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R E A D I N G 5 . 2

The Annual HR Strategic Planning Process: Design and Facilitation Lessons from

Corning Incorporated Human Resources Debbie Bennett and Matthew Brush

Abstract This article presents an internal perspective on the Annual HR Strategic Planning Process Corning’s HR team uses to prioritize HR investments and deliver services aligned with business requirements. Over three years, this process has integrated inputs from a Human Capital Planning process, the HR func- tion’s transformation goals, and other corporate initiatives into a one-page Annual Operating Plan with supporting objectives. The authors share process, meeting design and facilitation lessons learned from their work with their clients.

Corning Corporate History From a shatter-proof lens for railroad lanterns and a glass envelope for Edison’s new light bulb filament, to premium quality LCD glass substrates and highly engineered optical fiber, Corning has established a 150-plus year legacy of tech- nological innovation.

Through the early 1990s, Corning maintained a diverse portfolio of businesses that typically generated $4 billion to $5 billion in annual revenues; the sale of its well known con- sumer business (Corelle dishes, Visions cookware, etc.) funded a massive investment in the telecommunications sector and explosive growth, followed by a major retrenchment. All of which, of course, had significant impact on the HR function as well as the company overall.

Corning Human Resources History The HR function can be described as having a sterling legacy of constructive union labor relations, innovative corporate Centers of Excellence (COEs), and responsive generalists in the business – all three of which were managed separately for a number of years until they were consolidated under a single senior vice president in April 2002. This fragmented approach caused a disconnect between the COEs and the businesses. This created dynamic tension between centraliza- tion and decentralization of strategy as the COE specialists and the business unit generalists struggled in regard to their

roles relative to strategy development and deployment. When businesses were ascendant, the pendulum swung toward decentralization and the businesses set the agenda for what HR needed to focus on; when the businesses were not per- forming as well, as during the telecom downturn in 2001, the pendulum swung toward centralization as a way of control- ling costs and focusing the HR function on the most impor- tant work. Developing a robust Annual Operating Plan (AOP) process and applying the human capital planning pro- cess to the HR function has helped Corning HR to step out of the pendulum dynamic and better balance multiple sources of input regarding the work that HR should be doing.

Corning’s HR AOP Process This paper will examine the creation and evolution of Corn- ing’s Annual HR Strategic Planning Process – the Process that Corning’s HR team uses to prioritize HR investments and deliver services aligned with business requirements. We will examine how this process has blended the inputs from an innovative Human Capital Planning process, the HR func- tion’s transformation goals, and other corporate initiatives into a one-page Annual Operating Plan with supporting objec- tives. These objectives are woven into our compensation pro- grams and are used to track our progress toward our goals. Where practical, we will examine the process, meeting design, and facilitation lessons we have learned from our work with our clients – the senior leaders in Corning Human Resources.

It is important to note that the current Human Capital Planning process was built from foundational conversations with John Boudreau and Peter Ramstad (Boudreau, et al, 2003) that were then operationalized for Corning in partner- ship with Sibson Consulting.

Corning Human Resources – Business Context As Corning’s telecommunications businesses grew rapidly in the late 1990s, the human resources function had to change. HR was supporting explosive growth in an environment of

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plentiful resources. The HR leadership team developed four transformation goals (Figure 1) to guide that growth. We had to build a better connection between HR function strategy and business strategy, support growth globally, deliver scalable solutions and still manage to reach our broad cost targets.

Then, the telecommunications businesses started to con- tract dramatically. Although the transformation goals still made sense, the emphasis changed completely. Suddenly, it was primarily a “cost game” – with a target of spending no more than 1% of revenue on the global HR function – and scalability became focused on becoming smaller instead of bigger. The Senior Vice President of HR, Kurt Fischer, chal- lenged his team to still deliver the global mindset and pro- cesses, as well as a strategy process that linked with the client businesses, but faster, and on a much tighter budget.

Decentralization v. Centralization The tension between centralization and decentralization is new to no one in the organizational development field. How it played out in Corning HR was fairly classic. The field generalists were part of the business unit and the busi- ness unit provided direction, funding, appraisal and rewards. The COE folks were part of ‘corporate’ and their direction came primarily from large corporate initiatives emanating from the Senior Management Team or HR Function Strategy. COEs had some input from the business units but it was fragmented and often driven by whichever business hap- pened to be the current “king of the hill”. This created a situation in which the unspoken job of the generalist was often to protect the business from the COEs. The field gen- eralists were accused of “going native” and the COE specia- lists were accused of not knowing what was really going on, what was really needed by the people who generated revenue.

