Workforce Planning

Five Reasons to Focus on Recruiting in 2009

Posted on December 30, 2008. Filed under: Sourcing and Recruiting, Talent Strategy, Workforce Planning | Tags: , , , , , , |

Here we are entering the worst recession in more than 30 years, reading about layoffs, downsizing, and restructuring in almost every industry.   So why would I start our 2009 research with a discussion about the need to focus on recruiting?   Well, contrary to what many may believe, even in times of job reductions recruiting must take a top priority.  Let me give you five good reasons:I Want You

1.   Even in times of an economic slowdown, many organizations still suffer from severe skills and leadership shortages.  Our Fall 2008 TalentWatch® research shows that 36% of organizations have severe shortages in line managers;   17% cite major shortages in technical roles, and industries like healthcare, government, and professional services still have shortages in many line positions.   While the pool of job candidates is much greater now, organizations must still focus on identifying and selecting the best candidates and this must be accomplished with fewer dollars for recruiters, headhunters, and job placement advertisements.

Bottom line:   recruiting teams must continue to seek out top candidates, despite reduction in budgets.

2.  Job seekers become more desperate, making the recruiter’s job more difficult.   In today’s economic climate, job-seekers will aggressively seek out positions — meaning that you will receive more applicants and a much higher job acceptance rate than normal.   Managers must carefully decide if today’s passionate candidate really believes your organization is the perfect fit or if he or she is just desperate to find a position.   And in some cases the pool of highly qualified candidates may have shrunk:   in tough economic times top candidates may want to avoid a risky relocation, making it hard to attract a highly qualified candidate from another geography.

Bottom line: recruiters must slow down and screen candidates more carefully than ever.

3.  Downsizing initiatives may cause an increase in turnover and reduction in engagement.   Many studies show (and common sense bears this out) that organizations which go through severe or sudden downsizing then get a “double whammy” — an increase in voluntary turnover and a reduction in engagement.   I distinctly remember going through sudden layoffs at two of the high-tech companies I worked for.   In both cases the good people immediately started looking around for jobs, knowing full well that they could be the next ones to go.  And those who may not have as many opportunities start to lay low and hide, hoping to avoid the next round of cuts.  The employees who survive a layoff often feel like “survivors” – and often feel less committed to the company and its turnaround efforts.  This is why so many companies go through multiple rounds of layoffs:  the first cut seems deep, but problems get worse if the process is not handled carefully.

Bottom line:   any downsizing effort requies a heavy dose of communication, vision, and strategy to bring people together.   Read our brand new research, A Manager’s Guide to Successful Downsizing, for more tips and examples.

4.   A strong recruiting program brings new ideas and excitement into an organization.   The toughest challenge to deal with during a downturn is the need to create a strong sense of commitment and focus to rebuilding the business.  We ask people to take on new roles, work longer hours, and often lead change programs which are new and challenging.  We want our people to be committed to restructuring and growth.  One of the greatest ways to build such a spirit is to see key new people entering the organization in critical roles.  Not only does it give people a sense of excitement, but it brings new ideas and creativity into the organization.

Bottom line:  do not be afraid to bring new pe0ple into the organization during a restructuring — the right people can create the urgency and change needed to succeed.

5.  Remember that recruiters must continuously recruit existing people into new roles.   When a company restructures, downsizes, or goes through a reorganization there is a tremendous need to “recruit” people into new roles.   I distinctly remember the terrible feeling I had when I had to “take over” a role from a sales group which had been downsized at one of my prior employers.   Rather than being “recruited” into the position, I was “assigned” the job.  It took me many months to get excited about the opportunity and build a network of people to support the reduced function.  In retrospect, if someone had professionally “recruited” me into the role I would have been far better prepared and excited about the new opportunity.

Bottom line:  stay focused on your internal recruiting and job migration efforts, as these changes will be as important as ever.

Sourcing, recruiting, onboarding, and employee lifecycle management are vital parts of high impact talent management.   Stay focused on this important part of your organization and you will be well prepared for growth when your business cycle turns – which may be sooner than you think.

PS, as part of our continuing efforts to provide you with world-class, highly actionable research and advisory services I am very excited to introduce Madeline Tarquinio Laurano, our new Principal Analyst focused on sourcing, recruiting, and workforce planning.  Madeline comes to us most recently from ERE, where she was the primary recruiting analyst among their 80,000+ readers, and research experience at Linkage Group and Aberdeen where she studied leadership development, succession management, and onboarding.   We welcome Madeline to our research team — and her new blog “All Aboard” will focus exclusively on the important and rapidly changing areas of sourcing, recruiting, job boards, and the use of social networking in talent acquisition.

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Corporate Talent: Where the US Labor Market is Going

Posted on October 20, 2008. Filed under: Enterprise Learning, Sourcing and Recruiting, Talent Management, Workforce Planning | Tags: , , , , , |

One of the important things senior business and HR leaders must consider is the availability of labor – that is not just “people” but “the right people.”  Right now, with a 6.1% unemployment rate, the US labor market has undergone some major changes…. and such changes in the availability of work directly affect the skills and capabilities of people.  For example, when I graduated from college in 1978, there was a dearth of engineers and a tremendous interest in energy (as there is now).  So, I studied Mechanical Engineering.  In the decades since, that particular area of study dropped out of favor – but now it’s back.

