After Talent Management: Enter People Management

Posted on December 17, 2008. Filed under: Talent Management, Talent Strategy | Tags: , , , |

Business and HR leaders have been focused on integrated talent management for the last three years now, and it is clear that talent management concepts, strategy, and solutions have started to transform HR.  Most HR organizations today now have an owner of “talent management” and this person is pulling together formerly silo’d HR processes like performance management, succession management, career management, and leadership development.

Bersin & Associates Talent Management Framework

Fig 1:  Bersin & Associates Talent Management Framework

But something continues to be missing: many of these programs and strategies arevery HR-focused. They are often cost-justified and driven by the HR or L&D organization’s desire to become more aligned and efficient.  (I have sat through five presentations called “One-HR” in the last six months).  And yes, as we talked about in our research, “Business-Driven Talent Management” is our ultimate strategy.  But today many organizations have not yet reached the “business-driven” part of the solution – so the “talent management” strategy looks like an “HR-strategy.”

As we have written about many times in the past, the solution here is to do two things:  first, clearly identify and document the business problems you want to address (today this is pretty easy!);  second, translate these into the talent strategies you want to implement which support these business problems.  If you are transforming yourself from an investment bank to a retail bank, for example, you have many new roles to train, people to migrate, and processes to implement.  If you are moving from a healthcare service company to a preventive healthcare company (more on this below), then your talent strategy should include a process of retraining and re-thinking the roles of everyone in the healthcare value chain.

As we discuss in our research “every business strategy has an underlying talent strategy.”

As we talk with literally hundreds of companies over the past few years, we continuously remind them to work on these two levels first.  Only after these strategies are in place, can you design and implement your new performance, succession, and career development program.


Economic Downturn Creates a New Focus – An Expanded Role for Talent Management

Now, however, the business world has changed.   The critical problems organizations face in 2009 are very different: rapid market changes, restructuring, downsizing, mergers and acquisitions.  These problems not only create a need for better alignment and leadership, but a heavy focus on rapid talent planning, employee mobility, rapid skills development, and what we call “business agility.”  (You will see a lot more from us on this topic in 2009.)  This means that many of the 2006 and 2007 and 2008 concepts of talent management are no longer enough.  

Today I hear more and more HR and business leaders telling me “we have our talent management strategy well underway” but what we really need is a “People Strategy.”

What they are really saying is that while the traditional definition of talent management is important, they really need more — and I believe this concept of the “People Strategy” is the next “big thing” coming in the world of business-driven HR.

Consider the challenges of one of the nation’s largest healthcare providers, Kaiser Permanente.  This organization has 160,000 employees and is one of the country’s largest insurance providers, healthcare service providers, IT organizations, and facilities management organizations. It is transforming itself from a “healthcare service provider” to a “wellness provider,” which means a tremendous change in focus on preventive medicine. This transition will affect every role in the company, and it is accompanied by tremendous changes in organization structure.

The Concept of the People Strategy

The company’s “people strategy” must include things which go beyond what we would call “talent management:”

  • Talent segmentation or “audience analysis” – identifying the critical pools of people in the organization and how they will be managed, compensated, trained, and hired differently.   These segments will be used for many purposes:  different sourcing and recruiting policies, different compensation programs, different training and career development strategies, and different general management approaches.
  • Understanding pivotal talent – the concepts of “pivotal talent” have been around for a few years.  Which roles in your organization drive the greatest level of value today – and which will be even more important into the future?  If you had only one dollar to spend on development, where would you spend it?  When you need to downsize, which roles can you afford to do without?  Organizations do not yet know how to identify their pivotal talent, but I believe they will focus on this in the coming years.
  • Integrated compensation or total reward strategies – most “talent management” teams are very OD focused.  They do not directly integrate with the compensation function yet.  But once you think about your organization’s business strategies, talent segments, and pivotal talent, it is now important to consider compensation within the same framework.  While “total rewards” may not fit into today’s definition of the talent management strategy (in some organizations it does), it definitely fits into the “People Strategy.”  For example, during a downturn, which groups will get lower bonuses and compensation, which will suffer layoffs, and which may in fact see compensation increases?  Where and how should we implement pay-for-performance over different pools of talent?  Where can we afford to pour more money and where should we hold back?
  • Diversity – how will we dovetail our diversity strategy into our talent management strategy?  Several HR leaders have asked me why diversity is not included in our framework, and I told them that I have yet to see it included in most organizations’ view.  Yet in today’s rapidly changing labor market, diversity is not just a compliance issue, it drives your competitive advantage.  If you cannot hire, manage, and operate as a diverse organization your business opportunties will be severly limited.  It must be part of the “people strategy.”
  • Talent planning – how will we plan, model, forecast, and manage the pool of people we have, the people we need, and their requisite skills and capabilities?  This is one of the emerging areas we are studying in early 2009.  The term “workforce planning” is widely used today, but in most cases it refers to a system of collecting open headcount.  In a “people strategy” workforce planning must be accurate, dynamic, and integrated with the business.  For example, can you get a handle on the contingent workforce in your company and identify whether those roles are strategic or tactical and how cost-effective they are?  Using highly skilled contingent workers is a business strategy, not just something to account for in HR.
  • Career models and deep specialization and skills – most organizations now realize (and I hope all do soon) that their core business is dependent on deep levels of skills within certain critical roles.   New books like “Talent is Overrated” have driven home the principle that only by practice (read “training”) can someone become an expert.  Where are the critical career models in the organization and how will we allocate resources to build these skills, provide mobility into and out of these roles, and facilitate growth in these roles?  How can we create a development planning process at the manager level which drives the skills and mobility we need?  While this kind of thinking goes on in L&D today, it must be integrated into the company’s bigger strategies for people.
  • Learning Culture and Business agility – a big topic we are now studying.  How can the organization “learn” more quickly?  When a business downturn hits, one of the first things the CEO says is “how did this happen to us?”  “what can we do to prevent this from happening again?”  The topics of innovation, leadership, new business growth, harvesting of existing businesses, all depend on the “people strategy.”

