2006 talent management survey report

2006 Talent Management

Survey ReportA Study by the Society for Human Resource Management

2006 TalentManagementSurvey Report

Shawn FegleySurvey Research Specialist

ResearchSHRMJanuary 2006

This report is published by the Society for Human ResourceManagement (SHRM). All content is for informational purpos-es only and is not to be construed as a guaranteed outcome.The Society for Human Resource Management cannot acceptresponsibility for any errors or omissions or any liability result-ing from the use or misuse of any such information.

© 2006 Society for Human Resource Management. All rightsreserved. Printed in the United States of America.

This publication may not be reproduced, stored in a retrievalsystem or transmitted in whole or in part, in any form or byany means, electronic, mechanical, photocopying, recording orotherwise, without the prior written permission of the Societyfor Human Resource Management, 1800 Duke Street,Alexandria, VA 22314, USA.

For more information, please contact:

SHRM Research Department1800 Duke Street, Alexandria, VA 22314, USAPhone: (703) 548-3440 Fax: (703) 535-6432Web: www.shrm.org/research

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v About This Report

v About SHRM

v About SHRM Research

vi About the Author

vi Acknowledgments

1 Introduction

3 Methodology

5 Key Findings

7 Survey Results

17 Conclusions

19 A Look Ahead: A Future View of Talent

21 Demographics

23 Survey Instrument

29 SHRM Survey Reports

Contents

2006 Talent ManagementSurvey Report

v

About This Report

In September 2005, the Society for Human ResourceManagement (SHRM) conducted the TalentManagement Survey, which asked HR professionalsabout their talent management initiatives and specif-ic information about their recruitment, employeedevelopment and employee retention practices. Forthe purposes of the survey, talent management wasdefined as the implementation of integrated strate-gies or systems designed to improve processes forrecruiting, developing and retaining people with therequired skills and aptitude to meet current andfuture organizational needs. This report discussesthe differences between organizations with and with-out specific talent management plans in place.

Findings are discussed in the survey results section.Statistically significant findings by organization staffsize, organization sector, HR department staff sizeand the existence of talent management initiativesare integrated in the survey report, where applicable.Interpretations about future trends in talent manage-ment are presented at the end of the report in thesection titled “A Look Ahead.” A copy of the surveyinstrument is included at the end of the report.

About SHRM

The Society for Human Resource Management is theworld’s largest association devoted to humanresource management. Representing more than200,000 individual members, the Society’s missionis to serve the needs of HR professionals by provid-ing the most essential and comprehensive resourcesavailable. As an influential voice, the Society’s mis-sion is also to advance the human resource profes-sion to ensure that HR is recognized as an essentialpartner in developing and executing organizationalstrategy. Founded in 1948, SHRM currently has morethan 550 affiliated chapters and members in morethan 100 countries. Visit SHRM Online atwww.shrm.org.

About SHRM Research

SHRM Research produces high-quality, leading-edgeresearch and provides expertise on human resourceand business issues for the purpose of advancingthe HR profession. SHRM’s cutting-edge research isused by human resource professionals to developtheir knowledge and to provide strategic direction totheir organizations. As a leading expert in the field ofHR, SHRM works closely with leading academics, pol-icy makers and business leaders.

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2006 Talent Management Survey Report

vi

About the Author

Shawn Fegley is a survey research specialist forSHRM. His responsibilities include designing, con-ducting and analyzing surveys on HR-related topics.He has worked in survey research for the past sixyears.

Acknowledgments

This report is the culmination of a team effort. SteveWilliams, Ph.D., SPHR, director of Research, providedvaluable expertise adding to the content of the sur-vey report. Jennifer Schramm, manager of WorkplaceTrends and Forecasting, also contributed by providinginsight on future trends in talent management.

The Talent Management Survey instrument wasdeveloped by the SHRM Survey Program. The SHRMEmployee Relations Special Expertise Panel, specifi-cally Pete Fornal, Christine Vion-Gillespie, SPHR,Phyllis G. Hartman, SPHR, Patricia Mathews, DennySchroeder, SPHR, Brenda Tranchina, SPHR, andJoanne Webster, SPHR, provided valuable insight andrecommendations for the survey instrument.


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H uman resource professionals no longer sim-ply focus on their organizations’ day-to-daytransactional needs, benefits, compensation

and staffing. The role of HR throughout the years hasexpanded immensely to include a wide range of orga-nizational initiatives such as training, employee devel-opment, diversity and equity in the workplace, disas-ter preparedness, reward management, and develop-ment and execution of organizational strategy. Thereare direct and indirect intricacies linked to all of theseorganizational initiatives, and it has become impor-tant that HR professionals also have the ability tomanage, quantify and understand the nature andstructure of these organizational systems. As HRdepartments continue to evolve from a process-orient-ed function to a more strategic role within organiza-tions, they are putting in place additional integratedand strategic plans designed to improve processes tohelp meet future organizational needs.

Talent management is becoming an important com-ponent of human resource management. This prac-tice was initially designed to improve the process forrecruiting and developing people with the requiredskills and aptitude to meet current organizationalneeds. Today an organization’s success is directlylinked to the talent it can access. Competition andthe lack of available highly talented and skilledemployees make finding and retaining talented peo-ple a major priority for organizations.

In this highly competitive and demanding businessenvironment, HR departments are starting to moveaway from only focusing on recruitment and develop-ment to a more strategic position that unites themanagement of human capital with organizationalgoals. Over the years, talent management hasevolved, along with the expanding responsibilitiesand sophistication of the HR profession, to be incor-porated into the goals and strategy of an organiza-tion. The emphasis on human capital is now beingaligned with management processes such as suc-cession planning, development of leaders, retentionand career planning. Talent management has movedaway from being an administrative process to a con-tinuous organizational practice with a strategic focalpoint that drives organizational outcomes.

