Importance of embracing risk in business planning process - http://www.chaordicsolutions.co.uk/blog/from-our-strategy-implementation-consultants/importance-of-embracing-risk-in-business-planning-process/

http://www.chaordicsolutions.co.uk/blog/from-our-strategy-implementation-consultants/importance-of-embracing-risk-in-business-planning-process/

Importance of embracing risk in business planning process: maximising success by increasing confidence in activities.

 

Extract from NACD Directorship - Jim DeLoach:

While strategy-setting defines an enterprise’s overall strategic direction, differentiating capabilities, and required infrastructure, the business plan lays out how the company intends to execute the strategy during an annual period or, if longer, the operating cycle. Some companies have rolling multiyear business plans (say, three years), which take on the appearance of continuous strategy updates. Given this context, the question arises as to how risk should be integrated into the annual business planning process.

Key Considerations

In a business plan, it is critical to define the inherent soft spots, loss drivers, and incongruities that could dramatically affect performance and adversely impact execution. The budgeting and forecasting processes supporting the business plan also must be effective in managing risks, such as liquidity, which can threaten the organization’s viability during the planning period. With respect to the selected planning horizon, two important risks to consider are ensuring the plan itself can be delivered according to expectations and that the company won’t run out of money as it delivers the plan.

With respect to liquidity risk, there are a number of considerations. For example, there are the normal seasonal fluctuations, the inevitable unexpected developments causing revenue declines and operating cost increases, and the issue of inadequate financing facilities or insufficient working capital and/or cash-flow management processes. Then, there are unexpected events that cause business disruption, exposing the company’s failure to match the debt maturity profile to the ultimate realization of assets that its debts are funding. Finally, we cannot forget the extraordinary circumstances that lead to unplanned capital outlays or breaches of loan covenants. The point is clear: Reliable budgeting and forecasting processes in which management and the board have complete confidence are crucial to the business planning process.

Every business plan should identify the appropriate metrics and measures to monitor. If the strategy-setting process contributes to a better understanding of the risks inherent in the strategy, that understanding provides inputs to the determination of key metrics and targets. At this point, risk management begins to intersect with performance management. In effect, traditional key performance indicators (KPIs) and key risk indicators (KRIs) should converge to create a single family of metrics to drive the business planning process.

While KPIs monitor progress toward the achievement of the strategy and are the primary means for communicating business results across the organization, KRIs provide lead and lag indicators of critical risk scenarios. The result is a more balanced mix of forward-looking indicators to complement the usual KPI metrics around customer and employee satisfaction, quality, innovation, time, and costs. For example, accumulated deferred maintenance in a manufacturing plant or refinery may be a lead indicator of environment, health, and safety risks.

Together, KPIs and KRIs provide direction as to what should be managed in the execution of the business plan. The metrics selected must enable the organization to track progress toward the achievement of business objectives, monitoring and mitigation of risks, and compliance with internal policies and external laws and regulations. Metrics become the foundation for integrated business planning, which in turn provides a comprehensive framework to deploy and execute corporate strategy across an organization in concert with risk mitigation planning, budgeting, forecasting, resource allocation and the reward system. In many organizations, these are separate, individual processes, often championed by different parts of the organization.

To illustrate, one company defines its risk management process using the standard six steps: identify, source, measure, evaluate, manage, and monitor. Once risks are “identified,” they are “sourced” to their drivers or root causes. “Measure” means mapping the risks with regard to their impact, likelihood and other criteria. “Evaluate” means determining the desired risk profile and risk responses needed to achieve that profile. “Manage” and “monitor” both relate to executing the selected risk responses.

The company’s business planning process consists of three phases: environment assessment, plan development, and plan execution. The company integrates the “identify” and “source” steps of its risk management process into the environment assessment phase of the business planning process, the “measure” and “evaluate” steps into the plan development phase, and the “manage” and “monitor” steps into the plan execution phase. In this way, managing risks becomes an integral part of running the business.

In summary, integrated business planning deploys the strategy at the level of greatest achievability and accountability, engages appropriate managers who can access the resources required to get the job done, and incorporates the risk management capabilities needed to address the critical risks inherent in the plan.

Questions for Boards

Following are some suggested questions that boards of directors may consider, based on the risks inherent in the entity’s operations:

Does the business plan:

- Decompose the critical steps required to achieve key business objectives into performance plans supported by key metrics and targets that establish accountability for results?

