Business Analysis of Honeywell International

Business Analysis of H unityywell InternationalHoneywell International is a Fortune 100 global diversified engineering and manufacturing leader with revenues to the tune of $30.9 billion. The company has four strategic furrow units, videlicet Aerospace, Access and Control Solutions (ACS), Transportation transcriptions, and Specialty Materials. Honeywell employs almost 123,000 employees in more than 123 countries of which everywhere 10,000 ar 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 curriculum for two of the Strategic Business Units (SBUs) of Access and Control Solutions (ACS) namely Honeywell gage 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 diversi fied technology and manufacturing leader, serving clients worldwide with aerospace products and services stamp down technologies for buildings, homes and industry automotive products turbochargers and specialty materials. (Honeywell, 2010)Honeywell Security has an extraordinary range of solutions crossways intrusion detection, Video surveillance, access control technologies foundation net systems and invests everywhere $50 million a class 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.Honeywell Security South Asia opeproportionns spans across Sri Lanka, Pakistan, Bangladesh, Nepal and early(a) South Asian countries with HQ in India. Headquartered at Gurgaon, Honeywell Security has gross revenue offices in Mumbai, Bangalore and Kolkata catering to any four corners of the country. An exponenti totallyy growing business unit of Honeywell International, Honeywell Security caters to all electronic security needs for Industrial, G overnment, Defense, Transportation, Commercial, Retail, Hotel, Hospital, Corporate Buildings, IT, ITES, Banking and withal the Residential market.Lines of BusinessVideo SystemsProducts range from basic camera systems to amply integrated systems cap sufficient of beting on LAN and over internet.Access Control SystemsSingle door applications to integrated enterprise level access control systems.Integrated Security SystemsUse 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. infringement Detection SystemsIntrusion detection products ranging from the simplest door contact to the central st ation receiver.Home SystemsSophisticated end to end technology solutions for comfortable, secure informed living.In India, HSG employs around 61 employees constituting of about 33 sales employeesADIADI is a $1.8 billion leading distribution business encompassing security, fire, sound and low voltage products, with over 219 set-backes 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 erect 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 cutting Delhi, Chandigarh, Lucknow, Jaipur, Pune, Ahmedabad, Chennai, Cochin and Hyderabad. ADIs 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 2000products 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 BusinessCCTVFixed Cameras, Speed attic Cameras, Digital Video Recorders (DVR), Monitors, Lens, Accessories.Intrusion AlarmWired Wireless Control Panels, Keypads, PIR, Panic Switch, Magnetic Contacts, Gas-leak detectors, Sounders, Sensors, Speech Dialers, Accessories.Home AutomationVideo Door Phones, Multi-apartment solutions, Home Systems, Accessories.Access ControlSingle Multi-door Controllers, Readers, Card s, Locking devices, Accessories.Fire AlarmConventional Addressable Control panels, Sensors Detectors, Call points, Notification Appliances, Initiation Devices, Accessories.SoundSpeakers, Amplifiers, Microphones, Intelligent PA Systems, Professional Audio, Accessories.Chapter 8 Problem StatementThe 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 trouble has been even more consistent in ADI since its entry into the Indian market in 2006. This has a direct concussion on productiveness and revenue generation. Productivity is defined by an employees doing of their key result areas (KRA) with a firsthand focus on address 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 actualise the key reasons for attrition in th e two divisions and the delays in productivity.Chapter 9 HypothesisAccording to a study conducted by the Aberdeen Group, 90% new hires make their finish about whether to stay in the company within 6 months of joining. Inspite of this and 88% of companies require 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 evince the correlation amid 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 poise revenue streams on a regular basis.Chapter 10 Approach and MethodologyApproachThis project is approac hed 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 heading is to analyze the problem from the business, employees and the process owners perspective.The secondary research was conducted via published reports and white document about onboarding best practices. Once the results of the research were tabulated, an onboarding framework was designed averaged 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, both(prenominal) priority fill points are suggested for the implementation of the program.Research Met hodologyTwo 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 contain been with Honeywell for over a year. The intent of the interview was to identify the key challenge s 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 AnalysisEmployee Profile at ADI exercise Employee break-up by function in ADI Figure sales v/s Non-sales employee mixAs displayed in Figure 14 and 15, the sales function forms a study 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 conglomeration work experience of employees in ADI gross revenue DivisionThe division employs more skilled employees than fresh graduates (Figure 16). The max imum sales employee work