That is not to say that no collaboration or cooperation occurred, but rather, that it was situation dependent. Then the telecommunications bust forced us to look at how inef- fective and inefficient this approach had become. Accepting the fact that both centralization and decentralization have

advantages and disadvantages, the question before us was how we could better balance the two. Part of the answer came in the form of our AOP Planning Process.

Human Capital Planning as Transformation Accelerator Realizing that the first transformation goal, linking HR strat- egy effectively with business strategy, represented a powerful tool for driving change in the global HR function, Fischer commissioned a next-generation Human Capital Planning process using a combination of internal and external consul- tants. The result was a four step process (Figure 2) that gave business unit generalists shared tools and language for decon- structing client business strategy into actionable steps for tal- ent development, and gave the HR function as a whole a way of identifying and prioritizing needs across businesses and COEs.

Steps 1 through 3 of the process enable the identifica- tion of the talent that will most impact the success of busi- ness strategy, and the talent that will be most impacted by the success of the business strategy, enabling a multi-year look at the number, type and timing of critical talent requirements supported by rigorous gap analysis that drives staffing actions. Step 4 delivers powerful organizational effectiveness diagnostic tools and a prioritization process that balances competing inputs from the business unit HR team members.

As part of successive years of continuous improvement efforts, Corning has managed to build in opportunities for robust input from corporate COEs (compensation and bene- fits, workforce development and learning, talent manage- ment, and employee relations) and the regional HR leads outside the U.S. These inputs ensure that the division HR leads have an understanding of issues that will impact their global businesses, including HR technical and regulatory changes as well as regional dynamics that will impact one or more businesses that operate in greater China, Japan and Europe.

FIGURE 1

Corning Human Resources Transformation Goals

Strong Business Linkage

Global HR Processes

Scaleable Solutions

Continuous Cost Improvement

SUCCESS

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The COEs and the corporate HR leadership team have found it valuable to receive spreadsheets that consolidate the outputs from each business, allowing them to see all of the major initiatives to be undertaken by HR resources within the businesses on one sheet, and all the work being requested of the COEs by the businesses on another. This facilitates the identification of common requests across businesses that might otherwise go unidentified or might not make the final prioritized list, and forms one of the inputs for the AOP discussion.

Our annual strategic planning process (Figure 3) for HR brings together several key components including: (a) corpo- rate strategy and the implications of that strategy for HR, (b) HR function strategy including the strategic direction for each of the COEs, and (c) the outputs of the Human Capital Plan- ning process for each of the business units, which is essentially the HR implications of each of their business strategies. As all of these involve “strategy,” they all encompass a three to five year planning process. These three discrete inputs are brought together at an annual offsite meeting of the direct reports to the senior vice president of HR, plus several facilitators, usually in October, where we further develop and build alignment

around the Human Capital Planning process for HR and develop the Annual Operating Plan.

AOP Offsite – Preparation and Meeting Design Prior to the annual offsite to develop the HR Annual Oper- ating Plan (AOP), each of these components are analyzed for “must have’s”, common themes, clear conflicts in the data, and key outliers (e.g. those things that may not show up as a theme but are highly probable and will have a high impact). The senior HR leadership team owners of each component dialogue with their teams so that when they come to the HR AOP offsite they are ready to present the real core of the work. Several years ago much of this work was done during the offsite itself. We have since found that doing much of this in preparation for the offsite allows for broader participation, more ownership as the constituents are helping to provide prioritization, and a more efficient, more focused AOP ses- sion. In 2006 we actually “took our own medicine” by follow- ing the HCP Process for the HR Function as the funnel to synthesis the key inputs prior to the offsite (Figure 3).

