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Maersk group : Evaluating strategic talent management

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Chiranjibi Panda

on 30 August 2014

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Transcript of Maersk group : Evaluating strategic talent management

A. P. Moller-Maersk Group:
Evaluating Strategic Talent Management Initiatives

Maersk
End Notes
Growth has posed a daunting challenge to Maersk's talent management infrastructure. Their shifts in strategies have revealed their strengths and weaknesses as a global conglomerate but they were still faced with the question, Is this strategy Working?

Brief History

The A.P. Møller-Maersk Group was founded in 1904 by Arnold Peter Møller and his father, Captain Peter Maersk Møller
Headquarter :
Copenhagen
, Denmark
The largest company in Denmark, and operates in
130
countries with nearly
110,000
employees
Maersk’s total market capitalization was
$28
billion
(As of December 31, 2011)
Comprises over
100
companies
Core business : One of the largest container shipping businesses globally as well as oil and gas exploration and container terminals operations
Revenues : Container business (40% of revenues) – operates 2.5 million twenty foot equivalent units (TEU )
Transitioned from a family business to a global conglomerate
Employee
Turnover
Training and Development Programs
Should Maersk continue
to hire experienced individuals
from outside the firm?

30% senior positions
Rehiring former
Maersk employees
(“boomerangs”)
Bringing in external talent
&
Reducing integration risk
In increasing diversity
how to
creating an
Inclusive Culture ?
The global recession in 2008 had negatively impacted both Maersk’s top line and its returns; however, operating results had since improved, and Maersk earned record profits in 2010.

In recent years, Maersk had seen a rise in its
unusually

low historic employee turnover rate
. And, Maersk had experienced a notable change in its corporate culture because of transition.

In particular, Maersk was experiencing
five
notable talent challenges.
Traditionally relied heavily on employees who started with the Group as trainees and then spent the entirety of their career there.
It was estimated that, of the
approximately [400] trainees
that Maersk brought on-board
each year, only 20% of them
remained after five years.
Hiring
Talent Management in the Pre-2003 Era
Talent became increasingly mobile
As Maersk transitioned from a family owned Danish company to a publicly-traded global conglomerate, its work force changed, as did its talent needs and practices

Was not doing well enough on leveraging the talent of individuals

Number of employees in the organization were not the best version of themselves

Maersk had historically focused on hiring and training young, inexperienced individuals
A familial relationship
Talent Management since 2003
As Maersk expanded, that growth impacted both Maersk’s talent management practices and processes and its culture.

Hired both experienced professionals and accelerated the career progression of trainees

Hiring and training became business line rather than Group functions

Rotational training programs focused on rotations within rather than across Maersk’s business lines

More performance measurement standards

Let go of under-performing employees and having difficult conversations became more commonplace

Became increasingly global, in its business and its employee base

Number of senior level management changes - Keeping with the values of the company

Talent Management
Since 2008
Key Comments from Staff
Under Allen's Leadership Group HR implemented a new talent management process

Attraction-
bringing the right people in to the group

Identification / Review / Action Plan-
By People Strategy Sessions (PSS)

Development-
Universal training programmes replaced with individual

Deployment-
Based on talent intimacy


Scenario Planning-
Looking at five year plan
Objective:

Transition
of HR function from
administrative to strategic
and position the company for the 21st century.

Delegated
operational responsibilities to the business unit levels

Headcount in Group HR was reduced from 87 people to 24 (and all but one were new hires)

Revamped group had three key priorities:

Getting the right people in the right jobs at the right time for our top 1,000 employees

Leadership development drives business results

Differentiation in terms of rewards and pay for performance. “Performance Management.”
Development

- Stemmed from the action plans of the PSS

Deployment

- The firm had traditionally focused on meeting talent needs internally. This was replaced by a more balanced strategy

Scenario Planning

- Historically, HR had regularly updated a detailed succession plan for key positions. However, Scenario Planning involved looking at a five year plan for each unit, and assessing the unit’s major people needs going forward
...Increased emphasis on performance measurement and standardized benchmarks

…Maersk Line is incredibly driven by objective settings and Key Performance Indicators (KPIs) and schemes that dictate behavior

…Has become more performance focused

…More focused on accountability for the part of business you’re in– there is more transparency around who is responsible for what exactly.

…Benchmarking made it more difficult for underperforming employees to last at Maersk

…..Very rigid KPI structures don’t really encourage cross-functional collaboration…it’s one of the downsides of objective setting like that, the upside is of course it makes people know exactly what they need to do, and there’s no doubt about what you’re being rewarded on, but …. it’s come to the point where we tend to forget the end-to-end picture, the holistic picture of our business, and we’ve become too focused on our own turf”
Culture
Hiring / Integration
Rehiring
Development
Talent Management Challenges

