Honeywell International is a Fortune 100 global diversified technology and manufacturing leader with revenues to the tune of $30.9 billion. The company has four strategic business units, namely – Aerospace, Access and Control Solutions (ACS), Transportation Systems, and Specialty Materials. Honeywell employs about 123,000 employees in more than 123 countries of which over 10,000 are employed in India. The organizational structure of Honeywell India is illustrated in )
This thesis aims to formulate a design and implementation plan for a formalized onboarding program for two of the Strategic Business Units (SBUs) of Access and Control Solutions (ACS) namely: Honeywell Security Group (HSG) and ADI.
Honeywell Security Group (HSG)
Honeywell Security is an international supplier and distributor of electronic security systems and solutions. Honeywell Security is a business unit of Honeywell International, $34 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. (Honeywell, 2010)
Honeywell Security has an extraordinary range of solutions across intrusion detection, Video surveillance, access control technologies & Home net systems and invests over $50 million a year in research and development. It has its engineering “centers of excellence” in the U.S., Canada, China, Korea, India, Scotland and France and leverages technologies that are developed elsewhere in Honeywell and brings them to the security business.
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Honeywell Security South Asia operations spans across Sri Lanka, Pakistan, Bangladesh, Nepal and other South Asian countries with HQ in India. Headquartered at Gurgaon, Honeywell Security has sales offices in Mumbai, Bangalore and Kolkata catering to all four corners of the country. An exponentially growing business unit of Honeywell International, Honeywell Security caters to all electronic security needs for Industrial, Government, Defense, Transportation, Commercial, Retail, Hotel, Hospital, Corporate Buildings, IT, ITES, Banking and also the Residential market.
Lines of Business
Video Systems
Products range from basic camera systems to fully integrated systems capable of working on LAN and over internet.
Access Control Systems
Single door applications to integrated enterprise level access control systems.
Integrated Security Systems
Use of access control, alarm monitoring, video badging, digital video, CCTV, visitor management and perimeter intrusion detection on vindicator platform to provide a comprehensive security management solution integrated with process control, building management control and other enterprise level systems.
Intrusion Detection Systems
Intrusion detection products ranging from the simplest door contact to the central station receiver.
Home Systems
Sophisticated end to end technology solutions for comfortable, secure & informed living.
In India, HSG employs about 61 employees constituting of about 33 sales employees
ADI
ADI is a $1.8 billion leading distribution business encompassing security, fire, sound and low voltage products, with over 219 branches across North America, Europe, Mid-East & Africa. ADI globally represents more than 700 leading vendors and is a global distributor for more than 80,000 products. ADI also partners with customers by providing business tools, products and services they need to enhance their capabilities and grow their business. (Honeywell, 2010)
Beginning 2006, ADI launched its distribution business in Asia with first three branches in India at Gurgaon, Bangalore & Mumbai. ADI also has a team of sales professionals in New Delhi, Chandigarh, Lucknow, Jaipur, Pune, Ahmedabad, Chennai, Cochin and Hyderabad. ADI’s goal in India is to build a successful distribution model to satisfy the burgeoning need for quality and cost-effective security, fire, sound and other low-voltage electronic products in the rapidly growing Indian economy.
ADI in India represents over 40 leading industry brands in 7 product categories; over 2000
products and offers its customers a one stop shop value proposition at convenient branch locations, with multiple brands, local stocking, competitive pricing, training & technical support and customer business centre all under one roof. In India, ADI employs about 120 employees constituting of about 82 sales employees.
Lines of Business
CCTV
Fixed Cameras, Speed Dome Cameras, Digital Video Recorders (DVR), Monitors, Lens, Accessories.
Intrusion Alarm
Wired & Wireless Control Panels, Keypads, PIR, Panic Switch, Magnetic Contacts, Gas-leak detectors, Sounders, Sensors, Speech Dialers, Accessories.
Home Automation
Video Door Phones, Multi-apartment solutions, Home Systems, Accessories.