Very successful organizations like Yahoo Inc. arewell-known for their corporate culture and making tal-ent management a top priority. The SHRMFoundation’s DVD, “Fueling the Talent Engine: Findingand Keeping High Performers: A Case Study of YahooInc.,” showcases how Yahoo views talent as an inte-grated function that is incorporated into the compa-ny’s central organizational strategy. This case studyillustrates how Yahoo considers human capital to bethe central property in the information economy anda key component of the company’s success. Talentmanagement at Yahoo is observed from the timecandidates consider joining the organization, through-out their entire career and even after they depart.

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Introduction

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Managing talent at Yahoo is a never-ending system-atic process that includes targeted recruitment andretention programs along with policies that encour-age career growth and development, reward effectiveperformance and build a deep reservoir of succes-sors at every level.

This survey report examines organizational talentmanagement practices and insights from the per-spective of HR professionals, along with specificinformation about recruitment, employee develop-ment and employee retention. The report alsoexplores the differences between organizations withand without specific talent management initiativesin place.


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A sample of HR professionals was randomlyselected from SHRM’s membership database,which at the time included approximately

200,000 individual members. Only members who hadnot participated in an SHRM survey or poll in the pre-vious six months were included in the samplingframe. Members who were students, consultants,academics, located internationally or had no e-mailaddress on file were also excluded from the samplingframe. In September 2005, an e-mail that included alink to the Talent Management Survey was sent to2,622 SHRM members. In the end, 2,415 e-mailswere successfully delivered, and 384 HR profession-als responded, yielding a response rate of 16%. Thesurvey was fielded for a period of three weeks, andfour e-mail reminders were sent to sample membersin an effort to increase the response rate.

Notes and CaveatsAnalysis: Throughout this report, analyses by respon-dents’ organization staff size, the existence of talentmanagement initiatives, organization sector and HRdepartment staff size are presented and discussed,when applicable.

Differences: Conventional statistical methods wereused to determine if observed differences were sta-tistically significant (i.e., there is a small likelihoodthat the differences occurred by chance). Therefore,in most cases, only results that were significant areincluded, unless otherwise noted.

Generalization of results: As with any research,readers should exercise caution when generalizingresults and take individual circumstances and expe-riences into consideration when making decisionsbased on these data. While SHRM is confident in itsresearch, it is prudent to understand that theresults presented in this survey report are only trulyrepresentative of the sample of HR professionalsresponding to the survey.

Number of respondents: The number of respondents(indicated by “n” in figures and tables) varies fromtable to table and figure to figure because somerespondents did not answer all of the questions.Individuals may not have responded to a question onthe survey because the question or some of itsparts were not applicable or because the requesteddata were unavailable. This also accounts for thevarying number of responses from one table or figureto another or within each table or figure.

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Methodology

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Confidence level and margin of error: A confidencelevel and margin of error give readers some measureof how much they can rely on survey responses torepresent all of SHRM member organizations. Giventhe level of response to the survey, SHRM is 95%confident that responses given by all respondingorganizations can be generalized to all SHRM mem-ber organizations with a margin of error of approxi-mately 5%. For example, 52% of HR professionalsreported their organizations had specific talent man-

agement initiatives in place. With a 5% margin oferror, the reader can be 95% certain that between47% and 57% of SHRM members would report thattheir organizations presently had talent managementinitiatives in place. It is important to know that asthe sample size decreases, the margin of errorincreases, and therefore the margin of error for eachindividual question will vary depending on the num-ber of responses to that particular question.


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O ver one-half of HR professionals indicatedthat their organizations had specific talentmanagement initiatives in place. Among

respondents who reported that their organizationshad such initiatives, over three-quarters indicatedthey were a top priority for their organizations.

According to HR professionals, the top four areas ofimprovement for their organizations’ talent manage-ment programs were building a deeper reservoir ofsuccessors at every level, creating a culture thatmade employees want to stay with the organization,identifying gaps in current employee and candidatecompetency levels, and creating policies that encour-aged career growth and development opportunities.

The areas in the least need of improvement includedcreating a culture that valued employees’ work, cre-ating a culture that made individuals want to join theorganization and creating an environment whereemployees’ ideas were listened to and valued.

Among organizations that had specific talent manage-ment strategies in place, over three-quarters indicat-ed HR worked directly with employees or managers intalent management initiatives.

Respondents from organizations with talent manage-ment programs in place were much more likely torate their organizations more positively regardingtheir workplace culture, planning, development oppor-tunities, professional advancement, reward manage-ment, recruitment and retention than those fromorganizations without talent management programs.

HR professionals from organizations with talent man-agement plans in place were slightly more likely toprepare their junior or mid-level employees to stepinto senior leadership positions.

Organizations with talent management strategies inplace were more likely than organizations withoutsuch initiatives to have formal budgets for recruitingindividuals, developing employees and retainingemployees.

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Key Findings

Talent Management InitiativesOverall, 53% of HR professionals indicated that theirorganizations had specific talent management initia-tives in place. Forty-seven percent reported theirorganizations did not have such initiatives in place.These data are depicted in Figure 1.

As shown in Tables 1 through 3, large organizations(500 or more employees), publicly or privately ownedfor-profit organizations and organizations with five ormore staff members in their HR departments weremore likely to have talent management plans inplace. These differences may be due to these organi-zations having the in-house personnel and morefinancial resources to develop and maintain talentmanagement plans.

Among respondents who reported that their organiza-tions had specific talent management systems inplace, 76% of HR professionals indicated talent man-agement was a top priority for their organizations.These data are depicted in Figure 2.

