Rapport BCG

Creating People
Advantage 2014-2015
HOW TO SET UP GREAT HR FUNCTIONS:
CONNECT, PRIORITIZE, IMPACT

The Boston Consulting Group (BCG) is a global management consulting firm and the world’s
leading advisor on business strategy. We partner with clients from the private, public, and not-for-
profit sectors in all regions to identify their highest-value opportunities, address their most critical
challenges, and transform their enterprises. Our customized approach combines deep insight into
the dynamics of companies and markets with close collaboration at all levels of the client
organization. This ensures that our clients achieve sustainable competitive advantage, build more
capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with
81 offices in 45 countries. For more information, please visit bcg.com.
The World Federation of People Management Associations (WFPMA) is a global network
of professionals in people management. It was founded in 1976 to aid the development and
improve the effectiveness of professional people management all over the world.
Its members are predominantly continental federations, which are made up of more than
90 national human resource associations representing over 600,000 people management
professionals. For more information, please visit www.wfpma.org.

December 2014 | The Boston Consulting Group • WFPMA
RAINER STRACK
JEAN-MICHEL CAYE
THOMAS GAISSMAIER
CHRISTIAN ORGLMEISTER
EDDY TAMBOTO
CARSTEN VON DER LINDEN
SEBASTIAN ULLRICH
PIETER HAEN
HORACIO QUIRÓS
JORGE JAUREGUI
CREATING PEOPLE
ADVANTAGE 2014-2015
HOW TO SET UP GREAT HR FUNCTIONS:
CONNECT, PRIORITIZE, IMPACT

2 | Creating People Advantage 2014-2015
CONTENTS
3 INTRODUCTION
5 KEY HR TOPICS
Survey Methodology
Non-HR Respondents Say That Capabilities Need to Improve
12 THE LINK BETWEEN FINANCIAL PERFORMANCE
AND HR CAPABILITIES
18 HR’S BUSINESS IMPACT
21 REGIONAL AND INDUSTRY CONSIDERATIONS
The Regional View: Leadership and Talent Management Show the Greatest Urgency
The Industry Comparison: Energy and Financial Institutions Stand Out
25 WHAT SETS GREAT HR FUNCTIONS APART
26 APPENDIX I: METHODOLOGY
28 APPENDIX II: EXECUTIVE INTERVIEWEES
31 APPENDIX III: SUPPORTING ORGANIZATIONS
34 FOR FURTHER READING
35 NOTE TO THE READER

The Boston Consulting Group • WFPMA | 3
INTRODUCTION
Business leaders today are faced with an extremely dynamic
business environment, characterized by technological innovation,
blurring boundaries among industries, shifts in customer behavior,
scarcity of talent, and huge variations in growth across regions. HR
functions need to help companies meet these challenges as true
strategic partners. To fulfill this mandate, however, HR leaders need a
clear view of their current capabilities, their priorities over the next
three to five years, and the best way to tailor efforts to improve.
This report, the eighth in The Boston Consulting Group’s Creating
People Advantage series, explores key trends in people management
by considering ten broad HR topics and 27 subtopics. We looked at
each subtopic’s future importance, companies’ current capabilities
with regard to the subtopics, the levels of effort invested in them, and
how urgently each subtopic needed action. We also explored the link
between people management capabilities and economic performance.
In this year’s survey, 3,507 respondents from 101 countries participat-
ed, representing industries including industrial goods, consumer
goods, and the public sector. In addition, we interviewed 64 HR and
non-HR executives at leading companies around the world. The fol-
lowing are among the most compelling findings:
•• HR capabilities correlate with economic performance. Companies that
have strong capabilities in HR topics—such as talent and leader-
ship; engagement, behavior, and culture management; and HR
strategy, planning, and analytics—show significantly better finan
cial performance than companies that are weaker in those areas.
•• Analytics and key performance indicators (KPIs) give HR a seat at the
table. There is a strong correlation between the use of KPIs and
the strategic role of HR. HR leaders who want a role in strategic
discussions with the business must be able to quantify workforce
performance. This goes beyond “input” metrics, such as cost and
head count, toward more sophisticated “output” indicators, such as
productivity.

•• KPIs should link to strategic actions. Even high-performing organiza-
tions, which are generally more data driven, do not use their KPIs
systematically to formulate strategic actions. A clear prioritization
and selection of KPIs and tools is needed to achieve best-in-class
results.
•• Globally, the leadership and talent management topics are the ones in
the most urgent need of action. Across industries and regions, most
respondents identified leadership, talent management, behavior
and culture, HR and people strategy, employee engagement, and
strategic workforce planning as the topics that are most urgently in
need of action by their organization.
•• HR departments need to be more consistent in their investment deci-
sions. Many organizations need to invest their efforts in HR topics
more strategically to build capabilities. Among the three HR topics
rated as most important (out of a total of ten), companies showed
merely average capabilities, and they were not specifically target-
ing their investments to improve those areas.
•• HR needs to listen more to internal clients. Non-HR respondents re-
ported a strong need for action with regard to approximately 40
percent of HR topics, particularly in core HR capabilities, such as
staff capabilities and communication.
Fundamentally, the report identifies three hallmarks of great HR
functions:
•• They connect by partnering with stakeholders inside and outside of
the company to improve operational and financial performance.
•• They prioritize by using data-driven insights to identify and focus
on the most urgent HR priorities.
•• They create an impact by using KPIs and steering tools to support
the organization and its strategic goals.
The report also includes case studies of specific HR best practices
from Deutsche Lufthansa AG, PepsiCo, and Transnet.

KEY HR TOPICS
The Boston Consulting Group (BCG)
has published an annual Creating People
Advantage report—partnering, in alternating
years, with the World Federation of People
Management Associations (WFPMA) and the
European Association for People Manage-
ment (EAPM)—since 2007. In this year’s
report, BCG and the WFPMA conducted a
survey of human resources professionals and
other business leaders around the world. The
report summarizes the survey’s findings,
provides a comprehensive snapshot of people
management priorities and capabilities, and
explores their link to companies’ operational
and financial performance.
This report serves as an overview, with high-
lights of key findings. Follow-up reports will
provide more detailed findings and in-depth
analyses on specific topics.
Survey Methodology
More than 3,500 respondents from 101 coun-
tries participated in our online survey in
2014. (See Exhibit 1.) We also conducted 64
in-depth interviews with HR and non-HR ex-
ecutives at leading companies in a variety of
regions. (For more about the survey method-
ology, see Appendix I; for a list of executive
interviewees, see Appendix II.)
To identify HR priorities, we analyzed ten
broad HR topics, which were further broken
out into 27 subtopics. (See Exhibit 2.) For ex-
ample, the topic of training and people devel-
opment includes three subtopics: training and
learning, career models and competencies,
and assignment management. This categori-
zation allowed us to look at big-picture trends
and to drill down into specific analyses. We
asked the survey respondents to rank each of
the 27 HR subtopics by its future importance,
their companies’ current capabilities in the
subtopic, and the levels of effort invested in
the subtopic.
Exhibit 2 shows the ten HR topics ranked by
respondents’ assessment of future impor-
tance. The 27 subtopics are color-coded ac-
cording to the levels of effort invested. Inter-
estingly, while levels of effort broadly link to
future importance, there are notable excep-
tions. For example, leadership, talent man-
agement, and strategic workforce planning
are among the highest priorities, yet they re-
ceived only average levels of investment.
Clearly, companies must be more consistent
in their investment decisions.
In addition, we combined future importance
and current capabilities into a single metric—
defined as urgency for action—and ranked all
27 subtopics by this dimension.1
The subtop-
ics most urgently in need of action across all
industries were leadership, talent manage-
ment, behavior and culture, HR and people
strategy, employee engagement, and strategic
workforce planning. (See Exhibit 3.)
(For more on leadership, see the sidebar
“PepsiCo Offers Its Executives a Master Class
in Strategy.”)

