HUMAN CAPITAL Human Capital Readiness at Global Restaurant Franchise Autogrill
By Judith A. Ross, Contributing Writer
“Our people are everything.” How many companies give this notion lip service? Some, however, like Autogrill, live and breathe by it. The Italy-based global leader in travelers’ restaurants is a pioneering practitioner of the strategic job families and human capital readiness concepts put forth by Kaplan and Norton. Striving to seek ways to grow despite inroads by competitors and a new regulation, the company focused on identifying strategically critical jobs, skills—and gaps. With a clear line of sight between competencies and strategic themes, employees are more strategy-focused. And Autogrill’s human capital programs have already yielded
dramatic results.
For almost three decades, drivers on Italy’s Autostrada have followed the familiar red-andwhite sign to Autogrill’s roadside stores to satisfy their hunger and quench their thirst. Today, Autogrill is the world’s leading provider of food and beverages for people on the move, who stop in to order from the company’s menu of coffees, breakfast pastries, pizzas, sandwiches, pasta dishes, and desserts.
Headquartered in Milan, Autogrill is a market leader for serving travelers. The company operates in 30 countries, with sales outlets in nearly 1,000 locations, including 652 highway travel plazas, nearly 140 airport retail shops, and outlets in railway stations. In addition, Autogrill operates outlets in shopping malls throughout Europe and North America. In 2005, it boasted worldwide revenues of €3.5 million, EBITDA of €475 million, and net profits of €130 million.
New Challenges in the Italian Market
Autogrill’s home turf represents an important portion of its success. Its 350 Italian outlets produced net
revenues of more than €1 million in 2005—nearly one-third of the company’s global revenues. By Q2 2006, revenues from Italy
had grown 13.4% over the same period in 2005. These numbers To achieve these topmost goals, the are all the more management team understood the impressive, given recent regulatory and market company’s need to focus on personnel and their ability to provide consistently pressures. A outstanding service to customers, while new federal leveraging relationships with landlords.
based business, Autogrill serves two sets of customers: consumers and the landlords from whom it rents space. Some locations have a partnership with their landlords, whereby the landlord helps drive customer traffic in exchange for a royalty, and the store maximizes the value of the location by having an extended lease. For example, the landlord of an airport location might modify the retail-store layout to optimize passenger flows during airport renovations, and later help Autogrill move its operations close to a new passenger flow when the work is completed. As the landlord helps generate more traffic, Autogrill increases the royalties it pays accordingly.
Autogrill Italy’s strategy map highlights the company’s customer- driven strategy and its dual customer base. Its financial
regulation regarding market share restricted Autogrill’s ability to grow through adding new locations. Growing competition also threatened. The Telepass, an electronic pass system introduced a few years ago, has made it easier for drivers to exit and reenter the motorway to patronize off-highway restaurants. In addition, a handful of newcomers put between 30 and 40 new food stores on the motorway between 2004 and 2005 alone.
Autogrill Italy’s Strategy Map
To address these new challenges, Autogrill Italy needed to squeeze as much value as possible from its existing locations. As a concession- objectives emphasize attracting more customers, selling more product, and doing both more efficiently, as well as optimizing the cost and long-term value of locations. To achieve these topmost goals, the management team understood the company’s need to focus on personnel and their ability to provide consistently outstanding service to customers, while leveraging relationships with landlords. To better align the workforce with the strategy, Paolo Ferrari, Autogrill’s director of human resources for Italy and Europe, embarked on defining Autogrill’s strategic job families.
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Identifying Strategic Job Families
As Kaplan and Norton have shown, while all jobs in an organization are important to overall performance, some jobs have a much more direct, or greater, impact on the organization’s strategy than others. For an appliance retailer with a customer workers, belong to area and store managers. The team identified five strategic job families: (1) area managers, (2) store managers,
(3) R&D/marketing professionals, (4) technical construction managers, and (5) business development managers. These five job families all link to three strategic themes within the process perspective: “Attract the Customer”
“We have clear evidence that if we move (area and store managers);
successful store managers from one store
“Manage the
to another, good results go with them.
