Organization Strategies Today & Tomorrow Session Moderator John

Organization Strategies Today & Tomorrow Session Moderator John

Organization Strategies Today & Tomorrow Session Moderator John Moore Director, Technical Engineering Services BASF Corp 1 2 Effectiveness of an Organization

(Ref: Charles Handy, Understanding Organizations) A system composed of: The Individual Ability Motivation The Organization Leadership Systems/Structure Group relations The Environment Economic/Political Technological Physical

3 Aim of ECC Session 3 Input from the ECC community On hiring, integrating, and retaining Individual Talent On Organizational strategies On responses to the current and future Environment 4 Methodology Survey over 112 individuals in E&C business

Senior Executives Future leaders Members < 5 years experience Aiming to get Pulse of Industry Over 20 follow-up interviews to mine Best Practices and nuances 5 Organization Strategies Today &

Tomorrow Session Participant Tom Vaughn President of Construction BE&K Engineering and Construction 6 John Organization Strategies Today & Tomorrow

Session Participant Rob Berra Manager, EPC Contracting ConocoPhillips 7 Organization Strategies Today & Tomorrow Session Participant Chip Andrews

Chairman FMI Corporation 8 The Individual Attracting and Retaining the Best Talent Upgraded Hiring and Integration New College Grads- Gap Analysis Training and Development as an Asset

Resources Crossing Over 9 Upgraded Hiring and Integration Survey: What is your companys rate of new hires? New hires in 2002 1 in 13 New hires in 2005 1 in 6 Projected new hires in 2012 1 in 5

10 Upgraded Hiring and Integration The opportunity Develop best in class hiring Employ improved employee integration techniques Administer strong training Our opportunity to create a new and improved generation for our industry 11

Upgraded Hiring and Integration Solutions - Hiring Commit senior management to the process Aggressive use of co-op programs Focus on leadership potential 12 Upgraded Hiring and Integration Solutions Integration

Components of one program: Structured training and development program for the first 5 years Central training/training coordination function in place Use of a buddy system for new hires Formal approach to survey new employees temperature 13 Upgraded Hiring and Integration Safety Program Enhancement Entrance Interview for hires with experience Two months after a new hire settles in

Ask about your firms safety culture and practices What surprised the new employee (good and bad)? What were strengths of previous employer vs yours What suggestions does the employee have? 14 New College Graduates Gap Analysis Survey: What is the most likely reason for employees with 5 years or less experience to leave?

Better growth opportunities in the future Higher compensation More responsibility immediately 15 New College Graduates Gap Analysis Survey Results Largest gap new college graduates vs. senior managers Doesnt have the feeling of being on a winning

team Geography 16 New College Graduates Gap Analysis Survey: How many of the 5 years or less experienced staff are likely to resign in the next 2 years? New college graduates: 50% said you will lose more than 1 in 5 15% said you will lose between 1 in 3 and 1 in 2 Senior managers:

24% said almost none 74% said less than 1 in 5 17 New College Graduates Gap Analysis Solutions Better growth opportunities in the future and more responsibility immediately Aggressive training and mentorship to prepare them Push the envelope on upward mobility 18

New College Graduates Gap Analysis Solutions Higher compensation Market-driven Doesnt have the feeling of being on a winning team Be a winning team Communicate, communicate, communicate 19 Training and Development As an Asset Survey: What is your total and expected training and management

development spending per professional staff? $100,000 High $90,000 $80,000 Low $70,000 Average $60,000

$50,000 $40,000 $30,000 $20,000 $10,000 $0 Past (2002) Present (2007) Future (2012) 20

Training and Development As an Asset Opportunities Less experienced managers need proven skills and knowledge. Documented competence, leveraged with training and development capabilities, accelerates learning. Training and development creates a valuable recruiting tool. Training and development creates a valuable retention tool. 21 Training and Development As an Asset

Solutions Increasing training and development budgets 100%, 300%, even 500% justified with substantial returns. A culture of lifelong learning supports manager development. Employing multiple delivery methods yields the best results. Firm-wide documented competence is a big ancillary benefit. Performance evaluations need personal development and successor development as key metrics. 22 Training and Development As an Asset

Survey Responses Average training budgets are expected to at least quadruple from 2002 to 2012. Industry leaders in organizational development far exceed the average. Is training and development a cost or an investment? Overcome internal company cultural bias against substantial commitments to training. Hire the best-of-class development resources. 23 Training and Development As an Asset High Profile Training Elements

Assessments and development prescriptions yield superior results. New types of training are often required. Technical Project Management Leadership Financial Commitment starts with senior executives.

