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Creating People      Advantage 2011Time to Act: HR Certainties in Uncertain Times
The Boston Consulting Group (BCG) is a glo-       The European Association for People Mana-bal management consulting firm ...
Creating People      Advantage 2011Time to Act: HR Certainties in Uncertain Times          Rainer Strack         Pieter Ha...
© The Boston Consulting Group, Inc., and the European Associa-tion for People Management, 2011. All rights reserved.For in...
ContentsExecutive Summary                                                                4European Trends in Managing Peop...
Executive SummaryI        n a globalizing economy marked by uncertainties,          ◊ The report presents our findings and...
many companies have introduced better programs                edge sharing. They’re also concerned about the risks—  and m...
are male, 49 percent are between 51 and 60 years old,       insight and experience needed to meet the challenges    and 86...
European Trends                         in Managing PeopleT              his report analyzes how HR challenges have       ...
foresee the topic becoming more or less important in the                              Managing talent, which includes issu...
Exhibit 3. Managing Talent Ranked Highest in Importance in Most Countries                                                 ...
Exhibit 4. Capabilities Are Lowest in Areas Shaping the Senior Management Agenda             Topics of greatest current   ...
particular, look for more in a job than just salary and po-                        organizational development and planning...
Make Talent, Not War            Building a Strong Talent and Leadership AdvantageT             he growing shortage of tale...
employees (35 percent), whom we call “emerging poten-              A Talent Strategy Provides Option Valuetials.” Each of ...
Société Générale  Talent Management Overhaul  Don’t let the perfect become the enemy of the good. That          to each ex...
Exhibit 6. What High-Performing Companies Do Differently Regarding Talent                                                 ...
Exhibit 8. Best Practices Remain Rare in Talent Management                                                                ...
Exhibit 9. Tracking Returns from Investments in Talent                                    Investment                      ...
The top tier of talent—the “excellent” group—obviously          training and development programs, not treating them asnee...
A Technology Platform                   for All Ages                Why Social Media Are a Game Changer for HRM           ...
As for specific opportunities, almost three-quarters of re-                        main the cornerstone of a company’s Web...
Exhibit 11. Companies Are Just Starting to See Potential for New Platforms                                                ...
How Can Companies Organize Their Online Social-Media Activities?     Social media technologies are less than a decade old ...
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
BCG's report:  Creating people advantage 2011
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BCG's report: Creating people advantage 2011

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Rainer Strack, Jean-Michel Caye, Caroline Teichmann, Pieter Haen, Gerold Frick, Stephanie Bird
September 2011

The talent crisis is starting to hit European economies. A survey of more than 2,000 executives from 35 countries looks at the readiness of the HR function to meet the challenge, concluding that companies should base their people strategies on a rigorous analysis of personnel data and embrace both globalization and online social media.

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  • In common way, organizations missuses and fullmouth about the word Talent. Talent is only found between an elite, the best in class or ...could perhaps be found even at organization's bottom?. Too complicated if the top management 'just knows' who is the better according its own criteria: the closest!!. If you ignore it, doesn't exist!!. A lot of money and implication is lost every day in organizations 'cause the management only pay attention whom prefers but not the best (mainly to avoid problems with an unknown level of intelligence that they prefer keep slept?).
    It's a real big problem. Who's guilty?
    Steve
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Transcript of "BCG's report: Creating people advantage 2011"

  1. 1. Creating People Advantage 2011Time to Act: HR Certainties in Uncertain Times
  2. 2. The Boston Consulting Group (BCG) is a glo- The European Association for People Mana-bal management consulting firm and the gement (EAPM) was founded in 1962 by theworld’s leading advisor on business strategy. national associations and professional insti-We partner with clients in all sectors and re- tutions of personnel management in France,gions to identify their highest-value opportu- Germany, Sweden, Switzerland, and the Uni-nities, address their most critical challenges, ted Kingdom. Today, the nonprofit umbrellaand transform their businesses. Our customi- association, with 31 national member asso-zed approach combines deep insight into the ciations throughout Europe, represents pro-dynamics of companies and markets with fessionals specializing in people manage-close collaboration at all levels of the client ment. EAPM operates independently oforganization. This ensures that our clients employers, trade unions, governments, andachieve sustainable competitive advantage, political bodies. Its objectives are to promotebuild more capable organizations, and secu- and develop knowledge and experience inre lasting results. Founded in 1963, BCG is a the HR field, specifically knowledge of peo-private company with 74 offices in 42 coun- ple issues and people activities, and to de-tries. For more information, please visit monstrate the importance of these topics towww.bcg.com. both the public and private sectors. For more information, please visit www.eapm.org.
