One of CNH Industrial’s key challenges is growing and adapting to a constantly changing environment. The Company realizes that the nature of today’s socioeconomic context calls for leaders with the ability to evolve.
A solid people management process is the key to success, as it includes employees in the Company’s business goals, takes advantage of employee talent, and fuels workforce motivation. CNH Industrial is committed to supporting its employees with training initiatives, and recognizing and rewarding their achievements and contribution to business results. In this manner, the Company not only measures itself against today’s expected levels of global competitiveness, but also gains insight into potential improvements and succession plans that are essential for the future.
Leadership Development function
The Leadership Development function is one of the centers of expertise directly reporting to the Chief Human Resources Officer (CHRO). It is composed of a corporate team, and has dedicated resources in all Regions that directly support the COO’s Human Resource Business Partners (HRBP). The main responsibilities of the function are to manage and deploy the Performance and Leadership Management (PLM) process throughout the organization, to define and implement the Succession Planning and Talent Review process, as well as more broadly to manage the talent management process. As part of the latter process, Leadership Development partners with internal stakeholders (senior business leaders and the HRBPs) and with external institutions to identify the most critical business needs, and develop the best leadership development solutions to answer those specific needs. The goal is to help the organization develop an internal pipeline ready to fill critical leadership roles in the future, ultimately ensuring the long-term success of the Company.
PERFORMANCE AND LEADERSHIP MANAGEMENT
Five key principles, set out in the CNH Industrial Human Capital Management Guidelines (publicly available on the Company website), underpin the Company’s approach to the management and development of human capital:
- meritocracy – as a system that rewards excellence
- competition – as a factor to be embraced and encouraged
- best-in-class performance – as a core benchmark
- accountability – delivering on promises.
These principles are embodied in the PLM appraisal system, adopted worldwide to assess employees (managers, professional and salaried). It is one of the key processes used by CNH Industrial in the management and development of human resources. Through the PLM process, specific targets are set to help guide and assess employees based on their results, attitude and behavior.
To ensure implementation of the five human resource management principles, the CNH Industrial Leadership Development function operates according to the following pillars, which are also defined in the Guidelines:
- considering skills as an asset to be developed and shared. CNH Industrial is committed to helping people adapt in real time to change in an increasingly complex world. As the development of employees and the continuous improvement in corporate performance are strictly interrelated, the Company’s main objective is to increase the value of human resources through targeted programs. Training and knowledge management, in fact, ensure continuous improvement by developing cultural competencies, reinforcing the Company’s identity and spreading its values.
- developing leaders as the best guarantee for the future. To promote the value of leadership, CNH Industrial leverages a specific model based on two main dimensions: leading the change process and leading people.
This means encouraging cultural change and enhancing leadership values to achieve outstanding results.
- focusing on Talent Management and Succession Planning. Talent Management is a key lever in achieving the Company’s talent development goals and releasing the potential of people. Attracting, retaining and developing leaders that can face future challenges, prioritizing the development of internal resources, is crucial to effective succession planning. A consistent, global approach that encourages cross-functional and cross-segment mobility across Regions allows Company-wide capitalization of the talent management process, and constitutes an essential competitive advantage. This process ensures that the leadership pipeline is continuously fed at all levels of the organization.
Performance Management System
As part of the Performance Management system, managers and employees sit down at the beginning of each year and discuss individual targets to be achieved during the year. Then, at year-end, individuals are evaluated on performance (i.e., achievement of business targets) and leadership (i.e., the ability to lead change, work as part of a team, and manage people).
These two dimensions – performance and leadership – are plotted on a nine-square grid, which provides a brief assessment of the employee’s results. Consistency in the evaluation process is ensured by comparison with the rating of other employees in the same category/ role. Calibrations within an expected distribution curve reduce the risk of inequity and align appraisal outcomes through defined criteria. The final results are discussed in a meeting between the manager and the employee, during which an open dialogue on areas identified for improvement contributes to validating the employee’s performance and strengthening his/her bond with the organization. Upon completion of the process, employees can access their evaluation online, enter details on their professional aspirations, and request specific training to address areas identified for improvement, such as coaching, exposure to senior management, etc.
