of one to five in five broad categories: Leadership Practices, Employee Engagement, Knowledge Accessibility, Workforce Optimization and Learning Capacity. Bassi says that high scores in the Leadership Practices index “are consistently among the greatest predictors of [corporate financial] performance.” (For explanations of the five factors, see Table 1.)

The results of the survey were tabulated, broken into 23 subcategories and reported in McBassi’s Human Capital Capability Scorecard (HCCS). The scores are rated on a “Maturity Scale” that weighs the results for each manager against those in a proprietary “best practice” database. Maturity ratings run from one to five in each category, with five indicating optimum performance and one meaning little or none.

McBassi analyzes the survey results and links them statistically to business outcomes based on data provided by the company. Outcomes may include sales, turnover, retention or customer satisfaction, for example. American Standard chose to measure safety and financial performance of commercial sales offices.

The company’s managers were then rated by office or plant, by function and by region. To help determine where interventions could have the greatest impact, McBassi identified the human capital practices and processes that were the most critical drivers of business results.

The process allowed American Standard to develop a “decision science” for its human capital management, providing the company with analytical information on where to focus its HR budget and where to avoid investing additional time and money.

Proof Pours In

Initially, American Standard opted to test the HCCS in 2003 with 8,000 salaried employees in 130 reporting units in North America. Two of those units were in the Trane division—Commercial Systems Distribution and Residential Systems.

When the results came in, a shock wave ran through HR, says Craig Alexander, who works in American Standard’s corporate offices as director of organizational development. “In all categories across the board, we scored a ‘two,’ which was below average.” Those low scores translated into some rather disturbing, specific realizations. Alexander, a 15-year company veteran with experience as a business consultant and financial officer, says, “We were spending $20 million a year on learning and development, yet our people didn’t think we valued it!”

Along with the bad news came strategic news: The data showed direct relationships between managers’ overall maturity levels and their safety and revenue performance. For example, plants where managers scored in the top half on the overall maturity index had an average safety incident rate that was 14 percent better than those in the bottom half.

Alexander focused on raising the overall scores across the company, leaving it to executives of the individual businesses or units to decide how much deeper they wanted to drill.

John Conover, president of Trane’s Commercial Systems Distribution unit, was one executive who decided to zero in on specific areas where his managers should focus their efforts. His acceptance and use of the tool to guide management development was remarkable given that he was not an initial proponent of its use. At the outset, he resisted using the survey, and participated in the pilot only when Maureen MacInnis, the vice president of HR who reported to him, suggested it could improve his chances of reaching and exceeding his revenue goals.

When the results arrived, Conover was impressed. McBassi’s analysis showed that district sales offices that scored better in developing and managing talent—a factor that falls primarily under Leadership Practices—produced higher financial results. “We found that a manager of an office with a below-average HCCS overall score will produce $1 million less revenue than his counterpart with an above-average score,” he says.

So Conover asked Bassi to examine the data and recommend which areas his managers should focus on first for improvement. Bassi located the areas that correlated most closely with the company’s success, and recommended that Conover’s managers focus on boosting their Leadership Practices. This area, Bassi noted, is one that individual managers can most readily improve on their own; other factors require greater commitment and action from the company or division as a whole.

Conover looked at the data, took McBassi’s written suggestions, and used both to help guide the development of his managers. He asked each district manager and territory vice president—60 people in all—to develop plans for improving their 2003 Leadership Practices scores.

Since then, leaders of the five offices with the highest HCCS scores have gone on to bigger jobs; the five lowest scorers are no longer with the company. Staffing decisions were not made on HCCS results alone, but the scorecard is a significant factor in assessing overall performance.

Meanwhile, executives in the Residential Systems unit were finding patterns in their data as well. Says Tom Schlegel, the unit’s vice president of HR: “There were two major themes that stood out: People want more and clearer feedback on how they’re performing, and they want development plans that help them get better.”

So the division took action. “We made a commitment on improving these two things and built a system around it,” he says. “We told our employees, ‘We will give you good feedback relative to performance, and we’re committed to establishing a development plan for you that’s simple and meaningful, and then doing it.’ As a control, we developed a system to measure how well we were doing. Every one of our salaried employees got asked twice a year if their managers were following through.”