Concept This means we need to focus on training Portfolio” (R&D/marketing
and on succession development for this group
of job families.”
intimacy strategy, its sales clerks are more strategically important because their product knowledge and customer service skills are what draw in new customers and make existing ones return. Such job categories are called “strategic job families.”1 The competencies within these job categories can have the biggest impact on enhancing the organization’s critical internal processes, as defined in the organization’s strategy map.
Autogrill’s BSC leadership team— nine functional managers, three business unit managers, and the managing director (the general manager for Autogrill Italy)— worked with HR specialists to identify the company’s strategic job families. They analyzed the process perspective of the strategy map, split it into the main activities of these processes, and identified the organizational roles accountable for the results of those activities. For example, activities that support Autogrill’s brand and build its portfolio of offerings are carried out by marketing employees, while activities that impact customer satisfaction, such as managing frontline
and technical
construction);
and “Be Situated
in the Flow” (business development). The team reviewed these key roles with channel and functional-area managers companywide before gaining final approval from Italy’s HR manager and managing director.
The concept of strategic job families was a tough sell to leadership, but Ferrari made the case by explaining, “If we lose a finance guy, we could [easily] find another one on the market. But if we do not have enough store managers for the future, we will have a problem.” Area and store managers motivate workers and manage product and service quality; they can make or break a store’s success and therefore have significant impact on the company’s customer success—and its bottom line. According to Ferrari, area and store managers “really can change the results. We have clear evidence that if we move successful store managers from one store to another, good results go with them. This means we need to focus on training and on succession development for this group of [job] families.”
As company innovators, employees in R&D must create new concepts
(and the equipment to support them) and new offers that will keep the Autogrill brand fresh and attractive. Employees in the technical construction job family, who work closely with R&D to identify the food-processing equipment necessary to produce new foods, tap into and manage Autogrill’s capital expenditures, which directly impact the company’s financial results. Finally, employees in business development manage relationships with landlords and identify new store development opportunities, both vital for Autogrill’s continued growth.
Competency Profiles and Human Capital Readiness
Kaplan and Norton have called the process of identifying these strategically critical roles and ensuring they are adequately filled “human capital readiness.” To measure human capital readiness, an organization must identify the critical internal processes on its strategy map and then identify, within the human capital requirements of its learning and growth perspective, the set of competencies required to perform each critical internal process.
After identifying the strategic job families, the next step is to craft competency profiles—detailed descriptions of the requirements for each of these strategic jobs based on the goals of the strategic themes. A competency profile describes the knowledge, skills, and values (i.e., an understanding of company culture) an employee needs to be successful in a given position. For example, to “Attract the Customer,” both area and store managers must be proficient in sales management, service quality, and budgeting. Store managers must also be skilled at managing people. If development employees are to support the strategic theme, “Be Situated in the Flow,” they must be
. January–February 2007
Figure 1. Strategic Jobs and Competency Readiness at Autogrill
Autogrill’s human capital readiness chart enables it to quickly identify competency gaps by strategic job family— and thus isolate areas that need to be strengthened to support strategic themes.
skilled at business development, negotiation, client care, and continuous process improvement. Competencies for R&D/marketing employees, who must “Manage the Concept Portfolio,” include concept development, price definition, and CRM development. With support from the company’s HR specialists, channel or functional managers approved each competency definition and delineated the required skill level for each position within the job family. The team then assigned each competency five skill levels, with level 1 being entry level and level 5 highly skilled.
Filling the Gaps
Once the competency profiles and skill levels are determined, HR can reference them when recruiting, hiring, training, and developing people for that position. These profiles are also used to assess existing employees. Any disparity between an employee’s current capabilities and the competency requirements defined for his or her job represents a “competency gap.”