Access Control
Single & Multi-door Controllers, Readers, Cards, Locking devices, Accessories.
Fire Alarm
Conventional & Addressable Control panels, Sensors & Detectors, Call points, Notification Appliances, Initiation Devices, Accessories.
Sound
Speakers, Amplifiers, Microphones, Intelligent PA Systems, Professional Audio, Accessories.
Chapter 8: Problem Statement
The time taken for a sales employee currently to become productive, that is, start contributing effectively to the business at HSG and ADI divisions is about 6 months to a year. This problem has been even more consistent in ADI since its entry into the Indian market in 2006. This has a direct impact on productivity and revenue generation. Productivity is defined by an employee’s achievement of their key result areas (KRA) with a primary focus on target revenue achievement. Retention of employees is another concern especially at ADI. The attrition level is 13% at HSG and 31% at ADI year-to-date (YTD).
This Management Research Report aims to understand the key reasons for attrition in the two divisions and the delays in productivity.
Chapter 9: Hypothesis
According to a study conducted by the Aberdeen Group, 90% new hires make their decision about whether to stay in the company within 6 months of joining. Inspite of this only 88% of companies have onboarding programs of duration less than 6 months (Refer to ). Another research reveals that over 50% of new hire sales people leave voluntarily or are terminated before they even become productive.
The above statistics indicate the correlation between a formalized onboarding program and the productivity of an employee thereby “leading to the hypothesis that investing in a formalized onboarding program and other engagement initiatives improves productivity and retention of an employee and increases revenues.” It is a cost that needs to be incurred by a company so that the employees become productive assets by generating steady revenue streams on a regular basis.
Chapter 10: Approach and Methodology
Approach
This project is approached through a combination of primary and secondary researches. The primary research piece includes interviews with the business leaders, sales employees and human resource managers. The intent is to analyze the problem from the business, employees and the process owners’ perspective.
The secondary research was conducted via published reports and white papers about onboarding best practices. Once the results of the research were tabulated, an onboarding framework was designed based on the gaps identified between the current and desired state. A cost-benefit analysis is also conducted to estimate the effectiveness of the onboarding program.
Lastly, through the use of Six Sigma tools, a Failure Modes and Effects Analyses (FMEA) study is undertaken for the proposed onboarding framework to identify, prioritize and mitigate potential risks associated with the program. At the end, some priority action points are suggested for the implementation of the program.
Research Methodology
Two questionnaires were rolled out for the research based on the initial inputs from the Human Resources team, namely – for the business leaders and the sales employees.
The questionnaires were sent to heads of the two SBUs and based on their availability, they were interviewed. The questionnaire for the business heads was designed with the intent of identifying the core issues in processes which might impede employee productivity (for example, recruitment policy, onboarding/training employees, performance evaluation or engagement) and to understand the desired state of a productive employee from the business leaders’ perspective.
The second questionnaire was sent to a few of the sales employees at both of the SBUs. The sample employees selected for the interviews consisted of new sales employees who were about 6 months old in the organization. The others included some who have been with Honeywell for over a year. The intent of the interview was to identify the key challenges faced by the new employees in getting adequately oriented to the business.
The secondary research was conducted with the intent of understanding onboarding best practices. Some of the published reports and white papers consulted were taken from Corporate Leadership Council (CLC), Aberdeen Group, Kaiser Associates, Bersin Associates and Gallup Consulting.
Chapter 11: Analysis
Employee Profile at ADI
Figure – Employee break-up by function in ADI Figure – Sales v/s Non-sales employee mix
As displayed in Figure 14 and 15, the sales function forms a major portion of the employee population in Honeywell ADI. Understanding that ADI is in the distribution business and the presence of numerous players, both organized and unorganized, makes the market extremely competitive and explains the sales driven nature of the organization.