Talent management and
leadership
Engagement, behavior, and
culture management
HR strategy, planning, and
analytics
Performance management
and rewards
Recruiting: branding, hiring
and on-boarding
HR communication and
social media
Training and people
development
HR target operating
model
Diversity and generation
management
Labor costs and labor
management
Below median
Effort
invested
Above median # Effort invested rank
25
26
27
24
23
18
17
8
10
64
15
21
1920 12
22
7
1
2
3
14
9
5
13
1116
Median
10 HR topics 27 HR subtopics
High
Low
Futureimportance
Performance management Rewards and recognition
Diversity management
HR orga-
nization
HR services
and systems
HR staff
capabilities
Strategic
workforce planning
Employer
branding
Recruiting
strategy
Other HR and
workforce analytics
HR inter-
nationalization
Generation management
HR communication
Recruiting
processes
HR
processes
On-boarding
Social media
Labor costs and restructuring Works councils and union management
Training and learning
Career models and
competencies Assignment management
Employee engagement Behavior and culture
Talent management Leadership
HR and people strategy
Source: 2014 BCG and WFPMA proprietary Web survey and analysis.
Note: Only countries with more than ten responses are shown; of the total, 84 respondents did not specify a country. There were 3,507
respondents in total.
Note: There were 3,507 respondents.
Exhibit 1 | More than 3,500 Respondents from 101 Countries Participated in Our Survey
Exhibit 2 | The Analysis Includes 10 Broad HR Topics and 27 Subtopics
100 or more
60–99
30–59
10–29
No data collected
United States 319
Bangladesh 102
Malaysia 80
Senegal 21
Japan 45
Philippines 29
Botswana 11
India 112
Canada 189
Guatemala 22
Thailand 87Panama 31
Chile 29
Brazil 53
United
Arab
Emirates 29DominicanRepublic 36
Indonesia 19
New Zealand 91
Ecuador 18
Argentina 13
China 71
South Africa 54
Mexico 57
Australia 172
Taiwan 156
Russia 53
Mongolia 10
Venezuela 29
Nicaragua 43
Fewer than 10
Number of responses
Croatia 19
Ukraine 26
Austria 28
Slovenia 43
Cyprus 28
Hungary 12
Norway 37
Turkey 67
Bulgaria 19
Greece 24
Sweden 63
Romania 84
Finland 70
Italy 95
Israel 44
Lithuania 12
Portugal 78
Denmark 16
Switzerland 24
Germany 127
Netherlands 65
Spain 70
Ireland 31
Belgium 12
United
Kingdom
120
France 100
Macedonia 11

Non-HR Respondents Say That
Capabilities Need to Improve
Both HR and non-HR respondents identified
the same HR subtopics, such as talent man-
agement and leadership, as priorities—that
is, the areas with the lowest current capabili-
ties and the highest future importance. How-
ever, there were significant differences in the
perceptions of their companies’ people man-
agement capabilities. (See Exhibit 4.)
Virtually across the board, HR respondents
rated capabilities more highly than non-HR
respondents. They also did not consider any
areas to be in urgent need of action. By con-
trast, non-HR respondents categorized nearly
half of the 27 subtopics as urgently needing
action. This was especially true for talent
management and leadership, two highly im-
portant subtopics for which non-HR respon-
dents think their organizations show low ca-
pabilities.
Connect. Great HR functions
have a strong relationship with their
internal clients and thus understand
the organization’s most urgent
needs and strategic goals. This
connection allows them to address
the day-to-day realities of business
units and to meet long-term con-
siderations, such as the supply and
quality of employees.
PepsiCo has developed a well-deserved reputa-
tion as a high-performing company that invests
in leadership training and development. To build
on this, the company recently implemented a
strategy master class.
The program was designed around 15 PepsiCo-
specific case studies of major strategic decisions
over the past 20 years, such as significant
acquisitions or an expansion into developing
markets. Through these case studies, the
training provides a comprehensive foundation for
strategy composed of several aspects. First is a
uniform set of strategy fundamentals, including
consistent definitions, building blocks, and
guidance questions. Second is a set of tools to
help executives learn how best to lead them-
selves, lead others, and lead the business.
Third—and most important—is a set of five
tactics that executives can use to successfully
take on new strategic challenges:
•• Frame. Clearly assess the problem, including the
company’s aspiration, objectives, and scope.
•• Diagnose. Look at the current situation as
well as at future scenarios, including external
trends and forces, the company’s competitive
position and performance, and the relative
attractiveness of different options.
•• Design. Generate a solution that aligns with
the company’s portfolio strategy, business
strategy, and business model strategy and
clarify where to play and how to win.
•• Test. Stress-test the strategy to ensure that it
is coherent, robust, and ready to execute.
•• Execute. Implement the new strategy,
clarifying initiatives, owners, resources,
success metrics, and a mechanism for
capturing lessons learned.
The training is being rolled out in two stages,
starting with a two-day, in-person seminar for
senior leaders, led by one of PepsiCo’s C-level
executives. A broader segment of PepsiCo
executives will then receive a four-hour e-learn-
ing version of the class hosted on PepsiCo’s
internal education platform. Although the
program is still being implemented, the benefits
are already clear: PepsiCo’s senior leaders will
soon gain additional insights and training that
will help drive the company’s continued success
in a dynamic global market.
PEPSICO OFFERS ITS EXECUTIVES A MASTER CLASS
IN STRATEGY

(For more on talent management, see the
sidebar “Decoding 200,000 Global Talent Pro-
files.”) Also, HR respondents attributed a
higher importance to all subtopics—almost
10 percent on average—than did non-HR re-
spondents, and they rated their capabilities
as consistently higher.
Equally distressing, the strongest misalign-
ment was in the area of HR staff capabilities,
HR communication, works councils and
union management, and HR processes. (See
Exhibit 5.) HR and non-HR respondents
agreed on the level of capabilities in the sub-
topics employer branding, generation man-
agement, and assignment management.
In many organizations, the HR function is
perceived as not meeting the expectations of
its internal clients. To address this misalign-
ment, HR departments must better align with
business units throughout the enterprise, to
increase the impact of HR and generate
stronger business performance.
Note
1. Urgency is determined by calculating the difference
between future importance and current capabilities,
and then multiplying that difference by future
importance.
HR subtopics according to urgency rank1
HR communication
Career models and
competencies
Strategic workforce planning
Employee engagement
Behavior and culture
Talent management
Leadership1
2
3
4
5
6
7
8
9
10
HR internationalization
Labor costs and restructuring
HR organization and
governance
Works councils and union
management
HR processes
Assignment management
21
22
23
24
25
26
27
Recruiting processes
HR staﬀ capabilities
Rewards and recognition
HR services and systems
Other HR and workforce
analytics
Social media
On-boarding
Recruiting strategy
11
12
13
14
15
16
17
18
19
20
Employer branding
Note: There were 3,507 respondents.
1
Urgency is determined by calculating the difference between future importance and current capabilities, and then
multiplying that difference by future importance.
Exhibit 3 | Leadership, Talent Management, and Behavior and Culture Are Most
Urgently in Need of Action

HR respondents1
Non-HR respondents2
High
Low
Futureimportance
High
Low
Futureimportance
High Low Low
Medium
High
Low
High
Need for action:
Eﬀort invested:
Current capability
High LowCurrent capability
Employer branding
Other HR and workforce analytics
Generation
management
Diversity
management
Employee engagement
Talent management
Career models and competencies
HR communication
HR organization and governance
Works councils and
union management
Social media
Training and
learning
On-boarding
HR processes
Recruiting strategy
Leadership
Employee engagement
Leadership
Talent management
Performance mgmt.
On-boarding
Employer branding
HR processes
Works councils and union management
Labor costs and restructuring Social media
HR communication
Other HR and
workforce analytics
Recruiting strategy
1
The sample size for HR respondents was 2,909.
2
The sample size for non-HR respondents was 331.
Exhibit 4 | HR Respondents Rate Their Capabilities Higher Than Non-HR Respondents Do