So what I believe we are seeing is a “growing up” of the concepts of talent management.  Think about where you are in your own organization’s talent management plan.  My guess is that if you build a multi-year roadmap, what you will find is that today’s “performance management” project, which turned into an “integrated talent management” program, will soon turn into an integrated “people management” strategy.

We will be publishing much more on this topic in the coming year – and most importantly including examples and case studies at our IMPACT 2009 Research Conference.   I personally think it is very important to think ahead and understand that today’s focus on talent management will evolve soon.  And remember that in today’s economy your talent management program must be business-driven, focused on your organization’s short and long term strategy, and executed with speed and efficiency.

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Fear: Does your organization have the Courage to invest in tough times?

Posted on November 13, 2008. Filed under: Enterprise Learning, Leadership Development, Talent Management | Tags: , , |

You can’t pick up a newspaper these days without reading about more business downturns, layoffs, and lowered expectations for retail sales, automobiles, consumer products, housing, and financial services.  Lots of business leaders are making tough decisions right now, and I also know a lot of our HR and L&D readers are worried about their jobs.

In fact, for baby boomers like me, the concept of retirement in the next 10-15 years is now becoming a fleeting thought:  many people now realize that they may have to put off retirement for another time.  (The stock market has lost an entire decade of positive performance, so we all have to wonder what that says about US business competitiveness.)  

So there is a lot of fear out there – and business leaders in almost every industry are being forced to make difficult decisions:  cutting costs, reducing headcount, getting out of certain businesses, and restructuring.  In our just-released Fall 2008 TalentWatch®, we found that almost 1/3 of our respondents have a new CEO or top management team and 26% are going through some type of major restructuring.  These changes bring stress into every person in the organization.

How do organizations deal with these transformations?  The key, of course, is to build a workforce that can rapidly adapt.  In this kind of environment people have to take on new roles, take charge of turning around their operations, and focus relentlessly on execution.  In many cases these changes identify dramatic gaps in capabilities and skills which may have been glossed over during good times.  

An example:  Global Pharmaceutical Company

Let me give you an example.  We are working with a large pharmaceutical company which is going through a business transformation.  This company is a global leader and traditionally built its business through a series of autonomous geographic business units, supported by a global research, global manufacturing, and global corporate functions.  Such a business structure worked well in a market with fast growth, high margins, and highly differentiated products.

The world has changed however.  Today pharmaceutical companies must deal with the loss of patent protection on many products, the need to sell to low cost healthcare providers, a neutral to negative regulatory environment, and the need to continuously invest in R&D as new genetic-based pharmaceutical breakthroughs become possible.

So this highly successful, well regarded company, which is over 100 years old, needs to change.  They are changing in two big ways:  first, they are reorganizing the company into global business units which focus on different market segments;  second they are revamping their manufacturing capacity to more rapidly deliver generic versions of their patent drugs.  These two changes result in new job roles, new leadership positions, and a new sense of purpose among tens of thousands of loyal employees.  The company is now focused on operating as an integrated company, with the ability to reduce costs, increase adaptability, and deal with these market changes.

Such Changes Demand Investment:

This particular company realizes that in many ways they are not prepared for this transformation.  So they are investing in a series of new leadership development programs, a new global leadership model, and a new program to rebuild the “nobility of first line management” through a new focus on managerial talent development.  

They also realize that many people who’s careers were built in one business function (e.g. sales or marketing) have to broaden their understanding of the business, so they have built a business simulation which teaches leaders about how the entire company and the pharmaceutical industry work. 

These programs show a commitment to building skills and capabilities during the downturn, with a clear understanding that now is the time to empower and enable managers and leaders to make the changes needed.

Does Your Company have this Courage?

It takes courage and leadership to invest in talent now.  One of the easiest things to cut during tough times are HR and L&D budgets.  While you may have to tighten the screws on your learning and HR operations, you will find that a continued focus on talent development today is more important than ever.  Our 2008 High Impact Learning Organization® research clearly found that organizations with a continuous, systemic focus on organizational learning greatly out-perform their peers.   Your role as an HR or L&D leader is to help build confidence in your leadership that they should continue to invest and hold you accountable to deliver the programs and strategies that help your organization transform itself during today’s economic slowdown.

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Where is the “Talent Management” Market going?

Posted on November 9, 2008. Filed under: Enterprise Learning, HR Systems, Talent Management | Tags: , , , , , , , |

As the US economy lost 240,000 jobs last month and the unemployment rate rises to 6.5%, one of the questions I know many people ask is the direction of the “talent management” marketplace.  Let me give you our thoughts on the trends taking place.

First, the urgency of “talent management” in corporate HR organizations has not slowed.  In fact, nearly every organization we talk with is moving ahead with their new talent management strategies, which includes redesign of performance management, further integration of their HR organization, assignment of a Vice-President or other senior HR leader responsible for “talent management,” and the desire to implement talent management software.

Second, we also are finding that most companies are also reducing the size of their HR and L&D organizations (the US L&D market in 2008 has shrunk significantly, and we will be publishing this data in the next few weeks).  We are now working with many organizations to restructure their training departments to create more centralized organizations in the interest of reducing costs, and we see a dramatic dropoff in the development of new L&D initiatives which are not directly related to talent management.