24 Two ARS Questions Where is your company currently focusing its training and development budget? (estimated percent for each) 1 2 3 4 Technical Project Management Leadership

Financial Where do you think your company should spend its training budget? (estimated percent for each) 1 2 3 4 Technical Project Management Leadership Financial

25 Resources Crossing Over Owner Resources Contractor Resources What drives the switch? Simple resource volume Opportunistic employees Strategic gain on new skill set 26

ARS Question Which best describes your situation? For past three (3) years or more, have been: 1 2 3 Owner Contractor Supplier / Other

OR Within past three (3) years have crossed over from: 4 Owner Contractor 5 Contractor Owner 6 Other form of cross-over 27 The Organization Organizational Practices Lessons Learned in Real Time Organizational Dynamics Organizational impact of New Risk Profiles Project Managers Change in Skill Sets

28 Lessons Learned in Real Time Survey Results Opportunities Increasing number of new hires and new managers. Increasing requirement for mentoring/coaching. Increasing calls for technical expertise. Increasing use of multiple geographies. Increasing difficulty is successfully applying standard practices to every situation. 29

Lessons Learned in Real Time Solutions Share Lessons Learned Harvest much more value from existing experience in the organization. Build a global community of practice via web based discussion forums. Identify subject matter experts. 30 Lessons Learned in Real Time Discussion Forums in Real Time Examples:

European facility facing serious reliability issues with a vintage control system; recently changed out parts in a plant from the U.S. that were discovered to be available for their use; problem solved. Mechanical plant in England needed a valve part with a 10-week delivery, forum provided immediately available part in U.S. 31 Lessons Learned in Real Time Lessons Learned Opportunities Avoid lessons learned gathering dust on a shelf or

in a database. Capture corporate knowledge in real time. Use captured corporate knowledge as a development tool. 32 Lessons Learned in Real Time Lessons Learned One companys solution Write up case studies (no names/divisions, make it generic). Develop workshops for the case studies. Have developmental teams solve the issues. They

might find better solutions. Document the case study lessons learned for corporate access. 33 Lessons Learned in Real Time Lessons Learned Another companys solution Have facilitators lead discussions on pertinent lessons learned with teams at key project meetings (basic engineering kickoff, detailed engineering kickoff, etc.) or teambuilding events. Use a competitive team simulation environment to

foster innovation and creativity to find the best currently available solution. 34 Organizational Dynamics Survey: To what extent are business practices standardized at your company? 60% 56% 50% 40%

34% 30% 20% 10% 0% 8% 2% Few standardized Several

standardized Most standardized All standardized 35 Organizational Dynamics Project organizational structure considerations

Centralized vs. decentralized Static structure or continuously changing? Resources - working within matrix organizations Project related governance Accountability and ownership Solutions Increasing project size and volume may deserve centralized accountability

36 Organizational Dynamics Survey: Level of innovation assigned to your firms organizational staffing 37 Organizational Dynamics Examples of Innovation: BAA Terminal 5 Project: Organizational Behavior Management

ConocoPhillips Major Projects: Contractor Relationship Management International EPC Contractor: Market Awareness Committee Risk Management Committee 38 Organizational Impact of New Risk Profiles Contracting strategies generally trending away from fixed price, high risk Fewer industry personnel with recent lump

sum experience Owner resource availability may be in conflict with project risk Need to balance applied resource skills and risk acceptance Contracting methods tied to available resources and accountabilities 39 Project Managers Change in Skill Sets Survey results Owners Organization Number of direct reports expected to steadily

increase from 2007 to 2012 40 Project Managers Change in Skill Set Opportunities Project managers must become less controlling Project managers must create an internal collaborative atmosphere 41 Project Managers Change in Skill Set