DECODING 200,000 GLOBAL TALENT PROFILES
Over the past several years, talent management
has been consistently rated as one of the HR
subtopics in the greatest need of action.
Companies are scrambling to develop strategies,
programs, and measures to recruit, develop, and
retain their top talent and keep them motivated
at the same time—not an easy task.
In Decoding Global Talent: 200,000 Survey
Responses on Global Mobility and Employment
Preferences (BCG report, October 2014), we
explored this issue in depth. We partnered with
The Network—an association of more than 50
job boards worldwide, with more than 200
million visitors per month on all its websites—to
conduct an online survey. The survey included 33
questions about talent mobility and job prefer-
ences, 13 of which looked at demographic
factors, such as age, work experience, gender,
education, industry, salary, and occupation. The
result is a unique database that offers strategic
insights for developing people strategies.
For example, the report shows worldwide trends
in talent mobility across countries, age groups,
and positions, among other factors. Global
mobility is widespread, with 64 percent of job
seekers willing to work abroad. The U.S. is the
favorite work destination, followed by the UK
and Canada. Germany is the fourth most
popular country to work in and the top non-
English-speaking market in the group.
One of the survey’s more striking findings has to
do with what people say makes them happy on
the job: increasingly, workers are starting to put
more emphasis on cultural aspects and less on
financial compensation. Out of 26 job elements,
the single most important one for all people
globally is appreciation for their work. (See the
exhibit below for the top ten elements.) Good
relationships at the office—whether with
colleagues or superiors—are critically important
and come in second and fourth, respectively. A
good work-life balance is the third most import-
ant job factor. The implications for companies,
economies, and individuals are significant and
varied; addressing them will be key for future
success.
The full report is available at
www.bcgperspectives.com.
Work environment
Compensation package
Company reputation and image
Job content and opportunities
Appreciation for your work1
Good relationships with colleagues2
Good work-life balance3
Good relationships with superiors4
Company’s ﬁnancial stability5
Learning and career development6
Job security7
Attractive ﬁxed salary8
Interesting job content9
Company values10
"How important
are the following
job elements to you?”
The Cultural Aspects of Work Are More Important to Employees
Than Are the Financial Aspects
Source: 2014 BCG/The Network proprietary Web survey and analysis.
Note: Respondents could choose from 26 job elements; this list includes only the top ten.

Note: There were 2,909 HR respondents and 331 non-HR respondents.
Exhibit 5 | HR Respondents Report Higher Capabilities Than Non-HR
Respondents Across All Subtopics
HR communication
HR processes
Recruiting strategy
Leadership
On-boarding
Talent management
Social media
Employee engagement
Employer branding
HighLow
Capability ratings by HR respondents
Capability ratings by non-HR respondents
Current capabilities

THE LINK BETWEEN
FINANCIAL PERFORMANCE
AND HR CAPABILITIES
Acentral finding of our survey is the
correlation between HR capabilities and
financial performance. We segregated the top
100 and bottom 100 companies according to
financial performance, as measured by
average operating margins and average
revenue changes during the previous two
years (2012 and 2013), and we included only
companies with at least 50 employees. (See
Exhibit 6.)
We found that companies that are stronger in
people management have a correspondingly
higher financial performance. Among high
performers, no HR subtopic is designated as
being in urgent need of action.
In contrast, companies with the worst finan-
cial performance show a greater need for ac-
tion across virtually all 27 HR subtopics, with
seven clearly in the red zone and three more
at the border.
This has been a consistent finding in previous
Creating People Advantage reports and in
publicly available research. Looking at the
publicly listed companies that made Fortune
magazine’s “Best Companies to Work For”
ranking in 2014, and their share prices over
the decade from 2004 to 2013, it is clear that
the most successful people companies consis-
tently outperformed the market, by nearly
100 percent.1
In our survey data, there was a troubling dif-
ference in capabilities between companies
that are high performers and those that are
low performers. (See Exhibit 7.)
This was greatest in HR internationalization,
social media, employee engagement, career
models and competencies, and behavior and
culture.
High- and low-performing companies also
have different priorities in terms of future
importance. HR internationalization, HR and
workforce analytics, recruiting strategy, HR
and people strategy, and career models and
competencies are significantly more import-
ant in high performers than in low per
formers.
One possible explanation for the superior
HR achievement of high performers is their
strategic allocation of investment. (See Ex
hibit 8.)
Our analysis shows a strong relationship be-
tween the levels of effort invested and the fu-
ture importance of the subtopics being ad-
dressed. That is, high performers are more
strategic in the way they allocate their efforts;
they take a systematic approach to improving
capabilities; they are able to accurately distin-
guish high-priority topics from lower priori-
ties; and they can then direct their resources
accordingly, potentially improving their finan-
cial performance.
We found that low performers, by contrast,
have a more arbitrary relationship between

High
Low
Futureimportance
High
Low
Futureimportance
Low
Medium
High
Low
High
Need for action:
Eﬀort invested:
HR processes
Works councils and
union management
Social media
HR communication
Generation
management
Employee engagement
Leadership
Talent management
Assignment
management
Career models
and competencies
On-boarding
Recruiting strategy
Employer branding
HR processes
Works councils and
union management
Social media
HR communication
Generation
management
Behavior and culture Employee engagement
Leadership
Talent management
Assignment
management
Career models
and competencies
On-boarding
Recruiting strategy
Employer branding
High performers
Low performers
Note: High performers represent the top 100 companies (with at least 50 employees), which had the highest average revenue change and average
operating margin in 2012 and 2013; low performers represent the bottom 100 companies (with at least 50 employees), which had the lowest
average revenue change and average operating margin in 2012 and 2013.
Exhibit 6 | Companies with Strong Financial Performance Show Greater HR Capabilities

efforts invested and the importance of areas
targeted for improvement. Investments tend
to be misaligned; the most important issues
don’t necessarily win the greatest investment.
Prioritize. Great HR functions
identify the most important and
most urgent HR topics—both
internal and external—for a compa-
ny’s future and then prioritize their
efforts accordingly. This allows them
to get the biggest payoff for their
allocation of financial investments
and other resources.
This suggests that low performers don’t
have a rigorous process in place for improv-
ing their people-management practices.
Many companies lack a way to clearly iden-
tify the subtopics that are most important to
their organization. They struggle to imple-
ment governance that effectively targets
their resources, and they lack the discipline
to enforce alignment with need over
time—a necessity for the kind of sustain-
able improvements that can ultimately im-
pact the bottom line.
The alignment issue also arises when looking
at the urgency of specific HR subtopics.
Again, top performers are more strategic in
the way they invest their efforts, focusing on
the subtopics that they deem to be most ur-
gently in need of action.
For example, consider Pirelli, a leading tire
manufacturer, which systematically prioritiz-
es its HR processes to allocate investment ac-
cording to urgency. As Christian Vasino, the
company’s chief human resources officer, ex-
plains, “We conduct an annual internal sur-
vey to map the perceived sense of priority
and satisfaction among 12 HR processes. The
outcome of the survey was discussed within
HR’s top management as a starting point for
developing the people strategy.” Through this
assessment, the company is now able to fo-
cus on its most urgent areas, which they de-
fine as strategic workforce planning, recruit-
ing and on-boarding, training and
development, and employee engagement.
Note
1. Market performance was measured by the S&P 500
index.

Social media
Employee engagement
Talent management
Employer branding
HR communication
Recruiting strategy
Leadership
On-boarding
HR processes
HighLow
Capability ratings among low performers
Capability ratings among high performers
Current capabilities
Note: High performers represent the top 100 companies (with at least 50 employees), which had the highest average
revenue change and average operating margin in 2012 and 2013; low performers represent the bottom 100 companies (with
at least 50 employees), which had the lowest average revenue change and average operating margin in 2012 and 2013.
Exhibit 7 | Companies with Strong Financial Performance Report Higher
Capabilities in Almost All 27 Subtopics

High performers
Low performers
High
75 percent of
subtopics fall
within each
white corridor1
Low
Futureimportance
High
Low
Futureimportance
... with the most important subtopics
HighLow
Eﬀort invested
Correlation = 0.92
Correlation = 0.67
HR processes
Other HR and workforce analyticsEmployer branding
Recruiting strategy
On-boarding
Career models and
competencies
Assignment
management
Talent management
LeadershipEmployee engagement
HR communication
Social media Labor costs and restructuring
ouncils and union management
Other HR and work-
force analytics
Employer branding
Recruiting strategy Recruiting processes
On-boarding
Career models
and competencies
Talent management
Leadership
Employee engagement
Diversity
managementGeneration
management
HR communication
Social media
Works councils and
union management
HR processes
Exhibit 8 | High Performers Align HR Investments...