- Identify the soft spots and potential loss drivers that could dramatically affect performance and adversely impact execution of the plan and delivery of expected financial results?

- Link the reward system to performance expectations through a balanced compensation structure that is fair to both the near-term interests of employees and the longer-term interests of shareholders?

Do senior management and the board have confidence in the reliability of the organization’s budgeting and forecasting processes?

Jim DeLoach is a managing director with Protiviti and works closely with companies to improve their board risk oversight, including the communications between management and the board.

More … http://www.directorship.com/integrating-risk-with-business-planning/

Holistic vendor assessment using ERP/procurement data - http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/holistic-vendor-assessment-using-erpprocurement-data/

http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/holistic-vendor-assessment-using-erpprocurement-data/

Holistic vendor assessment using ERP/procurement data: reducing unanticipated costs by managing associated risks.

 

Extract from Corporate Compliance Insights – Joe DeVita:

Companies don’t have as many walls as they used to. In an effort to reduce costs, improve efficiency and flexibility, and leverage new technologies and expertise, most large companies today have engaged hundreds or even thousands of third-party vendors to provide products and services. From handling IT, payroll, and accounting to manufacturing, marketing, and selling a company’s products, third-party vendors are now woven deep into the fabric of companies’ most vital functions.

While all organi ations monitor vendor performance against the terms of their contracts and service level agreements (SLAs), many fail to put adequate resources into assessing and managing the risks associated with those vendors. This can leave the organi ation open to service or supply-chain interruptions if a vendor fails, experiences a technical or process breakdown, or is impacted by a crisis event — like, for instance, last October’s Hurricane Sandy. The list of risks goes on an on, from data breaches to regulatory noncompliance to risks associated with security, stability, and operational or cultural practices in the vendor’s country of origin. Vendor risk is receiving ever-greater scrutiny from boards, regulators, auditors, and other stakeholders, and managing these risks effectively is a must, both to satisfy those stakeholders and as a matter of simple good sense: When you’re up a ladder, you want to know the person holding the bottom has a steady grip.

Effective vendor risk management takes a holistic, strategy-driven view across the universe of an organi ation’s vendor relationships. It sets up a structure to promote consistency, accountability, and effective controls over all stages of the vendor lifecycle, from the risk-assessment stage, to vendor selection and due-diligence, to contracting, to ongoing relationship management. The range of risks across this universe is potentially huge, as is the sheer number of vendors with which a large company might have relationships. Getting a consistent vendor risk management structure in place and then taking the reins might seem like a Herculean task. But it doesn’t have to be.

Start with the numbers. A global firm might have as many as 100,000 vendor relationships, but when you start examining the individual strategic value of those vendors, the core numbers drop precipitously. Office supply vendors? Not critical. Janitorial services? Not critical. Coffee and vending machine suppliers? Not critical, except maybe late at night. Once you strip away vendors whose products and services have negligible impact on the company’s strategic direction and operations, you’re left with a small number that are truly important, and maybe only half of those provide absolutely critical functions in which your organi ation cannot afford interruption: IT, legal, health and benefits, payroll, outsourced production of products or elements required in your production cycles, etc. These are the vendors on which you need visibility. What are they doing? How are they doing it? What are the risks to which they’re susceptible? Are they stable and secure? If they fail, what’s your plan for replacing them?

Now, how do you parse your list of vendors, separating the wheat from the chaff, documenting the differences, and moving toward effectively managing risks around your critical vendors? As in much else today, a big part of the answer lies within your ERP platform, which can become the source for data on your procurement, your supply chain, and your critical joint business relationships. Being able to pull and analy e that information within your ERP system can give you the first cut of data you’ll need to begin ranking your vendors by their importance to your organi ation. From there, you can begin leveraging a governance, risk, and compliance (GRC) tool to focus your resources toward comprehensively monitoring your most critical vendor relationships.

Conducting a spend analysis is a good first step. Such an effort will provide visibility into where the company’s vendor dollars are going, what services or products it’s getting for its money, where its vendors are located, whether a particular service or product is solely or primarily sourced from a single vendor, and so on. Such information, gathered and stored in a database, provides companies with a flexible tool with which to analy e vendor risk.

Initiating a spend analysis program involves first extracting spend data from your ERP system and any other relevant locations within the organi ation (procurement applications, expense reports, manual spreadsheets, etc.), aggregate this data into a single database, then clean and normali e the data to remove errors, standardi e vendor names and abbreviations, and map services and products to a widely accepted set of classification codes (such as the United Nations Standard Products and Services Code, or UNSPSC). Analy ing this information will allow you to create a list of important vendors, from which point you can assign resources to make a deeper assessment and determine those that are absolutely critical to the organi ation.

