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President of Mercer Julio Portalatin says how a company deals with ageing and talent management will determine its success in the 21st century.
Saturday, October 31, 2015 - 05:50
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'It's now imperative that companies position themselves with talent that can be responsive, nimble and proactive in making decisions. It's more important than ever that you're able to (train) workers to be decision-makers. No longer can you afford to have a hierarchy of decision-making. Things are happening too quickly. By the time you make a decision through a traditional hierarchy, it's probably too late.'

JULIO Portalatin, global consulting firm Mercer's president and chief executive, sought management opportunities immediately after graduating from Hofstra University in New York in 1981. Allstate Insurance Company offered him that - first, a short six-week stint as a new business coordinator where he had to ensure no client file sat unaddressed for longer than 30 days. The second more challenging post was to manage the transition of seven women more than twice his age, whose jobs as "key punch operators'' were being phased out. He punched beyond his weight in both stints. Within four weeks of the six-week assignment, all client files were cleared within 30 days, which he says had not been done before. And, in his division of seven women, five opted to stay on to be retrained in the use of computers, as opposed to taking early retirement.

In the latter task, in particular, he tapped the power of empathy, something that wasn't necessarily taught in management school in the 1970s. Says Mr Portalatin: "People can be very powerful if you engage them in a way that makes them feel part of the success, as opposed to being another widget in the production line.''

Determination and the ability to empathise are traits Mr Portalatin, 56, wields in his approach to the major issues that occupy Mercer - retirement, health, talent and investments. Mercer, a subsidiary of Marsh & McLennan Companies, has 20,000 employees in 42 countries. He says two issues - ageing and talent management - are pivotal to the success of companies. "(Ageing) impacts everything - how we deliver health and work solutions, how we think about retirement savings, and younger generations looking to have progressive career advancement.

"One of the obvious responses is to extend the retirement age. It makes sense - as we live longer, people need to work longer. But that causes other challenges for younger people looking to advance in the organisation. When you think about the implications across society... the domino implications have to be addressed in ways that people see that you're responding to how it affects them. That's empathy, taking the time to realise the profound changes taking place."

Companies, he says, have to seriously re-think the ways they engage employees, particularly the older workers. "We have to accept and promote the fact that the most productive participation of the employee workforce will be more and more at the ages of 45 to 50-plus. That hasn't been the way we address employee performance, productivity and contributions in the past. That's a big change.

"However you say it, older people contribute more to the performance of the organisation. We have to recognise that something has to change in the way we motivate, change and ultimately engage that part of the workforce in aligning them with the success of the company. It's a different way of thinking."

An obvious corollary to ageing is the issue of the adequacy of retirement savings, which is one that has occupied Singapore as well.

Mr Portalatin says a number of countries have started to address issues such as extending the retirement age. "That has political and socio-economic challenges, but it's something everyone has to face. You can't have a population that is ageing at the rate that we are ageing, and combine that with longevity, and take no action on when certain financial aspects have to be triggered.

"We have to incentivise higher levels of private savings because... we have to put people in the position of hopefully having the savings they need. It's not a government-only solution. A government/private sector solution is necessary. Some companies will do it better than others, over and beyond what governments do. Those will be the ones who are able to retain and align an ageing population to the performance of the company."

Private pensions, he says, have to be on auto-enrolment basis. "We can't afford to have people who are not recognising that they will have this liability on their hands in the future, and not taking the appropriate action. We do have a responsibility in the public and private sectors to ensure that people are positioned for success in the future, for a livelihood they deserve."

The second issue of talent management for the mid to long term is something that companies may address only superficially, if at all. That is a mistake, he maintains. "Companies spend a lot of time on their three-, five- or 10-year plans. Very infrequently does a five-year plan include a workforce or talent plan. Yet, one of the major reasons that plans fail is that they cannot match the talent skills sets with the opportunities presented. It's not that opportunities don't exist. It's that we have not planned adequately to have the available talent in the workforce to match the opportunities."