  3. 3. Creating People Advantage 2011Time to Act: HR Certainties in Uncertain Times Rainer Strack Pieter Haen Jean-Michel Caye Gerold Frick Caroline Teichmann Stephanie Bird September 2011 bcg.com eapm.org
  4. 4. © The Boston Consulting Group, Inc., and the European Associa-tion for People Management, 2011. All rights reserved.For information or permission to reprint, please contact BCG at:E-mail: bcg-info@bcg.comFax: +1 617 850 3901, attention BCG/PermissionsMail: BCG/Permissions The Boston Consulting Group, Inc. One Beacon Street Boston, MA 02108 USA
  5. 5. ContentsExecutive Summary 4European Trends in Managing People 7The Most Critical HR Topics 8Trends Shaping the Senior Management Agenda 9Make Talent, Not War: Building a Strong Talent and Leadership Advantage 12The Dangers of Relying on Serendipity 12A Talent Strategy Provides Option Value 13Managing Three Tiers of Talent in an Economic Crisis 17A Technology Platform for All Ages: Why Social Media Are a Game Changer for HR 19Opportunities and Risks Presented by Social Media 19Using the Web for Talent Relationship Management 21Guidelines for the Virtual World 23HR Without Frontiers: Pathways for HR to Add Value on a Global Scale 26Value First, Cost Savings Second 26How Centralized and Standardized Is HR? 27Beyond Structures, Creating a Global Mindset 32Appendix I: Methodology 34Appendix II: Executive Interviewees 35Appendix III: Supporting Organizations 38Note to the Reader 39Creating People Advantage 2011 3
  6. 6. Executive SummaryI n a globalizing economy marked by uncertainties, ◊ The report presents our findings and analysis of 22 HR one thing is certain: talent and effective leaders topics covered by the survey. We also feature short grow scarcer every day. People stand at the heart of case studies on individual company initiatives or rel- business strategy and execution, and there are many evant research, and we have produced a BCG Focus, proven solutions and tools to develop human capi- Hard-Wiring Diversity into Your Business, inserted at thetal. Human resources executives thus have an extraordinary back of this report, on how companies can foster diver-opportunity to distinguish themselves as business partners sity in their workforce for business reasons—not onlyat the decision-making table. legal or social reasons—such as serving specific cus- tomer segments better, improving innovation, or mak-Many HR executives aim to make the HR function more stra- ing the organization more agile.tegic, beyond providing services and support. But becoming atrusted voice in the C-suite will require HR executives to step This year, four HR topics stand out as the most criti-up their game on several fronts. It will hinge on defining co- cal for our respondents—exhibiting high future im-herent people strategies in line with business objectives, sub- portance yet relatively low current capabilities.jecting consistent personnel data to rigorous analysis, embrac-ing the HR challenges of globalization, and having the ◊ Managing talent is the top priority in Europe overallself-confidence to counsel other executives on people impera- and in most individual countries. Recruiting, develop-tives. That’s a tall order for HR departments carrying a lega- ing, and retaining talent have ranked high on the agen-cy of being underresourced and defaulting to a less analytical, da over the past five years.soft-skill approach. HR’s willingness to change itself in theseways is a prerequisite for creating people advantage. ◊ Improving leadership development remains a high prior- ity for HR. This topic shows stronger capabilities, most-Good things won’t come to HR executives who wait. It’s time ly in large companies.to act. ◊ Transforming HR into a strategic partner has risen in im-This European survey is the third conducted by BCG portance. However, there is a significant gap betweenand the European Association for People Manage- the capability ratings of HR respondents and the lowerment; the first was completed in 2007. BCG has also ratings of business managers.partnered with the World Federation of People Man-agement Associations on two global surveys. ◊ Strategic workforce planning—the ability to quantify and simulate future capacity and skill demands—has◊ The online survey generated 2,039 responses from become a high priority. Few companies have a coher- executives in 35 European countries and a broad range ent approach to it, leading to low capability ratings. of industries and government bodies. We also inter- viewed 58 executives, including board and executive ◊ In addition, although enhancing employee engagement committee members of multinational companies. has dropped out of the red zone, perhaps because4 The Boston Consulting Group • European Association for People Management
  7. 7. many companies have introduced better programs edge sharing. They’re also concerned about the risks— and metrics on the issue, engagement remains a chal- particularly breaches of confidential data, lack of lenge in all HR domains. control over posted content, and headhunting of em- ployees.◊ Executives demonstrate a readiness to change regard- ing these topics. But their capabilities are lagging, ◊ As companies expand their social media activities, which suggests that they have not yet actively em- they should take care to integrate them at every step braced the challenges. of the recruiting process and to align them with the overall HR and business strategies, because any disso-In contrast to the business and financial uncertain- nance will be quickly spotted and criticized online.ties that companies now face, the major trends in HR They can mitigate risks by making clear who is respon-remain quite clear. Several megatrends shaping the sible for social media tasks, budgets, and progress, andsenior management agenda have a direct bearing on by setting down guidelines for communication.the HR function. To start, the growing scarcity of keyskills and people, and the complexity of businesses, Customer segments and supply chains are globaliz-raise the stakes for talent management and leader- ing, which requires HR to adapt its delivery modelship development. and manage the workforce in a global fashion.◊ By 2030, an additional 45 million employees will be ◊ Between 2003 and 2008, the 50 largest globally active needed in Western Europe in order to sustain econom- European companies created more than 500,000 jobs ic growth. In light of current population growth rates, abroad, while their workforce in domestic markets de- this number will be difficult to reach.1 At a time of clined by almost 300,000 employees. Thus, global growing talent gaps, when human capital is among the transparency, international frameworks and standards, most valuable assets for gaining competitive advan- and globally installed services are the hallmark of a tage, too few companies actively manage talent with a superior HR function today. sharp focus. Instead, most take big risks by relying on serendipity to address talent scarcity. ◊ Globalization raises the bar for becoming a true busi- ness partner, but HR now has the opportunity to help◊ By contrast, high-performing companies differ from plan and execute cross-border mergers, carve-outs, low performers in this regard: they fill far more senior and organic expansion abroad. To realize that part- manager positions internally than do low performers.2 nership globally, HR will have to standardize and pro- They are more likely to have a dedicated talent-man- fessionalize more of its activities, and HR staff will agement unit, and their top executives invest more also need to augment their international experience time in reviewing and sourcing talent. They under- and expertise. stand that a robust talent strategy gives them “option value”—the option to develop talent rather than buy Workforce diversity can yield strategic advantages it at ever-rising prices. when it’s hard-wired into the business.The rise of online social media changes how HR will ◊ An analysis of 40 randomly selected Euro Stoxx 50interact with prospects and employees of all genera- companies showed that 93 percent of board memberstions, not just younger ones. 1. Global Talent Risk—Seven Responses, World Economic Forum in◊ Social media have become a mass phenomenon, as 80 collaboration with BCG, 2011. percent of Internet users aged 16 to 24 are posting 2. Creating People Advantage 2010: How Companies Can Adapt Their messages to social networks, chat sites, and blogs.3 Us- HR Practices for Volatile Times, BCG report, September 2010. age is already substantial and rising rapidly among 3. Data in Internet Usage in 2010—Households and Individuals, Euro- stat (the statistical office of the European Union), December 14, older generations as well.4 HR executives view the 2010, available at http://ec.europa.eu/eurostat/ict under “Data.” main opportunities presented by social media technol- 4. Pew Research Center’s Internet & American Life Project surveys, ogies to be employer branding, recruiting, and knowl- September 2005 to May 2010.Creating People Advantage 2011 5