This unique skills-mapping and appraisal process is supported by information systems that give managers full access to up-to-date information on the people within their organizational unit, as well as those only indirectly in their reporting line. In this way, the individual performance of each employee is accessible and can be examined by senior management within the organizational structure. During 2013, performance and leadership mapping was carried out for 21,131 employees (of whom 4,504 were women), including all managers and professionals, and 66% of salaried employees.
The number of salaried employees evaluated increased from 40% in 2012 to 66% in 2013. This significant increase comprised 5,410 new employees, mainly in Italy and Brazil. To accomplish this, a specific training plan was also rolled out, including 294 training sessions in Italy and twenty sessions in Brazil with more than 5 thousand participants (employees and managers). Additional web-based training has been made available to all managers and employees worldwide to support the process, and a leadership page was created on the new CNH Industrial intranet. The trend is set to continue, contingent on market and organizational developments.
CNH Industrial’s Chairman and CEO firmly believe that an organization’s success is based on its resources and, for this reason, are directly involved in the PLM process. Together, they spent a day analyzing the results of the PLM process, focusing on senior managers. In addition, the CEO spent two days with the regional and business COOs, focusing on their leadership teams. This process serves as the basis for all employee-related management decisions, and is a fundamental element in Talent Management and Succession Planning.
In addition to the PLM evaluation process, other individual performance appraisal processes are in place around the world. In 2013, such systems were applied to 2,619 men and 454 women, for a total of 3,073 employees (of which 86% were hourly).
In the past, the results of PLM assessments were used as the basis for the individual contribution component of eligible employees’ variable compensation. In 2013, due to the specific circumstances, a discretionary approach was used, although still in line with our common pay for performance approach. In 2014, a review and integration of the performance-related compensation models was submitted to the Board of Directors for approval.
Top management seniority
The importance that CNH Industrial gives to the development of its internal resources is demonstrated by an average length of service within the Company of 19 years for the members of the GEC, ranging from four to 43 years. The 182 Business Leaders that report directly to GEC members have an average length of service of 15 years, ranging from zero to 43 years.
In 2013, 83 managers were promoted internally, while 47 were hired from outside the Company.
TALENT MANAGEMENT AND SUCCESSION PLANNING
Talent management program
CNH Industrial operates in dynamic, highly competitive industries where success is achieved through the presence of talented individuals within the organization, and by appointing the right people to key positions.
These objectives form the basis of the Talent Management process, which identifies the most talented employees and fast tracks their development. The selected individuals are offered professional opportunities that allow them to gain experience in other geographic areas or segments, enabling the Company to develop effective succession plans that give priority to candidates from within the Company.
The process is conducted in a uniform manner across countries, functions, segments and levels of the organization. Key individuals, selected on the basis of their professional profile (in terms of performance and leadership) and potential for growth in positions of greater responsibility, are evaluated through a process that directly involves management, from the immediate supervisor to senior management.
The first Talent Review after the demerger from Fiat Group was held in 2012. Following the evaluation of all managers and professionals, employee reviews were performed across ten professional teams.
The program focused on ensuring that all key leaders were developing both a short- and long-term succession plan. Through this process, attention was focused on talented individuals with less experience, not yet widely known within the organization but meriting investment as potential leaders for the future. The Chairman, together with the Leaders of the organization and the various central corporate functions, dedicated one full day to Talent Management. Various issues were addressed, including the assignment of key roles, the analysis of talents and initiatives to support their development, and international/cross-functional career plans.
In 2013, as CNH Industrial focused its efforts on the crucial integration of CNH, Iveco and FPT Industrial in the Company’s new regional organization, conditions did not favor a full, formal review across the entire Company. To avoid compromising the effectiveness of the Talent Review process, the decision was made to defer this activity to next year, enabling more meaningful and robust talent pipeline discussions, supported by a stable organizational structure. A fuller analysis can then be made of the people who have contributed to the Company’s early successes.
Long-term incentive program
In 2011, the long-term incentive program, designed to ensure the involvement and retention of individuals who are key to the Company’s continued development, was defined and delivered to 200 CNH Global top managers worldwide, and, in 2012, the extension of the plan to key talent in companies outside of CNH Global was approved. With the reorganization and merger of Fiat Industrial with CNH, no new grant activity occurred in 2013 under the former companies’ plans. A new equity incentive plan, subject to approval by the Board of Directors and shareholders, will be introduced in 2014 to meet the new organizational needs of CNH Industrial.