force has a total work experience between 2-4 yearsFigure 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 employee 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 sedulousness Experience ProfileMost 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 forthcoming skilled talent, they prefer to recruit from the IT industry, followed by distribution (Figure 18). A need for technical noesis 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 HSGFigure Employee break-up by function in HSGFigure Employee break up Sales v/s Non Sales HSGAs displayed in Figure 19 and 20, just kindred 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 DivisionThe 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 land tenure in organization Comparative view HSG vs. ADIWhile 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 tha t 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 HSGMost 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 ResultsInterviews with Business Leaders Challenges and Findings(Please refer to and for the details of the interview)This section summarizes th e 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. action both product and category wise targets To get a good knowledge about both Honeywell and competitor products Understand the customer and preempt his expectations. distinctly state objectives and desired outcomes of the onboarding program to the employeesHSG Low awareness about the industry and hence lack of relevant talent. Lack of a formalized onboarding/ training register 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 earliestInterviews with new-fangled Sales Employees FindingsADI Most respondents have relevant work experience. A lot of them have worked in the profile of a System Integrator. previous(prenominal ) 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 smack a lack of in-depth knowledge about the products. Lack of limpidity of role/ processes Control measures implemented in case of lack of clearness 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 mooring since it would serve as a platform for potential employees to take on higher rolesHSG Induction winded up too fast. Too much schooling 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 pr oduct/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 HoneywellCurrent State Time to Productivity Currently it takes about 6 months to a year for an employee to reach productivity selling Skills Employees sell 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 smack 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 strife 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 sh ould 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 wor k in coherence with other functional teams to get better market information and tune the companys 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 StateFigure Summary of Ideal versus Current StateThe current state of Actual versus Target Sales achievement and support Payouts is summarized below.Actual versus Target Sales and gain Margin deedMarket ShareTotal Market Size ($)349,000,000Market Share ADI%5%ADI Annual Revenue ($)17,450,000Total market size ($) quantify market share of ADI (%)ADI Gross Margin ($)13%Actual Gross Margin for ADIEmployee Targets Total Sales Employees in ADI82 New employees (not rated)32Revenue Target per employee per day (Rs.)80,000Revenue Target pe r employee per day ($)1818(1 USD = Rs. 44) working days23152 weeks times 5 working days per week minus 21 paid days off + 8 national holidaysAnnual Revenue Target per employee ($)420,000Sales target per employee per day times of working daysAnnual Revenue Target for ADI (all employees)34,440,000Annual Sales target per employee times total sales employees in ADIRevenueGross MarginDescriptionTargetsWeights in Sales Incentive Program75%25%Target per employee per day ($)1818N/AGross adjustment for ADI is 20%Annual target per employee ($)420,000N/AAnnual target per employee times of working daysAnnual target for the ADI division34,440,00020%Annual target per employee times total sales employees in ADIActual versus Target MismatchActual as a % of Target51%65.00% burthen (Actual as % of Target)38%16%75%25% weight to Revenue Gross Margin in SIPFigure Target Sales AchievementFigure 29 shows the actual versus target achievement by the sales employees at the ADI division. The total marke t 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 KRAs 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 ADIs gross margin target achievement. The gross margin target for ADI was set at 20%. The Individual revenue and gross margin SIP components are s plit in the ratio of 7525. Knowing the divisions 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 PayoutsBonus Payout (Actual versus Target)Payout % of target payout Planned exertion at 75% of target50%Performance at 100% of target100%Performance at one hundred thirty% of target200%Actual bonus payoutWhat % of target was bonus paid out Actual100% Sales employees who exceeded target performance (bonus payout 100%)25Honeywell Performance Development (HPD) 9 block rating (1,2,4) New employees who were not rated32Potential population at risk25 total sales employees in ADI ( of new employees not rated + sales employees who were paid bonus)Potential attrition rate30%Current attrition rate31%YTDFigure Bonus PayoutsFigure 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 followsFigure Sales Incentive PolicyPerformance LevelsPerformance Target Achievement %Payout (% of target payout)Threshold75%50%Target100%100%Maximumcxxx%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 an d 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 6535. 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.