  8. 8. are male, 49 percent are between 51 and 60 years old, insight and experience needed to meet the challenges and 86 percent are of European origin. Those same of globalization and varied customer segments. Com- companies generate an average 40 percent of their rev- panies must fish for talent in new waters and use di- enues outside Europe, and the share of female custom- versity strategically to deliver better products, enhance ers is steadily increasing. innovation, and make the organization more agile. The BCG Focus attached to this report offers advice on how◊ Organizations staffed exclusively with similar-looking best to achieve diversity for business. and similar-minded employees lack the broad range of6 The Boston Consulting Group • European Association for People Management
  9. 9. European Trends in Managing PeopleT his report analyzes how HR challenges have Among the industries generating the most responses were been changing over time through survey re- business services, industrial goods, the public sector, tech- sponses and interviews on 22 topics. Our on- nology and communications, and health care. We also in- line survey generated 2,039 responses from terviewed 58 executives, including board and executive executives in 35 European countries. (See Ex- committee members of multinational companies.hibit 1.) The top 5 responding countries were Germany,Italy, Portugal, Russia, and Spain. Respondents came from To start, we asked executives to rate their organization’sa broad range of industries and government bodies. current capability in each topic and tell us whether they Exhibit 1. More Than 2,000 Executives from 35 European Countries Responded to the Survey Finland 97 Estonia 28 Lithuania 18 Sweden 72 Latvia 17 Norway 42 Russia 416 Denmark 19 Poland 5 Germany 122 Netherlands 90 Czech Republic 16 United Kingdom 34 Ireland 33 Slovakia 4 Ukraine 14 Luxembourg 1 Belgium 37 France 90 Spain 151 Portugal 99 Hungary 13 Romania 46 Bulgaria 44 Serbia 1 =0 Fewer than 10 Turkey 72 10–19 Switzerland 68 20–49 Greece 22 Cyprus 16 Italy 170 Republic of Macedonia 10 50–99 Austria 26 100 or more Croatia 1 Malta 58 Slovenia 40 Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis.Creating People Advantage 2011 7
  10. 10. foresee the topic becoming more or less important in the Managing talent, which includes issues such as identifyingfuture. In general, the most pressing issues this year in- talent pools and effectively staffing leadership positions,volve more future-directed, strategic challenges, in con- continues to be the most critical topic for executives andtrast to our past surveys, in which the top issues con- has been in the red zone for several years, consistentlycerned present challenges. This year’s issues are among being viewed as having high future importance acrossthe red-zone topics shown in Exhibit 2. For example, many countries. (See Exhibit 3.)Transforming HR into a strategic partner entered the redzone in 2011. Improving leadership development follows managing talent. It ranks slightly higher than other red-zone topics in ca- pability, driven mostly by large companies.The Most Critical HR Topics Transforming HR into a strategic partner has risen in futureThe cluster of future-directed challenges in the red zone sug- importance. There is a significant gap between the capa-gests that executives are extending their field of view and bility ratings of HR respondents and the lower ratings ofdemonstrating a readiness to change regarding these topics. business managers.However, the corresponding capabilities rank low to mid-dling, suggesting that companies have not yet actively em- Strategic workforce planning was viewed by many respon-braced the challenges. Here’s what the red zone looks like: dents as fairly important for the future, but current capa- Exhibit 2. Respondents Perceived the Most Critical Topics to Be Future-Directed Strategic Challenges High Managing talent 2011 Improving leadership development Improving Transforming performance HR into a strategic management partner and rewards Enhancing employee On-boarding engagement and retention Strategic of new hires workforce Measuring planning Sample size: workforce 2,039 performance Future Becoming Medium Strong a learning importance organization need need to act to act Managing flexibility and labor costs Improving Managing employer change and Delivering on branding cultural Low Medium recruiting Mastering transformation need need to HR processes Managing work-life balance to act act Managing corporate Managing Restructuring social responsibility online Relevance today the organization Managing demographics social media Managing diversity and inclusion Providing shared services Low High Low and outsourcing HR Current capability Managing globalization High Low Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis.8 The Boston Consulting Group • European Association for People Management
  11. 11. Exhibit 3. Managing Talent Ranked Highest in Importance in Most Countries Matrix Analysis* Country Bul- Ger- Neth- Switz- garia Finland France many Italy er- Norway Portu- Roma- Russia Spain Sweden erland Turkey Mentions gal nia Topic lands in top 5† Managing talent 2 1 1 1 3 1 1 1 1 3 2 1 1 1 14 Improving leadership development 1 2 2 2 4 3 2 2 1 4 2 2 12 Transforming HR into a strategic partner 3 1 5 2 2 3 4 5 3 3 10 On-boarding and retention of new hires 4 4 4 4 3 5 2 7 Enhancing employee engagement 5 2 5 3 4 Improving performance management and rewards 4 5 4 1 4 Strategic workforce 5 3 5 3 planning Managing change and 2 4 5 3 cultural transformation Measuring workforce 3 4 2 performance Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis. Note: This exhibit shows countries with more than 35 respondents. *Ranking based on future importance. † Of the 35 countries that had respondents, the number of countries that cited the topic in the top 5 for future importance.bilities were rated low. In our experience, many execu- Trends Shaping the Senior Managementtives have not yet adopted the tools and mindset required Agendato plan the workforce over the long term. Instead, theyreact to short-term trends and adjust their workforce ca- Turning to the yellow zone, several HR topics clusteringpacities on an ad hoc basis. The HR function, however, low on both dimensions relate to megatrends that are highshould be equipped with sophisticated models to predict or rising on many companies’ agendas. Despite the impor-supply-and-demand dynamics that are closely aligned tance of these areas, the relevant capabilities were amongwith an evolving company strategy. those rated lowest by respondents, so companies face a tough task in addressing the issues. (See Exhibit 4.)Our survey data indicate that high-performing compa-nies (defined on the basis of a combination of revenue Demographics. It is a statistical certainty that the cominggrowth and profitability over a three-year period) con- waves of baby-boomer retirements will create huge talentduct a larger number of strategic-workforce-planning gaps in most industrialized countries.5 By 2020, the medi-projects than do their low-performing counterparts. As an age will exceed 47 in Germany and Italy.6 “More thanRoberto di Bernardini, HR head of emerging markets/ one thousand colleagues will be retiring in our group overEMEA for Janssen, explained, “Strategic workforce the next five years. Replacing their experience is a crucialplanning allows us to understand the talent challengesin the context of tremendous change in pharma mar- 5. Stimulating Economies Through Fostering Talent Mobility, Worldkets. It has also helped us make some counterintuitive Economic Forum in collaboration with BCG, 2010.moves.” 6. Various national statistical institutes; BCG analysis.C P A  