FIGURE 2

Corning’s Human Capital Planning Process

Identify and prioritize talent gaps (+/–) and determine best approach for closing the gaps

Business Strategy and Operational

Objectives

Identify actions necessary to align

the talent with the business

(highest & best use)

Determine the type of talent required to execute the critical

business initiatives Determine the

number of people required over the

term of the critical business

initiatives

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The HR AOP offsite meeting is attended by the HR func- tion staff, the chief of staff for business unit HR, and two inter- nal facilitators. We have the group arrive at the off-site location the night before and have a group dinner and some team activity to help them let go of the day-to-day, often role- specific work they were focused on and get them refocused, as a team, on their function leadership role.

The first day begins with a review of the agenda, ground- rules for the session and the boundary conditions. The bound- ary conditions are essential as no work is done in a vacuum. For our purposes the boundary conditions include our HR governance statements which include our corporate values and core deliverables; our budget for the upcoming year, the HR transformation goals (the strategic goals for the HR func- tion) and HR HCP outputs. Throughout the process we check our work against these boundary conditions to ensure that we remain on target. That is not to say that we never go outside the boundaries, but if we do, it is in a very explicit way. For example, if we have a large initiative that will go beyond regu- lar budget boundaries, it must be demonstrated how we can show the plan for funding that work, what is the likelihood of funding, what are the trade-offs with other projects that are then less likely to be resourced, etc.

Next, each staff member presents the pre-work they com- pleted with their staff. During these presentations each staff member explains the objectives that they are proposing be included in the upcoming year’s plan and why. The focus at this point is on understanding what conclusions were reached by the staff members, and how they were reached. This is done

through facilitated dialogue and, as these are the main ingredi- ents to success, we ensure that the tough questions and impor- tant challenges are brought out. Throughout these discussions the facilitators are capturing and testing changes so that by the time this section is complete we have a reasonable draft of the AOP. Hence this is a highly interactive and iterative session, as changes in one section often cause us to go back and revisit a previous section. Day one does not end until the group has agreed on the main elements of the AOP.

On the second day, following an evening of relaxation, we break the leadership team into sub-teams. The objectives agreed to on the previous day are divided up and the sub- teams’ task is to articulate how we will measure each objec- tive in the context of the Corning incentive compensation payout scheme by setting 50%, 100%, and 150% performance targets for each. This exercise serves several purposes includ- ing (a) providing another cross-check of the objectives them- selves, often helping us to calibrate scope, complexity, timing etc., (b) tightening up our language. Having to determine how to measure something lends a lot of clarity to the goals, and (c) forces even more clarity regarding what work will be required to deliver on these objectives.

The last day of the AOP offsite has two components. Considerable time is devoted to planning the communication of the finished AOP to business unit leaders and all HR employees. The balance of the day focuses on the creation of a global HR function calendar for the following year, capturing key function activities like deployment meetings, staff meet- ings, communication meetings, HCP process deadlines, etc.

FIGURE 3

Annual Strategic Planning Process

Corporate Strategy

(MC)

Strategic Planning Process

COEs

INPUTS

OUTPUTS

Annual Operating Plan COE Work BUHR Work

Function/Department Budgets

HR Function Priorities (HCP for HR)

Function Strategy

(Transformation)

Business Unit Needs

(BUHR HCP Outputs)

Chapter 5 Strategic Workforce Planning | 233

The outputs of the AOP offsite include: a final one-page Annual Operating Plan summary, the detailed goals behind the AOP, an understanding of the required work from both the COEs and business unit HR. While budgets are used as a boundary condition at the offsite, a follow-up staff meeting includes the reconciliation of the AOP with the relevant department budgets.

Strategy Elements in the Larger Context – Pulling It All Together To put the various elements in context, Figure 4 illustrates the annual cycle of human capital planning, the human resources annual operating plan process, and the corporate strategy process (as discussed previously in this paper) on a single timeline. The business unit human capital planning process runs in parallel with the business unit portion of the corporate strategy process, and the two inform each other. HR completes its human capital planning process on itself using the output of the business units’ work.

Lessons Learned & Continuous Improvement Opportunities As with many HR processes, the AOP process is based on an annual cycle and the year-on-year improvements are best understood by considering each year in turn.

We have implemented the annual AOP process for each of three years. Each year, we have learned new lessons that enable us to continually improve the process. In the first year, the COE presentations were made at the April kick-off meet- ing. The process did not include an opportunity for the region HR leaders to provide a global perspective. Addition- ally, the business unit HR output was not formally prioritized before the offsite, resulting in a mix of “wish list” and dupli- cate requests.

