2009-2013 JOURNEY REPORT

Hay Group Global R&D Centre for Strategy Execution

Singapore
!
CONTENTS
03 Foreword
04 Mergers and Acquisitions
06 Family-Owned Business
08 Corporate Centres
10 Culture Transformation
12 Human Capital Development
14 Publications and Speaker Engagements

Hay Groups Global R&D Centre for Strategy Execution researches best practices in strategy execution globally. Based in Singapore, the centre o#ers a unique East-West
perspective for business leaders all over the world. Our research helps provide insightful advice to executives looking to build e#ective organizations for the future. The centre
combines Hay Groups long-standing research tradition with extensive client experience, database and global expertise located in 86 o$ces across 48 countries. We aim to
nurture an ecosystem for global research through open collaboration with academia and professional institutions around the world to help business leaders transform their
vision into reality.
.


About Hay Group Global R&D Centre for Strategy Execution

2
Hay Groups Global R&D Centre for Strategy Execution
researches best practices in strategy execution globally. Based in
Singapore, the centre o#ers a unique East-West perspective for
business leaders all over the world. Our research helps provide
insightful advice to executives looking to build e#ective
organisations for the future. The centre combines Hay Groups

long-standing research tradition with extensive client experience,

database and global expertise located in 86 o$ces across 48
countries. We aim to nurture an ecosystem for global research
through open collaboration with academia and professional
institutions around the world to help business leaders transform
their vision into reality.
FOREWORD
It is my pleasure to share with you the progress
made by the Hay Group Global R&D Centre for
Strategy Execution since 2009.

The past four years have been a momentous period

for our Centre. I have seen the Centre grow from its
beginnings as a small research outt still grappling
with the inexperience of infancy to a truly global
R&D centre involved with multiple projects and
collaborating with parties both inside and outside
of Hay Group. Hay Group has traditionally been
admired for its solutions that focus on Human
Capital, and the Global R&D Centre is proud to
further this tradition through our research initiatives.

Among the milestones we have achieved along our
journey are numerous contributions to prestigious
publications such as the Human Capital Leadership
Insti tutes HQ Asi a, the begi nni ng of the
trademarking process for our own Family Capital
Index (FCI), and acceptance in the academic eld
through our contributions in various prominent
international conferences.

We are al so proud of the human capi tal

development that we have engaged in while
carrying out our R&D work. The Centre can now
boast of having a diverse team with multi-
disciplinary academic backgrounds. A focus on
learning, both on the job and through Hay Groups
internal training, means our team members will
undergo continuous personal development. We
have also trained students from local and global
varsities through many internship positions,
equipping them with important skills for applied
research and in the business world.

It is clear that there is much more that the Centre

can aspire to do. Nonetheless, it would be no
exaggerati on to say that much has been
accomplished in the last four years. Most of the
research and best practices that the Centre have
developed continue to be accepted internally by
Hay Group consultants. It gives us great pride
when consultants use our approaches in their
solutions for clients.

Although the Global R&D Centre is still a relatively

small team, we have played a part in growing
Singapores business strategy and management
knowledge base, and I hope you will be as excited
about the Centres future as I am after reading this
progress report.

Dr Andreas Raharso
Director
Hay Group Global R&D Centre for Strategy Execution

MERGERS &
ACQUISITIONS
Corporate dealmakers are increasingly seeking growth by looking
outside their rms. In line with this wider trend, Singapore is also
experiencing a signicant rise in M&A activity.

In 2009, global M&A activities had slowed down due to the recent
crisis. Such an unfavourable climate led the Global R&D Centre to
look at how executives could maximise M&A value by engaging in
deals only if an overall increase in shareholder value could be
guaranteed.

Our research e#orts led to the Intangible Capital Model capturing the
attributes of an M&A deal that were central to the success of the
deal: Organizational Capital, Relational Capital, and Human Capital.

Post-2009, the Centre has helped advance academic discourse and

M&As practices in Singapore and globally. Our unique approach that
focuses on intangible assets, known as the Intangible Capital Model,
was expanded and rened.