  12. 12. Exhibit 4. Capabilities Are Lowest in Areas Shaping the Senior Management Agenda Topics of greatest current Topics of greatest future Topics with the lowest importance importance current capabilities 1 1 1 Improving leadership development Managing talent Managing online social media 2 2 2 Delivering on recruiting Improving leadership development Managing globalization 3 3 3 Transforming HR into a strategic Managing talent Managing demographics partner 4 4 4 Providing shared services and Managing flexibility and labor costs Enhancing employee engagement outsourcing HR 5 5 5 On-boarding and retention of new hires Strategic workforce planning Managing diversity and inclusion Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis.challenge,” said László Szőcs, director of HR for Hungary’s growth in many countries over the past two years, havelargest oil and gas company, MOL Group. “The key is to led to an increasing number of cross-border activities. Butidentify a reserve of passionate natives and help them to international growth seems to have outpaced HR’s par-survive in the new world. They need to enable the integra- ticipation. Although core business and HR operationstion of the new generation’s competencies,” explained have become synchronized in some companies, the ma-Monica Possa, director of HR and organization for RCS jority of companies have neither built an internationalMedia Group. Even nations with large cohorts of young operating model for HR nor prepared their professionalspeople are not immune to workforce risk. Rapidly devel- to think and act on a global scale.oping economies show very high workforce demand yetare wrestling with the issue of low employability of many Diversity. Competitive markets today are characterized bycitizens, and that affects European companies doing busi- globalization, talent scarcity, and increasingly distinct cus-ness in those markets. Companies will have to address tomer segments. Companies staffed exclusively with simi-such demographic problems through better strategic lar-looking and similar-minded employees lack the broadworkforce planning and better recruiting. range of insight and experience needed to meet those chal- lenges. They must fish for talent in new waters and use di-Social Media. The growing talent gap in developed coun- versity strategically to deliver better products, enhance in-tries means that power is shifting to employees and re- novation, and make the organization more agile.7cruits. At the same time, several generations of peoplehave grown accustomed to more technology-intensive Work-Life Balance. This topic currently receives little at-ways of interacting with colleagues and potential employ- tention from companies. However, as the balance of pow-ers. Talent management is thus becoming democratized er shifts from employers to skilled employees, the demandand decentralized. Companies that don’t master online for a work life that meshes well with one’s private life—asocial-media technologies soon will struggle to keep pace preference strongly expressed by the millennial genera-in the talent race. tion—will become more important. “Younger people, inGlobalization. Globalization of customer segments and 7. For more information, see Hard-Wiring Diversity into Your Business,supply chains, together with the return of economic BCG Focus, June 2011, attached to this report.10 The Boston Consulting Group • European Association for People Management
  13. 13. particular, look for more in a job than just salary and po- organizational development and planning for Poste Ital-sition these days in choosing an employer,” said Christian iane. “HR needs to adopt the culture and skill set of theG. Machate, head of HR for private banking and Switzer- business functions to overcome that perception.”land at Credit Suisse. “They consider work-life balance,the company’s culture, and engagement with society. It’s Excellence in HR thus encompasses both solid execution ofabout a partnership, and that’s what Credit Suisse focuses basic HR activities for the present and active preparation foron. I strongly believe that’s why people approach us.” future challenges. In particular, we would highlight four trends and the areas for development that they entail:By addressing these topics, HR can substantially improveorganizational performance and increase its value added. ◊ Demographic changes and the attendant talent scarcity,HR executives at large companies seem to recognize this: with implications for talent and leadership developmentrespondents from companies with more than 5,000 em-ployees perceive a significantly higher future importance ◊ Technological shifts that increase the importance offor managing diversity and inclusion, managing demograph- mastering social media for use in recruiting, engage-ics, and strategic workforce planning. In addition, they re- ment, and communicationsport higher capabilities in managing globalization andmanaging diversity and inclusion. ◊ Globalization and the new role for HR, including de- velopment of a global delivery modelBut HR will first have to overcome its perceived role asstrictly a service provider, which contributes to the ongo- ◊ The growing diversity of customer segments, which,ing gap in perspective between HR and non-HR execu- combined with scarcity of talent, demands greater di-tives about HR’s capabilities and performance, both in versity in the workforcebasic service areas and in the strategic dimension. (SeeExhibit 5.) “The businesses often tend to see HR merely The remainder of this report discusses how HR can dealas a body provider,” said Pierangelo Scappini, director for with these challenges and turn them into opportunities. Exhibit 5. Five HR Capabilities Are Assessed Very Differently by HR and Non-HR Executives Assessment of HR capabilities by HR and non-HR executives Transforming HR into a strategic partner Mastering HR processes Delivering on recruiting Restructuring the organization Improving leadership development Current capability assessed by HR respondents Low High Low High Low High Current capability assessed by respondents outside HR 2011 2010 2009 Sources: Proprietary Web survey with 2,039 responses; BCG/EAPM analysis. Note: These five topics had the greatest difference between the two groups in 2011.Creating People Advantage 2011 11
  14. 14. Make Talent, Not War Building a Strong Talent and Leadership AdvantageT he growing shortage of talent will become their employer value propositions to chance—neither acute in most industries, as well as in na- customizing their brands to match talent segments’ tions that lack favorable demographics or needs nor regularly measuring the attractiveness of strong educational systems. Many compa- their brands. nies frame their response to that shortagein the context of a “war for talent.” We view this ap- And as for 360-degree performance assessments and oth-proach as undermining good talent strategy, because it er sophisticated approaches, they are common practicesets up a corrosive dynamic: focus on cloning the usual among 57 percent of responding companies but are usedsuspects (such as young, male, home-country MBAs), bid with very few employee groups.up the price for their services, promise them anything toget them, and then watch them job-hop to follow themoney and opportunities after their compensation has The Dangers of Relying on Serendipityoutpaced their capabilities. These survey responses show that in a time of growingThere are alternate avenues to building a strong bench of talent gaps, most companies are not actively managingcurrent and future talent, powered by a well-crafted ap- talent with a clear focus. Several factors account for theproach that relies on the development of “homegrown” haphazard approach.talent. In reality, however, few companies report havingany talent strategy in place. It’s not an exaggeration to First, for all the rhetoric about how “people are our great-say that they’re relying on serendipity to meet their cur- est asset,” senior executives devote very little time to tal-rent and future talent needs, incurring unnecessary busi- ent issues. On average, our respondents said, their CEOness risk. and other senior executives spend less than 9 days a year on activities related to talent management—far fewerThis is the fourth year in a row that managing talent falls