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Survey Results

Figure 1Existence of Specific Talent Management Initiatives

Source: SHRM 2006 Talent Management Survey Report

(n = 384)

Yes53%

No47%

Table 1 Talent Management Initiatives in Place (by Organization Staff Size)

Small Medium Large(1-99 Employees) (100-499 Employees) (500 or More Employees) Comparison by

Overall (n = 65) (n = 76) (n = 51) Organization Size

53% 45% 54% 61% Large > small

Note: Sample sizes are based on the actual number of respondents by organization staff size who answered this question using the response options provided.


8 2006 Talent Management Survey Report

Table 2 Talent Management Initiatives in Place (by Profit Status)

Publicly Owned For-Profit Privately Owned For-Profit Nonprofit Government Differences Based Overall (n = 65) (n = 97) (n = 24) (n = 8) on Profit Status

53% 65% 56% 36% 27% Publicly/privatelyowned for-profit > nonprofit

Note: Sample sizes are based on the actual number of respondents by profit status who answered this question using the response options provided.


Table 3 Talent Management Initiatives in Place (by HR Department Staff Size)

1-4 HR 5-9 HR 10-24 HR 25-49 HR 50-99 HR 100 or More Comparison byEmployees Employees Employees Employees Employees HR Employees HR Department

Overall (n = 223) (n = 53) (n = 39) (n = 10) (n = 14) (n = 14) Size

53% 45% 59% 57% 70% 86% 73% 5 or moreemployees

> 4 or feweremployees

Note: Sample sizes are based on the actual number of respondents by HR department staff size who answered this question using the response options provided.


Figure 2Talent Management Initiatives as a Top Priority

Note: Excludes respondents who indicated their organizations did not have talentmanagement initiatives in place.


(n = 203)

Yes76%

No24%

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Table 4 examines the relationship between organiza-tion size and talent management strategies being atop priority for organizations. Among respondents whoreported that their organizations had specific talentmanagement initiatives in place, regardless of organi-zation size, the majority indicated these initiativeswere a top priority for their organizations. However,large (500 or more employees) organizations weremore likely than small (1-99 employees) and medium(100-499 employees) organizations to indicate talentmanagement strategies were a top priority (90% forlarge compared with 75% for small and 69% for medi-um). These differences may be due to large organiza-tions having more financial resources and employeeswho are equipped to implement and produce thesestrategies than small and medium organizations.

Talent management plans help an organizationimprove the processes for recruiting, further develop-ing and retaining individuals and align these process-es with the organization’s business strategy. These

processes target people with the aptitude and skillsrequired to meet current and future organizationalneeds. HR professionals from organizations with tal-ent management plans in place were asked whowithin their organizations was primarily responsiblefor recruiting, developing and retaining employees.As seen in Table 5, HR professionals were primarilyresponsible for recruiting individuals while theemployee’s supervisor was primarily responsible fordevelopment and retention efforts. This is not sur-prising since HR normally leads an organization’srecruitment efforts and usually has a more indirectrole when dealing with employees once they enterthe organization. HR usually works closely with theemployees’ immediate supervisors and line man-agers on development and retention activities.Among organizations that had specific talent man-agement programs in place, the majority (85%) indi-cated that HR worked directly with employees ormanagers to implement talent management initia-tives. These results are not surprising since these

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Table 4 Talent Management Initiatives as a Top Priority (by Organization Staff Size)

Small Medium LargeOverall (1-99 Employees) (100-499 Employees) (500 or More Employees) Comparison by

(n = 47) (n = 52) (n = 46) Organization Size

76% 75% 69% 90% Large > small, medium

Note: Sample sizes are based on the actual number of respondents by organization staff size who answered this question using the response options provided.


Table 5 Primary Responsibility for Recruitment, Development and Retention

Employee’sSupervisor HR Staff Department Head Mentor Internal Coach No One Other

Recruiting 9% 78% 6% 1% 0% 0% 7%individuals (n = 197)

Further developingemployees (n = 196) 56% 16% 14% 2% 2% 5% 6%

Retaining employees (n = 198) 59% 10% 16% 2% 1% 6% 7%

Note: Percentages are row percentages and do not total 100% due to rounding.


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programs are typically extended to all or mostemployees so HR would be the most likely source tofacilitate this process within an organization. Thesedata are depicted in Figure 3.

HR professionals whose organizations had talentmanagement practices in place were asked to indi-cate the top three areas in which their organizationsneeded improvement in talent management prac-tices. As shown in Table 6, respondents reportedthat building a deeper reservoir of successors atevery level (28%) was the area in need of mostimprovement. This was followed by creating a culturethat made employees want to stay with the organiza-tion (17%), identifying gaps in current employee andcandidate competency levels (17%) and creating poli-cies that encouraged career growth and developmentopportunities (16%). The areas least likely to needimprovement included creating a culture that valuedemployees’ work, creating a culture that made indi-


Figure 3HR Working Directly With Employees orManagers in Talent Management Initiatives

Note: Excludes respondents who indicated their organizations did not have talentmanagement initiatives in place.


(n = 197)

Yes85%

No15%

Table 6 Talent Management Practices and Strategies in Need of Improvement

(n = 202)

Building a deeper reservoir of successors at every level 28%

Creating a culture that makes employees want to stay with the organization 17%

Identifying gaps in current employee and candidate competency levels 17%

Creating policies that encourage career growth and development opportunities 16%

Identifying vacancies that will be created as the company advances and expands 14%

Locating the kind of qualified professionals needed 14%

Rewarding top-performing employees 13%

Creating an environment where employees are excited to come to work each day 12%

Aligning employees with the mission and vision of the organization 12%

Assessing candidates’ skills earlier in the hiring process 12%

Creating a culture that values employees’ work 7%

Creating a culture that makes individuals want to join the organization 7%

Creating an environment where employees’ ideas are listened to and valued 7%

Other 1%


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viduals want to join the organization and creating anenvironment where employees’ ideas were listenedto and valued (all at 7%). Overall, the majority of HRprofessionals felt that there was no need for majorimprovements in any of these areas since theybelieved they were doing each of these well.