In 2010, our research uncovered certain triggers that are critical in

moving intangible capital from inert to active states. The Centre
has codied these triggers into four core drivers: Candor,
Courageous Follow-through, Calculated Risks and Compatible
Response. These drivers have become integral to Hay Groups
solution for value-creating M&As.

Additionally, we see these drivers as important for developing best

practices for the related eld of HR risk management. We believe that
more work can be done to introduce a stronger focus on intangible
capital when dealing with the risks entailed by people within an
organisation, an area of growing concern in management.

Subsequently, working with leading research companies such as

NASDAQ-listed Harris Interactive, and holding multiple interviews
with key M&A players in New York, the Centre collected a large set of
data that validated our intangible capital approach. These research
ndings gained acceptance during a formal presentation to an
audience of over 9,000 in September 2011 at the Academy of
Management Conference in San Antonio, Texas.

With most of the research ndings validated, the Centre began

internal marketing e#orts to roll out its M&A solutions to consultants
in Hay Group globally in 2012. Through two white papers,
4
Touching the Intangible and What Lies Beneath, the results of the
centres analysis were disseminated to over 2,000 consultants.

Hay Groups unique and rigorous approach to M&As has seen great
success across many of our global o$ces. Notably, an international
project for CGG, spanning both Hay Groups o$ces in France and
United States, uses this approach. The solution for CGG remains so
successful that the projects latest results will be presented in
Shanghai at Hay Groups International Conference 2013 in November
this year.

Our most recent milestone is the publication of Managing Intangible

Capital in M&As: Asia-Pacic Report. A 65-page report published in
Aprial 2013, it provides insights on how to best maximise the returns %
from intangible capital during the entire M&A process in Asia. This
report, a collaboration with Mergermarket, has already reached over
18,000 M&A practitioners all over the world.

The Centres insights and solutions have also been translated into
Hay Groups Masterclass workshop and sharing session series that
equip Hay Group consultants with the means to develop action plans
in alignment with their clients organisational strategies. The
workshops and sharing sessions have been conducted for senior
consultants in Tokyo, Sydney, Istanbul, Jakarta, Seoul, Shanghai and
Singapore.

In addition, to focus on marketing the Centres solutions in Asia, an
M&A event for the most signicant M&A dealmakers in India will be
held by in November 2013 in Mumbai.

The Centres achievements in M&A-related R&D are a validation of the

sound approach and methodology we used. In the next phase, as
both the level of M&A activity and the adoption of the Centres
solutions increase, the Centre is committed to translating its ndings
into M&A success in Asia and globally.

5
FAMILY-OWNED
BUSINESS
Family-owned businesses (FOBs) are increasingly recognised as a growth engine of the global economy.
FOBs also make up a large portion of the private sector in Asia, including Singapore. Given the economic
and business importance of FOBs, their sustainability is therefore an issue of great importance.

Our FOB-focused R&D e#orts began in 2009 with an examination of the key issues facing FOBs, such as
succession management and professionalisation. From there, we zoomed in on the question of how to
turn FOBs into professional outts by balancing family and business interests. In August, the Centres
director, Dr. Andreas Raharso, participated as a guest speaker and panellist at the Hong Kong University
of Science and Technologys Asian Family Business Roundtable, which brought together world-renowned
FOB academic researchers with regional practitioners and family business owners to explore topics in
family business research.

Our ndings from this period were presented in a paper entitled Strategizing for a Sustainable Family-
Owned Business at the Strategic Management Society Conference in Rome (2010), a summit attended
by over 1,000 academics, practitioners and consultants from around the world.

The next stage of our R&D e#orts was a collaboration with market research rm exvo (a subsidiary of
Moodys Corporation) in 2011, obtaining data through a global survey of executives from 1
st
to 8
th

generation FOBs.
%
6
With the information obtained, we were able to further rene our
scope to address a problem that transcends the professionalisation
questionthat of the sustainability of FOBs beyond the third
generation of owners.

We discovered that 60% of FOBs su#ered from sustainability issues

and 30% faced the dilemma of balancing family values with business
concerns, as compared to only 10% that grappled with the issue of
professionalisation. This is because the typical approach of looking at
professionalisation is not directed at FOBs most pressing problems,
which are associated more with inter-generational transition. Instead,
through our research, we were able to identify strong family dynamics
as the most important factor in the sustainability of FOBs.