than the 20-plus days spent at best-practice companies.in the red zone in our survey. Yet roughly 60 percent of It’s easier for senior leaders to ignore the issue if the tal-respondents said they lack a real strategy to source talent ent shortage has not yet hit the company hard. Some HRor to address their succession challenges. Indeed, more departments, meanwhile, may be stretched thin and sothan one-third ranked their company as having no strat- busy fighting fires that they don’t have time to step backegy at all, and only 2 percent cited a strong, comprehen- and present a cogent argument to senior management insive strategy. favor of a more comprehensive talent strategy.Digging deeper, only 30 to 40 percent of respondents Another complicating factor is the relatively narrowhave structured “on-boarding” activities to welcome scope of talent management at many companies. For ex-specific talent segments into the company once hired, ample, HR focuses more on high-potential employeesand very few companies manage international talent (69 percent) than on senior leaders (54 percent) or theirpools. About 60 percent of respondents said they leave successors (52 percent), or on the most promising junior12 The Boston Consulting Group • European Association for People Management
  15. 15. employees (35 percent), whom we call “emerging poten- A Talent Strategy Provides Option Valuetials.” Each of those groups requires HR’s attention in or-der for the company to build a talent pipeline. These problems can and should be overcome. We would argue that a comprehensive talent strategy offers “optionMore than half of respondents lack a dedicated talent- value”: it gives companies the option to develop theirmanagement unit and end up managing talent in piece- own talent in an environment of increasing scarcity. Themeal fashion through different pockets of the organiza- sooner a company starts, the less expensive and disrup-tion. It would be far more effective to take an end-to-end tive that option will be. (See the sidebars “GarantiBank:view that has the latitude and resources to see the big pic- Moving from Basics to Best Practice” and “Sociététure and try alternative approaches. Générale: Talent Management Overhaul.”)Related to the piecemeal approach is a tendency to con- Consider several data points from the survey that supportsider talent only in the short term. When asked whether the “build versus buy” case. High-performing companiestalent plans are embedded in and aligned with the com- (again, as defined by revenue growth and profitabilitypany’s business-planning cycle, only 1 percent of respon- over the past three years) fill 60 percent of their seniordents said they were aligned. Yet adequate planning for manager positions internally, compared with a mere 13talent sourcing and development in new markets or new percent for low-performing companies.8 Some 53 percentregions takes time. Absent a real talent strategy, manycompanies will face a rude awakening when shortages or 8. Creating People Advantage 2010: How Companies Can Adapt Theirother talent problems surface. HR Practices for Volatile Times, BCG report, September 2010. GarantiBank Moving from Basics to Best Practice Over the past ten years, GarantiBank of Turkey has expe- ance, while management talent gets assignments for rienced sharp growth rates, with the number of branches various projects that will stretch their skills.” Mean- and employees almost tripling. From 2001 through 2006, while, talent strategy focuses mainly on increasing the the bank’s executives devoted time and resources to spatial and functional mobility of staff, as well as on se- building a solid talent-management and leadership- nior executive succession planning. development framework in order to sustain long-term growth. ◊ Developing Talent and Leadership. With 95 percent of Ga- ranti’s management positions filled internally, young, With that foundation firmly in place, Garanti is refining its talented employees have excellent opportunities to de- approach to strive for best-practice levels in several areas velop into managers at the bank. Although there are of talent management: many young employees at the management level, high performance and at least seven years of experience in ◊ Recruiting. Garanti rose to the top of Turkey’s most- the banking sector are required for advancing into se- desired-employer list in 2008, in part because of its in- nior positions. Junior talent-development programs, for novative “talent camp” designed to tighten relation- both headquarters and the regions, play a big role in ships with key universities. At the camp, potential preparing these employees to be managers. Using a recruits work on cases that they present to a senior model dubbed Yıldız (“star”), Garanti senior managers management jury. The camp and its accompanying gather once a year to discuss the top talent company- website and Facebook page have helped to build the wide at all levels—their strengths, skills, and potential employer brand and to expand the recruiting pipeline for career growth and greater responsibilities. at leading schools. Talent challenges never stand still, and Garanti constantly ◊ Planning and Segmentation. “Currently the cohort of high- adjusts to new situations. For instance, as its hierarchies potential talent covers about 6 percent of the work- became flatter, vertical staff movement diminished. In re- force,” explained Osman Tüzün, HR coordinator for Ga- sponse, Garanti is working to enrich and expand certain ranti. “Different groups get different support from HR. positions, and to promote cross-functional transfers that For instance, one focus for junior talent is career guid- will yield new career opportunities.Creating People Advantage 2011 13
  16. 16. Société Générale Talent Management Overhaul Don’t let the perfect become the enemy of the good. That to each executive,” said Veronique Poulard, global head of concept guided French bank Société Générale in 2009 as leadership and talent management. it articulated a growth plan that included an overhaul of how it managed talent and leadership. The bank launched Société Générale believed it was necessary to adjust its its ambitious effort on many fronts simultaneously, over employer value proposition to meet increasingly demand- the course of one year. ing expectations from the staff. What the bank settled on was a simple promise, “Career, care, agility”—care for em- Talent targets were derived from the bank’s strategic plan ployees, help to boost their careers, and encouragement and adopted by the divisions. The talent life-cycle pro- of agile teamwork at all levels. This was expressed through cess—performance reviews, succession plans, and mobil- a series of concrete actions, such as an overhaul of mobil- ity management—was revised to get closer to industry ity and diversity policies, tailored local actions to improve best practices, with a much higher level of consistency work-life balance, and tools to measure both employee and adoption. Talent governance, moreover, was standard- engagement and the company’s attractiveness to job can- ized internationally to break through divisional silos and didates. encourage international mobility. Because the HR staff was being stretched by its more de- On the leadership front, a group leadership model has manding roles, the bank also began to upgrade skills been incorporated into most HR processes and systems. among HR business partners and to improve delivery Performance evaluations and bonuses now hinge not just through HR systems and shared-service centers. on individual results but also on behaviors that contribute to those results, which affect how people collaborate. Although this effort is not complete, the bank has already seen remarkable improvements. Talent pools have in- Development programs for executives were augmented creased sharply, and engagement levels have risen as and folded into a corporate university. Each group, from well, especially for the employee groups that received the emerging talent to potential senior executives, received greatest investments. As Anne Marion-Bouchacourt, head customized individual and team coaching and modules to of group human resources, said, “You shouldn’t wait to expand their ways of thinking about business issues. have it all perfect before implementing. If anything, I “Some modules are mandatory, while