Driving Strategic Success through Human Capital Planning: How Corning Links Business and HR Strategy to Improve the Value and Impact of Its HR Function
Brush, Matthew C., Ruse, Donald H., Human Resource Planning
The HR function at Corning, Incorporated, considers human capital planning (HCP) a critical business process because of its transformational impact on the value the function delivers to the business and the way it delivers that value. With HCP, HR has the opportunity to get and keep a seat at the strategic decisionmaking table.
Corning uses HCP to improve its ability to identify human capital implications of corporate strategy and reshape HR services to better support the business. This article shares the evolution of HCP at Corning, the process and tools in place, its business impact, and key lessons learned in designing and implementing this critical business process.
Corning: A Legacy of Innovation
The evolution of human capital planning at Corning directly reflects the history of Corning itself. Corning is a 150+ year-old firm with a record of successful process and materials innovation in support of life-changing products, a record that stretches all the way back to the invention of a shatter-resistant lens for railroad lanterns in 1874 (see Exhibit 1).
EXHIBIT 1 150 Years of Corning Innovations 1880 Electric Light Bulb Envelope 1874 Railroad Lantern Glass 1897 Thermometer Tubing Machine 1915 Pyrex[R] Glass 1936 Telescope Mirror 1947 CRT Bulb 1957 CorningWare[R] Housewares 1961 Spacecraft Windows 1970 Optical Fiber 1972 Catalytic Converter Cores 1984 LCD Glass Substrate 2002 LID Drug Discovery
Corning has historically maintained a diverse portfolio of businesses based on a common desire to be first to market with products that have functional advantages for customers and strong intellectual property protection against potential competitors. Talented employees have remained central to the company's ability to sustain an innovation-based business model, regardless of how the specific mix of products in the portfolio have changed over time.
A Wake-Up Call for Corning: The Impact of the Telecommunications Bubble
Corning's traditional strategy of maintaining a balanced portfolio was sorely tested by the telecommunications boom of the late 1990s, which ended in one of the most difficult industry contractions since the boom-bust cycles experienced in the U.S. railroad and steel industries in the late 19th and early 20th centuries.
The collapse of the telecom bubble, and its impact on Corning's profitability, threatened the company's viability and forced a serious re-evaluation of Corning's business plans and processes. The analysis included tough decisions regarding the portfolio of businesses on which Coming would continue to make bets on future growth, and resulted in the sale of several large businesses. During this time, Corning shed nearly half of its workforce and shrank from over 40,000 employees to just over 20,000. The mix of talent required shifted away from the optical, electronic, and systems specialties demanded by the telecommunications businesses back to materials and process specialties demanded by the environmental and display technologies businesses.
While the business portfolio was being reshaped, the corporation re-evaluated its investments in corporate staffs. Corning considered, and ultimately rejected, several proposals to outsource a range of staff functions that included procurement, human resources, information technology, and finance, choosing instead to centralize these functions to gain greater leverage from functional structure while significantly reducing costs. This process generated new performance expectations for each of these functions. Each group was challenged to sharpen its ability to add value to Corning's portfolio of businesses.
In response to this challenge, Human Resources renewed its focus on building functional capability and service offerings that ensure each business has the right number, quality, and type of talent needed to execute its strategy, and gets the highest and best use from that talent portfolio. The development of a robust human capital planning process was integral to HR's efforts to improve its ability to forecast human capital requirements in support of the business and enable the organization to get--and stay--ahead of the talent curve.
HR Transformation at Corning
"We started rethinking the HR organization during the explosive business growth we enjoyed in the late '90s, but those efforts took on added urgency during the unprecedented business contraction we faced from 2001 through 2003," says Kurt Fischer, Corning's Vice President of Human Resources. "We've had to question everything from the way we define HR's core capabilities to our service delivery model, while simultaneously reducing global headcount by 50% and cutting HR costs."
As often happens with staff groups, Corning's HR functional growth lagged behind the organic and acquisition-driven growth of the business during the boom period, despite its best efforts to staff up. As business growth slowed and reversed, HR's workload in support of the restructuring actually increased. When the dust cleared from the telecom contraction, HR found itself with a cost footprint much too large when compared to top-quartile HR organizations, whether expressed as total HR spend per employee or the ratio of total employees supported to HR employees. The challenge of correctly allocating resources was heightened by the shift in Corning's employee base from a largely Mid-Atlantic North American concentration to a primarily non-U.S, distribution, a shift that had profound implications for institutional mindset as well as headcount.
Corning's historical business model was that of multiple distinct businesses, as many as 10 or 12 in various stages of maturity, operating in a mostly decentralized fashion with little product/technology overlap. This model enabled the units to develop their specific technologies and products and build intimate customer relationships based on market knowledge. This decentralized business model also permeated staff functions, including Human Resources. Business units had relatively independent HR organizations that generally did not communicate at an enterprise level the specific human capital needs of their respective businesses. It was not uncommon for multiple divisions to tackle similar human capital issues independently, the redundant efforts increasing the overall cost of HR to the organization. Corporate HR functions at Corning were based on centers of excellence (COEs) in areas such as compensation and benefits, learning and development, …
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Publication information: Article title: Driving Strategic Success through Human Capital Planning: How Corning Links Business and HR Strategy to Improve the Value and Impact of Its HR Function. Contributors: Brush, Matthew C. - Author, Ruse, Donald H. - Author. Journal title: Human Resource Planning. Volume: 28. Issue: 1 Publication date: March 2005. Page number: 49+. © 1999 Human Resource Planning Society. COPYRIGHT 2005 Gale Group.
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