The result: Managers’ HCCS scores went up dramatically from 2003 to 2004.

eginning the Rollout

In 2005, American Standard extended the survey to 20,000 salaried employees in 300 reporting units. Some managers were assessed for the first time; for others, their 2003 results provided benchmark data.

As in 2003, on a companywide basis the McBassi business outcomes analysis proved prescient. Because of the priorities placed on improving areas identified on the scorecard, scores improved. Overall, the business units examined began to climb in maturity levels. (See Table 2.) As the scorecard index numbers rose in the aggregate, so did overall financial performance, as indicated by share value, says Alexander.

In addition, the correlations between individual manager performance and scorecard results remained powerful.

To be sure about the statistics, Alexander ran McBassi’s computations independently. “We took the sales offices and measured their financial performance against the overall HCCS ratings,” he says, “and found a 95 percent confidence level.”

Total Commitment

Poses had seen enough. He authorized a full rollout of the HCCS, with plans to repeat the process every 18 months. “Fred was skeptical at first; he’s seen a lot of tools. But he was convinced,” Costello says. As Poses says, “This is the clearest example I’ve ever seen of a diagnostic tool that can link directly to profitability.”

In the rollout, more than 60,000 people received surveys, and 75 percent responded; analysis and outcomes are pending.

When Costello presented the 2005 scorecard correlations and comparisons between 2003 and 2005 at his annual HR planning briefing with the board, the interest was palpable. “They were intrigued; they asked to see the data after each 18-month cycle so they could comprehend the influence of our people programs and how our leadership is reacting to them,” he says.

Now Costello is looking to the day when investment analysts, recognizing the critical impact of human capital on a company’s performance, will ask for metrics like the HCCS outcomes.

Some analysts, such as Edward Wheeler of the Buckingham Research Group, already seem prepared to listen. “So far, the metrics have not been available to me, and that’s probably because the company is still testing them,” he says. “But human capital is an important aspect of company performance, and I’d be interested in seeing the measures.”

(For information on sharing human capital management information with investors via corporate annual reports, see “Notable by Its Absence”.)

A New Perspective

Costello knew he had a winner with the HCCS when the business leaders bought in—when executives such as Conover and Dave Pannier, division president for Residential Systems, the business unit with the best HCCS overall in 2005, realized that the time they spent on talent development meant revenue in their columns.

Conover is the most vocal convert, extolling not only the tool but also the importance of HR to his organization. “I couldn’t spell HR when I took this job. Now I know better. It’s all about the people and the customer. And HR owns half that equation,” he says.

The fact that the scorecard has won companywide support is the ultimate sign of success for Costello. “The real difference is not about HR owning it; it’s about the entire business owning it,” he says. “Now even if Fred and I leave, these businesses believe in what we’re doing. They truly believe in the journey we’re on.”

Robert J. Grossman, a contributing editor of HR Magazine, is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.

Links to Related Topics (Tags):

Headlines: December, 2006; RPCV Fred Poses (Peru); COS - Peru; Directory of Peru RPCVs; Messages and Announcements for Peru RPCVs; Business

When this story was posted in December 2006, this was on the front page of PCOL:

Contact PCOLBulletin BoardRegisterSearch PCOLWhat's New?

Peace Corps Online The Independent News Forum serving Returned Peace Corps Volunteers
Ron Tschetter in Morocco and Jordan Date: November 18 2006 No: 1038 Ron Tschetter in Morocco and Jordan
On his first official trip since being confirmed as Peace Corps Director, Ron Tschetter (shown at left with PCV Tia Tucker) is on a ten day trip to Morocco and Jordan. Traveling with his wife (Both are RPCVs.), Tschetter met with volunteers in Morocco working in environment, youth development, health, and small business development. He began his trip to Jordan by meeting with His Majesty King Abdullah II and Her Majesty Queen Rania Al Abdullah and discussed expanding the program there in the near future.