Consider the following changes which have happened in the last 9 months:

  • The number of jobs in construction has dropped by 4.3% (323,000 jobs lost)
  • The number of jobs in manufacturing has dropped by 2.7% (366,000 jobs lost)
  • The number of jobs in natural resources/energy has increased by 8.6% (64,000 jobs gained)
  • The number of jobs in education and health services has risen by 2.1% (394,000 jobs gained)
  • The number of jobs in government has grown by 1.1% (254,000 jobs gained).
So what we have experienced is a fairly dramatic drop in the need for manufacturing and construction roles and a very dramatic increase in the demand for energy, education, healthcare, and government roles.  Interestingly, working for the government is more popular among young people now than it has been since the 1960s.

 

US Labor Market by Industry October 2008
Fig 1:  US Labor Market by Industry, Bureau of Labor Statistics

 

This data shows what a “non-manufacturing” economy we really are.  The largest industries by employment are business and professional services, healthcare, and retail (and government).  We truly have become an industry of shoppers who are trying to remain healthy.  The fact that 17% of all employees work for some form of government is also alarming.

 

The second economic factor to consider is where industry growth is occurring.  Today, despite the recent drop in the stock market, some industries continue to be doing very well:  our new TalentWatch® research (to be published this month) shows that many Aerospace, Business Services, Defense, High Technology, and Healthcare companies are still growing rapidly.  And when we ask business leaders what roles they need to grow, companies tell us that their biggest shortages are in:
  • Line Managers:  43% of organizations cite severe or major shortages
  • Engineering / technical professionals:  42% of organizations cite severe or major shortages
  • Skilled labor:  30% of organizations cite severe or major shortages
  • Sales:  30% of organizations cite severe or major shortages
  • Top executives:  yes, believe it or not, 34% of organizations cite severe or major shortages.
As our Talent Management Factbook® research supports, organizations are still suffering from shortages in their leadership pipelines, shortages in technical skills, and a never-ending need to find the right sales and executive roles to run their businesses.
 
What does this mean to you?  Despite the dire economic news, more than 40% of the companies we surveyed told us they are limited by the inability to hire key people.  And based on the information above, our economy is slowly but surely shifting to one of services, government, healthcare, and energy workers. 
 
Further supporting this trend is the following data.  According to the Bureau of Labor Statistics, the fastest growing jobs over the next five years will be: 
  • Network systems and data communications analysts – 53% increase
  • Home health aids – 49% increase
  • Software engineers and applications programmers – 45% increase
  • Financial advisors (!!! really?  yes) – 41% increase
  • Medical assistants and nurses – 35% increase
  • Substance abuse and other counselors – 34% increase (I wont even try to guess the reasons for this).

Bottom line is this:  if your organization needs technical, managerial, or healthcare workers to grow, you should plan ahead.  You are likely going to need to further invest in career development, tuition reimbursement, and increases in training in order to obtain the skills you need.  Our research shows a fevered interest in complete career development programs among corporations – programs which help young workers build their skills in professional, technical, and service roles – not only leadership.

I personally believe that the next administration in Washington is going to wake up to these shifts in labor skills and availability and start a massive emphasis on technical, energy, and health training and education in the US.  WIthout such a shift our businesses are going to be increasingly forced to invest in these skills internally.  Either way, we have no choice but to watch these trends – it’s a critical part of our role as strategic talent managers in our organizations.

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The Mysteries of Training Measurement

Posted on March 28, 2008. Filed under: Content Development, Enterprise Learning, Measurement, Workforce Planning | Tags: , , |

Training measurement continues to be a challenge in our industry.   In fact, it is one of the top three areas of concern on the minds of corporate training managers.  
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The Training Measurement Book

We have been studying this issue for more than five years now, and much of our findings are now available in a new book The Training Measurement Book (now available from Bersin & Associates  and from Amazon.com).  The book details the principles, methodologies, case studies, and findings of this research.
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A major part of this research has been the development of our Impact Measurement Framework® and Impact Measurement Model®, which identifies nine critical measurement areas and an entire process for training measurement. 
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A few comments to help people demystify this area:

  • Training measurement is business process measurement.  Effective training measurement is very similar to the measurement of any corporate business process, and should focus most importantly on measuring adoption, alignment (management buy-in), utility (how vigorously the learner recommends the course to others), and client satisfaction (did the business leader get what they wanted?).
  • Categorize your training program types.  The right level of measurement depends on the program type.  We identified four distinct types of training programs:  (1) informational, (2) skills-development, (3) competency development, and (4) certified skills development.  (Note this is slightly different and more practical than the ADDIE model of “awareness, informational and skills.”)  In the case of type 1 programs, it makes sense to measure adoption and completion.  In the type of type 3 or 4 programs, we need to capture more detailed information like learning results and job impact.
  • Focus on building and measuring alignment.  No training program delivers high value unless management and the rest of the organization supports it.  Therefore “alignment” (one of our 9 measurement areas) is perhaps the most important measure of all.  You can measure alignment in many ways – through the use of up-front manager signoff forms, certain types of course assessments, and a sound planning and budgeting process.   An employee who does not attend a course with the right management and organizational support will not gain much value, so you must focus your measurement on these “alignment” areas.
  • Consider the type of learner who takes the course.  One of the biggest drivers of impact is the nature of the person who attends the course.  At GM, for example, the measurement team found that in some courses as many as 1/4 of attendees come from areas outside of the functional program area.  For example, engineers take manufacturing training and marketing people take sales training.  If you try to measure “job impact” for everyone, results will be meaningless.  GM developed a powerful solution: they ask attendees to identify their functional area so they can see what percentage of the attendees are going to specifically apply the material toward their job.
  • Do not focus heavily on ROI.  Measurement of ROI is not as easy or valuable as it sounds.  In the book we give lots of examples where this fails.  Ultimately if you measure alignment, efficiency, adoption, and utility, no one will ask you to measure ROI.  In fact, the CLOs and Training Directors we talk with who are highly aligned with the business’s most strategic priorities rarely measure ROI.
  • Think “process” not “project.”  We find that a consistent and scalable process is far more actionable than a series of measurement “projects.”  As the process rolls out and you receive lots of information, you can tweak and modify it over time.  You want to focus 80% of your time on analysis of information and 20% on capturing information, not the other way around.
  • Measure what matters to your business.  Excellent IT organizations measure uptime, service levels, response times to trouble tickets, and number of security exposures.   Excellent marketing organizations measure number of leads, website hits, new sales opportunities, and ultimately conversions.  If you are developing a new hire sales training program, take the time to identify the business problems you want to solve (this is the essence of performance consulting) and engage the business leaders (e.g. the VP of Sales).  At Randstad, for example (a temporary staffing company), the critical measure of the effectiveness of the onboarding program is the client’s retention of the temporary worker.  If they are well trained, they stay on the job.  If not, there are high turnover rates.
  • Consider training measurement in the context of talent measurement.  Most organizations today not only want to understand the efficiency and effectiveness of training programs, but the impact on retention, employee satisfaction, engagement, performance, and even recruiting.  The GM University measurement program, for example, not only measures training programs, but also measures leadership effectiveness, employee satisfaction, and many other talent measures.  Remember that in today’s “Talent Management” focused organization, the corporate learning organization must contribute to the talent management strategy.   The days of a “standalone” training measurement group may be numbered, so think about how to integrate this effort with the “talent measurement” team in your organization.

Bottom line:  In today’s tightened budget environment, actionable measurement of training is one of your most valuable tools when the time comes to reduce the budget.   There is a lot more to talk about on this topic, and we welcome your comments.

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High Impact Talent Management: Top 22 High-Impact Processes

Posted on July 17, 2007. Filed under: Enterprise Learning, HR Systems, Leadership Development, Organization & Governance, Performance Management, Sourcing and Recruiting, Succession Planning, Talent Management, Talent Strategy, Workforce Planning |

The Top 22 Business Processes which Drive Business Impact


In 2007 we conducted one of the largest-ever studies of corporate talent management:  we interviewed and surveyed more than 750 corporations to gain an understanding of their business problems, their talent challenges, and their levels of maturity and sophistication in 62 different talent management processes.

This research was designed to do three things:  first, gain a clear understanding of how corporate talent management is defined;  second to understand the trends and directions in implementing these processes;  and third, most importantly, to see how talent management drives business results.

The research was extremely successful and also very enlightening.  Readers who would like to get a good understanding of the findings should read the executive summary

The full 300+ page report is available at www.bersin.com/hitm or by joining our research membership program.

The most interesting, and perhaps controversial part of the research, however is the following.  When we looked at the 62 different things which organizations can do to improve their talent processes (the list is available in the report), we found that there were 22 in particular which drove particularly high impact.  These “top 22” as we call them represent the “priority list” for HR executives, managers, and business leaders to consider when they decide they want to “do a better job of managing and developing talent.”   In other words, they tell you precisely where to focus.

When we looked at the final results, the findings were both obvious and subtle at the same time.  While many books and articles have been written about the value of various HR processes, we consider this list “modern,” “unbiased,” and “scientific.”  We have not applied any personal opinions to this list – it was generated from the research statistics and analysis.  (For a description of the methodology, please read the executive summary.)

Top 22 High Impact Talent Management Processes

Fig 1:  Top 22 High Impact Talent Management Processes

Here is the list.  Each process is clearly described, and color coded into process areas (performance management, sourcing & recruiting, workforce planning, competency management, learning & development, and leadership development).  Let me spend some time explaining some of the startling findings here:

1.  The #1 process organizations should focus on is coaching.  Coaching?  Is that really a talent management initiative?  Yes it is.  Organizations with strong coaching cultures, programs, and support structures develop much higher levels of engagement, leadership, flexibility, and performance.  For more details on coaching, read our article “Coaching, a new imperative for Leadership.”  This article explains why this process is so hard-hitting and what you can do to develop a better coaching program in your company.
2.  Workforce planning must become far more scientific and must identify skills gaps.  Skills-based workforce planning processes (#2 and #3) are critical today.  Most organizations have a workforce planning function, but it often consists of little more than a collection of headcount requirements for each business unit.  Organizations that succeed in today’s “tight talent” market must gain a deep understanding of their skills gaps.  They must understand these gaps among the “mission-critical” jobs first, and they must have visibility into the future of these gaps. 

