KEY STRATEGIES FOR MANAGING

HUMAN CAPITAL RISK

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Harold Morgan
Senior Vice President Human Resources, CHRO White Lodging Services
Former CHRO, CTA (Chicago Transit Authority), IDEX Corporation, Bally Total Fitness
Corporation, Bally Manufacturing/Entertainment, Director of Employment and Labor
Relations, Hyatt Hotels Corporation.

Jennifer Barton, SPHR

Chief Operating Officer | Willis Human Capital Practice
As COO of the Human Capital Practice for Willis North America, Jennifer has responsibility
for 48 offices throughout the U.S. and Canada representing over $330 million in revenue.
In this capacity she is responsible for defining, creating and deploying best-in-class client
deliverables designed to address human capital risk. Under her leadership, the practice
has grown to consult with over 3,000 clients across the U.S. in areas such as Human
Resources, Communication, Compliance, Health Outcomes and Reporting and Analytics.

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 What to Expect
1. Overview of Talent Management/Development
2. Best Practice Review
3. Five specific strategies for managing human
capital risk within your organization
4. Key questions for getting started with your
strategies

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Company Overview

WHITE LODGING OVERVIEW

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 Introduction to White Lodging
Established in 1985 Headquarters in Merrillville, Indiana (30 miles from downtown Chicago)
Owner, developer and operator of premium branded hotels
One of the largest independent hotel organizations in the U.S.
170 branded hotels totaling more than 26,000 guestrooms in 21 states
Deep talent pool: 10,000 Associates Full and Part Time
Manage leading brands: Marriott, Hilton, Starwood, Hyatt, InterContinental, Preferred,
Carlson
Mission: Maximize the value of each and every hotel asset for our owners
The State of the Industry
The Brands
Own very few, if any hotels
Manage less than 50% of the hotels bearing their name
Independent Management Model
Work for the owner instead of the brand
Offer more accountability, flexibility and ROI versus brands

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Human Capital Risk Practical Implications

HISTORY

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 Overview
1. No Chairman of Board / CEO has ever.... 3. Talent
3. Talent changes all the time
2. No CHRO has ever . Changes All
The Time
4. CHRO Survey major issue

Modify Talent Strategy All The Time

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Source: HR Policy Association

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 General Philosophy-
Talent Development
1. Right people on bus (80%) + robust on-boarding
2. KISS
3. 50/50 no hand holding
4. Develop those with most impact (more top of
house)
5. 70-20-10 rule of training

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 Elements of Great
Talent Management
1. Right people on bus
2. Business needs generate talent plan
3. Determine how to judge talent
Competencies current performance

Testing against competencies

future potential
4. Assess Talent flight risk
5. Produce choices for key roles (outside > 30%)
6. Conduct STR s of Key Leaders
7. Decide on development/coaching approach
8. Move plus manage talent-every move is scrutinized
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Source: HR Policy Association

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Willis

5 SPECIFIC STRATEGIES

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Specific Human Capital Strategies

1. Conduct a Total Rewards Gap Assessment

2. Alignment of Compensation

3. Implementation of Flexible Work Arrangements

4. Utilization of Competencies

5. Identification of High Potential / High Performing Employees

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Specific Human Capital Strategies

1. Conduct a Total Rewards Gap Assessment

2. Alignment of Compensation

3. Implementation of Flexible Work Arrangements

4. Utilization of Competencies

Identification of High Potential / High Performing Employees

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 What is Your Employee Value
Proposition?
Drive Business
Success
Employ Top Performance
Talent That Is Results
Optimal Mix of Engaged
Reward Satisfied
The Companys Elements
Ability Compensation
Attract Benefits
Motivate Work-Life
Retain Performance &
Recognition
Development &
Career
Opportunities

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Total Rewards Gap Assessment
Evaluate or Create a Total
Rewards Strategy
o Effectiveness of your rewards
elements
o Alignment to your business
strategy
o Competitive position
Develop an Action Plan
o Resources and
recommendations
o Prioritization and eligibility

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Specific Human Capital Strategies

1. Conduct a Total Rewards Gap Assessment

2. Alignment of Compensation

3. Implementation of Flexible Work Arrangements

4. Utilization of Competencies

Identification of High Potential / High Performing Employees

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 Pay for Performance in Theory
Percent of Percent
Population Increase

High High

Low Low

Does Not Partially Meets Exceeds Far Exceeds

Meet Meets
Performance

Employee Population Merit Increase

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 Pay for Performance in Reality
Percent of Percent
Population Increase

High High

Low Low

Does Not Partially Meets Exceeds Far Exceeds

Meet Meets
Performance

Employee Population Merit Increase

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 Merit Matrix Modeling
Distribution of Employees by BOTH Performance and Within Pay Range

1st 2nd 3rd 4th

Payout
Quartile Quartile Quartile Quartile
Largest increase to
those who perform 17% 39% 22% 22% 100%
well and paid low in
Outstanding 10% 7.5% 6.5% 5.5% 3.5% 0.59%
their range
Significantly Exceeds
20% 5.5% 4.5% 3.5% 1.5% 0.79%
Standards