others are adapted would go even further and faster.”of high performers have a strategy to address talent sourc- identifying the gaps in talent quantity and quality. Verying and succession problems, versus 27 percent of low few companies have a systematic strategy in place to meetperformers. High performers are also more likely to have their sourcing and succession challenges; only 8 percent ofa dedicated talent-management unit, do 360-degree re- respondents said their company was at or near a best-prac-views, and cover emerging potentials in their talent pro- tice level. (See Exhibit 8.) “Investments in people shouldgrams. (See Exhibit 6.) be considered just like investments in assets, and their re- turns should be tracked as such,” said Shafie Shamsuddin,How can companies move from serendipity to effective executive director of global talent management and organ-talent management and leadership development? We isation development for Carrefour.recommend a holistic approach that is grounded in busi-ness strategy, treats human capital with the same rigor as Thus, one could tally the total expenditure to hire, train,a capital asset investment, and looks for opportunities and develop an engineer, and also estimate the individu-throughout the employee’s life cycle. It consists of six di- al’s value through performance scores, record of meetingmensions. (See Exhibit 7.) targets, and upward feedback. (See Exhibit 9.)Talent Strategy and Returns Tracking. This involves, Leadership Model. Hierarchical, command-and-controlfirst of all, defining a talent strategy that fits with the busi- approaches do still address the basic needs of many orga-ness strategy and external market conditions. It asks where nizations, but they should be complemented by new be-the company is now and where it wants to be in the future, haviors that promote the fluid and collaborative nature14 The Boston Consulting Group • European Association for People Management
  17. 17. Exhibit 6. What High-Performing Companies Do Differently Regarding Talent Percentage of high versus low performers3 Define a comprehensive strategy High 53 Strategy 1 Low for talent sourcing and succession. 27 High 55 Install a dedicated talent- Organization 2 Low 35 management unit. Make sure emerging talent is covered High 54 Scope by the talent-development program.2 33 Low Install a 360-degree High 71 feedback process.2 Low 57 Performance management Provide employees and leaders with High 41 performance feedback more than 1 Low 27 once a year. Sources: Proprietary Web survey with 2,039 responses; 270 respondents in this section; BCG/EAPM analysis. 1 Percentage of respondents who chose 4 or 5 on a 5-point scale. 2 Percentage of respondents who said that they do this. 3 Performance based on revenue growth and profitability over the past three years. Exhibit 7. A Framework for Building Talent Improve governance around talent, 6 the employer brand, and other constituents of a company culture Talent magnet that will attract top talent culture Create a culture of high performance and collaboration, and adapt to Promote diversity among employees, employees’ changing expectations 5 and adopt on-boarding best practices, in order to become more efficient at Talent engagement sourcing talent and affiliation Accelerate learning and expose 3 4 employees to new situations in order to build capabilities Talent sourcing Talent development internally and reduce and diversity acceleration dependence on recruiting 2 Leadership model Develop middle managers and senior leaders around the world who can Define and monitor a talent strategy address twenty-first-century requirements 1 that reflects market conditions and business needs, and generates Talent strategy appropriate economic returns and returns tracking Source: BCG analysis.Creating People Advantage 2011 15
  18. 18. Exhibit 8. Best Practices Remain Rare in Talent Management Rudimentary approach Standard approach Best practice Definition of a strategy Talent for talent sourcing and succession 60 33 8 1 strategy and returns tracking Alignment of talent with business planning 53 30 18 Degree of CEO time commitment to talent management 50 36 15 2 Leadership model Degree of senior leader time commitment to talent management 41 42 18 Employer brand measurement system 60 31 8 Talent 3 sourcing and diversity Customization of employer brand to target audience 56 36 9 Talent Frequent competence reviews for 4 development employees and leaders 26 38 36 acceleration Variety of measures 5 Talent engagement for performance management 20 18 63 and affiliation 6 Talent magnet Systematic assessment and review culture of high-potential employees 28 27 45 0 20 40 60 80 100 Percentage of respondents Sources: Proprietary Web survey with 2,039 responses; 270 respondents in this section; BCG/EAPM analysis. Note: Respondents were asked to rate their organizations on a five-point scale. “Rudimentary approach” includes those who chose 1 or 2; “standard approach” includes those who chose 3; “best practice” includes those who chose 4 or 5. Because numbers were rounded, not all percentages total 100.of work today. More volatile business environments call ronment. Even in companies with more than 5,000 em-for adaptive leaders who embrace uncertainty and exper- ployees, almost half of respondents said that they lackimentation and can empathize with the perspectives of any staff dedicated to diversity—and only about one-other stakeholders. Effective talent management meas- quarter said that their company has internal diversity tar-ures leaders along those dimensions. Compensation and gets. Banco Santander strategically recruits individualsperformance reviews, for instance, could incorporate di- from markets of future growth and includes them in itsmensions of how well leaders engage employees, manage talent pool. “Our group has strategic agreements withteams, promote the employer’s brand, and build the tal- 1,200 universities around the world, including China. Weent pipeline, at both the global-leadership and middle- see this as a clear competitive advantage to have prefer-management levels. ential access to new talent,” explained José Luis Gómez Alciturri, executive vice chairman of Banco SantanderTalent Sourcing and Diversity. Competitive markets to- and director of the human resources division.day are characterized by globalization, talent scarcity, andincreasingly distinct and demanding customer segments. Talent Development Acceleration. Many employees,Companies staffed exclusively with similar-looking and particularly younger ones, increasingly prefer a careersimilar-minded employees lack cognitive diversity—that trellis offering multiple options rather than a career lad-is, the broad range of insight and experience needed to der oriented only vertically. A trellis model gives employ-meet those challenges. By contrast, organizations that tap ees more options for the speed and direction of their ca-into the full spectrum of capabilities offered by a diverse reers. Allowing employees to adjust their job to theirworkforce are better equipped for today’s dynamic envi- personal life will enhance the company’s value proposi-16 The Boston Consulting Group • European Association for People Management