Relative to the AOP offsite itself, in the first year there was no pre-agreement on what the AOP would look like or what the framework would be. As a result, this work took up considerable time in the meeting. The summary page was ultimately organized by a framework that included the fol- lowing three main headings: Improve Cost Performance, Deliver Quality and Continuous Improvement, and Drive for Talent Management Excellence. While the specific objec- tives under these headings have changed from year to year, the headings have remained viable.

In the second year, we kept the COE presentations at the April kick-off meeting, and added time for the regional HR leads to provide input. The business unit HR team prior- itized their requests in a single meeting prior to the AOP offsite, which resulted in a more coherent set of requests. The process was also modified to provide formal opportunity for COE leaders to work with their staffs on the business unit HR requests for support before coming to the offsite.

In developing the AOP itself, we re-used the framework developed in year one, saving considerable meeting time. We felt that consistency was more important than change for change’s sake. This meeting went considerably smoother from facilitation standpoint, as the participants were on more familiar ground.

In pursuit of efficiency in the HCP process, we made an overcorrection in the third year by having the COE presenta- tions done virtually, via a page on the intranet rather than during a live meeting. This was a mistake, as it sent a message to the COEs that their input was undervalued and it allowed some business unit HR people to under value the COE input. The prioritization of BUHR input was dramatically improved by facilitating a senior HR staff debrief dinner directly follow- ing the business unit HR HCP presentations in July and facil- itating a business unit HR cross-business prioritization process and identifying common threads.

With regard to the annual offsite, we broke the three days into two sessions; one day for HCP for HR, and two

FIGURE 4

Human Capital Planning and Annual Operating Plan Integrated Timeline

Corporate Strategy Process

Launch Meeting Region Reports

Q1 Q2 Q3 Q4

HCP for HR

BUHR Presentations Staff

Offsite

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days for the AOP. This made the work more manageable and resulted in more focused sessions with the senior staff. The strength of the AOP framework that we developed in year one, and retained in year two, was validated in year three when we kept the main headings consistent but were able to make accommodation for a major new initiative.

Meeting Facilitation – Basics Reconfirmed The following points, while focused on Corning’s experience with this particular set of meetings, and perhaps basic to the seasoned facilitator, have added value in our process:

• The meeting structure and overall process design must permit individuals with different work styles to process the information effectively, and to engage with their staffs as appropriate before group meetings.

• The meeting facilitators have to seek a balance between efficiency and effectiveness as the meeting unfolds – there is no substitute for frank dialog regarding thorny issues. Likewise the facilitators must provide pre-work material while resisting the urge to over-process that material for the participants. This means cleaning up the inputs with- out trying to do the work for the team.

• As with any leadership team working through a difficult process, facilitation was key. We found value in using someone outside the intact staff – which allows all the staffers to participate and improves facilitator indepen- dence. In addition, we found that a two person facilitation team added significant value in managing both the group dynamics and the meeting content. Using the same team year on year allowed the facilitators to develop a feel for when to push for closure and when to back off.

• Our facilitation was further improved by our ability to process the content live in the room on a computer and projector, rather than on flipcharts. Having immediate visual turnaround of the feedback greatly improved meeting effectiveness and efficiency.

• By including in the meeting design opportunities for max- mix sub teams to do break-out work and present it to the rest of the participants, we found that more issues got raised in the room and resolved productively.

Continuous Improvement Opportunities There are still many opportunities for us to improve our stra- tegic planning process in total. While most of the HR gener- alists have now embraced the human capital planning process, there are still some that struggle with the concepts and corrective action is now appropriate. As the generalists who do understand the process drive it further into their cli- ent business’ strategic planning process, we expect to draw more general managers into the mid-year report-out sessions. As the HR leadership team gets more comfortable with and

confident in the process, we have an opportunity to make greater distinctions between the requests from the different businesses, driving more prioritization of projects and work requests based on their impact to the requesting business. This will drive better portfolio management decisions and help HR to achieve its goal of containing cost while delivering value to the organization.