Figure – Total work experience of employees in ADI Sales Division
The division employs more skilled employees than fresh graduates (Figure 16). The maximum sales employee work force has a total work experience between 2-4 years
Figure – Work Experience in ADI Sales Division (in months)
ADI has a fairly new workforce; most employees have spent only about 6 months in the organization (Figure 17). This signifies that there is a high turnover in the ADI and people are being hired more frequently. Additionally, the loyalty of ADI employees seems to diminish over the years spent in the organization.
Figure – ADI Sales Employee Industry Experience Profile
Most sales employees have a background in security or IT. This implies that Honeywell aims to recruit as many people with a background in Security, although due to a lack of available skilled talent, they prefer to recruit from the IT industry, followed by distribution (Figure 18). A need for technical knowledge is the reason for IT and security taking precedence over distribution. Other industries include telecommunications, computer hardware, FMCG, chemicals, dish television providers etc.
Employee Profile at HSG
Figure – Employee break-up by function in HSG
Figure – Employee break up Sales v/s Non Sales: HSG
As displayed in Figure 19 and 20, just like the ADI division, the sales function too forms a major portion of the employee population in the HSG division as well.
Figure – Total work experience of employees in HSG Sales Division
The division employs more skilled employees than fresh graduates (Figure 21). The maximum sales employee work force has a total work experience between 2-4 years. However this variation is less in HSG as compared to ADI.
Figure – Work Experience in HSG Sales Division (in month)
Figure – Composition of employees by tenure in organization – Comparative view HSG vs. ADI
While experienced in the industry, HSG has a workforce new to Honeywell; most employees have spent only about six months in the organization (Figure 22). However a comparative look at the composition of employees by tenure in the organization (Figure 23), suggests that there are a greater number of employees hired at a faster rate in ADI than HSG. In ADI. 37% of the employee population has spent six or less than six months in the organization as compared to 27% in HSG. Also there are a greater number of older employees in HSG than ADI. This suggests that employee retention is better in HSG than in ADI for employees who spend more than 36 months in the organization.
Figure – Sales Employee Industry Profile: HSG
Most sales employees have a background in IT or Security. This implies that Honeywell aims to recruit as many people with a background in Security, although due to a lack of available skilled talent, they prefer to recruit from the IT industry, followed by System Integration. A need for technical knowledge is the reason for IT and Security taking precedence over System Integration. (Figure 24)
Interview Results
Interviews with Business Leaders: Challenges and Findings
(Please refer to and for the details of the interview)
This section summarizes the key findings from the interviews conducted with the business leaders of the ADI (Harish Vellat) and HSG (Anil Mehra) Divisions respectively.
ADI:
• To enable the sales employee to have an intelligent conversation with the customer.
• Meet both product and category wise targets
• To get a good knowledge about both Honeywell and competitor products
• Understand the customer and preempt his expectations.
• Clearly state objectives and desired outcomes of the onboarding program to the employees
HSG:
• Low awareness about the industry and hence lack of relevant talent.
• Lack of a formalized onboarding/ training schedule
• Challenge to administer employees based in remote locations
• No formalized feedback process to gauge the effectiveness of the onboarding program
• To bring the employees on board at the earliest
Interviews with New Sales Employees: Findings
ADI
• Most respondents have relevant work experience. A lot of them have worked in the profile of a System Integrator. Previous employers: Godrej, Vodaphone, Voltas, Sony Ericsson.
• The aggressive fast paced nature of work is a challenge. The product portfolios that the employees were handling at Honeywell are much larger as compared to their previous roles where it was much smaller.
• Employees sense a lack of in-depth knowledge about the products.
• Lack of clarity of role/ processes
• Control measures implemented in case of lack of clarity: Technical team, branch manager, colleagues. Most employees said that they prefer contacting their immediate colleagues first due to easy reach.
• Other employees supported the idea of having a buddy/mentorship system in place since it would serve as a platform for potential employees to take on higher roles
HSG
• Induction winded up too fast. Too much information in very little time
• Lack of clear understanding of the business models.