Rankings of vendor criticality determine the frequency and scope of the due diligence each vendor relationship requires. Core vendors might be assessed annually, providing information on their financials, credit rating, insurance, performance metrics, and controls, and completing a due diligence survey/self-assessment that addresses questions of information and software security, physical security, data access, etc. Adding this information to your database provides the raw material from which to generate risk insight and rankings. Examining vendors by industry classification or product, for instance, can show which vendors might be susceptible to certain industry-specific risks (talent shortages, commodity supply issues, etc.). Examining by geographies may show a concentration of critical vendors in a region prone to political instability or natural disaster. Examining by security protocols may point up vendors with inadequate data privacy controls, or where the security of physical assets is soft.

In addition to vendor surveys, information might also come from internal performance data, public external sources, and elsewhere, so doing the legwork to assemble, clean, normali e, and populate this data will be no simple task, even after you’ve pared your focus down to your critical vendors. But technology can help, providing tools to manage and automate your vendor GRC processes and your ongoing vendor relationships.

The use of automated vendor analysis is growing. Using tools that automatically extract data from source systems helps you classify and enrich data in your database and makes it easy to leverage dashboards to analy e spend data, contract compliance, performance against pre-determined service or delivery metrics, and compliance with standards related to labor practices, environmental impacts, supplier management, and so on.. Complete vendor risk management software solutions are available that can help companies:

- Assess and analy e vendor risks, define controls, track key risk indicators, and get visibility into risks via scorecards and dashboard reports.

- Create and manage comprehensive vendor profiles, execute vendor surveys/self-assessments (and track responses), manage vendor policies, and manage information on vendor cost, innovation, quality, customer complaints, loss incidents, etc.

- Measure vendor performance against the company’s business goals and rate them for comparative analysis vis-à-vis competing vendors.

- Achieve automation of various processes, including generating e-mails to vendors asking them to fill out surveys, etc.

- Achieve early detection and proactive management of developments such as missed SLAs, unfulfilled contractual commitments, deteriorating vendor financial condition, market events that might affect the vendor, and vendor practices (e.g., use of child labor) that could open up your organi ation to reputational risk by association.

Collating the vendor information stored in company ERP/procurement systems and using vendor risk management software to mine and enrich that data allows companies to more easily narrow their risk management focus to critical vendors, monitor the overall health and performance of those vendors, and make sure everything is proceeding according to plan, contract, and SLAs — or not. The goal is securing an early and more complete understanding of your company’s vendor relationships, which may help to reduce unanticipated costs related to regulatory fees, reputational damages, and unintended natural events.

Joe DeVita is a partner with PricewaterhouseCoopers, based in the New York Metro area, and leads the governance, risk and compliance (GRC) technology practice for PwC.

More … http://www.corporatecomplianceinsights.com/looking-within-leveraging-your-erp-data-into-a-platform-for-vendor-risk-management/

Are you willing to share your OCEG “Principled Performance” related experiences at the next IRM GRC SIG session in April? - http://www.chaordicsolutions.co.uk/blog/irm-grc-special-interest-group/are-you-willing-to-share-your-oceg-principled-performance-related-experiences-at-the-next-irm-grc-sig-session-in-april/

http://www.chaordicsolutions.co.uk/blog/irm-grc-special-interest-group/are-you-willing-to-share-your-oceg-principled-performance-related-experiences-at-the-next-irm-grc-sig-session-in-april/

The recently formed IRM GRC SIG is currently planning its next face-to-face session that will be held in London (and via the web) on the afternoon of 25 April 2013.

The focus of this session will to hear “real-life” stories from users/businesses that have previously implemented or are currently implementing an OCEG “Principled Performance” based approach to Governance, Risk Management and Compliance.

So are YOU willing to share any experiences in this area? If so, please let either me know me know via email at robert_toogood@chaordicsolutions.co.uk.

More … http://www.theirm.org/events/GRC_SIG.htm

Operations leader role now increasingly strategic - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/operations-leader-role-now-increasingly-strategic/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/operations-leader-role-now-increasingly-strategic/

Operations leader role now increasingly strategic: driving business model innovation using industrialised processes.