Third, organizations are cutting back on travel and other development-related expenditures and now investing more in lower cost, collaborative learning infrastructure.  One Fortune 100 company we are working with has decided that instead of replacing their learning managment system they are going to implement new collaborative, Learning 2.0 strategies using low cost social networking software to enhance their sales and service training and create more employee engagement.  The LMS “upgrade” looked like a $5 Million project, so it is going on hold.

Fourth, the talent management systems market continues to grow, but at a slightly slowing rate.  In fact, if we look at the Q3 2008 revenues of four publically traded companies, SuccessFactors, Taleo, SumTotal, and Saba, we see positive but slowing revenue growth in every single company.  Revenue growth rates at these four companies are 77%, 39%, 12%, and -1% respectively.  Unfortunately, each of these public companies continues to lose money and all have seen their market caps drop (along with the entire market).  But the market is still healthy:  for example we know that private companies are also growing – Plateau, GeoLearning, and Learn.com each grew by over 25% in the last year.

Fifth, if you look at the talent management software market, which we see as a tremendously important part of corporate HR and talent management going forward, it is beginning to become a bit crowded.  While we still see explosive growth into many years in the future, our latest research now shows that most buyers see similar features from many software providers.  As a result the “price to enter” the market is higher, and software vendors have to invest more and more in sales and marketing to maintain their revenue growth.  SuccessFactors, the fastest growing of all, continues to invest an amazing 61% of its revenue in sales and marketing, which is unsustainable for any company over a long period of time.   We firmly believe that the talent management software market, just like the LMS market, will segment itself into leaders in different segments (global enterprise, enterprise, mid-market, and eventually small business) – and both Oracle and SAP will continue to grow.

Bottom line:  Today’s economic environment has caused new stresses for the HR and L&D organization and will definitely slow the market for talent management software.  But is the party over?  Not at all.  Organizations of all sizes continue to push ahead with their new talent management, social networking, capability modelling, and collaborative learning strategies — they key is to maintain the focus on these programs in a highly efficient way.

New research on these topics:

The Essential Guide to Performance Management Systems and the Market

Enterprise Social Software 2009:  Facts, Analysis, Trends, and Vendor Profiles

The Talent Management Factbook

The Corporate Learning Factbook

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Your “Incumbent” HR Systems Vendor – What to do?

Posted on August 19, 2008. Filed under: HR Systems, Talent Management | Tags: , , , , , , , , , , |

I just completed a series of interviews with three organizations going through the important, challenging, and time consuming process of implementing a new performance management system.  In each case (a large healthcare provider, a global mining company, and a global call center operations company), the company is using the implementation of a performance management system to implement a new, re-engineered, strategic performance management process.  But rather than discuss this, I’d like to give you some thoughts on their vendor strategy.

These three companies each chose to use their “incumbent” systems vendor.  Rather than go to the “biggest” or “noisiest” systems vendor (I wont mention any names), they felt that they would see far greater benefits by using a newer system from their provider of recruiting software.  Why did they do this?  Because in each case they felt they had a wealth of data, experience, and strong working relationship with this company.

This points out two critical points, which we are publishing in a major research bulletin in the next few weeks:

1.  The biggest ROI from HR systems comes from integration, not automation.  As Leighanne Levensaler, our Director of Talent Management research has pointed out in many of her findings, the real breakthrough benefits of HR systems now come from newly enabled applications, such as pay-for-performance, integrated career and development planning, enterprise succession management, and strategic internal and external recruiting – not from automating or improving a single process.

As our data will prove, this means that the benefits of integration are now far greater than the potential downside of going with a product which may be missing a few features.  (Assuming your incumbent vendor is developing the features you need.)

This means that if your LMS vendor has a solution, or your recruiting vendor has a solution (or even your ERP vendor), you should really look hard at the time, energy, and existing investment you have made in this system before you rush out and bring in a new solution provider.  Obviously there are tradeoffs when your incumbent vendor is not keeping up, but in today’s HR systems world remember that “integration” is far more important than “automation.”

2.  The big “Incumbents” are getting their acts together.  The second point I want to make is that the traditional incumbents (recruiting systems providers, ERP providers (Oracle, PeopleSoft, SAP, Lawson), and LMS providers) are all getting their “talent and performance management” software acts together.  While there are many feature differences between the providers (and our Talent Management Suites research will help you identify these), all now provide some form of an end-to-end solution which includes performance management.

While this continues to be a wild and wolly world of innovation (watch social networking coming around the corner), we think the role of your incumbent is becoming more important than ever.

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Social Networking in Talent Management: Where are we?

Posted on July 2, 2008. Filed under: Enterprise Learning, HR Systems, Learning 2.0, Learning Programs, LMS, LCMS | Tags: , , , , , , , , , |

Whew.  Earlier this year we embarked on a major research effort to understand the growing role of social networking in enterprise learning and talent management.  The results are amazing.   Let me give you a brief preview of some of our initial findings:

  1. Organizations are working mightily to figure out how to leverage social networking (blogs, wikis, presence awareness, messaging, expert directories, communities of practice) in all forms of corporate training, customer education and support, and talent management.  For example, 77% of all L&D organizations believe that younger workers (under 25) have significantly different learning styles than older workers, yet only 16% feel they have developed some level of expertise in the implementation of collaborative learning.  In our most recent Learning On-Demand research, even the most advanced companies tell us that only 14% of companies are using blogs or wikis, and fewer than 4% feel highly successful with these solutions yet.  One big surprise:  28% of our research respondents are not even using Instant Messaging yet, illustrating how long it takes for collaborative solutions to reach broad adoption (and support from IT).
  2. Learning platforms are being “re-examined.”  Most of the companies we talk with are significantly rethinking their entire learning platform strategy (LMS) to understand how to evolve or add new systems which support collaboration.  And today’s LMS is not as successful as one would believe:  across all the organizations we studied (approximately 900 different organizations), on average only 51% of employees use the learning platform at all.
  3. Sophistocated, large, global companies are moving fast.  Almost 1/4 (24%) of organizations now have some concept or strategy for “learning on-demand” (the term we have coined to describe the next era of corporate e-learning), and larger organizations (those with more than 10,000 employees) are twice as far along as small to mid-sized organizations.  The reason, of course, is that large organizations have no choice – without collaborative solutions they can no longer scale their L&D programs.
  4. Social networking software companies are sprouting up like weeds.  We identified 90 such companies in our research, and more than 35 of them are somewhat focused on the corporate internal employee market.  Our initial research clearly shows that these companies fall into four categories:  (A) software providers focused on corporate learning, HR, and collaboration systems and solutions (e.g. IBM, Microsoft-Sharepoint, Jive, Mzinga, Awareness, Q2 Learning, and others), (B) providers focused on external customer and public-facing collaborative networks like a company external blog (e.g. Lithium, Ning, Communispace, Telligent) (C) providers focused on content management systems, who have added on systems for collaboration (EMC, OpenText,  Ektron, Alfresco) and (D) true application software companies who are adding collaboration and social networking to their systems (SuccessFactors, Saba, CornerstoneOndemand).
  5. I firmly believe that this new form of software-enabled collaboration is a revolution, not an evolution.  Like many of the software innovations that I have personally witnessed over my career (e.g. the first color graphics PC, the CD-ROM, the web-browser, Flash, SaaS architectures, and others), social networking is really going to shake things up.  The reason is that these systems are both complex, data-rich, and require a new type of software architecture.  A system which supports 200,000 employees and customers with in-depth employee and customer profiles, active communication and blogging, tagging, content management, custom branding, and tracking each and every communication is quite a complex software solution.  As we examine these vendors we are finding some very significant new areas of functionality which are going to change and upset the traditional HR software companies.
  6. The jury is out on what our ultimate HR software architectures will look like.  Small and mid-sized companies will likely adopt social networking through their SaaS application solutions.  Enterprises are more likely to develop IT standards eventually.  And many companies will implement departmental, divisional, and application-led solutions while the market evolves.  While most enterprises would like to have a corporate “architecture” in this area, it will take time for this to occur and it often takes a few years for the “safe, corporate-approved” solutions to emerge.  (None are there yet.)

We also recently hired David Mallon, our newest analyst covering this area – who is actively involved in identifying case studies and product solutions in “learning on-demand” and the applications of social networking to corporate talent management. 

Research Available:  A Primer on Social Networking in Talent Management

We recently published “Social Networking for Enterprise Learning and Talent Management:  A Primer” which is available to anyone who would like to register at our website. 

Note:  we are actively seeking input on your experiences and organizational strategy in this area – you can participate in this study by clicking here.

An exciting area and we look forward to giving you more information as we learn more!

 

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Talent Management in a Slowdown – Update

Posted on June 22, 2008. Filed under: Enterprise Learning, HR Systems, Organization & Governance, Talent Management | Tags: , , , , , , , |

In the last few months we have read more and more about the global economic slowdown.  Jim Cramer, the Wall Street pundit, wrote in today’s New York Magazine, that he has never seen things as dismal as they are on Wall Street.  Today the State of California announced a 5.7% unemployment rate, an increase of almost 12% over last month.  And I have noticed a fairly steady increase in HR and L&D leaders now looking around for work.

How is this affecting our HR and L&D organizations?  Our most recent Business of Talent® survey shows a similar impact on corporate HR and training.  Today 45% of HR and L&D executives cite “reductions in cost” as their top priority for the coming quarter, an increase of almost 30% over the last three months. 

In our just-released High Impact Learning Organization® research, we see similar trends.  Today’s L&D managers and executives cite “reducing the cost of training” as their #2 challenge, after business alignment.  And for the first time ever, people cited “building a business plan for learning” as their #3 challenge – illustrating the need to further take L&D investments and make them business-relevant and operationally excellent.

But in the midst of such news, we see many many good things coming.  As I mentioned in our earlier post on the economic downturn, “only when the tide goes out can you tell who is swimming naked.”  Now is the time for HR and L&D to become more relevant than ever.  In fact, one could argue that business slowdowns are good for talent organizations – they force us to become laser focused on what really matters now.

Witness some critically important things going on:

  • Organizations are focusing very heavily on building critical capability models for success.  Such models are mandatory to determine who to hire, who to develop, and who to lay off.  Organizations such as British Telecom, Microsoft, Chevron, GSK, Mercer, and Pemex are all spending significant new dollars to identify their critical competencies.  Such work is strategic and long-lasting.
  • Organizations are looking more carefully at HR systems investments.  We now see RFPs from companies which look far more carefully at the business strategies behind talent management, rather than projects to “automate” processes which may or may not be adding value.  One of the world’s leading consumer packaged goods organization recently asked us to help them rebuild their business case for talent management systems after spending six months gathering requirements.  Such an effort is good – it creates focus and business alignment in HR systems investments.  Nothing is worse than buying HR software to find that noone wants to use it.
  • Informal learning is exploding.  We are just about to publish a major research report on the use of social networking in corporate L&D.  Organizations now realize, often driven by cost reductions, that the corporate L&D organization can not possibly build all the content the company needs.  They are starting to invest in social networking and communities of practice as a mainstream solution.  In fact, in our High Impact Learning Organization Top 18 findings, we found that informal learning and content sharing are now more important to success than the traditional disciplines of performance consulting.
  • Centralization is coming back.  Almost all the clients we talk with now are looking for ways to reign in spending on L&D and other HR initiatives throughout the company.  Such efforts may look like cost savings from the outside, but inside they are driven by the intense need to coordinate L&D and HR efforts to build an integrated talent management process.  Caterpillar, Aetna, Rogers Communications, Wellpoint, and other clients are all focusing heavily in this “strongly centralized federated approach.”