Integrated and well thought-out talent managementpractices involve numerous characteristics that takeinto account workplace culture, planning, develop-

ment opportunities, professional advancement,reward management, recruitment and retention. HRprofessionals were asked to rate the extent to whichthey agreed or disagreed with a series of practicespertaining to these issues at their organizations. Asillustrated in Table 7, respondents from organizationswith talent management initiatives were significantlymore likely than respondents from organizations with-out such initiatives to rate their organizations posi-tively on the following issues: having policies that

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Table 7 Impact of Talent Management Practices and Strategies

Comparison byOverall Organizations With Organizations Without Organizations With and

My organization… Strongly Agree/Agree Talent Initiatives Talent Initiatives Without Talent Initiatives

Creates a culture that makes individuals want to join 82% 85% 79%the organization (n = 378)

Creates a culture that values employees’ work (n = 379) 80% 82% 78%

Aligns employees with the mission and vision of 77% 79% 74%the organization (n = 380)

Creates an environment where employees’ ideas are 71% 75% 66%listened to and valued (n = 377)

Creates a culture that makes employees want to stay 72% 73% 71%with the organization (n = 379)

Provides current employees with adequate training 70% 74% 65%that allows them to do their jobs well (n = 378)

Places the right people in the right jobs (n = 376) 70% 73% 67%

Creates a culture where employees passionately 68% 71% 65%believe in what they are doing (n = 380)

Rewards top-performing employees (n = 377) 65% 70% 60%

Has policies that encourage career growth and 64% 70% 57% With > withoutdevelopmental opportunities (n = 379)

Lets employees feel empowered to make decisions 63% 68% 57% With > withoutthat impact their work (n = 378)

Creates an environment where employees are excited 60% 63% 56%to come to work each day (n = 379)

Identifies vacancies that will be created as the 53% 57% 49%company advances and expands (n = 378)

Provides current employees with salary adjustments as 51% 55% 48%they master significant skills required for the job (n = 379)

Identifies gaps in current employee and candidate 47% 51% 43%competency levels (n = 377)

Builds a deep reservoir of successors at every level (n = 379) 31% 33% 29%

Note: Sample sizes are based on the actual number of respondents who answered this question using the response options provided. The table is sorted in descendingorder by percentage of respondents who indicated they either strongly agreed or agreed with the statement. Blank cells in the comparison column indicate that no statisti-cally significant differences were found.



encouraged career growth and developmental oppor-tunities (70% compared with 57%) and allowingemployees to feel empowered to make decisionsimpacting their work (68% compared with 57%).

The issues that were rated the highest by HR profes-sionals from organizations with and without talentmanagement plans were 1) creating a culture thatmade individuals want to join the organization (85%for organizations with talent initiatives and 79% fororganizations without talent initiatives); 2) creating aculture that valued employees’ work (82% and 78%);and 3) aligning employees with the mission andvision of the organization (79% and 74%).

One of the top areas of improvement for organiza-tions that implemented talent management process-es was to build a broader base of successors at alllevels. Table 8 examines perceptions of how ade-quately organizations prepared their junior or mid-level employees to step into senior leadership posi-tions. Overall, only 20% of respondents indicatedthese employees were adequately prepared for thistransition. This may be an area of opportunity forHR professionals to take a leadership role in the

vital element of preparing staff to move into senior-level positions. If this issue is not dealt with andresolved, it could become a major hindrance.

Talent management is a long-term and continuousprocess that entails a belief in the value of humancapital and the contributions that employees maketo the organization’s bottom line. The followingsections explore current budgets, projected budgetchanges and organizational practices for recruiting,developing and retaining employees.

RecruitingThe Internet has changed the way organizationsrecruit and reach out to potential employees.Technology has leveled the playing field by allowingsmaller-sized organizations to compete with largerand more well-known companies. It is not surprisingthat the majority of respondents (62%) indicatedtheir organizations had formal budgets in place forrecruiting; however, organizations with talent manage-ment processes in place were more likely than organ-izations without talent management processes tohave formal recruitment budgets (72% comparedwith 39%). These data are depicted in Table 9.

As illustrated in Figure 4, the majority of respondentsindicated that they expected budgets for recruiting toincrease over the next three years, and those fromorganizations with existing talent initiatives wereslightly more likely to expect an increase than thosefrom organizations without talent initiatives (61%compared with 51%). At organizations with talentmanagement practices in place, the expected

Table 8Organization That Adequately PrepareJunior or Mid-Level Employees to Step IntoSenior Leadership Positions

Overall With Talent Initiatives Without Talent Initiatives(n = 375) (n = 196) (n = 179)

20% 23% 16%

Note: Sample sizes are based on the actual number of respondents whoanswered this question using the response options provided.


Table 9 Organizations With Formal Budgets for Recruitment

Overall With Talent Initiatives Without Talent Initiatives Comparison by Organizations(n = 378) (n = 197) (n = 181) With and Without Talent Initiatives

62% 72% 39% With > without

Note: Sample sizes are based on the actual number of respondents who answered this question using the response options provided.


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increase varied from a low of 5% to a high of 200%,while the expected increase at organizations withoutsuch practices ranged from 3% to 100%. There wasa large variance between these groups, but the medi-an (middle) expected percentage increase for bothwas 20%.

Developing EmployeesIt is crucial that employees are properly trained fortheir specific positions when they first start at anorganization and that their skill sets are furtherupdated and developed to meet regularly changingorganizational needs. Organizations that offer theiremployees the chance to expand upon their skillsimprove the ability to retain these employees andcreate a pool of talent prepared to grow with theorganization. It is important for organizations tocommunicate to their employees that they have afuture and a career within the organization and tohave a system in place that specifically tells employ-ees what they need to do to succeed. One indica-

tion that an organization is serious about developingemployees is the existence of a formal budget fortraining and development. Sixty percent of organiza-tions reported having formal budgets for developingemployees—65% of respondents from organizationswith talent initiatives and 54% from organizationswithout such initiatives. These data are depicted inTable 10.