One of our research clients embarked on a 9 month study of workforce skills gaps and factored in retirements, attrition, new project demands, and known demographic shifts only to find that in order to make their business plan for the next 5 years they needed to find 45,000 new engineers.  This startling finding led them to a whole series of initiatives to change their sourcing, internal career development, and job placement strategies – including moving job to people and not vice-versa.

3.  Competency management is now fundamental.  While we do not recommend that organizations try to build enterprise-wide models up front, this research (and much of our other research) shows clearly that competency management is the “currency” for talent processes and decisions.  Without a fundamental understanding of the “secret sauce” which makes your organization succeed, much of your talent decisions sit on quicksand.  Well-defined competencies help you set goals, appraise people, identify high-potentials, create development plans, identify leaders, and develop the leadership pipeline.  Seven of the top 22 processes fell into this area.

4.  Performance management is a heavy hitter.  But high-impact performance management is not what you think.  While annual appraisals are important, they are far less important than coaching, goal-setting, goal alignment, and development planning.  In fact, performance appraisal and linkage to compensation is less important than coaching, goal-setting, and development planning. 

Our research clearly shows the following:  performance management is “management.”  It takes place every day, not once or twice a year.  It describes the way that individuals interact with their immediate managers, their executives, and their work teams.  The appraisal is no more than a single point in this wide continuum of activities.  By the way, most mature organizations realize a simple fact:  all we really have in business is management.  Your company is not successful because of its products – it is successful because of its people.  How they are managed is the backbone of success.

5.   Sourcing and recruiting is becoming a science.  In today’s labor market it is harder and harder to meet hiring targets.  We estimate that over the next 15 years there will be more than 10 million jobs available than there are ready skilled people.  This means several things:  you have to do a far better job of targeting, sourcing, assessing, recruiting, and marketing to the right candidates.  Recruiting has moved from a “purchasing” function to a “sales and marketing” function.

Moreover, there are a wide variety of new tools now available to improve the efficiency and effectiveness of talent acquisition:  exciting new assessment systems, fine-grained job boards and sourcing sites, innovative university recruiting programs, and new competitive intelligence approaches.  In addition, the days of “career development” programs are back.  Organizations must now invest in training and development programs which take the “unrefined new hires” and move them into key positions throughout their career.  Most of the learning & development managers we speak with are rebuilding a wide variety of “talent development” programs to develop engineers, sales people, manufacturing managers, and executives.

6.  Finally, a surprising fact.  HR systems, for all their excitement, don’t add as much value as people think.  In fact, in our ranked list of 62 processes which drive impact. HR systems ranked in the mid 50s.  There are more than 50 more valuable things to focus on than the selection and implementation of an “applicant tracking system” or a “talent management suite.”

This is not to say that automation is not important – it is.  But take it for what it is – automation.  HR systems do not “create processes” – they automate processes which you must design.  A few interesting facts:  organizations that have automated performance management software are 14% more effective than those with paper processes.  But organizations with in-house developed systems are 9% more effective than those with vendor solutions.  Vendor software, then, actually reduces overall impact for the first 2-3 years.  Only after 2.4 years do vendor solutions “catch up” to internally developed systems.

What this illustrates is that software systems which automate well-designed, well-implemented processes (typically home-grown systems) add value.  Software systems which automate non-existing processes or poorly defined processes simply create overhead.  Do not fall into the trap of thinking that your talent management “strategy” is centered around buying software.  Your strategy should focus on implementing business-driven, carefully governed processes which focus in the 22 areas above.  Each of these 22 processes takes years to implement.  They require a close alignment with business managers.  They require careful investments in training and change management.  Software may facilitate these processes, but it does not create them.  Do not let the next big wave of software vendors convince you otherwise.

Bottom line:  we have clearly entered a “third wave” of HR – a time when HR can add strategic value by focusing on high-value roles, solving business-specific talent problems, and helping the organization adjust to the changing workforce.

 

Evolution of HR

 

Fig 2:  The Third Wave of HR

Focus your time on three things:  First, focus on the processes and people that matter to the business.  Find the 30% of your workforce which generates 70% of your organization’s value and spend your time there.  Second, work with your business leaders to design and implement processes that drive impact, with a careful focus on change management, governance, and monitoring and maintenance.  Third, automate as much as you can, but focus on automating processes which work – not using software to drive change.

We believe that if you follow the guidance from this research you will find talent management to be a transformational, exciting, business-changing experience.  As always, we welcome your feedback and comments on this article.

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What is Talent Management?

Posted on July 16, 2007. Filed under: HR Systems, Performance Management, Sourcing and Recruiting, Succession Planning, Talent Management, Talent Strategy, Workforce Planning |

Talent Management” has become one of the most important buzzwords in Corporate HR and Training today.  In this article we will explain the history, principles, and processes of talent management and help readers understand our research agenda in this important area.

From Personnel to Strategic HR to Talent Management

To understand why Talent Management has become so important, we must first look at the evolution of corporate HR:

Stage 1:  Personnel Department: 

In the 1970s and 1980s the business function which was responsible for people was called “The Personnel Department.”  The role of this group was to hire people, pay them, and make sure they had the necessary benefits.  The systems which grew up to support this function were batch payroll systems.  In this role, the personnel department was a well understood business function.