Top Stories and Breaking News PCOL Magazine Peace Corps Library RPCV Directory Sign Up

November 12, 2006: This Month's Top Stories Date: November 12 2006 No: 1030 November 12, 2006: This Month's Top Stories
Michael O'Hanlon writes: The New Congress and Iraq 9 Nov
Amanda Host named new PC Press Director 12 Nov
Shays will reach across the aisle for answers in Iraq 8 Nov
Petri loses chance to become committee chairman 8 Nov
Doyle gets a mandate to improve education 8 Nov
Eunice Shriver spends election night with Schwarzenegger 8 Nov
Donna Shalala writes: Eliminating gender bias in universities 7 Nov
Robert Paul upheld peace amid Afghan war 6 Nov
Carol Bellamy receives humanitarian award 6 Nov
Joseph Opala studies Black Seminoles 6 Nov
David C. Liner named PC Chief of Staff 3 Nov
PCV Matthew Costa remembered 2 Nov
Ethiopian-American community rallied for Garamendi 2 Nov
Christopher Poulos named Teacher of the Year 1 Nov
Peace Corps Writers and the Lost Generation 1 Nov
James Rupert writes: A deadly attack in Pakistan 31 Oct
Hill meets secretly with North Korea to restart talks 31 Oct
Jimmy Carter remembers mother in Peace Corps 30 Oct
Leigh Emery travels world for science 27 Oct
IFAW breaks ground for new headquarters 25 Oct
RPCVs Podcast Around the Globe 23 Oct

Election 2006: Results of RPCV Races Date: November 8 2006 No: 1024 Election 2006: Results of RPCV Races
Chris Shays claims victory in closely watched race
Jim Walsh wins re-election to Congress in close race
Tom Petri unopposed for re-election to Congress
Sam Farr wins re-election to Congress
Mike Honda wins re-election to Congress
Jim Doyle wins re-election to Wisconsin Governorship
Kinky Friedman loses in long shot bid for Texas Governor
John Garamendi elected Lt. Governor of California

October 22, 2006: This Month's Top Stories Date: October 22 2006 No: 1005 October 22, 2006: This Month's Top Stories
The crisis over North Korea's nuclear bomb test 14 Oct
Hill faced strong opposition for denuclearization agreement 8 Oct
John Coyne writes: The first Peace Corps book 20 Oct
Thomas Tighe moderates discussion with President Clinton 17 Oct
PC announces Community College degree program 18 Oct
Donna Shalala expresses dismay over football brawl 16 Oct
Gina Abercrombie-Winstanley defends Lebanon policy 16 Oct
Jan Guifarro elected Chair of NPCA Board 15 Oct
Carl Pope writes: From the pump to the polls 13 Oct
Ambassador Gaddi Vasquez Says Africa a Priority 12 Oct
Chris Dodd opposes Bush terrorism bill 10 Oct
Isaac Edvalson is founder of Africa's Tomorrow 9 Oct
The Man who turned down Shriver 8 Oct
Mae Jemison tells girls to reach for the stars 6 Oct
Loren Finnell receives Shriver Award 4 Oct
Matt Sesow paints onstage during opera 2 Oct
Film examines anti-malaria drug lariam 29 Sep
Blackwill dismisses Musharraf's claims 27 Sep
Ron Tschetter sworn in as 17th Peace Corps Director 26 Sep
Rape Victim Student Gets $1 Million From City College 26 Sep
Ricardo Chavira narrates Public Service Announcements 25 Sep

The Peace Corps Library Date: July 11 2006 No: 923 The Peace Corps Library
The Peace Corps Library is now available online with over 40,000 index entries in 500 categories. Looking for a Returned Volunteer? Check our RPCV Directory or leave a message on our Bulletin Board. New: Sign up to receive our free Monthly Magazine by email, research the History of the Peace Corps, or sign up for a daily news summary of Peace Corps stories. FAQ: Visit our FAQ for more information about PCOL.

Chris Dodd's Vision for the Peace Corps Date: September 23 2006 No: 996 Chris Dodd's Vision for the Peace Corps
Senator Chris Dodd (RPCV Dominican Republic) spoke at the ceremony for this year's Shriver Award and elaborated on issues he raised at Ron Tschetter's hearings. Dodd plans to introduce legislation that may include: setting aside a portion of Peace Corps' budget as seed money for demonstration projects and third goal activities (after adjusting the annual budget upward to accommodate the added expense), more volunteer input into Peace Corps operations, removing medical, healthcare and tax impediments that discourage older volunteers, providing more transparency in the medical screening and appeals process, a more comprehensive health safety net for recently-returned volunteers, and authorizing volunteers to accept, under certain circumstances, private donations to support their development projects. He plans to circulate draft legislation for review to members of the Peace Corps community and welcomes RPCV comments.