• People based in remote locations face a problem in reaching out to their RMs directly
• Changing the mindset of people to open up to a niche product/market
• Lack of clarity on processes especially order and collection processes
• Products are priced at par/high priced compared to competitors and the challenges are in justifying the product to them.
Ideal versus Current State of New employee productivity at Honeywell
Current State:
• Time to Productivity – Currently it takes about 6 months to a year for an employee to reach productivity
• Selling Skills – Employees selling skills is currently based on their previous work experience. They lack selling skills specific to Honeywell and the distribution model.
• Industry/ company knowledge – Employees come from similar industries and have a fair understanding of the industry. However they lack the understanding of the impact of their contribution to Honeywell objectives.
• Product Knowledge – Employees do not feel confident about their understanding of the products as they think the product trainings wind up too fast and the product portfolio is large. A few respondents also felt that Honeywell products are priced at par or higher than a few competitors and they find it challenging to justify the product to the customers.
• Learning internal processes (order, booking, preparing bill of quantities etc.) – Employees do not feel comfortable with the processes and utilize previous work experience to comply with processes
• Build relationships with various functions (commercial, marketing, technical, supply chain etc.) – Lack of interaction with marketing team, inadequate technical support
• Engagement in day to day selling activities (prospecting/ meeting customer) – Employees selling skills is currently based on their previous work experience. Lack of clarity on everyday process which increases follow ups with managers/colleagues.
Ideal State:
• Time to Productivity – Desired state would be to reduce the time to productivity to 3-4 months
• Selling skills – Employees should be able to make an intelligent conversation with the customer. They should possess employee good prospecting skills and should continuously communicate with the customers by asking questions, listening to them and collecting the information and thereby draw an action plan to approach the same.
• Industry/ company knowledge – Productive employees should possess a thorough knowledge of the various products offered not only by Honeywell but also the competitors. These employees should be able to connect individual objectives to Honeywell objectives.
• Product knowledge – The employees should have a deep understanding of the products. They should be able to bring out the strengths of each product to the customer to justify the price and add value.
• Learning internal processes (order, booking, preparing bill of quantities etc.) – A productive employee should adhere to all internal processes from the start to the closure of an account; customer evaluation, payment, order taking, billing
• Build relationships with various functions (commercial, marketing, technical, supply chain etc.) – A productive employee needs to work in coherence with other functional teams to get better market information and tune the company’s environment to market conditions (competitor moves, changing market trends, forecasting demand)
• Engagement in day to day selling activities (prospecting/ meeting customer) – A productive employee consistently follows up with the customer, is extremely responsive to customer demands and prepares a plan of action from themselves.
Summary of Ideal versus Current State
Figure – Summary of Ideal versus Current State
The current state of Actual versus Target Sales achievement and Bonus Payouts is summarized below.
Actual versus Target Sales and Gross Margin Achievement
Market Share
Total Market Size ($)
349,000,000
Â
Market Share ADI%
5%
Â
ADI Annual Revenue ($)
17,450,000
Total market size ($) times market share of ADI (%)
ADI Gross Margin ($)
13%
Actual Gross Margin for ADI
Employee Targets
# Total Sales Employees in ADI
82
Â
# New employees (not rated)
32
Â
Revenue Target per employee per day (Rs.)