We are preparing a series of reports on the economic trends driving HR, so stay tuned.  Even if the economy does continue to slow down, I hope you believe, as I do, that such a slowdown will not last beyond early to mid 2009.  My experience talking with hundreds of organizations shows me that even in times of great dislocation, our economy is filled with entrepreneurial and creative spirit to build new businesses in the face of change.  And change is something we must deal with in good times and bad.

More to come…  your comments welcome as always.

 

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Globalized Talent Management: Pemex and Banamex

Posted on June 13, 2008. Filed under: Enterprise Learning, Performance Management, Succession Planning, Talent Management | Tags: , , , , , |

(more…)

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On the Minds of HR and Learning Leaders

Posted on May 17, 2008. Filed under: Enterprise Learning, Organization & Governance, Performance Management, Succession Planning, Talent Management | Tags: , , , , , , , , , , , , , , , , , |

We recently completed our annual research conference and I had a wonderful opportuinty to meet and talk with 15 different HR and L&D executives in a special roundtable.   The theme of our research conference is The Business of Talent®, and as you will read, this theme comes through in almost every organization.  Talent management is a strategic business tool, not an HR initiative.

Commerce Bank and TD Bank:  Michelle Fetterman-Gaughan, vice-president and talent planning manager, discussed how her bank is going through a major merger with TD Bank – impacting 74,000 employees.  Commerce Bank developed a complete competency model for its commercial lending operation, which now must be merged and integrated into TD Bank’s competency models.  A key challenge ahead is the blending of corporate cultures and different competency models and systems.  Michele believes that Commerce Bank’s existing competency strategies will be extremely valuable during and after the merger, as new roles and responsibilities are defined.

Turner Broadcasting – Improving Competitiveness:  Michele Golden, vice president, talent management for Turner Broadcasting, discussed how this global media company faces intense competition in every market.  The company is putting together a three-year roadmap to create common processes, linkage of pay to performance, and new goal alignment systems to improve innovation and competitiveness.  She is collaborating with business leaders throughout the company to help craft these new integrated processes.

Aetna – Transition from Turnaround to Industry Leadership:  Deborah Kelly, head of Learning Services at Aetna, discussed how the company’s management-led turnaround was built on Aetna’s pioneering work in competency analysis, job analysis, and integrated management processes.  Now that Aetna is an industry leader, the challenge is how to take Aetna’s integrated talent management process and build processes and systems to foster innovation and leadership, not just execution.  Deb’s presentation is available to IMPACT attendees on the IMPACT 2008 Online community site

Verizon Wireless – Improving Talent Migration and Culture of Learning:  Lou Tedrick, Vice President of workforce development at Verizon Wireless, discusses how the company relies heavily on operational training and rapid development processes to keep its sales and service teams up to date on new products and services.  But as the company’s products continue to grow in volume and number, there is a need to drive learning down to the line manager level, simplifying the process and forcing individual managers to train workers on an informal basis.  In addition the company is now working to start migrating talent across the business entities to promote leadership development and deeper levels of succession management.

Boeing – Developing Technical Skills in the Manufacturing Workforce:  Ed Chang, senior project manager at Boeing, discussed how the average age of a Boeing manufacturing worker is 48 years old and as much as 15-20% of the workforce will retire in five to seven years.  One of his key objectives in attending the conference was to network with other attendees to identify best practices in building technical skills in newly hired workers.  The manufacturing skills required at Boeing take years to develop.  Ed’s challenge is to develop a wide variety of technical development programs to fill the anticipated gap.

Caterpillar – Global Model for People Management:  Fred Goh, director of strategic learning, Caterpillar University at Caterpillar discussed the company’s new integrated talent management model, which includes all elements of talent from recruiting to development to learning to diversity.  Caterpillar is building integrated career models throughout the company and using this new infrastructure to roll out Caterpillar’s new Global Manufacturing System.

Honeywell – Moving from Enterprise Learning to Integrated Talent Strategy:  Steven Teal, the former vice president and CLO of Honeywell, discussed how the company identified a tremendous gap in technical skills throughout its global defense and control businesses and realized that its enterprise learning function must migrate to an enterprise talent management function.  As he helped architect this new strategy, he realized that his existing role as CLO was no longer needed.  He helped the company define a new position, vice president of talent management, which will facilitate a more integrated approach to employee development, succession, and technical capability management.

Northshore Long Island Jewish Healthcare – Driving Performance through Leadership and Learning:  Kathy Gallo, senior vice president and CLO at Northshore LIJ, discussed how this well-known healthcare provider continues to be the largest and most profitable delivery operation in downstate New York.  Its talent development model, patterned after JetBlue’s flight training and GE’s leadership institute, provides deep levels of technical development for nurses and medical professionals, focuses heavily on leadership development and action learning, and focuses heavily on innovative learning techniques to drive the highest levels of patient care, employee retention, and performance.

Northrop Grumman – Retaining Talent in a Company of Acquisitions:  Kathy Thomas, vice president of learning and development for Northrop Grumman, described how this 120,000 employee organization operates as diverse business entities with loosely-federated model for employee development.  She described how the company uses a series of leadership councils to build consensus in its leadership development, executive succession management, and technical skills development across its broad and highly diversified businesses.

Yum! – Providing Consistent, Efficient, and Highly Focused Retail Training Worldwide:  Rob Lauber, vice president, YUM! University and global learning services, described how this one-million- employee powerhouse (Pizza Hut, KFC, Taco Bell, and other brands) is just now rolling out world-wide training systems and programs to provide consistent, sharable training programs in restaurant operations.  This complex implementation will give the company the ability to run brands independently yet provide tremendous sharing and efficiency in functional training, onboarding, food safety, and other important operational talent development needs.