Figure 5 shows the percentage of respondents whoexpected their employee development budgets tochange over the next three years. As illustrated in

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Figure 4 Expected Change in Recruitment Budget Over the Next Three Years

0%

10%

20%

30%

40%

50%

60%

70%


� Organizations With Talent Initiatives (n = 195) � Organizations Without Talent Initiatives (n = 177)

Increase Decrease No change

61%

51%

4%6%

35%

43%

Table 10Organizations With Formal Budgets for Developing Employees


60% 65% 54%



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this figure, the majority of respondents (60% fromorganizations with talent initiatives and 58% fromorganizations without talent initiatives) indicated thattheir budgets were expected to increase over thenext three years. The percentage of expectedincrease was within a similar range for both groups(3% to 200% for organizations with talent initiativescompared with 5% to 200% for organizations withouttalent initiatives); however, there was a slight differ-ence between median values (20% for organizationswith talent initiatives and 25% for organizations with-out talent initiatives).

Retaining EmployeesWith potential labor shortages as a result of anaging workforce and the growing scarcity of highlyskilled workers, employee retention may be thebiggest talent management concern organizationswill confront in the next decade. Less than one-third(31%) of HR professionals indicated their organiza-

tions had formal budgets in place for retainingemployees, possibly suggesting that most organiza-tions were not viewing this piece of the talent man-agement process seriously. Overall, the employeeretention budget was significantly lower in compari-son with the budgets for recruitment and employeedevelopment (31% compared with 62% and 60%respectively). This may be another area of opportuni-ty for HR professionals to take a leadership role with-in their organizations since not focusing on retentioncan possibly undermine the hard work and effortsput toward recruitment and development. For talentmanagement to be considered successful, the prac-tices and resources devoted to recruitment, develop-ment and retention must all be sound. These dataare depicted in Table 11.

Overall, 53% of HR professionals expected theiremployee retention budgets to remain the same overthe next three years while 45% expected them to


Figure 5 Expected Change in Employee Development Budget Over the Next Three Years

0%

10%

20%

30%

40%

50%

60%

70%

Note: Percentages may not total 100% due to rounding.




60%58%

4% 5%

36%38%

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increase and only 2% indicated their retention budg-ets would decrease. As illustrated in Figure 6,respondents from organizations with talent initiativeswere slightly more likely to expect an increase in theemployee retention budget than respondents fromorganizations without talent initiatives (50% com-pared with 40%). At organizations with talent initia-tives in place, the expected percentage increase var-ied from a low of 2% to a high of 300% while inorganizations without these initiatives the expectedincrease ranged from 3% to 100%. Although there

was a large variance between these groups, themedian value for both was 20%.

Table 12 illustrates current practices related torecruitment, employee development and retention.HR professionals from organizations with talent man-agement initiatives in place were much more likely toindicate their organizations routinely performed eachfunction than those from organizations with no talentmanagement initiatives in place. The practices thatwere most prevalent in both types of organizationswere formal performance appraisals on a regularbasis (93% of respondents from organizations withtalent initiatives and 80% of respondents from organ-izations without talent initiatives) and exit interviews(68% and 52% respectively). It is not surprising thatthe majority of organizations without talent manage-ment processes routinely carried out these functionssince they are widespread organizational practices.However, organizations with existing talent manage-

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Figure 6 Expected Change in Retention Budget Over the Next Three Years

0%

10%

20%

30%

40%

50%

60%

70%





50%

40%

2% 2%

49%

59%

Table 11Organizations With Formal Budgets forEmployee Retention


31% 36% 26%



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ment initiatives were significantly more likely thanorganizations without such initiatives to engage inthe following practices: conducting regular employeesurveys (45% compared with 25%), utilizing a formalapproach to identify why employees leave the organi-zation (41% compared with 26%), aligning their orien-tation process for new hires with their talent man-agement initiatives (33% compared with 17%), utiliz-ing a formal approach to track potential leaders’ per-formance (26% compared with 11%) and utilizing aformal approach to identify potential leaders (24%compared with 6%).

The practices that were rated the lowest by respon-dents from organizations with and without talentmanagement plans were utilizing a formal approachto identify why employees stayed at the organization(13% overall), utilizing a formal approach to identifywhy employees joined the organization (12%), proac-tively attempting to recruit employees from competi-tors (8%) and having a strategy or plan in place todeal with competitors that try recruiting employeesaway from the organization (7%). It is not surprisingthese four were rated the lowest since they are fre-quently considered nontraditional practices. HR pro-fessionals should reflect on the merit and potentialadvantages of incorporating these valuable strate-gies within their originations.


Table 12 Routine Organizational Practices

Comparison by With Talent Without Talent Organizations With and

Overall Initiatives Initiatives Without Talent Initiatives

Conduct formal performance appraisals on a regular basis 87% 93% 80% With > without(quarterly, biannually, annually) (n = 371)

Conduct exit interviews (n = 373) 61% 68% 52% With > without

Conduct regular employee surveys (quarterly, biannually, annually) (n = 371) 36% 45% 25% With > without

Utilize a formal approach to identify why employees leave 34% 41% 26% With > withoutthe organization (n = 371)

Align new-hire orientation process with the organization’s talent 25% 33% 17% With > withoutmanagement initiatives (n = 369)

Utilize a formal approach to track potential leaders’ performance (n = 367) 19% 26% 11% With > without

Utilize a formal approach to identify potential leaders (n = 370) 16% 24% 6% With > without

Utilize a formal approach to identify why employees 13% 15% 11%stay at the organization (n = 369)

Utilize a formal approach to identify why employees join the organization (n = 371) 12% 16% 9%

Proactively attempt to recruit employees from competitors (n = 371) 8% 10% 6%

Have a strategy or plan in place to deal with competitors 7% 7% 6%that try recruiting employees away from the organization (n = 364)

Note: Sample sizes are based on the actual number of respondents who answered this question using the response options provided. The table is sorted in descendingorder by percentage of respondents who responded “routinely” for each statement. Blank cells in the comparison column indicate that no statistically significant differ-ences were found.