He served with honor Date: September 12 2006 No: 983 He served with honor
One year ago, Staff Sgt. Robert J. Paul (RPCV Kenya) carried on an ongoing dialog on this website on the military and the peace corps and his role as a member of a Civil Affairs Team in Iraq and Afghanistan. We have just received a report that Sargeant Paul has been killed by a car bomb in Kabul. Words cannot express our feeling of loss for this tremendous injury to the entire RPCV community. Most of us didn't know him personally but we knew him from his words. Our thoughts go out to his family and friends. He was one of ours and he served with honor.

Meet Ron Tschetter - Our Next Director Date: September 6 2006 No: 978 Meet Ron Tschetter - Our Next Director
Read our story about Ron Tschetter's confirmation hearing before the Senate Foreign Relations Committee that was carried on C-Span. It was very different from the Vasquez hearings in 2001, very cut and dried with low attendance by the public. Among the highlights, Tschetter intends to make recruitment of baby boomers a priority, there are 20 countries under consideration for future programs, Senator Dodd intends to re-introduce his third goal Peace Corps legislation this session, Tschetter is a great admirer of Senator Coleman's quest for accountability, Dodd thinks management at PC may not put volunteers first, Dodd wants Tschetter to look into problems in medical selection, and Tschetter is not a blogger and knows little about the internet or guidelines for volunteer blogs. Read our recap of the hearings as well as Senator Coleman's statement and Tschetter's statement.

Peace Corps' Screening and Medical Clearance Date: August 19 2006 No: 964 Peace Corps' Screening and Medical Clearance
The purpose of Peace Corps' screening and medical clearance process is to ensure safe accommodation for applicants and minimize undue risk exposure for volunteers to allow PCVS to complete their service without compromising their entry health status. To further these goals, PCOL has obtained a copy of the Peace Corps Screening Guidelines Manual through the Freedom of Information Act (FOIA) and has posted it in the "Peace Corps Library." Applicants and Medical Professionals (especially those who have already served as volunteers) are urged to review the guidelines and leave their comments and suggestions. Then read the story of one RPCV's journey through medical screening and his suggestions for changes to the process.

The Peace Corps is "fashionable" again Date: July 31 2006 No: 947 The Peace Corps is "fashionable" again
The LA Times says that "the Peace Corps is booming again and "It's hard to know exactly what's behind the resurgence." PCOL Comment: Since the founding of the Peace Corps 45 years ago, Americans have answered Kennedy's call: "Ask not what your country can do for you--ask what you can do for your country. My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man." Over 182,000 have served. Another 200,000 have applied and been unable to serve because of lack of Congressional funding. The Peace Corps has never gone out of fashion. It's Congress that hasn't been keeping pace.

PCOL readership increases 100% Date: April 3 2006 No: 853 PCOL readership increases 100%
Monthly readership on "Peace Corps Online" has increased in the past twelve months to 350,000 visitors - over eleven thousand every day - a 100% increase since this time last year. Thanks again, RPCVs and Friends of the Peace Corps, for making PCOL your source of information for the Peace Corps community. And thanks for supporting the Peace Corps Library and History of the Peace Corps. Stay tuned, the best is yet to come.

History of the Peace Corps Date: March 18 2006 No: 834 History of the Peace Corps
PCOL is proud to announce that Phase One of the "History of the Peace Corps" is now available online. This installment includes over 5,000 pages of primary source documents from the archives of the Peace Corps including every issue of "Peace Corps News," "Peace Corps Times," "Peace Corps Volunteer," "Action Update," and every annual report of the Peace Corps to Congress since 1961. "Ask Not" is an ongoing project. Read how you can help.

Read the stories and leave your comments.

Some postings on Peace Corps Online are provided to the individual members of this group without permission of the copyright owner for the non-profit purposes of criticism, comment, education, scholarship, and research under the "Fair Use" provisions of U.S. Government copyright laws and they may not be distributed further without permission of the copyright owner. Peace Corps Online does not vouch for the accuracy of the content of the postings, which is the sole responsibility of the copyright holder.

Story Source: Society for Human Resource Management Online

This story has been posted in the following forums: : Headlines; Figures; COS - Peru; Business; Human Resources


Add a Message

This is a public posting area. Enter your username and password if you have an account. Otherwise, enter your full name as your username and leave the password blank. Your e-mail address is optional.