High performers
Low performers
75 percent of
subtopics fall
within each
white corridor1
High
Low
Urgency2
High
Low
Urgency2
... with the most urgent subtopics
Correlation = 0.70
Correlation = 0.03
HighLow
Eﬀort invested
Employee engagement
Employer branding
Recruiting strategy
On-boarding
Career models
and competencies
Talent management
Leadership
Employee engagement
Generation
management
HR communication
Social media
HR processes
Employer branding
Recruiting strategy
On-boarding
Training and learningCareer models and competencies
Talent management
Leadership
HR communication
Social media
Works councils and
union management
Works councils and
union management
HR processes
Note: High performers represent the top 100 companies (with at least 50 employees), which had the highest average
revenue change and average operating margin in 2012 and 2013; low performers represent the bottom 100 companies (with
at least 50 employees), which had the lowest average revenue change and average operating margin in 2012 and 2013.
1
The white corridors indicate the strength of the relationship between a company’s level of investment and the importance
of any given subtopic: the narrower the corridor, the stronger the relationship.
2
Urgency is determined by calculating the difference between future importance and current capabilities, and then
multiplying that difference by future importance.
Exhibit 8 | High Performers Align HR Investments...
Continued

Another key finding is that HR leaders
will have a seat at the table for strategic
discussions only if they can demonstrate the
business impact of HR. That is, they need to
be able to quantitatively establish the areas in
which HR supports the organization’s strate-
gic decisions. Our experience has found that
data-driven, analytical HR departments are
more likely to play a strategic role in their
organizations, and the survey data supports
this. (See Exhibit 9.)
HR functions that use people-related KPIs
and steering tools (such as simulations and
forecasts) to measure areas such as workforce
productivity and personnel costs, and then
analyze and communicate the results
throughout the organization, have a greater
strategic role in the organization.
Yet our survey data also shows that using
a data-driven approach is far from univer-
sal. Nearly half of the respondents (44 per-
cent) said that if they use KPIs and steering
tools, they do so only occasionally to track
workforce productivity. An even larger
proportion (55 percent) said that, at best,
they use them only occasionally for tracking
HR’S BUSINESS IMPACT
12
13
10
5
4
6
6
10
1
3
3
17
15
14
15
11
7
5
9
4
4
3
6
5
5
9
9
2
3
2
3
1
0
11
10
9
8
9
2
3
3
1
0
0
20
8
10
12
2
3
1
1
0
0
0
11
17
22
17
8
2
3
2
0
0
0
22
17
25
20
14
2
3
0
0
1
0
20
20
9
5
8
2
0
0
0
0
0
12
7
6
1
2
0
0
0
0
0
0
16
11
7
2
2
0
0
0
0
0
0
21
18
12
13
7
3
5
3
1
0
0
15
29
25
23
16
12
6
11
3
0
0
≤ 4 ≤ 11 ≤ 19 ≥ 20
Number of companies
Average (approximate)
Strong
Weak
StrategicroleofHR1
HighLow
Use of HR KPIs and steering tools2
1
The strategic role was determined by the average score in questions concerning HR’s role in the company; there were 979
respondents to this section.
2
KPIs = key performance indicators; use of KPIs and steering tools was measured by the average score of responses to
survey questions concerning workforce productivity, full-time equivalents, and personnel costs.
Exhibit 9 | KPIs and Steering Tools Allow HR to Play a More
Strategic Role

personnel costs—a relatively basic output
metric.
An HR organization that does not use metrics
and analytical techniques simply cannot play
a strategic role in its organization. Without a
clear, data-driven understanding of how the
organization is leveraging its human capital,
HR leaders have little to contribute to big-
picture strategic discussions.
Such results reinforce a common stereotype
of HR: that the function is better at working
with “softer” aspects of human capital, such
as training and development, and is less
skilled at applying the economic logic re-
quired for higher-level areas, such as work-
force productivity, planning, and forecasting.
The use of HR KPIs and steering tools is yet
another point of differentiation between high
performers and low performers. (See Ex
hibit 10.)
That said, there is still room for improvement
among the high performers. While these com-
panies were far more likely to define quanti-
tative targets and have KPIs in place, there
was still a noticeable drop-off in the number
of companies that take the next step—using
those KPIs to formulate new HR initiatives.
So, the low performers need to become more
data oriented, and both high and low per-
formers need to use that data to take action.
Quantita-
tive targets
deﬁned
KPIs in
place
Actual use
of KPIs to
derive HR
initiatives
HR
initiatives
tracked in
terms of
impact
on
workforce
productivity
Quantita-
tive targets
deﬁned
KPIs in
place
Actual use
of KPIs to
derive HR
initiatives
Benchmark-
ing overall
and by job
function
against
industry
standards
and
competitors
Programs
in place to
identify
and place
high-per-
formers in
key
positions
Programs
in place to
address low
perfor-
mance
Workforce productivity development FTE2
and personnel cost development
Often
Never
Low performers
High performers
UseofKPIs1
Note: High performers represent the top 100 companies (with at least 50 employees), which had the highest average revenue change and average
operating margin in 2012 and 2013; low performers represent the bottom 100 companies (with at least 50 employees), which had the lowest
average revenue change and average operating margin in 2012 and 2013; there were 979 respondents to this section, of which 28 were high
performers and 27 were low performers.
1
KPIs = key performance indicators.
2
FTE = full-time equivalent.
Exhibit 10 | High-Performing Companies Are More Data-Driven
“We are linking various analyses and data
to create true insights for a select group of
300 managers, and we regularly discuss the
results and define activities and HR
support. For example, we have created and
back-tested predictors for attrition risks—
based on engagement scores, turnover,
performance ratings, and other factors—
which we frequently discuss with manag-
ers in areas that show an above-average
risk of losing talent. The goal is to tailor
developmental support to mitigate the
risks.”
—The managing director
and global head of compensation and benefits
at a global Swiss bank

HOW LUFTHANSA CONSOLIDATED ITS KPIS TO MEASURE
THE THINGS THAT REALLY MATTER
Deutsche Lufthansa AG operates one of the
biggest aircraft fleets in the world and employs
more than 115,000 people throughout its
passenger and air-freight divisions, logistics
functions, catering operations, maintenance
and repair operations, and IT.
But until recently, the company’s KPIs were
not centrally aligned. Because of decentralized
governance, each business unit and division
had its own definitions and data standards,
and only a small percentage of the several
hundred KPIs used could be applied across
the entire organization.
The HR function realized that it needed to
align its KPIs in order to assess its impact
across the entire company. Therefore,
Lufthansa conducted an audit of all potential
KPIs—such as those currently in use by
individual divisions, those required to align
with the company’s overall people strategy
and financial-reporting requirements, and
those identified as external best practices.
The total tally: 461 possible KPIs.
The process took several steps, but Lufthansa
managed to consolidate the list and distill the
number of KPIs to the 35 most strategically
relevant, grouping them in four main clusters:
financial HR indicators, workforce overview,
HR and organizational efficiency, and HR
core processes. (See the exhibit below.)
Granu-
larity
Compar-
ability
Rele-
vance Effort Coverage461
KPIs
35
KPIs
External best
practices
Individual
divisions
Groupwide
For financial
reporting
For business
strategy
Sorted
according to:
Financial HR
indicators
Workforce
overview
HR and
organizational
efficiency
HR core
processes
Deutsche Lufthansa AG Consolidated Its KPIs, Going from 461 to Just 35
Source: BCG project experience and analysis.
Impact. Great HR functions gen-
erate a strong impact on organiza-
tional performance through a solid,
data-driven approach, which in-
cludes implementing people-related
KPIs. Using tailored metrics and an-
alytical techniques strengthens the
role of HR functions and gives them
a seat at the table during strategic
discussions.
Key performance indicators are crucial in
assessing HR impact, yet many companies
struggle to ensure that they’re measuring the
aspects of performance that truly matter.
For example, many companies look primarily
at the “input” elements of HR, such as head
count or costs, rather than the “output” ele-
ments, such as productivity. They neglect to
track the effectiveness of their HR spending
to ensure that it supports the company’s stra-
tegic orientation. (For more on KPIs, see the
sidebar “How Lufthansa Consolidated Its KPIs
to Measure the Things That Really Matter.”)

