Emerging Trends and Practices
Kathy Nixon
Watson Wyatt
November 14, 2007

Why Integrated Talent Management?
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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
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Companies with employees that have high
Commitment and high Line of Sight have TRS
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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
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Our Approach to Talent Management
Watson Wyatt’s approach is to apply the same clarity,
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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
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based on Real Data…

First Year Challenges
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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
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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
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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?
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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
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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
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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
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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