Talent Management
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Talent Management

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Compelling forces in the business landscape drive the need for Integrated ...

Compelling forces in the business landscape drive the need for Integrated
Talent Management
􀁹 Research shows that companies with stronger Human Capital
Management outperform in both Total Return to Shareholders and
Annualized Return to Shareholders
􀁹 Human Capital Management is a Leading Indicator of financial
performance
􀁹 Significant improvement in engagement for the typical S&P 500
company is associated with an increase in revenue per employee of
$4,675 or over $93M per year.
􀂀 In addition, significant demographic and other trends will continue to drive
talent scarcity
􀂀 Cost of Talent Acquisition and impact of losing Talent are both increasing
􀂀 Talent Management is a key driver of Line of Sight and Employee
Commitment – both of which strongly correlate with improved company
performance

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Talent Management Talent Management Presentation Transcript

  • Emerging Trends and Practices Kathy Nixon Watson Wyatt November 14, 2007
  • Why Integrated Talent Management? y g g Compelling forces in the business landscape drive the need for Integrated Talent Management Research shows that companies with stronger Human Capital Management outperform in both Total Return to Shareholders and Annualized Return to Shareholders Human Capital Management is a Leading Indicator of financial performance Significant improvement in engagement for the typical S&P 500 company is associated with an increase in revenue per employee of $4,675 or over $93M per year. In addition significant demographic and other trends will continue to drive addition, talent scarcity Cost of Talent Acquisition and impact of losing Talent are both increasing Talent Management is a key driver of Line of Sight and Employee Commitment – both of which strongly correlate with improved company performance
  • Commitment Engagement and Financial Success gg Companies with employees that have high Commitment and high Line of Sight have TRS g g more than 100% higher than the typical* firm Typical firm 12% Firms with high 18% Commitment only Firms with high 26% Commitment and High Line of Sight Li f Si ht 0% 5% 10% 15% 20% 25% 30% Total Return to Shareholders (TRS) *Typical firm is based on the norm of all companies represented in WorkUSA(TM) 2006/2007 Typical
  • Why is Integrated Talent Management Important? Companies that fill vacancies more quickly reduce the disruption and lost productivity associated with turnover and have total shareholder returns five i fi times higher than companies that take longer to fill vacancies Companies that take a more balanced approach to hiring non-entry level positions and fill roughly half of the non-entry level positions internally reflect shareholder returns nearly six times greater than those that fill too many or too few positions internally Companies that make substantial distinctions based on performance and have shareholder returns five times higher than those that do not make sharp distinction Source: Watson Wyatt s 2005 Human Capital Index Report: Maximizing the Return on Your Human Capital Wyatt’s
  • Value of Talent Management Talent = Competitive Advantage Companies that get it right From finding and developing to motivating and outperform their keeping the right workforce – effective talent competitors management integrates recruiting, performance management, rewards, succession planning, learning and career development, and strategic workforce planning kf l i
  • Our Approach to Talent Management Watson Wyatt’s approach is to apply the same clarity, Wyatt s discipline and objectivity to managing talent as you would other critical business assets
  • Integration is Key
  • New Talent Reality Old adage says it’s 5x more expensive to acquire a new customer than it is to retain a current customer In the coming Talent War, the same will likely be said for acquiring new Employees vs. retaining current Employees Talent Scarcity will make retention critical Costs of finding new Talent will dramatically increase Salary / Benefits / Incentive Compensation Recruiting Costs / Search Fees Time to Proficiency Lost Productivity Lost Knowledge, Relationships etc Knowledge Relationships, etc. While initially companies will try to address Talent Shortages through increased compensation (as they did in the 90s), they will quickly realize that this is insufficient