LOCAL MINIMUM WAGE
In many countries, minimum wage levels are set by law and, in some cases, are subject to variations by Region/State or other criteria. Where no speciﬁc law exists, a minimum wage is often established by collective bargaining agreements between employer associations and trade union representatives. This is the case in Italy, Germany and Belgium, for example, where pay and employment conditions are negotiated at regional or national level, with the possibility of further agreements on their application or supplementary terms and conditions at Company level. Lastly, minimum wage levels are also established on the basis of speciﬁc economic, social and political circumstances and, therefore, do not allow for cross border comparisons.
To evaluate the adequacy of entry-level salaries in each country, in 2013, CNH Industrial carried out an analysis in a number of countries, representing 99.1% of its employees. In all countries, CNH Industrial entrylevel salarieswere at or above the statutory minimum or the levels set by non-company collective labor agreements, as can be seen in the graph above.
COMPARISON BETWEEN ENTRY-LEVEL SALARY AND MINIMUM WAGE
CNH INDUSTRIAL WORLDWIDE (MINIMUM WAGE = 100)
With a view to promoting internal mobility, an internal Job Posting program is active in the majority of the countries in which CNH Industrial operates.
Job Posting works as an internal marketplace where the supply and demand for professional opportunities come together in a transparent and efficient manner, following some key principles:
- giving visibility and priority to internal candidates
- ensuring a self-driven and proactive approach from employees
- developing a new relationship at various levels of the organization between the individual and his/her manager, ensuring transparent relations with the employee (giving clear feedback to all candidates during the selection process).
Each Region posts open positions, making them visible to all employees within the Region. In some cases, employees are also allowed to apply for positions outside of their Region.
Over the course of 2013, the program advertised 2,319 positions (2,462 in 2012), and 5,829 internal candidacies (4,747 in 2012) were received from all over the world. The majority of the positions were posted in NAFTA, where, out of 1,471 positions posted, 241 were filled by internal applicants.
In an effort to continuously expand the program, seven additional countries were included over the course of 2013: China, Finland, Hungary, Lithuania, Luxemburg, Romania, and Slovakia.
An internal analysis revealed that outplacement services, outsourced to external partners, are available in 16 countries. Based on specific needs, and at the Company’s discretion, CNH Industrial offers outplacement services to managers, provided by carefully selected external partners. In 2013, the service was utilized by approximately thirty people, mainly in the USA, Italy and Brazil.
Benefits go beyond employee salaries and cash incentives, and can make up a significant part of the total remuneration package received. For this reason, CNH Industrial offers a competitive range of benefits normally available to all full-time employees, with many countries also providing competitive benefits to parttime or temporary employees. Benefits differ according to an individual’s level of remuneration and country of employment, and depend on local policy. CNH Industrial conducted a survey on 99.1% of its workforce worldwide, covering all major Company sites as at 31 October 2013, on the availability and adoption of various Company benefits (supplemental health plans, financial support for those with accident-related permanent disabilities, life insurance, and employee cafeterias or meal vouchers). According to the survey, approximately 85.2% of employees were eligible for a supplementary pension plan; 70.6% of them joined a supplementary plan, representing 60.2% of those surveyed (see the table below).
EMPLOYEES ENTITLED TO BENEFIT
|Supplemental health plans||80.4||82.8||80.9|
|Financial support for disability||87||78.8||56.6|
|Employee cafeterias or meal vouchers||75||78.3||60.5|
|Wellness & nutrition programs4||47.2||33.3||31.3|
|Other (e.g., flexible working scheme, emergency care/first aid, referral programs, leave of absence or other flexible benefits)||46.1||53.5||27|
(1) Includes benefits such as company cars, housing, and interest-free loans.
(2) Includes kindergarten, free gymnasiums for children, assistance with homework, summer camps/holidays, and other child care services.
(3) Includes free gymnasium access, gym/fitness courses, and other sports initiatives.
(4) Includes nutrition coaching, training on stopping smoking, medical check-ups, medical screening, and other wellness programs.