REGIONAL AND INDUSTRY
CONSIDERATIONS
To highlight the biggest priorities for
companies in various regions and
industries, we looked at all 27 HR subtopics,
using our urgency metric to determine those
with the greatest need for action.
The Regional View: Leadership
and Talent Management Show
the Greatest Urgency
Across most countries, the leadership subtop-
ic was ranked by far as the one most urgently
in need of action, and talent management
was ranked the second most urgent. Beyond
those clear-cut results, however, we found
considerable differences in the rankings of
subtopics across countries. (See Exhibit 11.)
For example, behavior and culture, as well as
employee engagement, were all ranked as
more urgent in the U.S. than they were in
most other regions. In that market, growth is
slowly returning and unemployment is eas-
ing. As a result, the competition for labor—
particularly in skilled positions—is becoming
tougher. Increasingly, some companies are
finding that they have to manage their em-
ployees on a long-term basis.
In other markets of the Americas, such as
Brazil, the focus is still primarily on talent
management, given the shortage of candi-
dates for many positions. “The challenge that
we see is a huge lack of qualified profession-
als in Brazil, which is restraining Brazil’s
growth and, consequently, the growth of Bra-
zilian companies,” says Simone Cristina T.
Salsa Nunes, a corporate strategic people de-
velopment manager at Queiroz Galvão, a Bra-
zilian conglomerate with investments in in-
frastructure, energy, food, steel, and
shipbuilding industries.
Notably, rewards and recognition were
ranked as more urgent in Brazil than in most
other markets. This is primarily due to the
country’s current economic situation, with
relatively low productivity growth and in-
creasing salaries. As Brazilian companies lose
competitive ground, they must work harder
to motivate their existing employees.
The talent management challenge also exists
for Asian countries. According to Joseph Bata-
ona, a human resources director at Indofood
Sukses Makmur, “Indonesia has a talent crisis
at the national level—in almost every sector,
including government. The shortage of talent
is not being addressed in higher education,
whereby graduates are not really ready for
the professional world. There is also a short-
age of vocational training. Companies really
have to invest more in developing people,
even at the entry level.”
In many European countries, by contrast, de-
mographic challenges, such as those posed by
an aging labor pool, are compelling companies
to adopt strategic workforce planning, which
was ranked as far more urgent in Germany,

among others, than the global average. (See
the sidebar “The Global Workforce Crisis.”)
These dramatic shortfalls only underscore the
importance of subtopics directly related to
long-term human capital planning and prepa-
ration, such as strategic workforce planning,
diversity, and generation management. Yet
most organizations in northern Europe—with
the notable exception of German compa-
nies—are not prioritizing those topics. (See
the sidebar “Transnet Has a Clear View of
Future Employment Needs.”)
Countries in southern Europe are facing a
different set of challenges, namely sluggish
growth and high unemployment. In general,
the closer a country is to economic crisis, the
more companies in that country will need to
differentiate among their employees, to en-
sure that they can keep the most promising
workers in the event of staff reductions.
The Industry Comparison:
Energy and Financial Institutions
Stand Out
An industry breakdown shows similar differ-
ences among the relative levels of urgency of
specific subtopics. While leadership, talent
management, and behavior and culture were
ranked as the three most urgent across most
industries, we uncovered several key insights.
(See Exhibit 12.)
In the energy sector, leadership was rated the
most urgent topic. Leaders in the oil industry
are facing significant challenges, such as
growing demand for environmentally
sustainable processes, bad publicity from
recent spills and other accidents, and
pressure on financial results. Because of these
factors, they have to move from traditional
(technical) competencies in the sector to
more twenty-first-century skills, such as how
to manage uncertainty. Also, in the utilities
sector, there are significant uncertainties with
respect to supply, which means that leaders
must navigate among, and negotiate with,
multiple stakeholders. Talent management
was the second most urgent topic in the
energy sector, mainly due to the lack of
talent—especially skilled technical workers—
needed to meet the strong demand for new
oil and gas projects.
Among financial institutions, several differ-
ences stand out. These companies are slowly
SE ES AE
3
1
5
2
4
8
6
3
10
1
5
7
2
9
4
8
6
10
3
1
6
7
2
9
4
8
5
2
5
3
1
4
9
8
6
10
7
6
1
5
7
3
2
4
8
10 2
7
3
1
9
4
8
6
10
10
1
5
7
3
2
9
8
6
4
10
1
3
2
9
4
8
6
5
1
8
3
2
4
5
6
7
10
8
1
5
4
7
2
3
6
9
1
7
3
2
9
8
6
5
4
10
2
1
5
7
3
10
9
8
4
6
1
5
7
3
2
9
4
8
10
1
5
4
2
10
3
9
7
10
1
5
3
2
4
8
6
7 5
1
7
2
3
9
8
10
4
6
2
7
4
5
9
6
1
8
10
3
3
5
10
4
2
1
9
6
7
8
10
3
1
4
2
9
7
8
1
5
8
2
4
10
3
6
7
9
1
2
3
4
5
6
7
8
9
10
Urgent
Other
Very
urgent
>10
BR FICA
Americas Asia-PaciﬁcEurope
Middle East
and Africa
MX JPIN IDCNAUZADE IT PTUS UKFR TR
Leadership
Talent management
HRand people strategy
Employeeengagement
HRcommunication
Employer branding
Social media
Note: Urgency is determined by calculating the difference between future importance and current capabilities, and then multiplying that
difference by future importance; there were 3,507 respondents in this section.
Exhibit 11 | Differences in the Urgency Ranking of Selected HR Subtopics by Country

THE GLOBAL WORKFORCE CRISIS
In The Global Workforce Crisis: $10 Trillion at Risk
(BCG report, June 2014), BCG examined long-term
labor issues in 25 of the world’s major economies,
looking at imbalances in supply and demand over
the next 10 to 20 years. As shown in the exhibit
below, which summarizes the findings for 15
countries, some countries are likely to experience
tremendous labor shortfalls. The workforce in
Germany, for example, will likely fall 4 percent
short of the country’s needs by 2020 and 23
percent short by 2030. Brazil is expected to
experience a shortfall of 7 percent of its workforce
needs by 2020 and 33 percent by 2030. In some of
these countries—notably Germany—companies
are already feeling the pinch, struggling to find
qualified people to meet workforce demand.
Surplus
Shortage
De facto shortage1
3
5
3
17
6
6
10
7
6
Americas
Asia-
Paciﬁc
Europe France
Italy
UK
Canada
U.S.
China
Indonesia
Russia
South Korea
Germany
Spain
Mexico
India
Japan
Brazil
–11
–2
–1
–23
–4
–3
–1
–33
–8
–3
0
4
1
–24
–26
6
–4
8
–7
–5
–6
Labor shortage or
surplus in 2020 (%)
Labor shortage or
surplus in 2030 (%)
Some Countries Will Face Significant Labor Shortages by 2030
Sources: EIU CountryData database; ILO LABORSTA database; United Nations population database; BCG analysis.
Note: A surplus or shortage is determined by subtracting the labor demand for each time period (2020 and 2030)
from the labor supply. The labor supply is the forecast of the total population (age 15 and over, divided into five-year
age groups) multiplied by the labor-force participation rate (per five-year age group). Labor demand is defined as the
number of people required to be employed to produce a desired amount of gross domestic product (GDP) based on
a given output per person (labor productivity). The demand scenario is based on the assumption of retaining the
average compound annual growth rate (CAGR) of GDP and labor productivity over the past 20 years. Russia’s GDP
CAGR is based on the past 10 years, while its labor-productivity CAGR is based on the trend from 1995 through 2012.
Mexico’s labor productivity CAGR is from 2001 through 2012.
1
A de facto shortage is defined as a surplus of 5 percent or less.
Transnet—the largest logistics company in
South Africa, with significant operations through-
out Africa focusing on rail, port, and pipeline op-
erations—launched its market demand strategy
two years ago. Right from the start, Transnet re-
alized that it needed to identify and respond pro-
actively to skills requirements to anchor that
strategy. The process was aimed at mitigating
human-capital risk requirements and future em-
ployment needs so that the company would have
adequate human-capital capacity to advance its
goals and objectives. To mitigate the risk, Trans-
net decided to invest in strategic-workforce-
planning tools. The goal was to establish a
standardized process that could identify work-
force risks both in current operations and in fu-
ture stages of the investment program.
Transnet uses a holistic and flexible methodo
logy for strategic workforce planning, structured
along five key steps:
•• Skill Clustering. The company developed a
catalog that groups employees with similar
positions and skills. This approach reduced
complexity and allows Transnet to rotate
employees among job families and groups.
•• Supply Analysis. By linking the company’s
supply analytics to its enterprise-resource-
TRANSNET HAS A CLEAR VIEW OF FUTURE EMPLOYMENT
NEEDS