  • Increased Focus on Talent Management Talent Management issues such as Executive Compensation and Succession Planning are increasingly gaining attention at the Board level Strong recognition of the effect of Talent Management on business performance Top companies are finding new ways to understand and measure their talent strength Includes detailed Bench Strength analysis and Talent Balance Sheets
  • Moving to the Line Talent Management has begun to receive attention at the Board level, particularly issues such as Compensation level and Succession Planning This attention, as well as high profile CEOs who tout attention Talent Management has led to increased executive focus Best practice companies have succeeded at making Talent Management a Line-owned initiative, rather than an HR program With this shift comes the need for improved measures and tools
  • What Measures are Leading Companies moving towards? Results Capability Cost Return on People Programs Long Term Hold Compensation Investment vs. • • • Results Talent Balance Sheet Predictive Turnover • • Engagement • Leadership and Management Time to Proficiency Reduction Cost per Hire vs. Turnover • • • Effectiveness (composite ( p Key Skill Acquisition • index) Company Attraction Ability • Managed Attrition (against Critical Knowledge & Skill Cost Savings through Labor • • • target) Retention Optimization Impact of Innovation Potential Assessment Cost Savings through HR • • • Consulting Increase in Potential • Bench Strength • Differential Return on Increase in HR Key Skills • • Investment
  • As Discipline & Clarity Increase Increase… Focus of Talent Management shifts from Conversations t managing f C ti to i based on Real Data…
  • First Year Challenges g Numerous data challenges accompany the first year of serious Talent Management efforts Ability of Managers to effectively Assess Cross-organization Calibration No Baseline to Compare to Openness and Honesty in the Dialogue – Difficult Decisions / Conversations Manager understanding of process and ability to execute Linking Talent Management Processes to Talent Management Decisions Recommend first year Data Audit to recalibrate and realign collection
  • Talent Acquisition Significant focus on Talent Acquisition as the front end of the Talent Management p ocess – numerous innovations in t s a ea a age e t process u e ous o at o s this area Focus on Quality of Hire – Understanding predictors of success and making them part of the screening process More advanced pre-screening tools Increased focus on competency management Improving the effectiveness of interviewing, etc. More expansive view of what applicant can bring (Succession Planning links, etc.) Team Recruiting – recruiting intact teams increases success g g Relationship Recruiting – sites such as LinkedIn, Blue Chip, etc.
  • Top Performers Significant focus on the 20% that drive the business Companies are increasingly seeking to compress the bottom of the p performance distribution and expand p the top Also a focus on protecting Top Performers like trade secrets while minimizing potential impact of their loss – concepts such as Predictive Retention and Long Term Hold becoming more important
  • Problems with Traditional “Retention” Retention Reactive Often Too Late Equity Problems (especially with other High Performers) “Squeaky Wh l” S d “S k Wheel” Syndrome “Band-Aid” Approach Wrong Criteria
  • 2 Way Value Proposition 2-Way Only way to ensure effective Retention is a consistent 2 Way Value 2-Way Proposition: Employees are clear on what Organization wants and delivers it Organization is clear what Employees want and delivers it g py Once this equation gets out of balance, retention becomes problematic If Employees don’t deliver, Organization seeks other capabilities If Organization doesn’t deliver, Employee looks for other career options Addresses the problems with traditional Retention approaches
  • Distributed Investment in Retention Good Management Goal Alignment Leadership & Communications Recognition Targeted Compensation (direct investment)
  • Who Can You Afford to Lose? o Ca ou o d ose Some companies are finding that they cannot fight the retention battle on all fronts – that they need to accept higher than average turnover in some positions Generally look at “reverse criticality” – positions that are easier to find, have low time to proficiency, and are not critical to business performance This approach requires careful cost-benefit analysis that looks at the true costs of both retention and replacement
  • Concept of “Career Ladders” is Obsolete Career Ladders Research shows that path to Executive Ranks is rarely a straight line Traditional Career Progression is problematic in most organizations Fl tt structure Flatter t t Longer time in position Less mobility Coaching, Mentoring, and Relationships are critical to Career Development Expectations of generations in the workforce