Supplementary pension plans fall into two categories:
- defined contribution pension plans, in which contributions (by the employee, the Company, or both) are defined at the outset, and benefits paid out depend on the total payments into the pension fund and the financial returns of the fund itself
- defined benefit pension plans, in which benefits paid out to employees are defined at the outset, while contributions may vary over time to guarantee the pre-defined benefit levels.
Most existing pension plans at CNH Industrial companies are defined contribution plans.
Health care plans are also available for CNH Industrial employees, and about 47.6% of the total workforce has joined one (see also pages 68-71). There are also childcare services in place to meet employees’ needs, therefore helping them be more effective in their working life (see also page 67). Finally, CNH Industrial promotes a healthy lifestyle through comprehensive wellness programs, and facilitates access to dedicated sports facilities (see also pages 68-71).
Training Management Model
CNH Industrial believes that employee training is key to skill management and development. Training allows sharing operational and business know-how, as well as the Company’s strategy and values.
In 2013, CNH Industrial developed and applied a Training Management Model to enable a more effective and flexible response to evolving training needs arising from changes within the Company and in the economic environment.
CNH Industrial builds upon segment-specific training programs, in the belief that the most effective solutions should be specifically tailored to individual needs.
The Company manages training through a four-step process: training needs definition, content development, program delivery, and reporting.
Ownership in each of the four steps lies with different corporate roles, depending on the areas of contents or competencies to be enhanced.
CNH INDUSTRIAL TRAINING MANAGEMENT MODEL
As shown in the picture, the Model is very much business-oriented, therefore business departments are deeply involved in the four steps of the training process for content areas regarding management, leadership and development, business and job-related skills, and shared tools, languages, soft skills, legal aspects and compliance, ethics, EH&S, etc.
The Leadership and Development function of Human Resources enables the overall training process, supporting the business from a leadership, development, functional, and local perspective.
In order to manage the overall training process, CNH Industrial has implemented a global Learning Management System platform, an Internet-based corporate tool available to most employees through the corporate intranet. The Learning Management System allows setting and managing a comprehensive learning process for each employee based on business, location, or specific individual needs.
The HR Leadership and Development team serves as the Training Committee, specifically monitoring the implementation of the CNH Industrial Training Management Model. It comprises the HR Leadership and Development representatives of LATAM, APAC, NAFTA, EMEA, HR Training EMEA, and HR Leadership Development FPT Industrial.
The head of HR Leadership and Development, reporting to the Chief Human Resources Officer, serves as the Chairman of the Training Committee.
The effectiveness and efficiency of training activities are monitored and measured on an ongoing basis using a set of KPIs based on the Kirkpatrick scale. Training effectiveness is evaluated on the basis of:
- participant satisfaction with the initiative (reaction)
- improvement in individual knowledge/skills (learning)
- applicability of concepts learned to work processes (behavior).
To verify whether the desired outcomes have been achieved, training efficiency is monitored through:
- resources used for each training pillar
- hours of training provided for each training pillar
- hours of training provided by gender and by professional qualification.
Training in numbers
TRAINING EXPENDITURE AND ACTIVITIES
|Training costs2 (€ million)||8.7||12.1||24.7|
|Percentage of personnel costs3||0.25%||0.35%||0.75%|
|Hours of training provided (thousands)||969||1,363||1,305|
|Employees involved (thousands)4||50||69||32|
(2) Includes both direct and indirect costs.
(3) Personnel costs totaled €3,274 million in 2011, €3,440 million in 2012, and €3,511 in 2013.
(4) Includes people who have left the company.
TRAINING HOURS BY CATEGORY BY GENDER
|Salaried + Professional||78,136||302,051||380,187|
In 2013, CNH Industrial invested €8.7 million in training. The training strategy relies on the use of in-house experts in the teaching process, which has allowed cutting total investment. A total of 969 thousand training hours were provided to approx. 50 thousand individuals, of whom 86% were men and 14% were women.
Of the total employees participating in training, 61% were hourly, 38% salaried and professionals, and 1% managers. Each employee received an average of approx. 13.9 hours of training (hourly employees averaged 13.3 hours, professionals and salaried employees 15.4 hours, and managers 7.2 hours, the latter mostly online) compared with the average of 19.9 hours in 2012. Female employees received an average of 14.3 training hours each, male employees an average of 13.9 each.