resuming growth after the financial crisis.
Accordingly, rewards and recognition were
ranked as more urgent priorities than in oth-
er industries. By contrast, behavior and cul-
ture were seen as less urgent than in other in-
dustries. Given the fact that many
financial-services companies promised to
change the way they work after the crisis, this
subtopic should be a bigger priority in the
sector.
5
1
3
4
2
8
6
610
1
2
5
4 3
3
8
10
5
3
1
6
10
9
7
2
4 4
7
7
7
2
3
1
6
5
8
10
9 8
2
3
1
6
9
4
8
10 10
10
9
2
3
4
1
5
8
6
7
4
1
5
3
9
6
6
4
1
7
2
9
10
8 8
7
9
9
5
5
4
3
6
1
10
2
2
9
5
7
8
1
2
3
4
5
6
7
8
9
10
Urgent
Other
Very
urgent
>10
Consumer
goods Energy
Financial
institutions
Health
care
Industrial
goods Insurance
Professional
business
services
Public
sector
Technology,
media, and
telecommu-
nications
Leadership
Talent management
Employee engagement
HR communication
Employer branding
Social media
Note: Urgency is determined by calculating the difference between future importance and current capabilities, and then multiplying that
difference by future importance; there were 3,507 respondents in this section.
Exhibit 12 | Differences in the Urgency Rankings of Selected HR Subtopics by Industry
planning system, Transnet is able to ensure
consistent and reliable data and to factor in
metrics such as historical attrition rates and
retirement ages.
•• Demand Analysis. This approach includes
models, targets, objectives, and projections
that incorporate the different requirements
of individual business units along dimen-
sions such as volume, changes in the
company’s asset structure, productivity and
efficiency measures, and specific operational
skills.
•• Gap Analysis. By combining the supply and
demand picture with skills clustering, the
company gained transparency into its HR
situation at a very granular level—down to
individual qualifications and inherent job
requirements. With this approach, Transnet
quantified both the capacity and qualifica-
tion risks for both the current situation and
the future outlook.
•• Human Resource Measures. These efforts help
HR identify and appropriately manage the
gaps between available and needed resourc-
es through structured response strategies.
Through this methodology, Transnet has closed
the loop. The company’s HR function can now
identify and even isolate the business units and
operational areas that have the most urgent
needs—both currently and projected for the
future—and focus its efforts accordingly.
TRANSNET HAS A CLEAR VIEW OF FUTURE EMPLOYMENT
NEEDS
Continued

Based on BCG’s experience, and sup-
ported by the survey data, we see that
great HR functions are critical differentiators
that separate high-performing companies
from the rest. Collectively, the three ideas
below describe best-in-class HR functions.
•• Connect. An HR department needs to con-
nect with internal clients to ensure that its
HR and people strategies are clearly
linked to the overall business strategy. A
fundamental component of this is getting
the basics right. That is, if HR is to have
credibility as a true strategic partner with
the business, it must first establish strong
processes and develop core capabilities,
particularly in the areas of recruiting and
communication.
•• Prioritize. HR also needs to identify the
most important and most urgent priorities
for its organization and then target invest-
ments accordingly. As the survey findings
show, talent management, leadership, and
employee engagement are the topics that
virtually all HR departments will need to
focus on. Strong HR departments have
precise and trackable leadership-develop-
ment initiatives in place, along with enter-
prisewide training measures and firm con-
trol over internal mobility. These
departments shape engagement and lead-
ership behaviors to foster a more vibrant
and productive corporate culture.
•• Impact. Robust HR departments generate
and report people-based KPIs, which pro-
vide the data for formulating strategic ac-
tions and ultimately impact the business.
This is particularly true for strategic work-
force planning, which is increasingly im-
portant for most companies. People ana-
lytics—defined as the increased use of
data to generate insights on people man-
agement processes—is now taking off in
terms of use and importance. Just as other
functions of a company increasingly rely
on sophisticated algorithms in areas such
as pricing and supply-chain management,
HR analytics are becoming an indispens-
able tool to help HR functions impact the
business.
WHAT SETS GREAT HR
FUNCTIONS APART

After the first Creating People Advantage re-
port in 2007, we have occasionally removed
or added topics and subtopics for analysis de-
pending on the trends and shifting priorities
in HR and people management. In this year’s
version, we looked at 10 broad topic areas,
broken out into 27 subtopics. (See the exhibit
below.)
The online survey was conducted from March
through July of 2014. Using a six-point scale,
respondents rated each subtopic on future
importance, their companies’ current capabil-
ities with regard to that subtopic, and the lev-
els of effort invested in the subtopic in terms
of time, money, and full-time employees over
the past three years. We also calculated a
APPENDIX I
METHODOLOGY
10 broad HR topics 27 HR subtopics
HR strategy, planning, and analytics HR and people strategy
Recruiting: branding, hiring, and on-boarding Employer branding
Recruiting strategy
On-boarding
Training and people development Training and learning
Performance management and rewards Performance management
Talent management and leadership Talent management
Leadership
Engagement, behavior, and culture management Employee engagement
Diversity and generation management Diversity management
HR communication and social media HR communication
Social media
Labor costs and labor management Labor costs and restructuring
HR target operating model HR organization and governance
HR processes
The Report Subdivides 10 Broader Topics into 27 HR Subtopics

fourth metric—the urgency of individual sub-
topics—as follows: future importance minus
current capabilities, multiplied by future im-
portance.
A total of 3,507 respondents from 101 coun-
tries replied to the survey. The bulk of the re-
spondents (83 percent) were from HR func-
tions, including HR generalists, HR business
partners, members of a center of excellence
(such as recruiting, talent, or diversity), and
members of a shared-services center (such as
payroll or IT). The remaining respondents
were from non-HR functions.
The biggest industries represented in the sur-
vey were professional business services
(18 percent of respondents), industrial goods
(17 percent), the public sector (16 percent),
consumer goods (15 percent), and technology,
media, and telecommunications (12 percent).
The remaining industries represented were
health care (7 percent), financial institutions
(6 percent), energy (5 percent), and insurance
(4 percent).
We identified high and low performers
through self-reports of financial performance
overall, using operating margins over the
prior two years (2012 and 2013) as the prima-
ry criterion. For companies that had similar
operating margins, we used revenue change
over the same time period as a secondary
criterion. Also, we excluded from these analy-
ses any companies that had fewer than
50 employees.

We thank the following executives for their
valuable contributions in discussing the find-
ings of this report. (This list includes only
those who have agreed to make their names
public.)
Belgium
Cécile Tandeau de Marsac
Group General Manager Human Resources
Solvay
Laurent Yvon
Senior Vice President Human Resources
Lhoist
Brazil
Roberto Dumani
Executive Vice President for Organizational
Development
Cielo
Paulo Miri
Vice President for HR, Procurement, Business
Excellence and Communications
Whirlpool Latin America
Flávio Morelli
HR Director
TIM Brasil
Simone Cristina T. Salsa Nunes
Corporate Strategic People Development Manager
Queiroz Galvão
Finland
Jackie Cuthbert
Chief Human Resources Officer
Sanoma
France
Ivana Bonnet
Human Resources Director
Crédit Agricole Corporate & Investment Bank
Isabelle Gouyet
Director Human Resources
Crédit Immobilier de France
Daniel Lacabane
Vice President Executive & Talent Development
Renault–Nissan Alliance
Jérôme Nanty
Secretary General
Transdev
Philippe Rouxel
HR Director Western Europe
DBApparel
Marie-Christine Théron
Executive Director Human Resources and General
Affairs
SFR
Hans Vanbets
Head of HR Strategy, People Management Policies
& Diversity
BNP Paribas
APPENDIX II
EXECUTIVE INTERVIEWEES