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T oday, organizations face escalating demands tobetter acquire, retain and develop high-potentialand high-performing talent. The prospect of retir-

ing baby boomers and increasing competition from aglobal workforce make talent management even morechallenging and important. Successful organizationslike Yahoo, Inc. (see box below) realize that magnificentcorporate strategies will never be entirely successfulwithout talented employees. More than ever, the suc-cess of an organization rests on the availability of thetalent and resources that the organization can access.

Although the findings from this survey reveal that themajority of organizations have specific talent manage-ment strategies in place, there are varying degrees asto the quality and success of these strategies. Theuse of more outcome-driven practices will help to setapart those organizations that implement talent man-agement strategies more successfully than otherorganizations. Yahoo, for example, is an organizationthat has taken talent management strategies to thenext level. Successful organizations realize the impor-tance of developing formal policies and procedures toensure they are identifying and developing the besttalent available to meet current and future organiza-tional needs. The development of comprehensive tal-ent management systems and commitment to thesesystems are important in order to meet these chal-lenges and attain organizational superiority.

Implementing and maintaining a talent managementplan can be a challenge since it is a constantly evolving

process. The role of HR in talent management is vitalbecause this process must be an integrated part of anorganization’s central strategy. In this global businesssetting, HR is best equipped to forecast trends thatcould affect the management of talent. It is importantthat HR professionals take the lead in helping to createand integrate talent management initiatives within theirorganizations because these initiatives are extended toall employees.

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Conclusions

FUELING THE TALENT ENGINE DVDFinding and Keeping High Performers:

A Case Study of Yahoo! Inc.

If you would like to find out more about talent management, watch the SHRMFoundation’s DVD on this topic. This DVD showcases talent management atYahoo! Inc. as an integrated set of strategic decisions. Yahoo’s strategy focuseson attracting, selecting and keeping the very best talent to achieve a competi-tive edge in the global marketplace. The DVD includes interviews with many ofYahoo’s top executives, including the chief people officer, the chief financialofficer and the vice president of engineering.

The video features two segments: one 20-minute version perfect for classroomuse and a 10-minute version ideal for use in chapter programs and meetings.As a bonus, the DVD includes a slideshow on Yahoo! Inc. and a discussionguide. For the international audience, the DVD may also be viewed with subti-tles in Spanish, Chinese or Japanese.

The DVD…

• Makes the concept of talent management come alive • Is classroom-tested, easy to use • Includes a discussion guide that enhances understanding • Is hosted by Wayne Cascio, Ph.D., noted teacher, author and scholar

How to order:

The DVDs are available for purchase from the SHRMStore.

Full price: $80 SHRM member price: $50

Visit http://shrmstore.shrm.org/shrm or call 1-800-444-5006, option #1 to order.

19

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I n addition to the findings ofthis report, which indicatethat organizations with tal-

ent management practices aremuch more likely to have work-place culture, recruitment andretention initiatives as well asdevelopment opportunities thanthose organizations without tal-ent management practices, sev-eral other SHRM studies pointto talent management as a keyissue that will impact both thefuture of work and the role ofthe HR professional.

In the SHRM Special ExpertisePanels 2005 Trends Report,expert panels in a number ofdifferent specialized topic areaslist several aspects of talentmanagement as a key trendthat is likely to influence theHR profession over the comingfive to 10 years. This indicatesthat talent management maycut across several areas,though for different reasons.For example, the OrganizationalDevelopment Panel listed keep-ing key talent as its mostimportant trend over the com-ing years, especially if scarcityof key talent, particularly in theleadership ranks, occurs. Thismay lead to increased pressureon HR to limit turnover andimprove retention rates. This

contrasts with the survey findings, which report that onlya minority of surveyed organiza-tions have specific budgetsdedicated to retention. Otherkey panel trends included developing leaders throughmentoring and coaching, andthe ramping up of successionplanning with targeted trainingto transfer knowledge fromolder to newer workers.

The Employee Relations Panelalso focused on talent manage-ment issues but felt that thechanging relationship betweenemployees and employerswould have an important influ-ence on these strategies.According to this panel, as thenature of this relationshipevolves to one of partnership,talent management initiativesmust become more customized,requiring multiple strategiesgeared toward baby boomers,GenXers and GenYers. TheWorkforce Staffing andDeployment Panel focused onthe impact broader changes inthe workforce would have onworkforce planning and thestaffing function—specificallythe need for specialized indus-try knowledge as the best wayto find and recruit the mostskilled and talented individuals.

Three main themes seem toemerge from the panel contribu-tions. First, much will dependon the availability of talent. Theimpact of the baby boomers’retirement continues to be wide-ly debated, with some laboranalysts contending it will leadto labor shortages and otherexperts dismissing these con-cerns as exaggerated. HR pro-fessionals on the front lines doseem to be concerned aboutthis issue, and this concernappears to be driving the devel-opment of several talent man-agement initiatives. Along withconcerns about labor—or atleast skills—shortages inselected industries, anothercommon theme seems to bethe growing diversity of theworkforce and how this maylead to multiple talent manage-ment initiatives aimed at work-ers with different needs and indifferent stages of their careers.Finally, these changes may leadto more complexity within theHR function—particularly thestaffing function—as differentaspects of talent managementbecome more specialized.