Fully Meets Standards 60% 4.0% 3.0% 2.0% 0.0% 1.47%

Does Not Fully Meet

5% 0.0% 0.0% 0.0% 0.0% 0.00%
Standards

Does Not Meet Standards 5% 0.0% 0.0% 0.0% 0.0% 0.00%

2.85%

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Specific Human Capital Strategies

1. Conduct a Total Rewards Gap Assessment

2. Alignment of Compensation

3. Implementation of Flexible Work Arrangements

4. Utilization of Competencies

Identification of High Potential / High Performing Employees

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 New Ways to Define When, Where
and How Work Gets Done
Helping Employees Balance Why
Personal and Professional
Work-Life Demands 1 out of 5 cares for an elderly parent
100% Women comprise 60% of workforce
10%
90%
80% of men would like fewer hours
80%
70%
Priority from Boomers to Millennials
50%
60%
50%
In Practice
40% High-Performers
30%
Teams establish blueprints
20% 40%
10% Establish and hit benchmarks**
0%
Weak Adequate Excellent
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Specific Human Capital Strategies

1. Conduct a Total Rewards Gap Assessment

2. Alignment of Compensation

3. Implementation of Flexible Work Arrangements

4. Utilization of Competencies

Identification of High Potential / High Performing Employees

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 Identify Behaviors and Skills
Critical to Success
CUSTOMER FOCUS
The ability to plan a course of action while keeping customer information and feedback top-of-mind. This
includes how we interact with customers directly, interface with customers online and how we select the
products that we offer.
Developing and / or Low
Medium Performing High Performing
Performing
Able to work successfully with difficult Provides supports to others in meeting Oversees highly complex customer
customers and satisfy their requirements. difficult customer requirements and/or focus initiatives and assignments with
Maintains professionalism while
coping with customer care difficulties. success; makes customer experience a
top priority in every aspect of work.
responding with urgency. Reaches win-win agreements with
customers. Provides guidance to others in meeting
Acts on feedback concerning products
difficult customer requirements and/or
and services the Company provides. Evidences in depth understanding of
coping with customer care difficulties.
the Companys customer experience;
Identifies opportunities to improve
uses this information to identify better Creates opportunities for others to
company operations.
ways to serve the customer develop in-depth understanding of the
Companys customer experience and the
business operations that make this
experience a reality.

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Specific Human Capital Strategies

1. Conduct a Total Rewards Gap Assessment

2. Alignment of Compensation

3. Implementation of Flexible Work Arrangements

4. Utilization of Competencies

Identification of High Potential / High Performing Employees

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 Identify High-Potential and High-
Performing
Low Potential
Highly valued, seasoned
High professional in current role;
remain at current level
Probably solid performers in
current roles. Could
Effective progress higher in specialty
and become a high
performer.
Consider reassignment,
Low
reclassification or exit.
Recording of this sessioneffectively.
Moderate Potential High Potential
Does extremely well at
Consistently performs well in
current job with potential to
a variety of assignments,
do more, give stretch
prime targets for recruitment
assignments to help prepare
by other companies.
for next position.
Current role may still provide
These individuals should be
opportunity for growth /
considered for a bigger job at
development; focus should
the same level if they can
be on helping them improve
deliver better results.
performance
Tight performance Maybe job mismatch, new
management is crucial, hire with lots of potential, or
consider helping leader new assignments. May
manage time more require coaching to improve
performance.
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 Create a Plan to Manage Your Human
Capital
Succession Remember 10% | 20%| 70%
Candidates Projects
HIPOs Taskforce

Talent Inventory

Career Growth Job Rotations

Candidates Temporary Accountability
Stretch Assignments
Key Fix-it / Turn-around
Contributors Development Plans
Cross-Functional moves
Internal and External Leadership Development
Team
Players 360 Feedback
Non-HIPOs
Problem
Children

Exit
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 Not Everything at Once
Action Tool
Delivering on this initiative would help achieve business objectives?
Line managers are likely to cooperate, if asked to support this initiative?
We have the capabilities within our HR team to deliver this initiative well?
We have the infrastructure (e.g., technology, tools) to deliver this initiative well?
Results from the initiative can be measured to validate its effectiveness? How?
Leadership buy-in has been obtained or is likely to be obtained?
Who will be accountable for the success / failure of the initiative?
What are the estimated direct and indirect costs associated with this tactic?
Can we secure the budget necessary to deliver this initiative well?

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 Key Take Away

Human Capital is an Asset Manage it.

Whether a company competes on the basis

of productivity, innovation, customer loyalty,
efficiency, speed, or agility, the workforce
has a make-or-break impact on those results.

It is important to have the right talent, with

the right skills, in the right place, at the right
time, and at the right cost.
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Questions, Final Comments and
Contact Information
Harold Morgan
Senior Vice President Human Resources
White Lodging Services
harold.morgan@whitelodging.com

Jennifer Barton
Chief Operating Officer
Willis Human Capital Practice
jennifer.barton@willis.com

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