1 the new balance sheet
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Human Capital & Talent AcquisitionTRANSCRIPT
Recognizing Human Capital as a Competitive Asset
The New Balance Sheet
By Frank Pacheco
The New Balance Sheet
1. Human Talent as Misunderstood Capital2. Does Talent Make a Difference?3. It Makes a Difference!...Act Quickly4. Cost Analysis for Loosing Talent5. Cost Analysis for Acquiring Talent6. HR Strategy is Key to Business Success
OVERVIEWHuman Capital is the main competitive advantage of
the 21st century………. …….Mergers - Acquisitions;
Technical Advancements; Globalization - Emerging
Markets; Demographics and the “War for talent”
Let me walk you through it quickly….
Human Talent as Misunderstood Capital
Organizations or business Organizations or business groups that fail to appreciate groups that fail to appreciate human talent as a valuable human talent as a valuable asset, will be plagued by:asset, will be plagued by: •Weak earningsWeak earnings•Loss of market shareLoss of market share•Financial uncertaintyFinancial uncertainty•Unable to service growing Unable to service growing marketsmarkets•Unable to retain good Unable to retain good leadershipleadership•Unable to service internal Unable to service internal clientsclients
Name Branding suffers and top Name Branding suffers and top talent will avoid such talent will avoid such companies, causing:companies, causing:•Lowering of hiring standardsLowering of hiring standards•Retaining low performing Retaining low performing employeesemployees•Promoting un-qualified Promoting un-qualified personnelpersonnel•Condoning nepotism Condoning nepotism (Bush/Brown)(Bush/Brown)
Human assetsHuman assets are more valuable than
capital assets, but not treated the same, at times even casually………• Many companies track assets in
their balance sheet, but fail to track revenue per employee and/or analyze their bottom line impact
• Hiring is often ad hoc, not rigorous or well designed
• Performance metrics should be automated and ongoing
• Development dollars could be ambiguous or inefficient
• Little effort is spent in facilitating a smooth transition from onboarding to talent management
According to Gary Becker, winner of the Noble Prize in Economics, 65% of all capital in a highly evolved economy is Human Capital, therefore, workforce management
has a prominent role and the investment in technology to aid its endeavor is justifiable
According to Gary Becker, winner of the Noble Prize in Economics, 65% of all capital in a highly evolved economy is Human Capital, therefore, workforce management
has a prominent role and the investment in technology to aid its endeavor is justifiable
Does Talent Make A Difference?
1. Average firm $160,000
2. IBM $300,000
3. HP $500,000
4. Cisco $700,000
5. Dell $1,000,000
It takes 3x the number of bodies at IBM to produce the same revenue as Dell…….IBM has lost60% of the PC market share
Revenue per
Employee
Total sales revenue
# of employees
Bill Gates says…… “The productivity difference between my top performers (10% of his population) and the average ones is between 3x to 10x”
If rev per employee is $160,00010 x 160K = $1,600,000…Then
Top talent can make an extra $1,440,000 per year (Top RPE)
10% Top Performers
The rest
=
Talent Lost and Won
The tale of 2 cities exemplifies the consequences of talent acquisition.
Babe Ruth was released over the Boston Red Sox’s penny-wise and dollar foolish approach, which has earned them only one World Series in over a century, while the NY Yankees acquired Babe Ruth and continue spending on talent over the same period, winning 26 world series.
Paying for top talent is always the right choice!
Babe RuthWith the Red Sox
Babe RuthWith the Yankees
If Ally Mc Beal walked in…. Why would you feel the need to also interview Rosanne to check if Ally was really skinny?
• He was given an offer within 24 hours • Michael Jordan (s) are gone in one day• Within 10 days…the top 10% are gone• Quality of hire decreases over time• Top candidates hate delays
Just Do It !Just Do It !
Kai-Fu Lee
Looses lawsuit to
Over hiring their Top Talent
Google’s stock is up 200% since Mr. Lee’s arrival
Set fixed standards
Set fixed standards
Set fixed StandardsExpedite your hiring practice
It Makes A Difference!.....Act Quickly
Cost Analysis for Loosing Talent
New Hire at New Hire at $60,000$60,000Benefits Benefits 30%.30%. $18,000$18,000Space, Mgmt. Time, Soft Costs, TrainingSpace, Mgmt. Time, Soft Costs, Training $$22,00022,000 Total Yearly CostTotal Yearly Cost $100,000$100,000Recruiting & Termination CostsRecruiting & Termination Costs $60,000$60,000Sub-Total Capital Cost Sub-Total Capital Cost $160,000$160,000Top Rev P.E. $1,440,000
Total Capital Cost Total Capital Cost $1,600,000$1,600,000
How many organizations allow a $1,600,000 capital asset to walk?