BOOSTING CAREER DEVELOPMENT IN MEXICO
In 2013, many alliances were made with several universities to offer CNH Industrial Mexico’s employees the opportunity to continue developing their careers. To date, ten alliances have been sealed with educational institutes. The Training Department organized an internal fair to promote these institutions and provide information on the benefits and support the Company can offer employees and their families. This strategy proved to be successful, benefiting many employees in their pursuit of professional development through language programs and various courses leading to certifications, master degrees, and executive careers.
In addition, around 386 thousand hours of training on health and safety topics were delivered to about 50.2 thousand employees (of whom 37.2 thousand were hourly), and approximately 52.1 thousand hours of training on environmental issues targeted around 25.5 thousand employees (see also page 161). Investments in classroom, online, and on-the-job training focused primarily on the development of job-specific expertise (73%), corporate campaigns (1%), language programs (13%), and management skills (13%).
Most corporate learning campaigns are delivered online, allowing individuals to pursue training when most convenient and minimizing work disruption by allowing them to remain in their place of work.
The Company disseminates the principles of the Code of Conduct and the values of good corporate governance to all employees, irrespective of level or role and including security personnel, through specific periodic training and other information channels.
In 2013, the training activity focusing on the principles of the Code of Conduct, the values of good corporate governance, and sustainability and non-discrimination involved approximately 8,254 employees. The course for managers worldwide on the Organizational Model (pursuant to Legislative Decree 231/2011) and legal risks was completed during the year.
TRAINING ON CORPORATE GOVERNANCE, NON-DISCRIMINATION, ANTI-CORRUPTION AND HUMAN RIGHTS
|Hours of training provided||10.0||76.9||11.4|
With the merger of CNH Global and Fiat Industrial into CNH Industrial, the Company’s primary focus in 2013 was on supporting change management and integration. This objective was met through the launch of several important internal communication campaigns, including people involvement initiatives. In addition, the Company promoted sustainable behaviors through a variety of ad hoc activities and events.
Organization and management
At CNH Industrial, internal communications is a center of expertise within Human Resources. The global head of internal communications reports directly to the Chief Human Resources Officer and is responsible for a team that is organized according to Company-wide processes and regional activities. The Company-wide processes are divided into three core areas: Corporate Messages and Publications, Intranet and New Media, and Special Projects and Events. The manager of each of these processes reports directly to the global head of internal communications, as do the four heads for the APAC, EMEA, LATAM and NAFTA Regions, each responsible for managing communications activities in their designated geographical areas. The regional heads of internal communications also functionally report to the regional heads of Human Resources.
In 2013, several key internal communication initiatives were launched to communicate the new Company reality to employees, including the Becoming One Company campaign, which utilized an interactive infographic, available in 16 languages, to deliver high-level information about the new Company structure and strategic goals of the merger. To build upon this initiative, a Feedback Campaign was also launched to solicit questions and expectations from the entire salaried population worldwide, creating a two-way dialogue between the Company and its employees, and demonstrating an open and transparent approach. Inquiries were categorized into 14 topics and published anonymously in a 54-page question and answer document that was made available in 16 languages, and which delivered on the Company’s commitment to treat employees as internal clients and, ultimately, to reinforce credibility.
In addition to these initiatives, in 2013, the Company laid the groundwork for building long-term, large-scale communication channels to unite its employee population across its Regions and segments. These included the launch of a new Company intranet that, for the first time, allows employees to respond to content through interactive features and comment areas. The new intranet site is increasingly customizable and allows employees to access content relevant to their areas and needs, and, for the vast majority of the workforce, to read items in their native tongue since a total of six languages are offered. These features improve the Company’s capacity to reach employees and deliver information to them in a timely manner. In addition, CNH Industrial also launched a new internal publication, LINK – the magazine connecting people of CNH Industrial, aimed at both hourly and salaried employees. Printed quarterly in 14 languages and with a circulation of over seventy thousand, it delivers success stories from across the globe to unite the Company and align employees with common goals. On a regional level, a new magazine called Juntos (United) was also created for Argentina, Brazil, and Venezuela to bridge sites across the LATAM Region.
People Involvement Initiatives
In 2013, the Company continued to sponsor a variety of events to promote engagement and cohesion among employees.