 

Extract from Business Finance – Gianni Giacomelli:

Today’s volatile economy demands greater agility from business process operations. In this environment, businesses struggle to grow within established markets; they often seek out new and emerging markets to sustain revenue. And in order to do so, companies must operate both defensively to reduce costs in the face of new regulations and volatile materials prices, and offensively to gain traction in new markets and niches without losing control of operations.

To accomplish all this, the role of the operations leader — be it COO, head of shared services, operations director within the line-of-business or finance and accounting function — is becoming increasingly strategic. In essence, they are being called to create a business model innovation. This expanded responsibility requires a willingness to embrace changes that impact operational efficiency and effectiveness in three areas in particular: talent, technology and process management. By addressing these areas, a senior executive can effect a transformation capable of supporting “industriali ed” business operations across a wide range of support functions.

Three Reasons for Rethinking Global Operations

While operations can take various forms — for internal lines-of-business, shared services, operating centers, or global business services — they all share a common trait: the operations department has traditionally been slow to react to change because it was typically optimi ed for scale rather than agility. This lack of agility is often the result of the company’s focus on cost reductions rather than effectiveness and flexibility. But in a new macro environment, senior executives must rethink the key tenets of their global process delivery structure and take the following three factors into consideration:

1. The Human Factor: A global imbalance between demand for and the supply of skilled workers is growing. With experienced baby boomers retiring, some skills becoming obsolete, and others in increasingly short supply, the traditional office model is under pressure. Today’s operations departments include more part-time, offshore and work-at-home resources, but training, managing, motivating and ensuring the compliance of these workers is challenging. Whether the need is for transactional, judgment-based, or data-driven work at the delivery or the management level, finding the right people in the right locations is becoming much harder.

These realities are already impacting an organi ation’s ability to cost-effectively run specific support processes such as accounting, engineering design, and analytics. As job requirements change, HR departments must jettison any “business as usual” approach if they hope to find the right resources when and where they are needed.

2. Technology: Businesses have long invested their technology spending on implementing ERP systems and optimi ing desktop computing. But times are changing. Bandwidth costs have halved every 30 months over the past 10 years. And screen resolution has doubled every 1.5 years, enabling the use of larger screens and tablets in both office and home. As a result, new cloud-based technologies are providing more affordable alternatives to ERP, especially for smaller enterprises and processes that were not well served by ERP, such as collections.

And companies are increasingly discovering the benefits of social technologies. Knowledge workers currently spend 28 hours per week searching for information, writing e-mails and collaborating internally. The consulting firm McKinsey & Company estimates that harnessing social media technologies to enhance collaboration and information sharing could drive 20-25% productivity improvement.

3. Process: While technology is an enabler of operations effectiveness, technology alone cannot deliver business model innovation. Businesses benefit most when they deploy technology in standardi ed enterprise processes on a large scale.

To drive end-to-end efficiency and effectiveness, over 90% of finance and accounting operations use at least a partially shared delivery model. “Demateriali ing” operations — matching people to work, regardless of location — has helped companies attain economies of scale, process optimi ation and cost arbitrage from industriali ed operations. And increasing scale brings down unit costs: 10 times the scale can cut the cost of work by 50%. And standardi ing processes enables this scale and greater productivity. Lack of standardi ation explains much of the variance between large companies that have benefited from scale and those that have not.

Driven in part by the technology and human factor trends, but also by an increasingly scientific understanding of operations processes, global business services (GBS) models are emerging. Capable of demateriali ing the delivery of business processes, they have enabled the industriali ation of business operations across many support functions. This drives not only greater efficiency, but more effective operations.

Where Operations is Headed

Many companies already have some form of shared services or operating center. We foresee that the trend toward implementing some form of GBS and industriali ed operations will continue, in conjunction with corporate and line-of-business counterparts. However, even as businesses expand and refine existing operations, they will fall short of maximum potential if these models continue to use outdated technology and human resources practices.

As we have seen, communications constraints are rapidly being overcome, which means that future changes in allocation of work will be driven more by economies of scale, available skills, cost arbitrage and process optimi ation that drive better collaboration throughout the organi ation. And even though until recently ERP and its related workflows have largely governed operations, newer technologies enable changes that can produce the much-needed agility and speed required to capitali e on opportunity and accommodate work that does not fit into ERP’s neatly-defined workflows.

Supporting collaboration will also be a major focus of future operations. Human beings instinctively want to communicate face to face. Operations must support visual contact and sharing so that all parties can see and interact with a document simultaneously — a collaboration environment that makes people feel as if they were sitting side by side as they work. Operations must also be able to answer key questions such as: What is relevant to a specific person at this moment? How is the team doing? Can the system detect peer pressure or the effects of stress on team efforts? Does it provide mobile support for managers moving between work locations?