Stage 2:  Strategic HR: 

In the 1980s and 1990s organizations realized that the HR function was in fact more important – and the concepts of “Strategic HR” emerged.  During this period organizations realized that the VP of HR had a much larger role:  recruiting the right people, training them, helping the business design job roles and organization structures (organization design), develop “total compensation” packages which include benefits, stock options and bonuses, and serving as a central point of communication for employee health and happiness. 

The “Head of Personnel” became the “VP of HR” and had a much more important role in business strategy and execution.  The systems which were built up to support this new role include recuiting and applicant tracking (ATS), portals, total compensation systems, and learning management systems.  In this role, the HR department now became more than a business function:  it is a business partner, reaching out to support lines of business.

Stage 3:   Talent Management:   

We are now entering a new era:  the emergence of “Talent Management.”   While strategic HR continues to be a major focus, HR and L&D organizations are now focused on a new set of strategic issues:

  • How can we make our recruiting process more efficient and effective by using “competency-based” recruiting instead of sorting through resumes, one at a time?

  • How can we better develop managers and leaders to reinforce culture, instill values, and create a sustainable “leadership pipeline?”

  • How do we quickly identify competency gaps so we can deliver training, e-learning, or development programs to fill these gaps?   How can we use these gaps to hire just the right people?

  • How do we manage people in a consistent and measurable way so that everyone is aligned, held accountable, and paid fairly?

  • How do we identify high performers and successors to key positions throughout the organization to make sure we have a highly flexible, responsive organization?

  • How do we provide learning that is relevant, flexible, convenient, and timely?

These new, more challenging problems require new processes and systems.  They require tigher integration between the different HR silos — and direct integration into line of business management processes.  Today organizations are starting to buy, build, and stitch together performance management systems, succession planning systems, and competency management systems.  The HR function is becoming integrated with the business in a real-time fashion. 

Best-practice examples of companies embarking on these processes include Aetna, Capgemini, Eastman Chemical, Kimberly-Clark, PitneyBowes, SCI, Seagate, Steelcase, Textron, and more.  You can read about these companies’ talent and performance management initiatives in Performance Management 2006.

Defining the Talent Management Process

Organizations are made up of people:  people creating value through proven business processes, innovation, customer service, sales, and many other important activities.  As an organization strives to meet its business goals, it must make sure that it has a continuous and integrated process for recruiting, training, managing, supporting, and compensating these people.  The following chart shows the complete process:

 

1.  Workforce Planning:  Integrated with the business plan, this process establishes workforce plans, hiring plans, compensation budgets, and hiring targets for the year.

2.  Recruiting:  Through an integrated process of recruiting, assessment, evaluation, and hiring the business brings people into the organization.

3.  Onboarding:  The organization must train and enable employees to become productive and integrated into the company more quickly.

4.  Performance Management:  by using the business plan, the organization establishes processes to measure and manage employees.  This is a complex process in itself, which we describe in detail in our new research Performance Management 2006.

5.  Training and Performance Support:  of course this is a critically important function.  Here we provide learning and development programs to all levels of the organization.  As we describe in the Death of the Corporate University, this function itself is evolving into a continuous support function.

6.  Succession Planning:  as the organization evolves and changes, there is a continuous need to move people into new positions.  Succession planning, a very important function, enables managers and individuals to identify the right candidates for a position.  This function also must be aligned with the business plan to understand and meet requirements for key positions 3-5 years out.  While this is often a process reserved for managers and executives, it is more commonly applied across the organization.

7.  Compensation and Benefits:  clearly this is an integral part of people management.  Here organizations try to tie the compensation plan directly to performance management so that compensation, incentives, and benefits align with business goals and business execution.

8.  Critical Skills Gap Analysis:  this is a process we identify as an important, often overlooked function in many industries and organizations.  While often done on a project basis, it can be “business-critical.”  For example, today industries like the Federal Government, Utilities, Telecommunications, and Energy are facing large populations which are retiring.  How do you identify the roles, individuals, and competencies which are leaving?  What should you do to fill these gaps?  We call this “critical talent management” and many organizations are going through this now.

In the center of this process are important definitions and data:  job roles, job descriptions, competency models, and learning content. 

How do you Develop and Implement a Talent Management Strategy?

As I describe above, Talent Management is a natural evolution of HR.  It is a series of business processes — not a “product” or “solution” you can buy. 

Organizations we speak to are focused on different elements — driven by their maturity and the urgent business problems they face today.  While a few mature organizations have dealt with most of the processes above, most organizations focus on several of the key elements and build an integrated approach over time. 

Additionally, Talent Management is a “forward-looking” function.  Not only should talent management improve your organization’s flexibility and performance, it should give you the information and tools to plan for growth, change, acquisitions, and critical new product and service initiatives.

A few critical issues we have identified in our research:

1.  Talent Management requires integration and communication between existing HR-L&D functions. 

Training can no longer be “left on an island.”  As we detail in our workshops, the L&D organization must align much more closely with the performance management and recruitment process.  Training programs should be developed and updated to continuously address problems which surface in the performance management process.  New hires which are hired because of certain competencies should see a set of training offerings which complement and reinforce these competencies.  Compensation program should naturally tie to the performance management process.

