This time three years ago, a top-of-the-range digital camera would have set you back the best part of a cool £1,000. Today, the equivalent camera is half the price, has double the amount of mega-pixels and probably has a freebie of some sort thrown in for good measure. It is living proof that Intel founder Gordon Moore's 'law' of electronics (which predicts the computing power of processors doubles every two years while halving in price), is alive and well.
For 'imaging' company Canon this ever-increasing pressure to reduce costs is more than just a quirk of economics. Despite cuts in VAT and massive in-store discounts, resellers can barely give its camera equipment away. Jessops, the UK's largest camera retailer, has seen sales plummet by 6.4% up to September 2008 and, despite Canon having a bumper year in 2007, when it achieved year-on-year growth of 7.8% (with Europe up 33%), 2008 has told a very different story. Sales are down by 5.2%, translating into a 10.3% fall in operating profit in the third quarter.
Not surprisingly, the impact of this has been cost-cutting in every part of the camera maker's business. But while the imperative to be more efficient in the HR department has been no different, HR's response has been different in one major way. For Massimo Macarti, Canon's chief of human resources (Europe), reducing HR costs while maximising service has been a project he has actually been working on not just in the past year, but since he joined the organisation in 1991.
"From 2001 to 2005 Canon's number one strategy was to be a proper pan-European organisation," he declares, a reference to the fact the company was autonomous in each European country, with its own business targets and HR policies. "From 2006 to 2008, the plan we've just come to the end of has been to be an 'excellent' pan-European company. But at the heart of everything we have done here has also been controlling HR costs."
The journey the company has gone on to achieve this reads like a Who's Who of excellence in cost-efficient HR - the introduction of the Oracle HR system in 2004, an online recruitment system and common performance appraisal system in 2005, and employee management self-service introduced in 2008. Canon also introduced common European job structures, a European-wide employee commitment survey and a new set of organisational behaviours.
The upshot of all this has been a reduction in the cost of serving the workforce from 2,300 euros per HR employee a year to 1,700 euros. Five years ago, Canon employed 150 HR professionals; today it has 20 fewer, but in the same time, the number of employees each HR person is able to deal with has risen from 52 members of staff to nearly 70 today. But even despite these successes, Macarti is still not satisfied, saying costs are only "going in the right direction". He says: "The idea is not to squeeze out costs just for the sake of it, but to free HR to allow them to spend more time on people's careers and competency management without reducing services."
The driver behind cost and service consciousness, explains Macarti, is a desire to make Canon an exemplar in all areas of its business. "Eighteen months ago we decided to benchmark the company using Hackett Group's methodology, which establishes whether a company can be described as World Class," says Macarti. According to the Hackett methodology, for example, World Class companies are described as those where each full-time HR officer supports 90 employees. This still leaves Canon 20 short, but 18 ahead of the average. Adds Macarti: "My role is to help the HR department achieve World Class status."
Macarti says he knows HR is not yet world class in service provision because he is behind on establishing fully pan-European pay, has not yet achieved a shared services model (mainly, due to one problem, which is that Canon currently has 76 different nationalities working for it), and says online recruitment still has some room for improvement. But he is not at all daunted. "In payroll I want to reduce labour costs by 25%," he says, "and I also want an outsourcing cost reduction of 10%. HR mostly does the same processes so I cannot see any reason why we should not be able to do this."
For Macarti these cost concerns are not just nice things to achieve in their own right. "You can be inspired to do these things for two reasons - following some academic notion of how you think HR should be, or by trying to interpret what the business is doing. The HR agenda is very much driven by the business agenda," he adds quickly. "The business has selected several priorities in which it cannot be allowed to fail. One of these is the urgent need for extra capability to deploy talent in new markets. Currently we're having to use sub-optimal solutions, such as physically flying people around Europe - European commuting. HR needs to be able to work this out better, because the current way is not a long-term solution."
According to Macarti, the single most challenging project for achieving this has been creating an HR business partner model. According to Hackett, a World Class HR staff mix is 54% professional, 19% managers, and 27% doing clerical roles. "Currently half of the 130 HR officers are business partners, and I think there is still work to be done on converting more of the rest, but it is an area in which I feel I am starting to get somewhere. Three years ago Canon used a lot of HR consultants, but the mindset is now 'do we need more HR people to do this?' To me it links with the extent to which we think HR can be transformative. Our ratio of HR to staff is not far off World Class now, and my ultimate aim is to release more of HR's time to be more dedicated and value-adding."
Not all of Canon's HR staff, he admits, have been quite as receptive to this. "There are some who prefer the 'HR as a transactional role' model," he admits. "This is probably fine for now, but if we do move to a shared-services model - which is where my thinking is going - this will have to change."
The reasoning for moving to shared services is to solve a problem Macarti says he still has, despite all his policies to date: "We're still inconsistent, country-by-country in so many areas," he says. "This is particularly the case in time to hire, which can vary from two weeks in one region to a matter of months in another," he says. "It is also seven times more expensive to hire in some countries than in others," he adds. "At least my strong point is that I double-check 10 times what the business needs, but we can still do more."
Macarti is an HR director notable for saying 'more can be done' rather than 'this is what I have achieved'. It is an admirable ethic that sees him always striving for more, but which maybe does not allow him to celebrate his many successes. "We can now answer the question of knowing exactly how many people we need in our organisation," he says in a rare moment of jubilation. "I used to know this a month out of kilter, but now I know this today." But then there is a familiar moment of humility: "As for measuring the competencies, that may be harder to answer. We don't yet have such a fully-fledged, forward-thinking tool."
Such striving to doing better means Macarti is probably too hard on himself, but his slavish attention to detail ensures what he does seek will normally be achieved. His next big project is creating a global Canon culture. It is a big task, but is founded on the Japanese word 'Kyosei' - which means living and working together for the common good. Canon's own recruitment section on its website makes great play of this, and despite the regional diversity of employees, Macarti says he thinks this is a powerful enough symbol to unite staff. "Some of the European parts of the business still need to be persuaded that online recruitment works, but the underlying aim is to sell the same messages and same brand to prospective employees," he says.
Canon can already point to examples where the brand is having a galvanising impact. Canon UK & Ireland has just secured a place in The Times Top 50 Where Women Want to Work poll. It is the second consecutive year it has made it, and companies are assessed on how effectively they recruit female top talent, how they retain and develop them, and whether they can point to female role models within the company.
Not surprisingly, though, Macarti does not think he can rest on his laurels. "There's no end point in being an HR director," he says impressively. "There are the 'pull jobs' - the ones that have clear deadlines and have to be done. There are also the 'push jobs' where if you don't do it, nothing much will happen, but which you still need to do at some point. My life is about juggling the two." He adds: "The biggest dilemma for any manager in any organisation right now is that you can't talk long-term only, but if you only talk short-term, you won't have a long-term to look forward to."
But the toughest job, he concludes, is driving out HR practices that once worked, but do not any more. "What drives any decision I make is the eventual success of the division it affects, rather than any notion of whether it is standard practice or not," he says. "This can be the only way. Those systems which are harder to eradicate are those that were only successful in the past." With this frame of mind one cannot see Macarti getting things too far wrong.
CV
Degree in mechanical engineering, Politecnico of Milano, Italy.
Held commercial, technical and consulting roles in Italian companies in the high-tech sector
1991: Joined Canon Italia initially in service and support areas; later posts include corporate planning and communication director and director of HR, Canon Italia
2006: Appointed chief of human resources, Canon Europe
Outside interests: Ski (both downhill and cross country). cooking, growing bonsai, and travel