As we transition to a new facilitation team for the annual offsite, we have articulated clear concerns about how much work the facilitator can do in preparation for the meet- ing without undermining the leadership team. In some departments, facilitators can save time and add value by cre- ating “straw person” proposals that interpret the source data. However, our recommendation has been to resist that temp- tation and to allow the team to work directly with the raw data. This experience with the raw inputs gives them greater familiarity with the details and helps them to arrive at a shared point of view. Over-processing the inputs might save time in the meeting, but at the risk of losing the alignment of the participants.

General Conclusions Working together, the human capital planning and annual operating plan processes reviewed in this paper have helped to build a more coherent global HR function for Corning by creating a shared understanding across the COEs and the business unit HR groups of the many client business’ situa- tions and needs, and of the technical and strategic advances in each of the COEs. While the details of such processes must differ from company to company, the creation of such inte- grated, structured, and repeatable processes appear to add considerable value for HR professionals and their clients. Anecdotal evidence for the value of this work has come from the number of requests from other companies to bench- mark Corning on this subject.

Critical elements of a successful AOP process include a number of mechanisms for gathering input; corporate strat- egy input from senior management, function-specific direc- tion from the senior leadership of the function, and business-specific input from each of the businesses sup- ported by the HR function. The more diverse the lines of business that the company is pursuing, the more important a robust planning process similar to Corning’s HCP process becomes.

The process for developing the AOP is important as well. While a certain amount of pre-work is desirable, there is no substitute for a well-facilitated meeting of the senior team where options can be identified, ideas can be discussed and alignment can be gained on the agreed-upon actions.

Finally, alignment of the HR strategy process with the corporate and discrete business unit strategy processes increases HR’s ability to align the services it offers, and the way it delivers them, with the needs of businesses.

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Acknowledgements As with many Corning HR programs, the Annual Operating Plan (AOP) process originated in one of the businesses – in this case, in a best practice developed in the then Optical Fiber business. The calendar and AOP templates were intro- duced within Corning by Christy Pambianchi, who currently serves as Division Vice President of Business Unit HR. The current process incorporates the feedback of numerous Corn- ing HR colleagues received by the authors in the last three years, but most importantly from the members of Kurt Fischer’s staff, for whom this work was commissioned. The Human Capital Planning process that Corning has been using in its current form since 2004 has roots in the HC BRidgetm work of Dr. John Boudreau and Peter Ramstad. This work has also benefited greatly from the practical con- sulting approach of Don Ruse of Sibson Consulting.

Authors’ Reflection As Director of Human Capital Planning for Corning Inc., my mission was to develop, deploy and manage a process for identifying the talent implications of the business strategy each business was pursuing. Working directly for the SVP of HR, I was asked to co-develop and co-facilitate an Annual Operating Plan process with Debbie Bennett, a senior mem- ber of the in-house OD team.

As with any senior leadership team, a major challenge was to develop a process that would focus on a specific out- come – a clear, measurable plan – that would effectively bal- ance the differing personalities and perspectives of the senior HR leadership team. Being an internal consultant was

beneficial, because my co-facilitator and I were familiar with each team member’s style, strengths, and weaknesses. Our ongoing relationships with the team allowed us to push the team in ways that an external consultant would not have been able to easily accomplish.

Beyond the reflections contained in our paper, we would encourage any internal consultant to carefully consider the balance between completing some of the framework of the plan prior to any working offsite meeting to maximize the effectiveness of the session for all participants, and leaving sufficient work to be done by the group in person to ensure meaningful dialog between the participants and full owner- ship of the final project.

Source: Debbie Bennett and Matthew Brush, The Annual HR Strategic Planning Process: Design and Facilitation Lessons from Corning Incorporated Human Resources, Organization Development Journal, Fall 2007, 25, 3; pp. P87–P93.

REFERENCES

Boudreau, J. W., Ramstad, P. M. & Dowling, P. J. (2003). “Global Talentship; Toward a Decision Science Connecting Talent to Global Strategic Success.” In W. Mobley and P. Dorfman (Eds.), Advances in Global Leadership (Volume 3). JAI Press/Elsevier Science, 63–99.

Brush, M. C., Ruse, D. H. (2005). “Driving Strategic Success Through Human Capital Planning; How Corning Links Business and HR Strategy to Improve the Value and Impact of Its HR Function.” Human Resource Planning (Volume 28.1). 49–60.

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