2.  Competency management, a mis-understood and difficult part of training and HR, has become critical. 

The job descriptions, roles, and competencies used for performance management are shared by L&D, recruiting, and succession planning.  There are many techniques for effective use of competencies – many are described in our performance management systems research.  A simple best-practice is for your organization to have a small set of consistent, easy-to-understand competencies which can be applied across the organization.

3.  Software solutions are maturing, but not the solution. 

Despite vendor claims, there is no complete “talent management” software solution yet.  Vendors each offer different elements of this solution.  To solve urgent problems, most companies today buy standalone systems:  standalone learning management systems, standalone standalone performance management systems, standalone recruiting and standalone compensation systems.  As the market matures and companies press harder for integration, vendors will create more integrated solutions.

Our research has found, however, that software is not the solution.  In fact, of the 62 processes we studied, HR software was ranked 55 or lower in business impact.  You cannot “buy” a software solution to implement your talent management strategy.  You must focus on the top 22 process areas of greatest impact and build this strategy through a business-driven process.  Our research and workshops will help you develop this strategy.

What does this mean to your Organization?

Talent Management is a powerful and important trend across HR and L&D.  It changes the way you are organized, how you use technology, how your resources are allocated, and how you measure what you do.   If you are a training manager, director, or CLO, talent management will impact your role.  You may be asked to integrate your learning programs with the company’s performance management initiative. 

Many organizations have a new job:  The VP of Talent Management.  This role typically includes Learning & Development, Performance and Competency Management, and Succession Planning fucntions.  We believe that this integrated “HRD” function is an important evolution in the way HR organizations are run.

What does this mean to your HR-IT Strategy?

Talent Management will also impact your systems strategy:  For example, do you want a stand-alone LMS or should your LMS be integrated with the company’s performance management systems?  What systems integration are the most important?  How do you use competency models to tie learning to performance management?  What “suite” products are mature enough for your particular organization’s needs?

The role of HRIT has also become much more complex.  It is no longer possible to focus on HRIS systems alone – HRIT must understand learning technology, competency management technology, portal technology, and the integration of these different applications.  In many organizations LMS systems, for example, are not managed by HRIT.  Over time we believe the role of HRIT will be more strategic than ever.

Despite these issues, our research has shown that very few organizations have “integrated talent management systems” and most of the vendors of such products are far away from delivering a totally integrated solution.

For more information on our in-depth research on talent management, including best practices in each of the 8 key areas, the top 22 high-impact talent processes, and benchmarks for your HR organization, read High Impact Talent Management, our groundbreaking research on this important new business strategy.

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Talent Management Changes HR

Posted on June 1, 2007. Filed under: Talent Management, Talent Strategy, Workforce Planning |

“Talent Management” has become one of the most important buzzwords in Corporate HR and Training today.  In this article we will explain the history, principles, and processes of talent management and help readers understand our research agenda in this important area.

From Personnel to Strategic HR to Talent Management

To understand why Talent Management has become so important, we must first look at the evolution of corporate HR:

Stage 1:  Personnel Department: 

In the 1970s and 1980s the business function which was responsible for people was called “The Personnel Department.”  The role of this group was to hire people, pay them, and make sure they had the necessary benefits.  The systems which grew up to support this function were batch payroll systems.  In this role, the personnel department was a well understood business function.

Stage 2:  Strategic HR: 

In the 1980s and 1990s organizations realized that the HR function was in fact more important – and the concepts of “Strategic HR” emerged.  During this period organizations realized that the VP of HR had a much larger role:  recruiting the right people, training them, helping the business design job roles and organization structures (organization design), develop “total compensation” packages which include benefits, stock options and bonuses, and serving as a central point of communication for employee health and happiness. 

The “Head of Personnel” became the “VP of HR” and had a much more important role in business strategy and execution.  The systems which were built up to support this new role include recuiting and applicant tracking (ATS), portals, total compensation systems, and learning management systems.  In this role, the HR department now became more than a business function:  it is a business partner, reaching out to support lines of business.

Stage 3:   Talent Management:   

We are now entering a new era:  the emergence of “Talent Management.”   While strategic HR continues to be a major focus, HR and L&D organizations are now focused on a new set of strategic issues:

  • How can we make our recruiting process more efficient and effective by using “competency-based” recruiting instead of sorting through resumes, one at a time?

  • How can we better develop managers and leaders to reinforce culture, instill values, and create a sustainable “leadership pipeline?”

  • How do we quickly identify competency gaps so we can deliver training, e-learning, or development programs to fill these gaps?   How can we use these gaps to hire just the right people?

  • How do we manage people in a consistent and measurable way so that everyone is aligned, held accountable, and paid fairly?

  • How do we identify high performers and successors to key positions throughout the organization to make sure we have a highly flexible, responsive organization?

  • How do we provide learning that is relevant, flexible, convenient, and timely?

These new, more challenging problems require new processes and systems.  They require tigher integration between the different HR silos — and direct integration into line of business management processes.  Today organizations are starting to buy, build, and stitch together performance management systems, succession planning systems, and competency management systems.  The HR function is becoming integrated with the business in a real-time fashion. 

Best-practice examples of companies embarking on these processes include Aetna, Capgemini, Eastman Chemical, Kimberly-Clark, PitneyBowes, SCI, Seagate, Steelcase, Textron, and more.  You can read about these companies’ talent and performance management initiatives in High-Impact Talent Management.

