Note 12: Our people
Our people are the key to our success as an organization. We need to ensure that we have a performance-driven culture and the right people with the right capabilities to deliver on our strategic objectives.
The right culture
New core principles and values and behaviors
We want to encourage a high performance culture of engagement, feedback and trust. Our new core principles and values help to shape the behaviors that create this culture. During 2014, we continued to roll-out our new values and behaviors across the company through an awareness raising campaign called Count me in! The campaign was subsequently nominated for a European Excellence Award, in the category Internal Communications.
Pulse surveys have shown that after just one year, 96 percent of our people are aware of the new values and behaviors, while 67 percent indicated that they influence their way of working. We held thousands of Town Hall meetings and Count me in! workshops all over the globe. These were designed to help our people bring the values to life by showing how they are connected to their team objectives. In total, 82 percent of our people said that they have a clear understanding of how the values relate to the company strategy.
Our performance-driven culture is supported by our Performance and Development Dialog process (P&DD), which is mandatory for all employees. The values are now fully integrated into this process, which means that they are a crucial part of the objective setting phase and mid-year review, as well as the year-end performance assessment. In addition to the performance score, a separate values score has been introduced which influences the overall P&DD rating. This rating influences the annual salary review, so employees are rewarded not only for what they achieve, but also for how they achieve it.
ViewPoint engagement survey
One of our other key measures of progress in the area of culture is employee engagement, which we measure through our annual ViewPoint engagement survey. As well as measuring engagement generally, the survey now also includes questions about our core principles and values, giving us an understanding of the extent to which our people are aware of and live them. We see 2014 as the zero measurement for these questions and will be able to track our progress in the future.
We have also changed the timing of our annual employee engagement survey to better fit with the cycle of the business, so the results can be used to inform business planning, as well as being included in people’s objectives.
Compared with last year’s results, we have seen an increase in engagement. In the context of our ongoing change and restructuring this is a positive signal. Engagement has increased every year since we started the survey in 2010.
ViewPoint score employee engagement
(1 – 5 scale)
Our overall engagement score increase of 0.09 to 3.97 (2013: 3.88) means we’re on track to achieve our 2015 target of over 4.00.
Manufacturing is generally acknowledged to be one of the more difficult areas to build employee engagement. Our focused interventions in manufacturing led to a significant increase of engagement in this area. We have also learned that where we focus on the quality of action planning, it leads to an increase in engagement, so this was a significant point of attention in 2014.
In addition, we have made tools and training available to help our managers improve in the areas of giving and receiving feedback. This is an important factor in creating an engaged, values-driven culture. We will also create platforms to empower our employees to share ideas and best practice in living our values.
Diversity and inclusion
Diversity of thought is an important factor in creating the right culture. Our company’s workforce should reflect the societies where we do business. We need to truly represent the many and varied cultures of the markets we serve, and over the last year we have placed a stronger focus on inclusion as an important element of building winning teams.
We’re committed to continuously improving in this area. We want our management layers to reflect the diversity of our overall workforce, which is currently 24 percent female and 48 percent from high growth markets. In 2014, we increased the number of executives from high growth markets to 16 percent (2013: 14 percent). We also re-introduced a Women in Leadership training program for our female high potential employees to address some of the barriers that women face in moving to senior leadership roles. We saw the number of female executives increase to 17 percent in 2014 (2013: 16 percent).
High growth market executives
The right people
We are working hard to put in place the right talent management and resourcing processes across the company. This helps us to recruit, retain and develop the people we need to create winning teams.
We’re starting to manage talent in a more active way to ensure that we have a sustainable pipeline of internal candidates for our future needs. We have extended our focus from top management to also include other management levels.
Our approach to assessing growth potential now reflects the importance of our values and behaviors, our engagement and diversity and inclusion measures. We have also updated our recruitment policy, which now focuses on hiring people with potential – not just for that role, but for the future as well. And by making our processes simple and easy to understand, as well as communicating them clearly to our people managers and employees, we are being transparent about how we manage our talent.
Our internal promotion into executive level decreased to 68 percent (2013: 75 percent). This was due to our more rigorous approach to talent management, which resulted in the external recruitment of a number of new executives. This was a conscious choice to bring in new knowledge and skills from outside our organization to further encourage new ideas, innovation and diversity of thought.
The new talent management approach also resulted in a change to the definition of leadership talent. This impacted our leadership talent retention figures which increased slightly for the overall group to 93 percent (2013: 92 percent); and declined to 89 percent (2013: 92 percent) for the under-represented group.
The right capabilities
We know that continuous learning needs to be one of our critical focus areas if we’re to remain competitive and create a working environment that makes people feel valued while providing the right conditions for them to perform at their best. We want our people to feel empowered to own their development, so we give them the support and resources they need to grow.
Our online Academy learning platform helps us to drive functional and leadership capability and we are in the process of developing it to become the “go to” place for learning and best practice in AkzoNobel. During 2014, we redefined the governance, systems and structure of the Academy to make sure its philosophy and principles are part of our corporate growth strategy. We have further standardized learning across the organization by rolling out a standard Learning Management System in key countries. This will help us to measure and benchmark learning across businesses and geographies. We have also launched a best practice platform for commercial excellence and defined a common sales and marketing curriculum.
Throughout the year, we ran more than 50 centrally developed functional excellence and management development programs, impacting more than 4,000 employees. We also increased the number of online programs available to all employees (open enrolment) to more than 200, available in five languages.
During the next few years, we will use the AkzoNobel Academy to further build people manager capability and help them take more responsibility with regard to supporting their people. To date, we have trained 13,000 managers in our Situational Leadership Program globally.
ViewPoint score on Learning and growth
(Q12) (1 – 5 scale)
Our focus on capability development is reflected in our ViewPoint survey score, which has increased year on year.
In 2014, we introduced a new operating model for five of our support functions, including Human Resources. The model aims to reduce complexity and costs by introducing standardized processes and systems and harmonizing policies and ways of working across the organization. This will remove duplication and make us more competitive in the future.
The new model means that we’ll have one way of doing things, for example in terms of talent management, across the company. This is more efficient and will deliver a better employee experience, as well as making life easier for our people managers. It is based on three key elements:
- Business partners focused on high value added activities that are close to the business. They will offer analytical and strategic support and make sure our standard processes and policies are applied in their area
- Centers of Expertise made up of groups of experts who offer advice and support specific tasks for each of our Business Areas, such as Talent management, Compensation and benefits and Recruitment
- Shared Service Centers to focus on process efficiency and run all transactional support services, such as payroll and HR administration
Our target is an agile, effective, efficient and standardized HR organization which delivers high quality people strategies, service and support to the company at an affordable cost. The implementation of the new operating model allowed us to reduce HR headcount by 16 percent.