Germany
Milagros Caiña-Andree
Member of the Board of Management of BMW,
Human Resources and Labour Relations
BMW
Immanuel Hermreck
Executive Vice President Human Resources
Bertelsmann
Michael König
Member of the Board of Management of Bayer,
Labor Director, Human Resources, Technology and
Sustainability
Bayer
Kathrin Menges
Executive Vice President Human Resources and
Infrastructure Services
Henkel
Margret Suckale
Member of the Board of Executive Directors of
BASF, Industrial Relations Director
BASF
Uwe Tigges
Chief Human Resources Officer and Member of the
Management Board
RWE
Thomas Wessel
Member of the Management Board, Chief Human
Resources Officer
Evonik Industries
Greece
Athina Dessypri
General Manager, Human Resources
Eurobank
Vassilis Gavroglou
Head of Human Resources Strategy
National Bank of Greece
John Kollas
Group HR Executive Director
Titan Cement
Tina Moutzouri
Human Resources Manager
Thenamaris
Christine Roth
Chief Strategy Officer
Thenamaris
Indonesia
Joseph Bataona
Human Resources Director
Indofood Sukses Makmur
Aloysius Budi Santoso
Chief of Corporate Human Capital Development
Astra International
Italy
Luciano Carbone
Chief Corporate Officer
SEA
Andrea Faragalli
Director of Strategies and Resources
Intesa Sanpaolo – Corporate and Investment
Banking Division
Salvatore Poloni
Head of Human Resources and Organisation
Intesa Sanpaolo
Monica Possa
Group HR Director
Generali
Christian Vasino
Chief Human Resource Officer
Pirelli
Norway
Mike Turner
HR manager
FMC Technologies, Subsea Eastern Region
Qatar
Mohanna Nasser Al Nuaimi
Group Chief Human Resource Officer
Ooredoo
Russia
Natalya Albrekht
Vice President HR & OD
VimpelCom Russia
Vladimir Averin
HR Director Russia & CIS
Janssen, Pharmaceutical Companies of Johnson
and Johnson

Sofia Kadykova
HR Director Russia, Ukraine, Belarus
Pfizer
David Souperbiet
Human Resources Vice President Russia & CIS
PepsiCo
Andrey Zhvakin
Member of the Management Board and Managing
Director, Organizational Development
Sibur
Saudi Arabia
Patrice Couvègnes
Managing Director
Banque Saudi Fransi
South Africa
Ntoti Mosetlhe
Group Human Resources Manager
Debswana
Nonkululeko Sishi
Group Executive Human Resources
Transnet
Abram Thebyane
Group Executive of Human Resources
Nedbank Group
Spain
Victorino Anguera Gual
HR Leadership, Training, and Development
Gas Natural Fenosa
Lope De Hoces Iñiguez
HR Organization & Development Director
Grupo Cementos Portland Valderrivas
Switzerland
Christian Machate
Managing Director, Global Head of Compensation
& Benefits
Credit Suisse
Mark De Smedt
Adecco Group
Turkey
Bade Sipahioğlu
Oger Telecom
Idil Türkmenoğlu
Vice President Human Resources and
Sustainability
Boyner
United Arab Emirates
Abdulrahman A. Al-Awar
Director General
Federal Authority for Government Human
Resources
Abdul Aziz Ahmed Saleh Al Sawaleh
Etisalat Group
United States
Paulette Alviti
Senior Vice President and Chief Human Resources
Officer
Foot Locker
Michael O’Hare
Executive Vice President, Global Human Resources
Estée Lauder
Jeffrey Hurd
Executive Vice President, Human Resources,
Communications, and Administration
American International Group
Roxanne Lagano
Executive Vice President and Chief Human
Resources Officer
Zeotis
Debra Palermino
Executive Vice President, Human Resources
MassMutual
Hilda Harris Piell
Senior Managing Director and Chief Human
Resources Officer
CME Group
Kim Ryan
Vice President Human Resources
Pepperidge Farm

This report would not have been possible
without the support of the following member
organizations and partners of WFPMA, as
well as other HR organizations marked with
an asterisk (*), which helped with the pre
paration, distribution, and collection of the
online survey.
Asociación De Recursos Humanos de la
Argentina (ADRHA), Argentina
Armenia HR Association, Armenia *
Australian Human Resources Institute
(AHRI), Australia
Österreichisches Produktivitäts- und
Wirtschaftlichkeits-Zentrum (ÖPWZ), Austria
Bangladesh Society for Human Resource
Management (BSHRM), Bangladesh
Personnel Managers Club (PM Club), Belgium
Asociación Boliviana de Gestión Humana
(ASOBOGH), Bolivia
Institute of Human Resource Management
(iHRM), Botswana
Associação Brasileira de Recursos Humanos
(ABRH-Nacional), Brazil
Bulgarian Human Resources and
Development Association (BHRMDA),
Bulgaria
Canadian Council of Human Resources
Associations (CCHRA), Canada
Círculo Ejecutivo de Recursos Humanos
CERH CHILE, Chile
Federación Colombiana de Gestión Humana
(ACRIP), Colombia
Asociación Costarricense de Gestores de
Recursos Humanos (ACGRH), Costa Rica
Cyprus Human Resource Management
Association (CyHRMA), Cyprus
The Association of Human Resource
Managers in Denmark (PID), Denmark
Asociación Dominicana de Administradores
de Gestión Humana (ADOARH), Dominican
Republic
Asociación de Directores de Personal del
Ecuador (ADPE), Ecuador
Estonian Association for Personnel
Management (PARE), Estonia
Finnish Association for Human Resource
Management (HENRY), Finland
APPENDIX III
SUPPORTING ORGANIZATIONS

Association Nationale des Directeurs des
Ressources Humaines (ANDRH), France
Deutsche Gesellschaft für Personalführung
e.V. (DGFP), Germany
Greek Personnel Management Association
(SSDP), Greece
Asociación de Gerentes de Recursos
Humanos de Guatemala (AGRH), Guatemala
Hong Kong Institute of Human Resource
Management (HKIHRM), Hong Kong
Hungarian Association for Human Resources
Management (OHE), Hungary
National Institute of Personnel Management
(NIPM), India
Perhimpunan Manajemen Sumberdaya
Manusia (PMSM), Indonesia
Chartered Institute of Personnel and
Development (CIPD), Ireland
Israeli Society for Human Resources
Management (ISHRM), Israel *
Associazione Italiana Per La Direzione Del
Personale (AIDP), Italy
Japan Society for Human Resource
Management ( JSHRM), Japan
Institute of Human Resource Management
(IHRM), Kenya
Latvian Association for Personnel
Management (LAPM), Latvia
Macedonian Human Resources Association
(MHRA), Macedonia
Institute of People Management Malawi
(IPMM), Malawi
Malaysian Institute of Human Resource
Management (MIHRM), Malaysia
Foundation for Human Resources
Development (FHRD), Malta
Asociación Mexicana en Dirección de
Recursos Humanos (AMEDIRH), Mexico
Mongolia HR Association, Mongolia *
Namibia Institute for People Management
(IPM), Namibia
Nederlandse Vereniging voor
Personeelsmanagement &
Organisatieontwikkeling (NVP), Netherlands
Human Resources Institute of New Zealand
(HRINZ), New Zealand
Asociación de Ejecutivos de Recursos
Humanos de Nicaragua (AERHNIC),
Nicaragua
Chartered Institute of Personnel Management
of Nigeria (CIPMN), Nigeria
HR Norge, Norway
Asociación Nacional de Profesionales de
Recursos Humanos de Panamá (ANREH),
Panama
Papua New Guinea Human Resources
Institute (PNGHRI), Papua New Guinea
Asociación Paraguaya de Recursos Humanos
(APARH), Paraguay
Asociación Peruana de Recursos Humanos
(APERHU), Peru
People Management Association of the
Philippines (PMAP), Philippines
Polish Human Resources Management
Association (PHRMA), Poland
Associação Portuguesa dos Gestores e
Técnicos dos Recursos Humanos (AGP),
Portugal
HR Management Club, Romania
National Personnel Managers’ Union
(ARMC), Russia
Arabian Society for Human Resource
Management (ASHRM), Saudi Arabia