Implementing operations that support such fluid collaboration will be critical. Operations must facilitate productivity no matter how distant the workers. The optimal environment will also enhance team management, enable better performance reviews, and facilitate one-on-one interaction. This globally connected model will ensure better knowledge sharing, training and faster answers to questions. Ideally, the operations staff need not be in proximity to the team’s location in order to troubleshoot or effectively run day-to-day operations.

Innovating for Growth and Agility

Industriali ed business process operations are both the model of the future and achievable right now. Operations leaders must recogni e the demands of a changing marketplace and evolving workforce and alter their operations to keep up. Rather than resist a globally distributed workforce, they can lower cost and enhance productivity and responsiveness by facilitating global collaboration.

An agile GBS model supported by modern technologies and scientific, standardi ed processes may very well be a key to continued competitiveness. The time has come for industriali ed operations to be a discussion topic in many enterprise strategy conversations.

Gianni Giacomelli is senior vice president & product innovation leader at Genpact.  Gianni is responsible for building and executing a Global Product Development framework and a product roadmap which take an integrated view of Genpact’s process excellence capabilities, IT solutions and analytical tools.

More … http://businessfinancemag.com/article/finance-enters-age-industriali ed-business-services-0225?

Rising complexity means must excel simultaneously in efficiency and innovation - http://www.chaordicsolutions.co.uk/blog/from-our-strategy-implementation-consultants/rising-complexity-means-must-excel-simultaneously-in-efficiency-and-innovation/

http://www.chaordicsolutions.co.uk/blog/from-our-strategy-implementation-consultants/rising-complexity-means-must-excel-simultaneously-in-efficiency-and-innovation/

Rising complexity means must excel simultaneously in efficiency and innovation: four different approaches available.

 

Extract from Boston Consulting Group – Martin Reeves, Knut Haanæs, James Hollingsworth, and Filippo L. Scognamiglio Pasini:

Managers today face an apparent contradiction. On one hand, austerity in the developed world and intense competition push them to cut costs and drive efficiencies. On the other, the increasing pace of change means they need to emphasi e innovation.

Resolving this contradiction requires ambidexterity—the ability to both explore new avenues and exploit existing ones. Companies need ambidexterity when operating in diverse environments that require different styles of strategy simultaneously, or in dynamic environments that require them to transition between styles over time. Companies need to be ambidextrous when operating in both emerging and developed markets, when bringing new products and technologies to market while exploiting existing ones, when integrating startups into their existing business, and in a range of other circumstances.

The need to develop ambidexterity is widely acknowledged: in a recent BCG survey of 130 senior executives of major public and private companies, fully 90 percent agreed that being able to manage multiple strategy styles and transition between them was an important capability to develop. But this aspiration is hard to reali e. Exploration and exploitation require different ways of organi ing and managing. Exploration is facilitated by long-term targets, a flexible and decentrali ed structure, and a culture of autonomy and risk taking, while exploitation typically requires short-term targets, centrali ation, standardi ation, and discipline in execution. And switching between them is difficult because managers tend to emphasi e what delivered success yesterday. In the words of BCG’s founder, Bruce Henderson, “Success in the past always becomes enshrined in the present by the over-valuation of the policies and attitudes which accompanied that success.”

3M, a company renowned for its culture of innovation, experienced the exploration-exploitation tradeoff in the early 2000s, when it introduced Six Sigma practices in an effort to boost productivity. While the company’s productivity did indeed increase, the same practices reduced 3M’s ability to innovate, as evidenced by a fall in the proportion of revenues from new products.

Ambidexterity is therefore rare: a recent BCG study of the financial performance of approximately 2,000 publicly listed U.S. companies found that only about 2 percent consistently outperformed their industry in both turbulent and stable periods. But ambidexterity is becoming an increasingly critical asset as the diversity and dynamism of business environments rise. The growing economic importance of emerging markets, for example, is expanding the range of environments that companies need to operate in. At the same time, technological change is overturning existing products and business models at an increasing rate. It took the PC approximately 15 years to go from 10 percent market penetration to 40 percent; it took the Internet 5 years and smartphones fewer than 3.