80,000
Â
Revenue Target per employee per day ($)
1818
(1 USD = Rs. 44)
# working days
231
52 weeks times 5 working days per week minus 21 paid days off + 8 national holidays
Annual Revenue Target per employee ($)
420,000
Sales target per employee per day times # of working days
Annual Revenue Target for ADI (all employees)
34,440,000
Annual Sales target per employee times # total sales employees in ADI
Â
Revenue
Gross Margin
Description
Targets
Weights in Sales Incentive Program
75%
25%
Â
Target per employee per day ($)
1818
N/A
Gross margin for ADI is 20%
Annual target per employee ($)
420,000
N/A
Annual target per employee times # of working days
Annual target for the ADI division
34,440,000
20%
Annual target per employee times # total sales employees in ADI
Actual versus Target Mismatch
Actual as a % of Target
51%
65.00%
Â
Weighted (Actual as % of Target)
38%
16%
75%:25% weight to Revenue: Gross Margin in SIP
Figure – Target Sales Achievement
Figure 29 shows the actual versus target achievement by the sales employees at the ADI division. The total market size as mentioned before for the Electronic Security Market is USD 349 million. ADI accounts for about 5% of the total market share and its gross margin for FY2010 was recorded at 13%. There were 82 sales employees as of June 2010 of which 32 were new (less than 6 months old) and were not rated for performance. The Key Results Area (KRA) set for each sales employee includes “Billing of Rs.80,000 (USD 1818) per day and meet weekly targets.” For details of the all the KRA’s please refer to . Assuming an employee has 5 working days in a week and there are 52 weeks in a year of which there are 21 paid leaves and 8 national holidays, the total number of working days is 231. The annual revenue per target is thus USD 420,000. For a typical sales employee at ADI the sales incentive program is split between individual revenue target achievement and ADI’s gross margin target achievement. The gross margin target for ADI was set at 20%. The Individual revenue and gross margin SIP components are split in the ratio of 75:25. Knowing the division’s annual revenue achievement in FY2010 was USD 17.45 million and the target revenue is USD 34.44 million, we can infer that the actual revenue as a percentage of target revenue was only 51%. Additionally the actual versus target gross margin achievement is calculated as 65% (13%/20%). Assigning the respective weights based on the SIP, the actual as a percentage of target achievement is 38% and 16% for the revenue and gross margin components respectively.
These figures clearly suggest that the division is way behind achievements of its targets. A closer look at Figure 30 also supports the possible reasons for this mismatch.
Bonus Payouts
Bonus Payout (Actual versus Target)
Payout % of target payout – Planned
Â
Â
Performance at 75% of target
50%
Â
Performance at 100% of target
100%
Â
Performance at 130% of target
200%
Â
Actual bonus payout
Â
Â
What % of target was bonus paid out – Actual
100%
Â
# Sales employees who exceeded target performance (bonus payout >100%)
25
Honeywell Performance &Development (HPD) – 9 block rating (1,2,4)
# New employees who were not rated
32
Â
Potential population at risk
25
# total sales employees in ADI – (# of new employees not rated + # sales employees who were paid bonus)
Potential attrition rate
30%
Â
Current attrition rate
31%
YTD
Figure – Bonus Payouts
Figure 30 illustrates the actual bonuses that were paid out in FY2010 to the ADI sales employees. The sales incentive policy distinguishes the payout at different levels of performance as follows:
Figure : Sales Incentive Policy
Performance Levels
Performance Target Achievement %
Payout (% of target payout)
Threshold
75%
50%
Target
100%
100%
Maximum
130%
200%
Based on the limited data available, the number of employees who exceeded their performance and got a bonus payout of greater than 100% was estimated based on the performance ratings. Honeywell follows a 9-block performance rating matrix called the Honeywell Performance & Development (HPD). The matrix is based on two parameters: results and behaviors with three rating scales namely: Exceeds Honeywell Standards, At Honeywell Standards and Below Honeywell Standards. Additionally, the base salary to incentive is pay mix is in the ratio 65:35. Refer to for the matrix. Based on the matrix, ratings 1, 2 and 4 signify exceeds standards ratings in one of the two parameters at least or both. There were 25 employees who received an HPD rating 1, 2 or 4, while the number of employees who were not rated since they were new is 32 in number. This means that the remaining 25 employees form part of the potential employees who are the risk of leaving the organization. This accounts for an attrition rate of around 30%. As per the data provided by the Human Resources team as well, the attrition rate was indicated as 31% YTD.
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