The SHRM report 2015:Scenarios for the Future ofHuman Resource Managementalso considers the issue of tal-

A Look Ahead:A Future View of Talent ManagementBy Jennifer Schramm, Manager, Workplace Trends and Forecasting

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ent management. Through inter-views with key HR stakeholdersand a survey of key trends in thebroader environment, the reportaims to identify the forcesbehind the trends. “Availability oftalent” emerged as one of thetwo most important forces that

could drive the development ofthe future work environment. Thedifferent ways this issue mightinteract with organizationaldesign and hierarchy lead tovastly different scenarios on theroles of the HR profession in thefuture. These and the Special

Expertise Panel findings indicatethat although talent manage-ment is already of critical impor-tance and seems to influencemany other aspects of organiza-tional culture, it may become aneven more important issue inthe years ahead. �


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Demographics

Census Region

(n = 337)

Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin) 34%

South (Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina,Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia) 27%

Northeast (Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont) 20%

West (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Nevada, New Mexico, Montana, Oregon, Utah, Washington, Wyoming) 19%

Organization Staff Size (Entire Location)

(n = 369)

Small organization (1-99 employees) 19%

Medium organization (100-499 employees) 28%

Large organization (500 or more employees) 53%

HR Department Staff Size

(n = 354)

1-4 63%

5-9 15%

10-24 11%

25-49 3%

50-99 4%

100 or more 4%Organization Staff Size (HR Professional’s Business Location)

(n = 369)

Small organization (1-99 employees) 40%

Medium organization (100-499 employees) 38%

Large organization (500 or more employees) 23%


Organization Sector

(n = 370)

Privately owned for-profit 47%

Publicly owned for-profit 27%

Nonprofit 18%

Government 8%


Organization Industry

(n = 368)

Construction and mining/oil and gas 5%

Educational services 5%

Finance 7%

Government 5%

Health 8%

High-tech 5%

Insurance 3%

Manufacturing (durable goods) 15%

Manufacturing (nondurable goods) 6%

Newspaper publishing/broadcasting 1%

Services (nonprofit) 7%

Services (profit) 13%

Telecommunications 2%

Transportation 2%

Utilities 2%

Wholesale/retail trade 4%

Other 13%


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Survey Instrument

SHRM 2006 Talent Management Survey

T he Society for Human Resource Management (SHRM) is conducting a survey on talent management.Your responses to this survey will be kept strictly confidential. Responses from all participants will becombined, analyzed and the findings reported only in their aggregate form.

Please participate in this survey by answering the following questions and clicking the “submit” button at theend no later than October 19, 2005. If you have any questions, please contact the SHRM Survey Program bytelephone at (703) 535-6301 or by e-mail at [email protected]. Thank you in advance for sharing your timeand knowledge. Your insight and experience as an HR professional are invaluable to us in this effort.

Results of this survey will appear free to all respondents on the Survey Program homepage on SHRM’s Website. Please visit the Web site at www.shrm.org/surveys.

This survey should take no more than 10 minutes to complete.

Talent management—broadly defined as the implementation of integrated strategies or systems designed to improve processes forrecruiting, developing and retaining people with the required skills and aptitude to meet current and future organizational needs.

1. Does your organization have any specific talent management initiatives in place?YesNo � Skip to question 7

2. Are talent management initiatives a top priority for your organization?YesNo

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3. What are the top three areas your organization needs to improve in terms of talent management initiatives?� Aligning employees with the mission and vision of your organization� Assessing candidates’ skills earlier in the hiring process� Building a deeper reservoir of successors at every level� Creating a culture that makes employees want to stay with the organization� Creating a culture that makes individuals want to join the organization� Creating a culture that values employees’ work� Creating an environment where employees are excited to come to work each day� Creating an environment where employees’ ideas are listened to and valued� Creating policies that encourage career growth and development opportunities� Identifying gaps in current employee and candidate competency levels� Identifying vacancies that will be created as the company advances and expands� Locating the kind of qualified professionals needed� Rewarding top-performing employees� Other (please specify) ________________________

4. In your organization who is primarily responsible for… (Check one per statement)

5. In your organization does HR work directly with employees or managers in talent management initiatives?YesNo

6. Does your organization have a staff member whose position is exclusively responsible for overseeing talent management initiatives?

Yes, at the management/executive level (e.g., chief people officer, director of talent management) Yes, at the nonexecutive/nonmanagerial levelNo


No OneEmployee’sSupervisor

DepartmentHead

(excludesemployee’ssupervisor) HR Staff

InternalCoach

(excludesemployee’ssupervisor)

Mentor(excludesemployee’ssupervisor)

OutsideConsultant

Other (please specify)

Recruiting individuals

Further developing employees (preparingcurrent employees for advancementopportunities or to improve performanceto surpass expectations)

Retaining employees

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7. To what extent do you agree or disagree with the following statements? (Check one per statement)

8. What percentage of your employees…

9. Has your organization adequately prepared junior or mid-level employees to step into senior leadershippositions?

YesNo

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My organization….StronglyDisagree Disagree Agree

Strongly Agree

Aligns employees with the mission and vision of the organization

Builds a deep reservoir of successors at every level

Creates a culture that makes employees want to stay with the organization

Creates a culture that makes individuals want to join the organization

Creates a culture that values employees’ work

Creates a culture where employees passionately believe in what they are doing

Creates an environment where employees are excited to come to work each day

Creates an environment where employees’ideas are listened to and valued

Has policies that encourage career growth and developmental opportunities

Identifies gaps in current employee and candidate competency levels

Identifies vacancies that will be created as the company advances and expands

Lets employees feel empowered to make decisions that impact their work

Places the right people in the right jobs

Provides current employees with adequate training that allows them to do their jobs well

Provides current employees with salary adjustments as they master significant skills required for the job

Rewards top-performing employees

Percentage

Have a written career development plan in place, which has both short-and long-term development goals to succeedwithin your organization?