Xerox – Implementing a New Strategy for Continuous Learning in Professional Services:  Gary Vastola, vice president, Xerox global services, discussed the implementation of a three-year plan to blend classroom, e-Learning, and Learning 2.0 tools to develop the knowledge and skills of Xerox services resources worldwide.  This operation will focus on promoting a continuous learning culture and has been incorporated into the overall Xerox global services strategy.

Aramark – Creating a Common Talent Scorecard among Broadly Distributed Operations:  Liviu Dedes, vice president of organizational effectiveness and development for Aramark, described how the company manages its widely distributed businesses in food service, prison operations, and other people-intensive businesses.  He discussed how he has instituted a standardized human capital scorecard across the corporation to facilitate operational reviews of talent, standardized processes, and global talent data to help his team implement focused programs to solve talent management problems throughout the company.

Wellpoint – Implementing an Integrated Talent Process and Performance-Driven Culture:  David Casey, vice president of talent management for Wellpoint, discussed how the company has been rebuilding itself after a major merger into a “leading innovator” culture by developing an integrated talent management strategy, centralized L&D strategy, and new process and systems strategy to drive leadership development, a performance-based culture, and faster response to talent gaps in the company.

The Business of Talent

These are only a few of the leaders who joined us this year at IMPACT 2008:  The Business of Talent®.  I was inspired and energized by the business focus and technical prowess of these leaders.  Enterprise learning and talent management is never easy and never a one-size-fits-all solution.  Each organization must use its skills in leadership, organizational development, and learning to build the right organization, processes, tools, and systems to drive business change.  Conference participants demonstrated that enduring organizations are “talent machines” – they focus on people first, and products and services second. 

We look forward to your comments.  And look for details on IMPACT 2009 coming soon.  We have even more planned for next year’s conference.

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Corporate Universities: They’re Baaaaaaack!

Posted on May 9, 2008. Filed under: Enterprise Learning, Organization & Governance | Tags: , , , , , , |

I recently spent a few days in Mexico City meeting with HR and L&D leaders from some of the largest companies in Mexico (Banamex, Pemex, Groupo Modelo, and others).  The meetings reinforced a very important trend which is going on in corporate training today:  the “recentralization of corporate training.”

Over the last five years there has been a tremendous focus on building what we call the “federated” training organization – a model where the centralized L&D function focuses on learning technology, strategic leadership development programs, learning standards, and some key enterprise-wide programs.  In a well run federated training organization the central (a’la the Federal Government) takes clear responsibility for corporate-wide systems and programs, and the federated training groups (a’la the State Governments) take responsibility for training in their functions (sales training, customer service training, IT training, etc.).

We have written extensively about trends in this direction, and we have dozens of case studies and examples of high performing organizations which are learning how to implement this model well.  It takes advantage of the built-in tension within corporate L&D:  the need to centralize for efficiency and sharing, juxtaposed with the need to move training closer and closer to the business problems and operational groups.

The Corporate University

Historically, the term “Corporate University” was used to describe a fairly large, centralized training group which ran a wide variety of corporate programs, often organized into “colleges” which specialize in different functional areas.  For example, at GM there is a “College of Manufacturing.”  Other organizations have a “College of Finance,” using the term “college” to represent a set of programs and curricula designed to meet the needs of these functional units.  The heads of these program areas are even called “Deans.”

This terminology connotes the concept of education, not training.  The idea is that the University will focus on the long term development needs of the organization and will build multi-tiered curricula and career development programs which help employees within these disciplines build skills and careers in the company.

Unfortunately, when e-learning became the rage (starting around 2000 and 2001), many of these “universities” became somewhat obsolete, and over the last 10 years many companies have been disbanding them to build what we called “learning services” organizations.  (I actually wrote a controversial article entitled ‘Death of the Corporate University’ around 2004, identifying this trend.)  The “learning services” organization is a highly powerful concept:  the idea here is that the centralized training group is in fact a shared services team which provides LMS services, content development services, and other types of learning services which are used by employees and federated training groups to improve performance. 

The “learning services” model is patterned after the same transition which took place in IT.  IT departments have moved from “data centers” into “IT service centers” which provide direct support to business units, employees, and strategic initiatives through applications, networking, personal computers, and a wide variety of tools.  Instead of only “running systems,” the provide “IT support at your desk.”  Similarly, Learning Services organizations provide “learning services” at the point of need, and they do not only “run courses.”

Enter Talent Management and the New Corporate University

Enter the tremendous need for integrated talent management.  Today, thanks to the aging workforce and many other changes in employee demographics, organizations are in desperate need for integrated talent management solutions.  They now need integrated career development programs, onboarding programs, and a wide variety of what we call “talent-driven learning programs” to fill gaps in the leadership pipeline, an under-educated workforce, and the influx of younger workers.  Such solutions require a greater level of investment in the centralized learnign and development organization, and this has created a “new type of corporate university.”

Corporate University at Banamex

For example, at Banamex in Mexico (Citibank of Mexico), the Corporate University not only manages leadership development and operational training, but the organization has recently developed several degree programs, taught by local professors and business leaders, to deliver Bachelors and Masters degrees to Banamex employees. 

The program leverages virtual classroom technology to enable employees from all over the country to participate.  Employees take classes and do homework at night, and they receive accredited degrees.  The program includes basic educational training and many Citibank-specific topics in banking, customer service, and operations.   The results have been fantastic:  employees must be nominated to attend (only high-performing and high-potential employees are included) and hundreds of employees are participating. 