This inaugurated our framework of family capital, the key elements of

which are dened in 2012 as: Heritage Capital, Kin Interaction Capital
and Principled Capital. To measure the intangible value that is
represented by family capital, the Centre created the Family Capital
Index (FCI) in 2013. An intellectual property originating in Singapore,
the Index is currently in the process of being trademarked at the
United States Patent and Trademark O$ce.

Once the trademarking process had started, there was a need for the
proper rollout of FCI within Hay Group. Thus, marketing for our FOB
ndings followed a di#erent method. Beginning in March 2013 with a
meeting in New Delhi that was attended by Hay Group executives
from Europe, Asia and South America, a global roll-out team with a
multi-million dollar revenue target to actualise the solutions derived
from the Centres research was established.

Another outcome of the meeting was the 2013 white paper on family
capital entitled The inner workings of the family-owned business. In
addition, to help prepare Hay Group consultants for the delivery of
FOB-related services, the Centre also produced an FCI dictionary, an
FOB technical manual and an FCI database.

The solutions we have developed also provide a practical and

rigorous approach to talent management within FOBs, which is a
common problem, as our data shows that less than 2% of FOBs
succeed past the third generation due to the phenomenon of
unplanned gifting, where unforeseen circumstances cause the next
generation of family owners to have to quickly take over the family
business. This nds the new owners unprepared to run the family
business.

Moving forward, the Centre will continue to support and develop Hay
Groups FOB practice. We will also reach out to both public and
private organisations to raise awareness about FOB issues and help
them improve the sustainability of family businesses.
7
CORPORATE
CENTRES
As companies struggle to rebuild revenue streams and protability in
the post-recession world, growth for many lies in exploring new
market opportunities. Many MNCs are expanding and consolidating
their Asia-Pacic operations under regional corporate centres in order
to be more responsive to local markets.

However, e#orts to set up regional corporate centres do not always

produce desired results. Corporate centres are often labelled value
destroyers due to local interventions. This is a worrying trend when
MNCs are increasingly choosing to set up corporate centres in
Singapore.

The Centres R&D e#orts into Corporate Centres began with a CEO
roundtable in April 2010 at the Four Seasons Hotel in Singapore. At
the roundtable, 11 CEOs from notable Singaporean companies
discussed wide-ranging issues that they faced when setting up
regional corporate centres.

Viewpoints from the roundtable were used to create Corporate

Centers: Value Destroyers?, a white paper combining the problems
highlighted by the CEOs with our Resources-Synergy-Learning (RSL)
model. This gave consultants and their clients a starting point from
which to approach the issue of corporate centres and their value
proposition.

As part of our ongoing e#orts to share our insights with the broader business community, the Centre
collaborated with the Singapore Business Federation (SBF) to organise the Singapore Business
Federation-Hay Group Human Capital Initiative, a series of seminars for over 100 SBF-a$liated
executives, which were held in August 2011. The seminars outlined the Centres approach for handling the
tension between centralisation and decentralisation, and how our solutions can be applied to local
businesses and employee groups.

Feedback from the seminars was highly positive and there was su$cient demand for the Centre to hold
similar workshops on managing corporate centres for the public. In September 2011, the Centre
conducted one such workshop for many large Singaporean rms, such as mega-retailer Courts.

In February 2012, the Centre expanded the RSL model with a companion framework called the Formalized
Stakeholders-Attention Focused-Reputation Management (FAR) model. The FAR model, developed with
additional data collected in collaboration with notable Australian research rm ResearchNow, entails an
improved form of management control that enhances the value-creation activities of corporate centres.

8
The FAR model is a signicant aspect of the Centre approach to
regional corporate centres as it deals with the issue of control
mechanisms, and how and where they must be applied to ensure
value creation. As our model ranks as one of just a handful globally
that directly addresses the issue of how to become an e#ective
leader in corporate centres, developing best practices for these
control mechanisms will greatly improve leadership practices in
Singapore. We believe this is a timely and relevant area of work
whose existing body of knowledge urgently needs to be expanded.