More … https://www.bcgperspectives.com/content/articles/business_unit_strategy_growth_ambidexterity_art_of_thriving_in_complex_environments/

Value of organisational model based on capabilties not functions - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/value-of-organisational-model-based-on-capabilties-not-functions/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/value-of-organisational-model-based-on-capabilties-not-functions/

Value of organisational model based on capabilties not functions: maximises potential and organisational coherence. bit.ly/XBq3w3

 

Extract from strategy+business – Paul Leinwand and Cesare Mainardi:

The prevailing functional model in most companies dates back to the 1850s. Some of the first private-sector functionaries were railroad telegraph operators who managed schedules. Soon after, food and tool companies created sales forces instead of depending on outside wholesalers as intermediaries. Then came finance departments, followed by in-house research and development labs, which took the place of R&D contractors—including the original labs of Thomas Edison and Alexander Graham Bell. By placing their specialists at headquarters, divided into corporate functional departments, large companies could make better use of their people’s expertise, give them career tracks, and harness the power of scale to build superior capabilities. During the decades that followed, as companies grew steadily, the “corporate staff” (as it was originally called) grew accordingly.

By now, the functional model has become the conceptual core of nearly all organi ational structures, public and private. It is so ingrained in the daily activities of most companies that it is rarely questioned. Even when functions are seen as “shared services,” which would place them relatively low on the org chart in many companies, they are typically the most permanent parts of the enterprise. Business units come and go with the product life cycle, but finance, HR, marketing, legal, and R&D last forever. Even in matrix organi ations, the functions maintain quite a bit of power, managing career tracks and a huge portion of discretionary investments.

The value of functions is undeniable; no company could do without them. But the business and organi ational models that govern functions need updating. The most important business practices and collaborations no longer fall neatly into groupings designed many decades ago.

Perhaps the most obvious symptom of distress from the functional model is the widespread problem of incoherence. Most functional teams are good at many things, but great at nothing. They often struggle to meet the needs of all their constituents, juggling an endless (and sometimes conflicting) list of demands from line units; they never manage to build the type of advantage or differentiation that is required for long-term success. The underlying problem is not a lack of desire to focus, a lack of functional ability, or an inadequate budget. The functional organi ation simply no longer serves companies as effectively as it once did, in three important ways.

More … http://www.strategy-business.com/article/00161?gko=68ead

Diversity inevitable consequence of business strategy - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/diversity-inevitable-consequence-of-business-strategy/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/diversity-inevitable-consequence-of-business-strategy/

Diversity inevitable consequence of business strategy: four main drivers that are making diversity strategy crucial.

 

Extract from HR Maga ine – Katie Jacobs:

London Business School professor Lynda Gratton has called diversity an “inevitable consequence of business strategy”.

She told delegates at Tuesday’s Future of Work consortium on diversity and inclusion that organisations needed to widen the conversation around diversity so that it is about more than just gender and ethnicity.

“Diversity is such an important area right now,” she told the meeting. “The sheer speed of transformation is beyond anything we’ve ever seen. Diversity and inclusion are rising up the CEO radar screen.”

Gratton identified four main drivers that are making diversity strategy crucial for organisations: increasing globalisation, more generations at work, more women in senior positions and the increasing importance of specialism.

“Companies have more nationalities working for them than ever before,” she said. “And even if people aren’t physically migrating, they are still connecting with each other virtually. If you think diversity is at the end of its path, it is really only beginning. Your next talent pool is going to be even more diverse.”

Organisations now exist in a time where “generations are defined by the age at which they start using technology”, said Gratton. “Intergenerational cohesion is a problem. Your diversity agenda needs to include generational differences.”

She added that the increasing “specialisation” of working life, which can lead to silo working, was also an important diversity issue presenting both opportunities and challenges. “Diversity is all about getting different people in the organisation to talk to each other and work together.” 

Gratton said research shows that diverse teams often underperform, and that managers need to think differently and exercise inclusive leadership. “If you want your diverse teams to do well, you have to manage them differently,” she said.

The Future of Work consortium on diversity and inclusion, which includes organisations such as Ernst and Young, BT Global Services and RSA, will be discussing best practice and innovative thinking over the next year.

It is part of the Hot Spots Movement, a research and development-based community that brings together academia and management practice, and is addressing the question, ‘What will work be like in 2030′?

Professor Gratton, who comes second in HR maga ine’s most influential UK thinker list this year, is founder and leader of the Hot Spots Movement.

More … http://www.hrmaga ine.co.uk/hro/news/1076349/diversity-takes-thinking-businesses-hr-thinker