Autogrill’s HR specialists trained line managers in assessing each of their employee’s skill levels so they could identify competency gaps. For example, the manager of a large motorway store must be at level 4 in “people management.” If the manager were assessed as a level 3, he would be asked to create a personal development plan to raise his skills one level. Such a development plan might include internal and external training, or contributing to an international project or participating in a special development project under a mentor’s guidance.
Autogrill conducts formal training for employees at all levels. An entry-level marketing employee, for example, might take a course in project management to learn a system for coordinating activities among cross-functional teams. She would also learn how to manage resources, since managing resources effectively has a positive impact on the company’s bottom line.
Training for a level 3 and 4 employee in the technical construction job family includes learning how to forge partnerships with suppliers to develop joint strategies to reduce the cost of project components. Besides classroom training and counseling, this program takes an “action learning” approach, where employees participate in actual projects where they analyze all the cost implications of buying.
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If 90% or more of the positions in a given strategic job family are at the required competency level, the job family is rated a “green” in Autogrill’s human capital readiness chart. A rating of between 80% and 90% is a “yellow,” and a rating below 80% means the family is not strategically ready. (See Figure 1.) Competency development is also a learning and growth objective in Autogrill’s scorecard (“Develop competencies for key job families”). While the company has made steady improvement, as of Q3 2006, it had not reached 95% of its target— in part because marketing activities to support targets took precedence. To address this shortfall, Autogrill began a management training program to help store managers improve employees’ attention to service, as a part of its broader learning system initiative.
Lessons Thus Far
Competency profiling and training has helped managers better understand how to focus on employee behavior that affects strategic goals. For store
managers, it has highlighted the linkages between the behaviors of its salespeople and store revenue. A training program created by HR and the motorways
channel manager gave store managers techniques for motivating their employees and helping them provide consistently good customer service. Improving their management
skills has helped store managers significantly reduce employee turnover and improve employee satisfaction, as shown by surveys conducted by store managers.
By aligning human capital to its strategic priorities, Autogrill has already seen a payoff: in the first half of 2006, motorway revenues increased 11.7% over 2005 levels during the same period, despite a motorway traffic increase of only 2.7%. “We have linked our people strategy with the business strategy.
We now have a basic platform to go forward and align the rest of the company,” concludes Ferrari.
1. For Kaplan and Norton's definitive article on the subject, see “Strategic Job Families,” BSR November–December 2003 (Reprint #B0311A). Competency profiling and training has helped managers better understand how to focus on employee behavior that affects strategic goals—such as the linkages between the behaviors of its salespeople and store revenue.
TO
LEARN MORE
See “Measuring the Contribution of Human Capital,” BSR July–August 2001 (Reprint #B0107A), and “Managing the Development of Human Capital,” BSR September–October 2001 (Reprint #B0109A), both by David P. Norton.
Visit Autogrill on the Web at www.autogrill.com
Reprint #B0701D
Coming Soon
The Balanced Scorecard Hall of Fame Report 2007
Don’t miss the latest edition of the Balanced Scorecard Hall of Fame Report, due out in March. The 2007 Report highlights the breakthrough achievements and Strategy-Focused Organization best practices of the 15 members of the Hall of Fame class of 2006—a roster that includes Metro de Madrid, Bank of Tokyo Mitsubishi-UFJ, the U.S. Postal Service, Sprint Nextel, and the National Federation of Coffee Growers of Colombia (best known by its trade character, Juan Valdez).
Available (along with the four annual Hall of Fame Reports published since 2004) at http://sfo.harvardbusinessonline.org.
COMING UP IN BSR • Defining innovation strategy: the challenges of defining—and executing—innovation strategy • A model office of strategy manage- ment: Canadian Blood Services • The challenges of target-setting (especially stretch targets) • Initiative management: guidelines for successful reporting • Emerging best practices from the Hall of Fame class of 2006 • The challenges of communication: thoughts from a Canon USA strategy executive • Lean big government? The Defense Finance Accounting Service gets streamlined—and aligned