In mid-2012, the Centre published its research ndings in the white
paper Innovation: Staying ahead of the Red Queen. This paper was
subsequently shared to London Business School by members of the
Hay Group senior leadership team. The Centre also started to reach
out to prominent, C-suite-targeted online publications such as CFO
Innovation Asia and CEOWorld Magazine, thereby marketing our
approach externally and contributing to the body of academic and
professional knowledge in this area.

In 2013, the Centre organised a workshop titled Global expansion:

the role of the regional HQ at the Hay Group International
Conference in Berlin, one of only four workshops in the conference,
which was attended by international business leaders and
practitioners. We also began a collaboration with Harvard Business
Review (HBR) to create an article entitled Harness the power of soft
control for the HBR Blog Network. The article will address the
pressing issue of how organisations should retain control of their
increasingly global operations, and what headquarters role in these
control mechanisms is.

Also in the works is a global white paper entitled The secret of

successful relationships based on a global survey of MNCs that
breaks the FAR model down into 8 dimensions. Additionally, it will
show that organisations using the FAR model have better nancial
and non-nancial performance than other rms.
%
9
CULTURE
TRANSFORMATION
The Centres Culture Transformation research e#orts began with a
literature review of the existing research on corporate culture and
climate in June 2009.

With the benet of being able to build on the extensive knowledge

contained in external literature, the ndings of the Centres research
as well as our own analysis were soon collated with data from
collected by a leading Australian research rm. In collaboration with
Professor Ruth Wageman from Harvard University, the result was a
2010 technical manual for the Organisational Culture Assessment
(OCA) tool, a comprehensive diagnostic tool for assessing the culture
of an organisation through observation as well as employee surveys
and interviews.

The manual expanded on the earlier C-sort culture diagnostic method

used by Hay Group that featured a four-dimensional culture model
functional, network, process and time-based. Feedback from the eld
suggested that the four-dimensional model was inadequate for
dealing with the complex realities of corporate culture. Hence, the
OCA manual expanded the model to encompass 20 di#erent types of
culture, marking a fundamental shift in Hay Groups approach to
culture solutions.

Subsequently, the Centre was able to simultaneously develop our
ideas into business-ready solutions and engage in internal marketing
by producing and disseminating a streamlined technical manual for Hay Group consultants in 2012. Entitled
Organizational Culture Observation through Symbol, the manual outlined the implementation steps for the
OCA tool to be used in client work. The Centres e#orts culminated in the creation of a Culture
Transformation viewpoint entitled, Sustaining culture change, which was launched to Hay Groups
consultants and clients globally in July 2012.
10
The tool has enjoyed great success. It has been fully adopted within
Hay Group, having been incorporated by Hay Group Insight services
and utilised by the companys consultants as an integral part of the
Building E#ective Organizations (BEO) practice. In fact, of all the
approaches and best practices the Centre has developed, Culture
Transformation remains our most widely applied tool in terms of both
acceptance by Hay Group consultants and integration with the
solutions they implement for clients. The Cultral Transformation
framework sees the most use in Change Management projects, as
the model directly addresses the cultural dimensions that need to be
transformed in order to align the values and behaviours of an
organisations workforce with its business strategies.

Further internal marketing e#orts have also taken place in conjunction

with external marketing. Externally, the Centre has been able to push
for culture as the focus of Fortune magazines 2013 Worlds Most
Admired Companies list. Internally, following up on this success, a
webminar for Hay Group consultants on the Worlds Most Admired
Companies list was conducted in July 2013 by Group Vice President
Je# Shiraki that featured extensive interviews with executives from
Coca-Cola and IBM.

Progress in the Culture Transformation area has been dramatic. In the

coming years, the Centre will keep pace with developments in
cultural studies beyond the elds of business and management,
continuing to develop and deepen Hay Groups culture approach.

11
HUMAN CAPITAL
DEVELOPMENT
The Centre is made up of team members from diverse cultural and
academic backgrounds, including graduates from local universities
such as the National University of Singapore as well as overseas
academic institutions such as the London School of Economics.