A good talent management plan, he says, should recognise that the next five years will demand skills that do not exist today. "If you are to compete for talent in the traditional way, you would most likely be underwhelmed by your ability to get the right skills sets for the job you want them to do in the next five years.

"A good plan recognises that some skills building and education will be necessary to feed the types of skills sets to achieve your plan. Relying on the market to provide that will probably give you market results. But if you want to outperform, you have to do better than that.''

Mercer, for instance, has developed tools using neural science and gaming to assess people's suitability for jobs. "We combine the power of both to assess people much more broadly than they'd normally be assessed for a talent or role that we think they are able to perform... They may not have the specific skills set but they have the capability and we train them to bring (those capabilities) up. What does that do for a company? It opens up the possibility to bring in a broader set of thinking, to achieve the skills set for a three- to five-year plan."

In terms of the skills set for the future, there are two things companies can begin to address. One is to empower employees to make decisions opportunistically without being saddled with the burden of a hierarchy.

"It's no longer an option. It's now imperative that companies position themselves with talent that can be responsive, nimble and proactive in making decisions. It's more important than ever that you're able to (train) workers to be decision-makers. No longer can you afford to have a hierarchy of decision-making. Things are happening too quickly. By the time you make a decision through a traditional hierarchy, it's probably too late. Someone else has made the decision and they're moving fast and forward."

Strategic decisions, he adds, can still be made through a hierarchy, but opportunistic decisions have to be made quickly. "Many companies talk about empowerment; it's no longer just a nice thing to do. The skills set to develop for that is a rhythm of logical thinking that allows employees to diminish the risk of error. That doesn't mean you eliminate the risk of error; things are going to happen and sometimes things don't work. But the same skills set that allows you to diminish the risk will also allow you to recognise that things are not working, and make a decision to move on."

Another prerequisite is that companies should celebrate failure as much as success. In one of Mercer's innovation hubs, one of the projects a team was working on failed. The nature of the project is confidential, he says.

"We chose not to continue to invest in (the innovation). Of course the natural reaction is disappointment from the team members as if they failed. I went to the hub personally and congratulated them for the effort they put in and immediately rewarded them by putting them on another project as opposed to disbanding the team and sending them to another job.

"This is a leadership responsibility. The only way culture changes is by a leadership dedicated to change. It doesn't change because you talk about it and do nothing. If you talk and do nothing, all you do is increase the distrust between employees and leaders."

Staying within the value system of an organisation matters more, he adds, than the outcome of a project. "I made a conscious decision in this case to show that as a prime example so the rest of the organisation can understand that as long as you are within the value system of the organisation, as long as you are in the framework of our purpose which is to make a difference in people's lives... in the framework of our mission to help our companies enhance the health, wealth and careers of our employees, and you are working on innovation in that framework - if you fail, it's okay.

"I would argue this - if you are not failing, you are probably not innovating enough."


JULIO PORTALATIN

Mercer President and Chief Executive Officer

1981 Graduated from Hofstra University with BSc in Business Management

1981 Joined Allstate Insurance Company (underwriting, sales and marketing positions)

1993 Joined AIG

1993-1994 Vice-President and Chief Underwriting Officer (Property) at Lexington Insurance Company of AIG Commercial Insurance

1994 (May to Dec) Executive Vice- President Latin America, American International Underwriters

1994-Aug 1996 Country General Manager & President, AIG Mexico at American International Underwriters

1996-2003 President, Worldwide Personal Lines at American International Underwriters

2003-2008 President, Worldwide Accident and Health at American International Underwriters

2008-2010 President and CEO, AIG Europe SA

2010-2011 President & CEO, Emerging Markets Region, AIG/Chartis Insurance Co

2011-2012 CEO, Growth Economies at AIG/Chartis

2012 Joined Mercer as President and CEO