To benefit employees and their families, CNH Industrial organized Family Days in many of its Regions.An event held at the CNH Industrial Village in Turin, Italy was attended by 12 thousand people, while a celebration at the Company’s facility in Sankt Valentin, Austria welcomed 11 thousand. In China, a special day was arranged for fifty employees and their families at the Shanghai Auto show, where they visited the Iveco brand’s booth and witnessed the launch of a new vehicle. In the USA, more than 560 people attended the annual family day celebration at the Chicago Children’s Museum. The Company’s corporate membership with the museum entitled employees and their children to free entrance; they also benefitted from food and ride vouchers at Chicago’s Navy Pier, where the museum is located. In India, 571 employees took part in the family day celebration, held at the Case Construction plant since its inception, while in Brazil, a celebration reaching 6,800 employees was held for the sixth year.
In Italy, the Break4you campaign was launched as a chance for employees to engage in a variety of planned activities during their lunch hour to boost their motivation and support integration. In 2013, as part of this campaign’s Wellness in a Flash series, employees participated in forty-minute wellness classes to improve balance, concentration, and breathing. Of the 57 participants surveyed during the year, 96% said they would attend another Break4you event.
Employees in Brazil were given the opportunity to showcase their musical talents in front of their colleagues during an after-hours talent festival organized by the Company. The festival in Curitiba, in its ninth year, was attended by 6,800 employees. Over time, the initiative’s popularity has grown and, in 2013, it was extended to two additional sites in Brazil.
National holiday celebrations are important events that CNH Industrial organizes in each of its Regions. In India, 1,200 employees attended Company-organized events for the Holi and Diwali 2013 festivals.
Promoting sustainable behaviors
Throughout the year, CNH Industrial engaged employees through several sustainable behavior campaigns, such as the Action for Road Safety. Through a series of communication highlights, like the Ten Golden Rules of Road Safety, the initiative was aimed at building awareness among employees on best practices and safe driving etiquette (see also pages 92-93).
To celebrate World Environment Day, 11 thousand employees at plants throughout the LATAM Region were given information on the proper use of resources in the form of cards made out of seed paper, a sustainable material that generates a plant when buried in the ground. Employees at each plant further contributed to the initiative through the development of their own environmentally responsible initiatives, such as switching to making soap from recycled cooking oil, and delivering seedlings.
PEOPLE SATISFACTION SURVEY
CNH Industrial recognizes that people satisfaction surveys are a useful tool not only for measuring the level of employee satisfaction, but also for identifying improvement opportunities that meet the needs and expectations of the entire organization.
While the Company recognizes the importance of these activities, it also believes timing is key, especially if worthwhile conclusions are to be drawn. Due to the organizational changes taking place across the Company, and the integration of CNH, Iveco and FPT Industrial, the conditions in 2013 were not well suited to performing a thorough analysis, or to identifying appropriate solutions. The approach that CNH Industrial will follow in 2014 regarding the implementation of satisfaction and/or engagement surveys is currently under review.
CNH Industrial among best companies to work for in Brazil
In 2013, CNH Industrial was ranked as one of the 150 Best Companies to Work For in Brazil for the eighth year in a row. This forms part of the most important organizational climate survey in the country, conducted by Voce SA Magazine (published by Editora Abril, one of the largest and most influential media and educational groups in Latin America), in partnership with Fundação Instituto de Administração of the University of Sao Paulo, one of Brazil’s leading higher education institutions, recognized throughout the world in a number of rankings. CNH made it through a series of stages in order to be included on the list. First, a report was drawn up summarizing various human resources policies and practices in the Company, divided into seven categories: strategy and management, leadership, compensation, careers, health, development and corporate citizenship. At the same time, 600 employees were selected at random by the publisher to answer an online satisfaction questionnaire consisting of 64 questions covering various issues relating to identity, satisfaction and motivation, learning and development, and leadership. In the final stage, a journalist from the magazine visited the Company to meet employees and the heads of Human Resources. The result reflects the efforts and commitment of all employees to making CNH Industrial one of the most respected and high-profile companies in Brazil.
In 2013, CNH Industrial Mexico was awarded for its culture of accountability and good working practices, as the result of an analysis conducted by Great Place to Work on 407 employees, or 30% of the workforce.
The Institute also pointed out areas where company culture has improved, such as the reinforcing of working groups and cooperation between workers.