We can not afford to loose talentWe can not afford to loose talent• We need to change how we We need to change how we
think about talentthink about talent• We need to view talent as a We need to view talent as a
legitimate legitimate balance sheetbalance sheet item item• We need a “Rigorous Process” We need a “Rigorous Process”
responsive to changing needsresponsive to changing needs• We need to effectively acquire We need to effectively acquire
and manage the talent we needand manage the talent we need
This is a shared responsibility between the hiring managers
and recruiting staff
Each business units needs a “Talent Acquisition and
Management Strategy”
Source of Hire
Internet
Print Advertising
Job Fairs
Employee Referrals
Contingency Agencies
College Recruiting
Executive Search
Exempt CPH
$ 213
2,084
1,284
500
15,596
2,544
34,844
Non-Exempt CPH
$ 51
726
70
70
2,076
457
7,838
Source: EMA 2000 Cost Per Hire and Staffing Metrics Survey
Yearly average Yearly average
100 Open reqs. per 100 Open reqs. per
5000 employees5000 employees
External$ 34,844$ 34,844
X 100X 100------------------------------------------------------------------
$ 3,484,400$ 3,484,400
Internal$6,625$6,625X 100X 100
----------------------------------------------------------
$ 662,500$ 662,500
Executive Executive Search CPHSearch CPH
HR Team HR Team CPHCPH
Yearly Savings for usingYour Internal Recruiters
$2,821,900$2,821,900
Cost Per Hire (CPH)
Cost Analysis for Acquiring Talent
HR Strategy is Key to Business Success
Business StrategyBusiness Strategy• ReliabilityReliability• Safety Safety • Asset UtilizationAsset Utilization• Growth in Market ShareGrowth in Market Share• Process ImprovementProcess Improvement
HR StrategyHR Strategy • Leadership DevelopmentLeadership Development• Succession PlanningSuccession Planning• Talent Acquisition • Teamwork & CommunicationTeamwork & Communication• Performance ManagementPerformance Management
Competitive Advantage• Lower Fixed Costs• World Class Performance • Faster Decision Making• Improved Revenues• Efficient Operations
Profits, Growth & Profits, Growth & Shareholder ValueShareholder Value
1
2
3
Star Over
Good people make companies successful andattracting Top Talent requires mastering…..
Good people make companies successful andattracting Top Talent requires mastering…..
Client-Candidate Relations, Power Client-Candidate Relations, Power Sourcing, Metrics and ReportingSourcing, Metrics and Reporting
By Frank Pacheco
The Art of War Talent Acquisition
The Art of Talent Acquisition
1. Talent Acquisition Management Strategy
2. Phase 1 - Understand Your Organization
3. Understanding Talent Types
4. Phase 2 – Understand What You Are Seeking
5. Attracting Top Talent (Beyond $$$)
6. Phase 3 – Recruit Aggressively
7. Process Drives Talent Acquisition
Talent Acquisition and Management Strategy(TAMS)
Multi-step process.
Forces organizations to understand
themselves.
Basis for imbuing a “talent is an
asset” culture in an organization.
Makes “Performance Management” an
expected practice.
Promotes recruitment “branding” to
make you an “Employer of Choice”
Phase One
Strengths
Shortcomings
Culture
Values
Value proposition for employees
Are you able to articulate the dream?
Understand Your Organization
Understanding Talent Types
Active job seekers
Undesirable if they had no job in 2007
May be unable of managing work relationships so they want to leave
May be poor communicators because no one knows they are leaving
Weak because no one is trying to keep them
Passive job seekers
Content/currently employed (top performer)
Must be convinced to look
Counter offers expected
Hired rapidly when they decide to look
Customers, competitors, investors and other website visitors that are already coming to your website but won’t leave a resume
PassivePassive
ActiveActive
These are candidates with active resumes
“C” Managers don’t hire “A” Players “A” Players won’t work for “C” Managers“C” Recruiters can’t recruit “A” Players
Phase Two
Rigorously review – “Do We Need This Role?”
Focus on the role’s ROI in alignment with your business plan
Can you justify the cost for the right talent?
Always aim for top performers! They produce 3x to 10x more than an average performers
Understand What You Are Seeking
Be prepared to answer three key questions
for the ideal candidates:
1. What do you want me to do? – Precisely.
2. How am I to be measured ? – Precisely.
3. How can I win?
Attracting Top Talent (Beyond $$$)
2%
17%
19%
23%
37%
0% 10% 20% 30% 40%
The bureaucratic red tape and lengthyhiring process*
Offering competitive compensation
Benefits, pensions, vacation time
Top talent unaware of available jobs*
Perception of boring and bureaucratic jobs
Overcome their concerns by discussing:
Your management style
Open 2 way communications
Challenging projects & opportunities
Opportunities to grow and learn
How their work makes a difference
How performance is recognized
How performance is rewarded
Degree of control over their job/life
CandidateConcerns
Phase Three
• Apply proven innovations• Eliminate unnecessary criteria• Focus on the goal and process• Be ready to act quickly. “The top 10% of candidates
accept jobs within 10 days.”
• Hire experienced Recruiters • HR professionals should design new
processes• Become a recruiter/salesperson• Treat every candidate with respect (increase
your network)
Recruit Aggressively
There is an ongoing
Talent Acquisition War
Your competitors
know your top
producers by name!
Process Drives Talent Acquisition
Powerful screening, filtering and scoring tools ensure that you find better
candidates faster.
Seeker Universe
Filtering,
Screening
Scoring
Client Relations
Highly qualified candidates
Proactive & Reactive ModelsProactive & Reactive Models
Recruiting Roundtable Research (I)
Recruiting Roundtable Research (II)