Defining the Talent Management Process

Organizations are made up of people:  people creating value through proven business processes, innovation, customer service, sales, and many other important activities.  As an organization strives to meet its business goals, it must make sure that it has a continuous and integrated process for recruiting, training, managing, supporting, and compensating these people.  The following chart shows the complete process:

 

1.  Workforce Planning:  Integrated with the business plan, this process establishes workforce plans, hiring plans, compensation budgets, and hiring targets for the year.

2.  Recruiting:  Through an integrated process of recruiting, assessment, evaluation, and hiring the business brings people into the organization.

3.  Onboarding:  The organization must train and enable employees to become productive and integrated into the company more quickly.

4.  Performance Management:  by using the business plan, the organization establishes processes to measure and manage employees.  This is a complex process in itself, which we describe in detail in our new research High Impact Performance Management.

5.  Training and Performance Support:  of course this is a critically important function.  Here we provide learning and development programs to all levels of the organization.  As we describe in the Death of the Corporate University, this function itself is evolving into a continuous support function.

6.  Succession Planning:  as the organization evolves and changes, there is a continuous need to move people into new positions.  Succession planning, a very important function, enables managers and individuals to identify the right candidates for a position.  This function also must be aligned with the business plan to understand and meet requirements for key positions 3-5 years out.  While this is often a process reserved for managers and executives, it is more commonly applied across the organization.

7.  Compensation and Benefits:  clearly this is an integral part of people management.  Here organizations try to tie the compensation plan directly to performance management so that compensation, incentives, and benefits align with business goals and business execution.

8.  Critical Skills Gap Analysis:  this is a process we identify as an important, often overlooked function in many industries and organizations.  While often done on a project basis, it can be “business-critical.”  For example, today industries like the Federal Government, Utilities, Telecommunications, and Energy are facing large populations which are retiring.  How do you identify the roles, individuals, and competencies which are leaving?  What should you do to fill these gaps?  We call this “critical talent management” and many organizations are going through this now.

In the center of this process are important definitions and data:  job roles, job descriptions, competency models, and learning content. 

How do you Develop and Implement a Talent Management Strategy?

As I describe above, Talent Management is a natural evolution of HR.  It is a series of business processes — not a “product” or “solution” you can buy. 

Organizations we speak to are focused on different elements — driven by their maturity and the urgent business problems they face today.  While a few mature organizations have dealt with most of the processes above, most organizations focus on several of the key elements and build an integrated approach over time. 

Additionally, Talent Management is a “forward-looking” function.  Not only should talent management improve your organization’s flexibility and performance, it should give you the information and tools to plan for growth, change, acquisitions, and critical new product and service initiatives.

A few critical issues we have identified in our research:

1.  Talent Management requires integration and communication between existing HR-L&D functions. 

Training can no longer be “left on an island.”  As we detail in our workshops, the L&D organization must align much more closely with the performance management and recruitment process.  Training programs should be developed and updated to continuously address problems which surface in the performance management process.  New hires which are hired because of certain competencies should see a set of training offerings which complement and reinforce these competencies.  Compensation program should naturally tie to the performance management process.

2.  Competency management, a mis-understood and difficult part of training and HR, has become critical. 

The job descriptions, roles, and competencies used for performance management are shared by L&D, recruiting, and succession planning.  There are many techniques for effective use of competencies – many are described in our performance management systems research.  A simple best-practice is for your organization to have a small set of consistent, easy-to-understand competencies which can be applied across the organization.

3.  Software solutions are maturing. 

Despite vendor claims, there is no complete “talent management” software solution yet.  Vendors each offer different elements of this solution.  To solve urgent problems, most companies today buy standalone systems:  standalone learning management systems, standalone standalone performance management systems, standalone recruiting and standalone compensation systems.  As the market matures and companies press harder for integration, vendors will create more integrated solutions.

Even if you do find an integrated toolset which manages multiple talent processes, the biggest challenges in implementation are integrating you own business processes.  Our keynote new research report, High Impact Performance Management, details the state of this industry and provides detailed analysis of the top 20 performance and talent management systems providers.

What does this mean to your Organization?

Talent Management is a powerful and important trend across HR and L&D.  It changes the way you are organized, how you use technology, how your resources are allocated, and how you measure what you do.   If you are a training manager, director, or CLO, talent management will impact your role.  You may be asked to integrate your learning programs with the company’s performance management initiative. 

Many organizations have a new job:  The VP of Talent Management.  This role typically includes Learning & Development, Performance and Competency Management, and Succession Planning fucntions.  We believe that this integrated “HRD” function is an important evolution in the way HR organizations are run.

What does this mean to your HR-IT Strategy?

Talent Management will also impact your systems strategy:  For example, do you want a stand-alone LMS or should your LMS be integrated with the company’s performance management systems?  What systems integration are the most important?  How do you use competency models to tie learning to performance management?  What “suite” products are mature enough for your particular organization’s needs?

The role of HRIT has also become much more complex.  It is no longer possible to focus on HRIS systems alone – HRIT must understand learning technology, competency management technology, portal technology, and the integration of these different applications.  In many organizations LMS systems, for example, are not managed by HRIT.  Over time we believe the role of HRIT will be more strategic than ever.