Talent became increasingly mobile
Managers were often slow to let go of under-performing employees
Not doing well enough is on leveraging the talent of each individual
Historically, very low employee turnover rate. Turnover was rising across business lines but was particularly worrying in some areas
Maersk’s energy businesses had seen a notable uptick in attrition – annual voluntary attrition rates in Maersk Drilling had recently risen from 1-2% to 5%
Retention
Hiring inexperienced individuals and providing them with training had historically been the hallmark of Maersk’s recruitment program.
In 2005-6, it launched a series of programs aimed at decreasing the time it took trainees to progress from a trainee to the executive band. At the time, it took 15-20 years on average, with the fastest movers taking 12 years
Goal of programme was increased retention ratio and support people’s careers accelerating at a faster pace
By 2008, Initial results showed above-average attrition rates for program participants as a result the program was closed down.
Post 2008, a shift in internal training to emphasize leadership development
Training—it was no longer viewed as a reward to be given to high-performing employees. Instead, “it should be given to people who need it to perform better in their jobs, instead of a bonus
The idea of individualized, need-based employee training this concept alongside pay-for-performance initiativesThe concept of “talent intimacy” that is some training was best done on an individualized basis, rather than in a broad training program
Sentiment among many that bringing in outsiders was good for the organization
Maersk referred to this new, balanced talent development approach as “Build, buy or borrow”
Not enough done to support these hires, and that strong and cohesive culture made it difficult for experienced hires to succeed
Historically, Maersk had an unwritten, but widely upheld, policy of not rehiring former employees under any circumstances. As one employee recalled, “In the old days, it was a bit like—they abandoned ship, and they could never return, because it was borderline treason that you did that before your retirement age”

In the 2000s, HR began to question the wisdom of this policy. Hiring needs were increasing, and the decision was made to reverse the policy of not rehiring and to consider returning applicants on an opportunistic basis

The thinking was “There are people that have been successful in the organization, they left for the right reasons—they didn’t leave us in a lurch, they didn’t disparage the company on their way out. And, they were truly high performers, than we ought to rehire them”

Before rehiring a former employee, HR, as a rule, checked with their old unit to ensure that the employee left on good terms
With a Danish founding family, which continued to own a majority stake, and its position as Denmark’s largest company, Maersk had traditionally been very much a Danish company

In recent years, that had begun to change, and as Maersk grew larger and more globalized with respect to its business operations and its customer base, its employee base and its corporate culture began to reflect that

With expansion efforts focused largely on developing markets such as Asia and Africa, and with significant, and growing, hiring needs, it was realized that building a corporate culture which would allow them to attract and retain talent from all over the globe was of paramount importance
Recommendations
Retention & Development
Hiring/Integration
Rehiring
Culture
Integration of HR
Retention should be synced with Development (pre 2003 era)
Return to Development focused on entry based development
Grooming staff in the organization's values
Allow for staff to move around

Facilitate "Talent Intimacy" [individualized development] in alignment with the company's and the employees expectations

Integrate actions out of the 5 talent management areas as part of the strategy to improve retention

Leadership and development coaching to support upward movement
Establish external and boomerang hiring quotas with a criteria (background, experience, leadership qualities) to smooth intake and transition into the organization.

Improve the On boarding experience for external hires. (Look at the changes in communication styles, culture, processes)

Establish Bi - directional mentor-ship programmes to facilitate knowledge transfer and ease of integration

Initiate Orientation programme for new, external hires highlighting work processes, tacit knowledge inherent to the organization, deeper insights into organizational culture - norms, language, heros in the organization
Exit Interview
– provide employers with the opportunity to gain candid feedback and provide employers with information as to how the organisation compares with other employers who recruit from the same talent pool. Provide an opportunity to effectively maintain relationships with departing employees and be able to better recruit them later and provide data on overall HR Strategy

Develop a tracking system to keep touch with key employees that have left to further their development to ensure they return and can contribute positively to the firm
Develop informal mix of heavy/light task related programmes that will facilitate employee mixing to build relationships.

Conduct Culture Assessment to understand the explicit and tacit facets of the organization's culture to inform the Talent management Strategy.

Conduct cross functional and departmental training exercises to drive integration and greater sharing organizational values
Increase bonuses or delink compensation for employees in Maersk Oil from the rest of the group (EBITDA of the Maersk Oil 9.5 times that of the next nearest, APM Terminals, in 2011)
Thank You!!
PCHRMR Module
FDP 2014-15, IIM Ahmedabad

Presentation by

Anjali Kharola
Chiranjibi Panda
Kavita Srivastava
Mamta Bajpai
Nutan Samdani
Saji George
Seema Singh

High attrition rate &
Industry Competition
Action Plan -
The PSS facilitated identification and prioritization of talent gaps in the organization and the development of a basic action plan

What needed to be done? Was it a training need? Did an employee need to be moved? Should they bring someone in from the outside?

Adapted and conducted in each of the major business units—with the management team of each unit reviewing their top 75-100 positions

Integrated into the Global compensation system for senior leaders, with an individual’s PSS rating functioning as a cap on what that person could earn as an annual bonus

“High performers”
were entitled to the maximum bonus.
“Successful”
employees were entitled to a payout of up to 50% of the maximum and
“Less effective”
employees could earn only 25% of this maximum number

After three cycles of the PSS, there was a visible link between the PSS rating and the annual short term incentive strongly reinforcing the Company’s commitment to reward performance and drive the talent management strategy
Thank You!!
Source for assistance - ppt -http://prezi.com/
Full transcript