L’Association Nationale des Directeurs et
Cadres de la fonction Personnel du Sénégal
(ANDCPS), Senegal
Singapore Human Resources Institute (SHRI),
Singapore
Slovak Association for Human Resources
Management and Development (ZRRLZ),
Slovakia
Slovenian Association for Human Resource
Management and Industrial Relations
(ZDKDS), Slovenia
Institute of People Management (IPM), South
Africa
Asociación Española de Dirección y
Desarrollo de Personas (AEDIPE), Spain
Institute of Personnel Management Sri Lanka,
Sri Lanka
Institute of Personnel Management—
Swaziland, Swaziland
Centrum för Personal and Utveckling,
Sweden
HR Swiss - Schweizerische Gesellschaft für
Human Resources Management, Switzerland
Chinese Taipei—Chinese Human Resource
Management Association (CHRMA), Taiwan
Personnel Management Association of
Thailand (PMAT), Thailand
İnsan Yönetimi Derneği (PERYÖN), Turkey
Human Resource Managers’ Association of
Uganda (HRMAU), Uganda
HRForum, Ukraine *
Chartered Institute of Personnel and
Development (CIPD), United Kingdom
Society for Human Resource Management
(SHRM), U.S. and its affiliates: SHRM China
(China), SHRM India (India), and SHRM
MENA (UAE)
Asociación Venezolana de Gestión Humana
(AVGH), Venezuela
Human Resources Association (HRA),
Vietnam
Zambia Institute of Human Resources
Management (ZIHRM), Zambia
Institute of Personnel Management of
Zimbabwe (IPMZ), Zimbabwe

The Boston Consulting Group has
published other reports and articles
that may be of interest to senior
human-resource executives. Recent
examples include those listed here.
Decoding Global Talent:
200,000 Survey Responses on
Global Mobility and Employment
Preferences
A report by The Boston Consulting
Group and The Network, June 2014
The Global Workforce Crisis:
$10 Trillion at Risk
Group, June 2014
Conversations with Leaders
About Thriving amid Uncertainty:
Leading in a Complex World
An article by The Boston Consulting
Group, March 2014
Creating People Advantage 2013:
Lifting HR Practices to the Next
Level
Group and the European Association for
People Management, October 2013
Growing Pains, Lasting
Advantage: Tackling Indonesia’s
Talent Challenges
A Focus by The Boston Consulting
Group, May 2013
Leadership in a Two-Speed
Economy: Conversations with
CEOs on Straddling Different
Worlds
Group, December 2012
Creating People Advantage 2012:
Mastering HR Challenges in a
Two-Speed World
Group and the World Federation of
People Management Associations,
October 2012
Shattering the Glass Ceiling:
An Analytical Approach
to Advancing Women into
Leadership Roles
Group, August 2012
From Capability to Profitability:
Realizing the Value of People
Management
Group and the World Federation of
People Management Associations, July
2012
Four Ways to Stop Worrying
About Talent in China
Group, May 2012
The Making of a Talent Magnet:
Lessons from Singapore’s Public
Service
Group, May 2012
Is Your Team Stuck? Inject
Boldness by Unlocking Leaders’
Emotions
Group, April 2012
Winning Practices of Adaptive
Leadership Teams
Group, April 2012
When Growth Outstrips Talent:
Five Strategies for Emerging
Markets
Group, March 2012
FOR FURTHER READING

This publication is part of BCG’s
Creating People Advantage series of
reports, which provides companies,
economies, leaders, and individuals
with insights on today’s and
tomorrow’s people challenges.
The next publication in the series
will be on leadership and talent.
Additional publications of interest
include The Global Workforce Crisis:
$10 Trillion at Risk (BCG report,
June 2014), and Decoding Global
Talent: 200,000 Survey Responses on
Global Mobility and Employment
Preferences (BCG report, October
2014), which are available at
www.bcgperspectives.com.
Acknowledgments
We would like to thank the many
executives who shared their
thoughts during interviews, as well
as the respondents who completed
the online survey. The insights and
expertise of these individuals have
greatly enriched this report. A list of
interviewees who were willing to be
named is provided in Appendix II.
We thank Jacqueline Betz, Nico
Geisel, Katrin Jaskiewicz, Julie
Keveny, Charlotte Pallua, Cleo Race,
Samuel Schlunk, Susanne Schrader,
Carlos Tielesch, and other BCG
colleagues for their research and
analysis, as well as Jeff Garigliano
for his help in writing this report.
The authors also thank the
members of the BCG and WFPMA
steering committees for their help
with this project. From BCG: Jens
Baier, Vikram Bhalla, Grant
Freeland, Pappudu Sriram, Peter
Tollman, Dean Tong, and Roselinde
Torres. From WFPMA: Max Becker,
Izy Behar, Patrick Belpaire,
Stephanie Bird, Even Bolstad,
Catherine Carradot, Joe Gerada, Ute
Graf, Soli Johansson, Roberto Luna,
Leena Malin, Kim Staack Nielsen,
Vanda Pecjak, and Svetla Stoeva.
Moreover, we are grateful for the
support we received from various
BCG colleagues in coordinating and
conducting interviews and for their
expert advice: Alfonso Abella,
Alexandre Amoukteh, Vassilis
Antoniades, Monique Baars, Jens
Baier, Julio Bezerra, Massimo
Busetti, Davide Corradi, Emanuele
Costa, Guido Crespi, Christopher
Daniel, Filiep Deforche, Camille
Egloff, Maxim Fedotov, Alessandra
Ferraro, Gabriele Ferri, José Antonio
Gil, Alberto Guerrini, Tatu Heikkila,
Jörg Hildebrandt, Adrian Hofer, Jens
Irion, Chryssos Kavounides, Meg
Kedrowski, Klaus Kessler, Ivan
Kotov, Daniel López, Manuel Luiz,
Jussi Mattsson, Stéphanie
Mingardon, Riccardo Monti,
Matthias Naumann, Mikko
Nieminen, Gözde Yalazi Özbek,
Christina Paraskevopoulou, Knut
Olav Rød, Michael Seeberg,
Alexander Schudey, Achim
Schwetlick, Michael Shanahan, Art
Uprety, and Jan Dirk Waiboer.
Finally, we thank the members of
the editorial and production team
who worked on this report:
Katherine Andrews, Gary Callahan,
Lilith Fondulas, Kim Friedman,
Abby Garland, Sara Strassenreiter,
and Ellen Treml.
NOTE TO THE READER

For Further Contact
If you would like to discuss the
observations and conclusions of
this report, please contact one of
the authors listed below:
Rainer Strack
Senior Partner and Managing Director
Central Europe, Middle East and Africa
Leader, People and Organization
Practice;
Global Topic Coleader, HR;
Coleader, Creating People Advantage
Research
BCG Düsseldorf
+49 2 11 30 11 30
strack.rainer@bcg.com
Jean-Michel Caye
Global Topic Coleader, Leadership and
Talent;
Coleader, Creating People Advantage
Research
BCG Paris
+33 1 40 17 10 10
caye.jean-michel@bcg.com
Thomas Gaissmaier
Partner and Managing Director
BCG New York
+1 646 448 7600
gaissmaier.thomas@bcg.com
Christian Orglmeister
Partner and Managing Director
BCG Sao Paulo
+55 11 3046 3533
orglmeister.christian@bcg.com
Eddy Tamboto
Asia Pacific Leader, People and
Organization Practice
BCG Jakarta
+62 21 3006 2888
tamboto.eddy@bcg.com
Carsten von der Linden
Principal
BCG Munich
+49 89 231 740
vonderlinden.carsten@bcg.com
Sebastian Ullrich
Project Leader
BCG Düsseldorf
+49 2 11 30 11 30
ullrich.sebastian@bcg.com
Pieter Haen
President
World Federation of People
Management Associations
Past President
European Association for People
Management
+31 343 578 140
pieterhaen@duurstedegroep.com
Horacio Quirós
Past President
+54 11 4309 7448
hquiros@grupoclarin.com
Jorge Jauregui
Secretary General and Treasurer
+52 1 55 3222 4901
jorgeandres.jauregui@gmail.com

© The Boston Consulting Group, Inc., 2014. All rights reserved.
For information or permission to reprint, please contact BCG at:
E-mail: bcg-info@bcg.com
Fax: +1 617 850 3901, attention BCG/Permissions
Mail: BCG/Permissions
The Boston Consulting Group, Inc.
One Beacon Street
Boston, MA 02108
USA
To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcgperspectives.com.
Follow bcg.perspectives on Facebook and Twitter.
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