  19. 19. Exhibit 9. Tracking Returns from Investments in Talent Investment Returns One-time and recurring Combination of financial and behavioral KPIs and metrics A • Employee engagement survey Where to invest Employee • Leadership evaluation data, including • Area of greatest gaps engage- Strategic 360-degree feedback and results • Fastest-growing region ment and • Most critical roles throughout productivity • Satisfaction factors on growth and employ- the organization ability from teams • Specific talent segment • High-profit business unit • Succession pipelines from middle managers to executives B Pipeline • Actual fit and future fit results from perfor- How to spend money performance mance reviews • Balance internal and external programs • Overall pipeline strength, depth, and • One-time costs such as concept design Tactical employee preparedness and IT development • Recurring costs such as HR support, IT administration, and training • Enhanced employee-development ratings • Accelerated financial performance Current value • Improvement in behaviors or capabilities C How to execute talent strategy • Increased retention rates • Number and nature of pilots • Training development module design • Improved external brand perceptions and Operational and rollout • Tool development, implementation, headhunter ratings and rollout Future value • Increased applicant quality and quantity • Ongoing change management • Overall competence enhancement • Building a talent magnet culture • Reputation for a development culture Source: BCG analysis.tion among high-potential employees. For those employ- tics can be quite varied, including one-week “engineeringees who want to accelerate their experience and compe- camps” at Royal Dutch Shell, three rotations over 15tencies, companies can immerse them in unfamiliar months at Nike Europe, or active mentorship for womenmarkets, temporarily assign them to external groups, or at Goldman Sachs. High-potential employees who seeprovide limited-authority experiences like joint-venture their company being flexible are more likely to go the ex-positions. tra mile both in their own jobs and in singing the com- pany’s praises to people outside the company.Talent Engagement and Affiliation. Executives andmanagers play a big role in establishing norms and expec-tations around what constitutes superior performance Managing Three Tiers of Talent in anand how employees should collaborate. Management in- Economic Crisiscentives should include metrics related to culture and en-gagement, holding managers accountable for developing For at least four years, executives have said that talenttheir teams and ensuring that employees feel engaged in management and leadership development are top con-their work. It’s not sufficient for a manager to meet her cerns, now and in the future. Yet they have a long way tonumbers and deliver on deadline if in the process she go in meeting those concerns with the right capabilities.beats up her team so that they all quit or seek a transfer. The recent financial crisis and recession, which spurred high levels of unemployment, perhaps lulled executivesTalent Magnet Culture. Companies need to build strong into thinking that the shortage of talent was no longer aemployer brands to attract and retain top talent. The tac- pressing problem. That’s a false sense of security.Creating People Advantage 2011 17
  20. 20. The top tier of talent—the “excellent” group—obviously training and development programs, not treating them asneeds to be nurtured. These people are always in high de- discretionary spending to be cut.mand, even during the worst period of an economic crisis. Whatever the coming years hold on the economic front,But companies should not neglect the “adequate” or key talent will become even scarcer and more important.“fragile” tiers, either, as growing scarcity raises their po- Companies should start preparing now in order to havetential value in the long run. Companies can improve the the option to build and keep the best team possible.mix of talent internally by raising the skill levels and en-gagement of both groups—for example, through invest-ments in corporate universities. Even during tough eco-nomic times, then, companies should be investing in18 The Boston Consulting Group • European Association for People Management
  21. 21. A Technology Platform for All Ages Why Social Media Are a Game Changer for HRM any HR executives believe that Face- traditional channels but mastering the new ones as book, video sharing, and mashups are well—the applications that facilitate user-generated con- phenomena limited strictly to Millenni- tent and social interactions, as distinct from websites als and their younger siblings. And they where users are passive viewers. As Rupert McNeil, HR doubt that online social media have se- director for Aviva UK, said, “This way of interacting willrious import for HR activities. Recent trends show that become pervasive with all generations of employees.they should reconsider both assumptions. Make sure you work out how to use it.”Internet penetration has reached more than 2 billion Like it or not, employers are being discussed in very pub-people and continues to increase worldwide. And while lic online forums. In German-speaking countries, for ex-social media use is highest among younger “digerati,” it’s ample, young employees and recent graduates use thealready substantial and rising rapidly among older gen- website Kununu to gain insights into companies througherations as well.9 Throughout 27 European Union coun- employees’ own evaluations and commentary on sub-tries during the first quarter of 2010, 80 percent of Inter- jects like work-life balance.net users aged 16 to 24 posted messages to socialnetworks, chat sites, and blogs; 42 percent of users aged25 to 54 did so, along with 18 percent of users in the 55- Opportunities and Risks Presented byto-74 age group.10 LinkedIn, the world’s largest profes- Social Mediasional network, reports that a plurality of its members, at36 percent of total membership, is in the 35-to-54 age Many executives do seem aware of the opportunities af-group.11 forded by social-networking sites. Almost nine out of ten respondents to our survey have an account in a socialSocial media site Facebook alone has more than 750 mil- network. And more than three-quarters of their compa-lion users, averaging more than a half-hour every day on nies are active in some form of social media. Half of thethe site. And the three largest professional networks claim respondents maintain corporate pages on Facebook, and145 million members—LinkedIn with 100 million, France- 41 percent on LinkedIn.based Viadeo with 35 million, and Germany-based Xingwith 10 million. And, of course, social media never stand 9. Pew Research Center’s Internet & American Life Project surveys,still: Google+ attracted more than 10 million new mem- September 2005 to May 2010.bers in just two weeks.12 10. Data in Internet Usage in 2010—Households and Individuals, Euro- stat (the statistical office of the European Union), December 14,Social media have become woven into the lives of many 2010, available at http://ec.europa.eu/eurostat/ict under “Data.”employees, no matter what their age. More and more 11. LinkedIn Demographics presentation, January 2011, at http:// www.slideshare.net/amover/linked-in-demographics-and-statis-people blur the lines between work life and personal life, tics-2011.and between virtual and face-to-face communication. HR 12. Larry Page, CEO of Google, posted this number on his Google+executives need to adjust accordingly, maintaining the profile on July 14, 2011.Creating People Advantage 2011 19
  22. 22. As for specific opportunities, almost three-quarters of re- main the cornerstone of a company’s Web presence. Fewspondents cited employer branding as the leading one. companies consider themselves highly effective in most(See Exhibit 10.) Next came attracting young profession- of the associated activities. For classic activities such asals (half of respondents), skilled workers (almost one- job search engines, 57 percent of respondents regardthird), and graduates (about one-quarter). Most respon- themselves as effective, and even fewer, 38 percent, rateddents did not think that other target groups, such as themselves effective in career networks. Although half ofexecutives and interns, could be reached effectively the companies use social media, only 19 percent ratedthrough the same channels. At the same time, executives themselves effective in these networks. More broadly, re-are concerned about a variety of risks that arise from so- spondents cited relatively low capabilities in social me-cial-networking sites. Breaches of confidential data are dia—certainly lower than the perceived future impor-the greatest risk, cited by 47 percent of respondents, fol- tance of the activities. (See Exhibit 11.)lowed by the scant influence companies have on postedcontent. Several concerns relate to the potential head- Like many initiatives, the success of social media pro-hunting of employees by competitors: 37 percent cited grams will depend in part on having sufficient budgetsthe threat of easier access to employee information, and and senior management commitment. Fully half of all32 percent said they worry about competitors actively social-media “champions” (companies that assess theirpoaching staff. social-media capabilities as being strong) dedicate re- sources to social media, compared with only 16 percentDespite those risks, companies have more to gain than of