Solutions More dashboard type information available Survey said 80% becoming more standardized More people skills training 42 The Environment Responding to the Current and Upcoming Environment Increasing Project Size and

Complexity Increased Volume, and Pace of Change Reinventing Retirement Renewing the Management Team 43 Increasing Project Size and Complexity Experiencing unique period in our industry Projects are different:

Larger More complex Riskier More diverse More challenged Yet, approaching with essentially the same resources and tool kit 44 ARS Question Are you currently prepared for the size, complexities

and volume of Mega Projects? 1 Yes 2 No How are you going to become prepared? 3 Hire the best in the industry 4 Training 5 Cross your fingers, try to stretch people 6 Use management in line functions 7 Turn down / not execute 45 Increasing Project Size and Complexity Mega-Project Managers What makes one?

What are differences from a few years ago? How develop new ones? How compare to previous large projects? 46 Increased Volume, and Pace of Change Survey: Five years from now (2012), do you expect your engineering and construction volume to 70% 66% 60%

50% 40% 30% 22% 20% 12% 10% 0% Increase Stay the same

Decline 47 Increased Volume, and Pace of Change Survey: Relative to dealing with todays challenges, the rate of corporate change is 50% 45% 40% 35% 30% 25% 20%

15% 10% 5% 0% 46% 34% 9% Not Moving Fast Enough

Moving Too Fast About Right 48 Increased Volume, and Pace of Change Is organizational change keeping pace with growth demand? What are constraints on growth and change? Where are constraints coming from? Self imposed Market

49 Increased Volume, and Pace of Change Solutions: Factors that necessitate change Market segment demands competition Growth

Risk Skill sets Strategies Work processes 50 Reinventing Retirement Survey: Please indicate how your company is utilizing retired professionals. Slowly becoming more utilized Quickly becoming more utilized No change

5% 26% Slowly becoming less utilized 29% 42% 51 Reinventing Retirement The Free Agents Opportunities

The 50-70+ year old Free Agents can be assets not yet depreciated. They are a big part of the industrys collective wisdom. Many are retirement eligible, but still want to be in the game. Most companies allow or even encourage valuable human assets to walk out the door. 52 Reinventing Retirement The Free Agents Solutions Aggressively recruit Free Agents inside the

company. Aggressively recruit Free Agents in the industry. Consider knowledge workers as their predominant roles. Embrace high levels of individual flexibility to meet personal agendas in roles and schedules. 53 ARS Question If your company put a full court press on recruiting Free Agents, how many more average productive employment years could be achieved?

1 2 3 4 5 <2 years 2-3 years

3-4 years 4-5 years >5 years 54 Driver for Renewing the Management Team Survey: What % of the management team will be replaced in the next 5 years? Normal replacement over 5 years approximately 12% About 25% said within the next five years it will actually be up to between 20-40%. An additional 25% said the number would be

as high as 40-80%. 55 Driver for Renewing the Management Team The opportunity Retain the knowledge Retain the people 56 Driver for Renewing the Management Team

Solutions Formal program for downloading retirees experience Web-based data bases, identifying retired subject matter experts Retaining experienced people longer through: Flexible work hours Telecommuting 57 Driver for Renewing the Management Team The opportunity

Replace senior/general management Replace experienced project management personnel 58 Driver for Renewing the Management Team The solution Prepare remaining project managers for more responsibility Aggressively develop the next level of management

59 ARS Questions Does your company have a formal high potential employee program? 1 Yes 2 No Is it valuable and achieving desired results? 3 Yes 4 No What is largest constraint on the program? 5

6 7 8 Budget Too busy Poor results Loss of personnel after training 60 Renewing the Management Team The solution High Potential Programs

Start or upgrade your companys high-potential program Opportunities to develop and advance will be greater due to replacement needs Drives better focus One size may not fit all Someone has to be engineering and constructing the next management team 61 Renewing the Management Team Should you really put a lot of energy into people development?

62 Closing Comments 63

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