What is the value of this program?  There are many benefits:  first, the program develops tremendous levels of retention and employee engagement – people greatly respect the company and those that can complete the program are employees for life.  (They do have a two year commitment to stay with the company after completion, otherwise they must pay back tuition fees.)  Second, the program fills needed gaps in employee skills.  Mexico is a country with highly motivated people but a tremendous lack of educational opportunities.  Many of these employees would succeed in a university setting but did not have the financial resources or access to education before they went to work.  Third, this program is a career-development program which improves employee performance.   These people are not only learning accounting, math, and financial skills – they are also learning how to manage accounts and run the bank.

We have been talking with dozens of companies going through similar “recentralization” projects in their corporate learning.  These include Cardinal Health, Wellpoint, Caterpillar, and even GE.  While we still do not believe that a large centralized corporate university is the right solution for many organizations, talent management is clearly creating a tremendous need to “recentralize” much of L&D.

 

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Are you an Enduring Organization?

Posted on April 20, 2008. Filed under: Enterprise Learning, Learning Programs, Performance Management, Succession Planning, Talent Management | Tags: , , , , , , , |

As we continue to study best practices in the implementation of corporate learning and talent management, we find that high performing organizations fall into two categories:  those who endure and prosper over long periods of time (decades), and those who rapidly rise to prominence, then falter during a major business challenge, and often become acquired (or disappear).

The former are what we call “enduring organizations” – and they typically become iconic brands which provide tremendous returns to shareholders, employees, and customers.  (These are the types of companies that Warren Buffet likes to invest in.)  The latter are exciting companies to read about, but often disappear and become historic roadmarks in the highway of progress (one could call them “roman candles”).   Fast-growing, trend-setting companies (e.g. Google) set trends and create tremendous excitement, but they are not truly tested until they endure broad economic and business cycles.

Characteristics of Enduring Organizations

These enduring organizations have several things in common.  First, they have an uncanny ability to grow and prosper under a wide variety of economic and business conditions, and survive for many decades.  Second, they survive wrenching upheavals in their markets and somehow learn to reinvent themselves over time.  Third, they become iconic brands, which last long beyond their product lifecycles.  And fourth, they provide extraordinary returns to shareholders, employees, and customers.

An excellent example of such a company is IBM. IBM was founded in the early 1900s and originally built IBMrifles for the US military.  It turned into a “tabulating machine” company which developed systems for the US census, and then later developed the first mainframe computer.  IBM dominated the mainframe computing era for more than 20 years, reaching such market monopoly that the US Department of Justice forced the company to unbundle its services from its technologies. 

In the 1980s the computing industry shifted – from one of vertical integration (one company making the chips, computers, operating system, and application software) to one of horizontal integration (many compaines making chips, many companies making computers, many companies making operating systems, and many companies making application software).  IBM helped create this market by launching the IBM PC, the first open systems computer.  But the company suffered a painful transformation in its business as a result, almost being forced to split itself up into seperate companies. 

Demonstrating its ability to deal with change, IBM transformed itself again – and thanks to Lou Gerstner and Sam Palmisano (the current CEO), IBM re-emerged as the most trusted and profitable IT services and consulting company in the technology industry.

During this period of time, many innovative and well-run companies emerged, grew, and disappeared.  Tandem computers, Digital Equipment, Compaq, SiliconGraphics, and many more.  Somehow they never seemed to build the processes and staying power of IBM.

We can think of dozens of examples of companies that have created such enduring brands:  Caterpillar, UPS, GE, Procter and Gamble, Clorox, AIG, McDonald’s, Goldman Sachs, and many more.  If you take a “long term view” of stock market value, you will find that these enduring brands generate far greater returns over the longrun than many “high fliers.”

What makes thes Organizations Endure?

As we have studied these organizations, and their underlying business and talent processes, we have found that one of the most important things these organizations have in common is their ability to manage talent.  In a sense, these organizations have learned over time that they are not really “product” companies or “service companies” but rather they are “talent companies.”  They have built processes, systems, and strategies to hire, develop, manage, and coach people to build an adaptable, accountable, and value-driven organizations.

Enduring Organizations Adapt Well to Change

If you consider the biggest challenge most companies face, it is change.  Once you build a unique and value-oriented product or service, the biggest challenge you run into is the fact that the world never sits still.  Change occurs on a relentless and continuous basis:  competitors copy your product;  customers demand new capabilities;  the economy stalls or goes into a tailspin;  your market segments change and demographics shift;  and sometimes even bigger changes are taking place.  Today, for example, the environment has become a major driver of buyer behavior (more than 40% of US corporations consider the “green movement” as a fundamental threat or opportunity to their business).  Many of these changes are rapid and unpredictable.

The question we consider is not how to adapt to one of these changes in particular, but rather to learn how organizations create enduring strengths which enable them to adapt successfully.  My personal belief is that the ability to understand and adapt to change is one of the biggest strengths in these enduring organizations.  Many companies develop monopoly positions with their products and services, but they often find that these monopolies are attacked quickly. 

Consider Motorola in the cell phone industry.  Motorola invented the mobile phone, and hit a home run withMotorola the RAZR.  But the company has been unable to adapt to the relentless progress in this market, losing market share again and again to Nokia, Apple, Samsung, and other competitors.  Enduring organizations find ways to continuously move “up the value ladder” by changing their products, services, and strategies.

There are dozens of examples of such organizations:  consider UPS, which originally was a company that delivered messages via horseback.  It moved into automotive transportation, then global shipping, and now global business logistics — all with the same focus on business productivity and value.   UPS has a strong, end-to-end focus on hiring, developing, and managing the right talent.  They have well-developed, clear competency model for success and they reinforce it throughout their people processes.