all social-media “novices” (companies that rank theirthey do to lose—if they use social media in thoughtful, capabilities as low). Similarly, 74 percent of championseffective ways. Current usage tends to favor more tradi- report strong senior-management commitment, com-tional applications such as corporate websites, which re- pared with 44 percent of novices. Exhibit 10. The Opportunities and Risks Presented by Online Social Networks Share of opportunities Share of risks assessed Opportunities assessed as top 3 (%) Risks as top 3 (%) 1 Employer branding 74 1 Confidential content 47 becoming public Attracting young 50 Little influence on 37 2 professionals 2 posted content 3 Knowledge sharing 34 3 Easier access to 37 employee information 4 Attracting skilled workers 31 4 Staff misbehavior 37 Competitors actively 5 Attracting graduates 26 5 approaching staff 32 6 Tracking public opinion 23 6 Ethical concerns 26 Problems implementing 7 Internal communication 22 7 Web 2.0 in recruiting 22 8 Employee engagement 21 8 Legal restrictions 21 9 Learning and development 19 9 Technical problems 18 Loss of intellectual 10 Attracting executives 14 10 property 12 11 Attracting apprentices 11 11 Increasing transparency 7 and interns 12 Alumni networking 9 12 Other 4 13 Other 1 0 20 40 60 80 0 20 40 60 80 Sources: Proprietary Web survey with 2,039 responses; 528 respondents in this section; BCG/EAPM analysis.20 The Boston Consulting Group • European Association for People Management
  23. 23. Exhibit 11. Companies Are Just Starting to See Potential for New Platforms Percentage of respondents Assessment of capabilities Percentage of respondents who say they are highly and future importance with an official presence effective in Web 2.0 for recruiting application Traditional Corporate website1 96 50 Job search engines2 66 57 Social media networks 50 19 New social-media platforms Career networks 41 38 - (Micro-)Blogging 28 13 Multimedia sharing 20 11 Current capabilities Future importance Low High Sources: Proprietary Web survey with 2,039 responses; 528 respondents in this section; Recruiting Trends 2011--Top 1,000 Companies, University of Bamberg/University of Frankfurt/Monster.de; BCG/EAPM analysis. 1 Based on EuroStoxx 50 companies. They all have a dedicated career section on the corporate website, and 96 percent offer general career information and specific online-application options. 2 Based on the 1,000 largest German, the 500 largest Austrian, and the 500 largest Swiss companies.Success will also hinge on embedding these new commu- ate a vivid, multifaceted portrait of a company that reso-nication channels by specifying responsibilities and clear nates with a broad swath of potential employees. Shortguidelines. Too many companies execute social media ac- video clips by company representatives, for instance, cantivities informally, which tends to limit coordination, answer questions that have been raised on blogs, as wellalignment, and eventually their effectiveness. (See the as provide a more personal tone that creates an emotion-sidebar “How Can Companies Organize Their Online So- al bond.cial-Media Activities?”) To further improve companies’use of these tools, it is important to consider the Web’s The choice of tactics will depend on the company’s cur-potential for several of HR’s major endeavors. rent brand equity. Companies with a strong existing em- ployer brand, for instance, should make sure that social media highlight the particular equity elements of theUsing the Web for Talent Relationship brand. They can target their communications to particu-Management lar groups and try to move them from interest to actions like applying for a position. Companies with a weak em-Employer branding and recruiting activities can be re- ployer brand will need to raise awareness first, perhapsgarded as the central segments of a broader funnel that by establishing a presence on career sites and social net-starts with general awareness of a company’s character- works, becoming a topic of discussion among a broadistics and progresses to questions about recruiting and community of users.on-boarding new hires. (See Exhibit 12.) The Web is prov-ing quite useful in actively managing contacts who might Social media, especially career networks, can make it eas-be interested in joining the company at some point. ier to identify relevant candidate groups through filters that isolate specific functional expertise, qualifications, orStarting with employer branding, online channels have regions. By searching for specific variables linked to a cer-some unique characteristics that make it possible to cre- tain job profile, a company can efficiently screen out un-Creating People Advantage 2011 21
  24. 24. How Can Companies Organize Their Online Social-Media Activities? Social media technologies are less than a decade old and The airline Lufthansa takes a mostly centralized ap- have caught fire only within the past four or five years, but proach: HR runs all recruiting-oriented social-media ac- we have already identified three broad stages of organiz- tivities, and the public Be-Lufthansa website is the exter- ing for these online activities. Typically a company starts nal interface for online recruiting. Be-Lufthansa has with an informal approach to social media, with no dedi- received 115,000 applications for 4,000 posted jobs and is cated responsibilities and no established policies. Sixty- a convenient channel for the airline to answer questions one percent of the companies we surveyed are conducting and guide applicants through the recruiting process. social media activities in this manner. Next is a more cen- tralized approach, in which a small unit or team conducts Lufthansa’s platforms also include Facebook, StudiVZ, or coordinates social media efforts. Forty-four percent of LinkedIn, and Xing; the company’s Facebook page, which social media “champions” in our survey (companies that is being used for HR purposes, recently had more than rank their capabilities as high in social media) give cer- 17,000 fans. The corporate intranet, meanwhile, supports tain employees responsibility for Web 2.0, in contrast to applications that extend the advantages of social media just 22 percent of “novices” (companies that rank their ca- internally. The general experience with social media to pabilities as low). This approach can be extended to a date has convinced Lufthansa executives that the bene- cross-functional model, which uses teams across business fits outweigh the risks and that the risks are manageable. units to support the central social-media unit. Here all “Executives have to discard the idea of perfect control employees are encouraged to take an active part, within over communication,” said Martin Schmitt, senior vice the bounds of clear policies. But many companies don’t president of corporate personnel policy. “Because if we yet have such policies. While 37 percent of the champions don’t act, we are going to lose even more control.” in our survey have social media policies in place, only 18 percent of novices do. Exhibit 12. The Web Should Be Integrated into Each Stage of the Recruiting Funnel Demand Employer Recruiting Candidate On-boarding Retention planning branding strategy recruiting • Engage target candidates with • Encourage online applications to increase campaigns on the company website, recruiting efficiency online job forums, and social networks • Support interview preparation with online • Leverage multimedia capabilities—for training tools example, video testimonials, interviews, • Target preferred candidates with the or company portraits company’s value proposition, communicated through social media channels How well are Are we How well are Do we receive Is our process Is our process able to Key we planning for enough questions we known in fast and effective and retain our future staff high-quality complete? needs? target groups? effective? staff? applications? • Use intranet and external social • Use appropriate channels to recruit, such networks to connect new employees as posting jobs on the corporate website • Share relevant knowledge through social or career forums media channels • Use employee contacts in social networks • Build an external talent pool Source: BCG analysis.22 The Boston Consulting Group • European Association for People Management

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