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Talent Management: Too Important to Delegate to HR

Posted on May 11, 2007. Filed under: Talent Management, Talent Strategy, Workforce Planning |

Talent Management is a Business Problem, not an HR Problem

As we complete our High Impact Talent Management® research (to be launched this May), we are uncovering some very important issues.  One in particular is the critical need to understand that talent management is not an “HR process ” but rather a “business process” which must be implemented through line of business executive leadership.  This article highlights this critical issue and previews our upcoming High Impact Talent Management findings in this area.

The Linkage between Business Issues and Talent Issues

Underlying this finding is the obvious but often subtle issue that in today’s tight labor markets almost every major business challenge has an underlying talent challenge.  Talent management strategies, then, should not be developed except in the context of your particular business strategy.

For example, in our research we found that the two biggest challenges facing US corporations today are a combination of growing markets (a need to expand globally or into new products and services) coupled with a need to hold back costs.  While the economy is expanding, business executives remain afraid of committing large sums of cash to growth – a problem well documented in the business press.

What this has done is create a talent squeeze.  Organizations are finding skills gaps, headcount gaps, and leadership gaps in their workforce which they must fill to grow – yet they do not have the resources to dramatically increase salaries to compete for labor.  As a result, we are seeing a tremendous focus on sourcing and recruiting strategies, internal career development, and leadership development.  

These problems are very business and organization-specific.  In some cases the challenges involve a shortage of critical skills which create shortages in particular job roles.  This takes the form of shortages of production engineers in the oil and gas industry (Hess Petroleum, Shell, Chevon), regional managers in the retail industry (Starbucks, The Gap), nurses in the healthcare and insurance industries (HealthNet, Intermountain HealthCare), or mid-level managers in manufacturing and most industries(GM). 

While these problems are similar, the solutions vary widely from company to company and industry to industry.   The solution to a shortage of mid-level regional Starbucks managers, for example, is very different from the solution to a shortage of petroleum production engineers.

Creating a Business-Driven Talent Strategy

What this means, then, is that you cannot buy “the book on talent management.”  You must develop a talent management strategy unique to your business, using best-practices, tools, research, and principles of HR and L&D.  In fact, the approach we have developed from our research is shown below:

High Impact Talent Management Strategy Process

Figure 1: High Impact Talent Management Strategy Process

This process, which is described in detail in our research, starts with your organization’s business plans and overall business strategy.  If you are expanding into Eastern Europe, for example, you will find a series of talent gaps required to implement that strategy.  Your sourcing, staffing, training, and performance management processes must be designed to solve that problem.

(Notice also, that this methodology places the system selection at the bottom.  Our research has shown that HR software, while important, has far less impact than careful process design and implementation.  More on this in a future article.)

Therefore the Business must Lead the Solution

Therefore, if you want the talent management solution to be effective and well-adopted throughout your organization, it must be led by a line executive (not HR).  While HR is clearly the subject-matter and process expert (we think of HR as the “steward,” not the “owner”), an HR-driven approach usually creates a high level of compliance but a low level of true adoption. 

Consider the following data: this data, taken from our High Impact Talent Management research (which analyzed more than 1 million different elements of strategy and impact) clearly shows that business-driven solutions have much greater impact than HR-driven initiatives.

Governance of Talent Management

Figure 2: Impact of Governance in Talent Management

Is Talent Management too Important to Delegate to HR?  

In a sense, the answer is yes.  It is too important to be “left” to HR – while HR must steward the process and implement much of the solution elements, ultimately talent management solutions must be business-driven.  Our research details the process for developing and governing these solutions, and also helps you identify the best-practices for such solutions.

Not Sure How to Define your Talent Management Strategy?

In our Talent Management Framework, we describe how organizations can integrate their people processes (sourcing & recruiting, performance management, succession planning, leadership development, learning & development, and succession planning) to address their urgent talent challenges.  Read and listen to us describe this framework to help you get started.

Bottom Line:  Key Thoughts to Remember

1.  Talent challenges exist in the context of the underlying business strategy. It is because the business is growing (or shrinking) that a certain skills or talent gap exists.  It is because of the company’s expansion into a new market that new managers are needed.  If you, as an HR or L&D manager do not understand this underlying business strategy, you cannot possibly hope to design, implement, and manage a process to solve it.2.  The detailed solution to these problems is unique to your organization, but can leverage best practices. You cannot buy a book on talent management to solve these problems.  There is no textbook answer to the problem of hiring more engineers, for example.  At Raytheon, the problem is manifest by a huge increase in US Federal contracts which demand US citizens.  At NetworkAppliance the problem is manifest by hyper growth and the need to hire customer-facing engineers that understand the network storage industry. 3.  The solutions to these challenges demand ownership by business leaders and managers. The solution to the problem of a shortage of engineers cannot be solved by the staffing and recruiting organization:  it must be solved by managers, directors, and executives in the product and engineering organization who carefully define the skills needed, work with recruiters to attract these people, develop the internal candidates for these positions, and manage their teams to increase retention and job mobility.   It is the VP of Engineering or Product Operations who feels the pinch when he or she cannot hire the right caliber of people, not the VP of HR.

 

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