  • “Career Climbing Wall is New Model Career Wall” Many paths to the top Focus on continuous Progression and achieving specific Goals and Milestones Progress defined at various stages Appropriate “toe holds and “safety toe holds” safety lines” Guidance and Assistance Tools such as “Career Development Guides” by Job Family
  • Other Career Development Concepts Interest is a key factor in linking Career Development with corporate needs Fit for position Development focus Driver of retention Interest and alignment with values is one of the predictors of executive success Need to ensure that there is an appropriate matching process Understanding of interests Understanding of requirements Understanding of options
  • Performance, Succession, & Career , , Progression Career Progression IS for everyone Even if employee is in the same position, they should be seeking to increase their skills & capabilities If they are not focused on Career Progression, they are p probably losing g y g ground – Contentment is your Enemy y y Career Progression vs. Raising the Performance Bar Capability Development should be part of Performance Assessment
  • Centrality of Development Plan The Development Plan is the central link to other Talent Management p g processes from the individual’s perspective Recruiting: Initial data (experiences, gaps, skills, etc.) should initially inform the plan Performance: Performance goals, gaps, and needs should be linked to the development plan Learning: Should support role, required skills and competencies, and gaps Career Development: Plan should clearly articulate interests, needs, and planned actions Succession: Data forms the basis for corporate Succession analysis
  • Turnover Mapping TM
  • Integrated Talent Profile ( g (example) p)
  • Model Succession Planning Process
  • Sample Decision Tree Others • Build vs. Buy • Cost-Benefit • Scenario Analysis
  • Organization Spider Web Management
  • Selection and Transition One of the most important – but most often missed – aspects of Succession Planning Need consistent process for selecting people to actually fill a position – based on job requirements and definition of successful leadership Selection = Promotion Recruiting Special Assignment etc Promotion, Recruiting, Assignment, etc. Must hire for Today and Tomorrow! Need appropriate support to ensure they are successful Makes Succession Planning meaningful and effective; reinforced by other Talent Management processes Role of the manager is critical
  • Knowledge Mapping – Definition Process for identifying, capturing, and retaining critical knowledge in an organization Key to Succession Planning Method to ensure that knowledge isn’t lost when employees leave (retire, quit, terminated, etc.) Focused on both risk management and operational continuity Key role for Managers
  • Knowledge Mapping – Critical Positions • Context • Mission-critical project • History • Central to service delivery • Instructions ( (internal/external) ) • Project Plans • Specialized skills not resident • Calendars elsewhere in organization • Contact numbers • Likelihood/Impact of turnover • People • Processes • Systems • Documents • Online database • Standard operating procedures • Process documentation • Competency models • Suppliers • Organization charts • Vendors • Hand-written notes • Customers • Lessons learned • Finance • People
  • Spectrum of Workforce Planning Needs and Approaches
  • Workforce Planning
  • Talent Management Progression g g Performance Management Development Planning / Support Foundation for other processes Needs prioritized by previous processes Highest short-term impact Focus on critical gaps (“push”) and Defines results and behaviors then employee desires (“pull”) ( pull ) Sets the tone for manager / employee interactions Career Development Have something to focus on from Succession Planning previous processes Address critical gaps Have infrastructure to actually move Define leadership success towards career goals Platform for identifying critical development needs Workforce Planning Requires the full spectrum of data Targeted Selection / Talent Reviews from other processes Strong link to succession Vision should be defined first planning (most effective if done in tandem) Recruiting Additional foundation for development planning Fed by other processes and must be linked to desired outcomes Looked at providing opportunities for internal employees first
  • New Roles for HR Good Talent Management requires significantly different support from the HR team Organization Strategists Design & Refine Programs & Processes Change Management and Communications Supporting Line Managers & Executives Training Calibration Building Assessment Skills Coaching Helping make “Hard Calls”
  • Q&A sucipto.asan@gmail.com