On top of our R&D e#orts, the Centre has also taken a proactive
approach in the development of human capital locally.

The Centre has trained undergraduate and postgraduate students

from Singapore universities through internship opportunities in
strategy execution and management research. With good testimonies
from past interns, internship positions within the Centre are coveted
even by MITs Sloan School of Management.

The Centre has also supported the development of Asias

management scholarship by co-chairing a prestigious doctoral
workshop at the Singapore Management University in 2012. In this
workshop, a team of world class strategic management experts led
by the SMU Lee Kong Chian School of Business Dean Prof. Howard
Thomas shared their knowledge to 30 of the best doctoral students
from all over Asia.

Internally, the Centre has contributed to the training of Hay Group

sta# through webinars and workshops on its four research areas as
well as on Hay Group practices. In addition, we help Hay Group
o$ces around the globe in plugging knowledge gaps through our
Ask an expert service found on the companys Global Gateway
intranet site.

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Addi ti onal l y, ski l l s trai ni ng
within the R&D team has seen
remarkable milestones. Among
other learning e#orts, 30% of
the research team has been
trained in and accredited for
Hay Groups compet ency
coding tool, a rare achievement
even among Hay Gr oup
consultants.

Finally, the Centre has engaged

in external knowledge-sharing
and exchange sessions with
var i ous or gani sat i ons i n
Si ngapore. We have hel d
s h a r i n g s e s s i o n s wi t h
professional associations such
as the American and European
Chambers of Commerce, the
r e s u l t s o f wh i c h we r e
subsequently disseminated to
over 1,000 leading companies
in their networks. From time to
t i me , t h e Ce n t r e a l s o
approaches major MNCs such
as Google, Unilever, Pzer and
IBM, as well as Singapore-
based organi sat i ons l i ke
Keppel, SPRING Singapore and
Contact Singapore to share our
ndings and seek feedback.

Through our work, and as a

partner to the local business
ne t wor k , t he Ce nt r e i s
committed to contributing to
the development of Singapores
human capital.%
Learn more about the Global R&D teams diversity here: https://vimeo.com/71786221
PUBLICATIONS AND
SPEAKER ENGAGEMENTS
As a research centre, we constantly strive to publish our rigorously-
validated ndings and insights on two levels: internally to Hay Group
consultants and our clients and externally to academics and
professionals.

We have published papers in academic journals, presented at

academic conferences, developed white papers for Hay Group
consultants and clients, as well as written customised articles for
print and online publications read by professionals. We will continue
to ensure that our best-in-class research and solutions reach as
many people as possible, and that the body of academic and
professional knowledge in our research areas is continuously
expanded.

The Global R&D Centre also conducts and participates in external

seminars to share research ndings with members of the public such
as professional associations, interest groups and universities.

14
2009-2013 JOURNEY REPORT

About Hay Group Global R&D Centre for Strategy Execution

Contact

Dr. Andreas Raharso
Director
Hay Group Global R&D Centre for Strategy Execution
E | andreas.raharso@haygroup.com

Hay Group Global R&D Centre for Strategy Execution

10 Hoe Chiang Road #04-03/05 Keppel Towers Singapore 089315
T | +65 6323 1668


2013 Hay Group. All rights reserved.

15
Hay Groups Global R&D Centre for Strategy Execution
researches best practices in strategy execution globally. Based in
Singapore, the centre o#ers a unique East-West perspective for
business leaders all over the world. Our research helps provide
insightful advice to executives looking to build e#ective
organisations for the future. The centre combines Hay Groups

long-standing research tradition with extensive client experience,

database and global expertise located in 86 o$ces across 48
countries. We aim to nurture an ecosystem for global research
through open collaboration with academia and professional
institutions around the world to help business leaders transform
their vision into reality.
Hay Group is a global management consulting rm that works with leaders to
transform strategy into reality. We develop talent, organise people to be more
e#ective and motivate them to perform at their best. Our focus is on making
change happen and helping people and organisations realize their potential.

We have over 2600 employees working in 86 o$ces in 48 countries. Our clients
are from the private, public and not-for-prot sectors, across every major
industry. For more information please contact your local o$ce through
www.haygroup.com.
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!$