What we find is this:  These companies do not define themselves by their products and services, but rather by their talent.  It is their “talent machine” that enables them to adapt their strategies, move up the value ladder, and execute well in the face of continuous and relentless change in their markets.

The Five Essential Elements

It’s not enough to say that these companies have “good people strategies” or “strong cultures.”  They actually have much more.

When we dissect what makes these companies endure, we have found five keys — each of which requires a strong focus on talent.  We call these five keys the “five essentials” – they are business essentials which are supported by strong talent management.   Your job as an HR professional is to understand how to implement these five essentials in unique and long-lasting ways.

As I prepare to present this information at our upcoming research conference (IMPACT 2008:  The Business of Talent®), let me briefly highlight them here.   We will be publishing more detail and examples in months to come:

  • Strategy:  The first essential is strategy.  Enduring organizations have developed strong and focused value-add strategies for their markets.  They clearly understand how they add value.  There are three core value add strategies in any market:  product innovation, customer intimacy, and low-cost production.  Enduring organizations select a strategy and stick with it – enhancing it over time.  They codify these strategies into their talent management processes:  who they hire, how they manage people, who they promote, and how people grow in the organization. 

    For example, in technology, one could argue that Apple is the product innovator, IBM is the customer intimacy company, and Dell is the low-cost producer.  Each must staff, manage, and incent people differently because of these different value strategies.  

  • Management:  The second essential is management.  Enduring organizations focus on alignment, transparency, accountability, and trust.  Management is all about making sure people know what to do every day — and that they have the tools and support to be successful.  Management must be tied directly to strategy, hiring the right people and incenting people to do things which support the strategy.  HR professionals can and must play a major role in building these management systems, and we have many examples of amazing management processes which drive these enduring organizations. 

    For example, our research shows that organizations which build strong, strategic competencies from which to manage their employees have almost 4X the return on the ability to build a high performance culture.  We also know that high performing companies in different industries manage people very differently (e.g. financial services companies focus much more heavily on service and quality;  technology companies focus much more heavily on innovation and engineering.)Your job in HR is to help the organization craft and implement its management process, and rigorously and extensively train and coach managers to use the process.  

  • Leadership:  Third, and perhaps most importantly today, enduring organizations have an amazing focus on leadership.  (The #1 issue on the minds of corporate leaders today is strengthening their leadership pipeline.)  Enduring organizations understand the core competencies of their leaders, they vigorously identify and build new leaders, and they move leaders throughout the business.  They know that only by hiring and developing excellent leaders can they build and develop excellent employees.  They understand the need for continuous focus on succession management, as both a tool for growth and a way to hedge against business risk.   

    Here our research clearly shows that organizations at level 4 in our leadership maturity model are generating almost 6-fold higher returns on business outcomes and bench-strength.  Unfortunatley fewer than 10% of organizations have reached this level today, but we see tremendous focus on improving this critical area and we are committed to helping others understand best-practices here. 
     

  • Learning:  The fourth essential element is learning.  Enduring organizations realize that organizational learning is a fundamental to success.  These companies spend 1.5-2.5X more on training per employee, and they focus on a wide variety of strategies to build organizational learning:  career development, coaching, mentoring, as well as strong skills development.  Most importantly they implement a “learning culture” which encourages risk-taking, innovation, and continuous improvement.

    An interesting example:  during the 10 years that I worked at IBM I was involved in the rollout of some of the biggest flops of the decade.  There was the IBM PC Junior, the RT-PC, the 9370 Minicomputer, and many more.  These products, often the results of years of R&D, were announced with flourish and fanfare.  When they failed, IBM was clearly disappointed.  But the leaders of these products were not fired or demoted — rather they were forced to “learn from these mistakes” and go on and make them better.  The PC Junior became the IBM Thinkpad.  The RTPC became the IBM RISC System/6000 and the SP2 supercomputer.  And the 9370 eventually re-emerged as a family of high powered mid-sized mainframes which are still in the market today.  This is an example of an organization that really learns.   

  • Systems:  Finally, enduring organizations build systems.  Systems (processes, not software systems) create scale, consistency, and provide information for decision-making.  These systems become the backbone of the organization and they create a focus on quality and continous improvement.My best example here is McDonald’s. One may believe that McDonald’s is a hamburger company, or perhaps a fast-food company.  But actually, if you truly understand how McDonald’s works, you would realize that this company is an amazing combination of systems.   More on this later.

We will be discussing these topics in detail at our upcoming research conference, and giving you examples of how enduring organizations implement these solutions for business value. 

The Role of HR and Talent Management

Today’s “talent management” is all about implementing these five elements.  Talent management is not an “HR strategy” – but rather it is a “business strategy.”   The talent processes and systems which HR managers implement (employment branding, recruiting, competency assessment, performance management, succession management, leadership development, career development, and on) directly support these five elements.  HR leaders are the architects and craftsmen of the systems and processes which create such enduring organizations.  Business leaders should think about “building a talent engine” in support of the organization’s goals, rather than just building products and selling them to customers.

Jack Welch, ex-CEO of GE, put it well.  He stated that the #2 most important person after the CEO is the VP of HR.  Why?  Because the VP of HR identifies and develops the pipeline of leaders which will run GE in a profitable and adaptable way.

Your job as an HR or L&D professional is to take your skills and expertise and apply it in these five areas, remembering that as you craft expert solutions, the implementation of these solutions will be performed by the business leaders, managers, and employees in your organization.  In a sense you are the “master carpenter” who builds a long-lasting house.  The house you are building will be inhabited by executives, managers, and employees – not only you – and you have been entrusted with a large part of its design.  And your role is dynamic:  you must monitor the house to make sure it is continually being enhanced and improved as needed.

This is what we call The Business of Talent®, and it is the focus of our research.  I hope these thoughts are helpful and welcome your feedback.

 

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