Who enter into a new position are formally assessed against competencies and qualifications required to be successfulin that position?

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10. Does your organization currently have a formal budget in place for:

11. How do you expect your budget for recruiting individuals to change over the next three years?IncreaseDecreaseNo change � Skip to question 13

12. By what percentage? ______%

13. How do you expect your budget for developing employees to change over the next three years?IncreaseDecreaseNo change � Skip to question 15


15. How do you expect your budget for retaining employees to change over the next three years?IncreaseDecreaseNo change � Skip to question 17



Yes No

Recruiting individuals

Further developing employees

Retaining employees

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17. Does your organization… (Check one per statement)

18. How many total employees (full and part time) are employed within your entire organization, includingyour location? ___________

19. How many total employees (full and part time) are at your location only? ________

20. At your location, how many employees are in the HR department? _____________

21. Which of the following best describes your organization? (Check only one)Publicly owned for-profit NonprofitPrivately owned for-profit Government

22. Which industry best describes this location’s main business? (Check only one)Construction and mining/oil and gas Newspaper publishing/broadcastingEducational services Services (nonprofit)Finance Services (profit)Government TelecommunicationsHealth TransportationHigh-tech UtilitiesInsurance Wholesale/retail tradeManufacturing (durable goods) Other (please specify) _______________________Manufacturing (nondurable goods)

23. What is the ZIP code at this location? _________

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Routinely Occasionally Rarely Never

Align its orientation process for new hires with its talent management initiatives

Conduct exit interviews

Conduct regular employee surveys (quarterly, biannually, annually)

Have a strategy or plan in place to deal with competitors that try recruiting your employees away from your organization

Have formal performance appraisals on a regular basis (quarterly, biannually, annually)

Proactively attempt to recruit employees from your competitors

Utilize a formal approach to identify potential leaders

Utilize a formal approach to identify why employees join your organization

Utilize a formal approach to identify why employees leave your organization

Utilize a formal approach to identify why employees stay at your organization

Utilize a formal approach to track potential leaders’ performance

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Available to members and the public1. SHRM/CareerJournal.com 2005 U.S. Job

Recovery and Retention Survey Report (40 pages, November 2005)

2. Organizational Communication Poll Findings (24 pages, June 2005)

3. Workplace Productivity Poll Findings (17 pages,January 2005)

4. SHRM/CareerJournal.com Workplace Privacy Poll Findings (47 pages, January 2005)

5. SHRM/CareerJournal.com 2004 U.S. JobRecovery and Retention Poll Findings (33 pages,November 2004)

6. Employee Trust and Loyalty Findings (21 pages,July 2004)

7. Job Negotiation Survey Findings (41 pages,April 2004)

8. Job Opportunities Survey (39 pages, September2003)

9. Job Recovery Survey (28 pages, August 2003) 10. Job Opportunities Poll (39 pages, April 2003) 11. Job Satisfaction Poll (74 pages, December 2002)12. HR Implications of the Attack on America

(23 pages, September 2002)13. Corporate Credibility and Employee

Communications Survey (14 pages, August 2002)14. Job Opportunities Poll (30 pages, August 2002)15. Workplace Romance Survey (24 pages, February

2002)16. School-to-Work Programs Survey (16 pages,

January 2002)

17. HR Implications of the Attack on America:Executive Summary of Results of a Survey of HR Professionals (13 pages, October 2002)

18. Negotiating Rewards Poll (14 pages, October 2001)19. Search Tactics Poll (8 pages, April 2001)

Available to members only1. 2005 Disaster Preparedness Survey Report

(48 pages, October 2005) 2. 2005 Workplace Diversity Practices Survey

Report (40 pages, October 2005)3. 2005 Offshoring Survey Report (51 pages,

October 2005)4. 2005 Fair Labor Standards Act Survey Report

(22 pages, August 2005)5. 2005 Benefits Survey Report (72 pages, June 2005)6. 2005 Future of the U.S. Labor Pool Survey

Report (58 pages, June 2005)7. 2005 Job Satisfaction Survey Report (52 pages,

June 2005)8. SHRM/Catalyst Employee Development Survey

Report (36 pages, April 2005)9. 2005 HR Technology Report (37 pages, March 2005)

10. 2005 Rewards Programs and IncentiveCompensation Survey Report (38 pages,March 2005)

11. The Maturing Profession of HR: Worldwide andRegional View Survey Report (33 pages,February 2005)

12. Reference and Background Checking SurveyReport (41 pages, January 2005)

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SHRM Survey Reports

30

13. Job Satisfaction Series Survey Report (193 pages, August 2004)

14. Generational Differences Survey Report (41 pages, August 2004)

15. Employer-Sponsored Investment Advice SurveyReport (60 pages, July 2004)

16. Human Resource Outsourcing Survey Report (40 pages, July 2004)

17. 2004 Benefits Survey Report (76 pages, June 2004)18. Health Care Survey Report (40 pages, June 2004)19. SHRM/CNNfn Job Satisfaction Series: Job

Satisfaction Survey Report (52 pages, April 2004)20. SHRM/CNNfn Job Satisfaction Series: Job

Compensation/Pay Survey Report (36 pages,February 2004)

21. The Maturing Profession of Human Resources inthe United States Survey Report (48 pages,January 2004)

22. Workplace Violence Survey (52 pages, January 2004)23. SHRM Eldercare Survey (40 pages, December 2003)24. SHRM/CNNfn Job Satisfaction Series: Job

Benefits Survey (57 pages, December 2003)25. Undergraduate HR Curriculum Study (45 pages,

October 2003)26. SHRM Equal Employment Opportunity

Commission Survey (10 pages, October 2003) 27. Fair Labor Standards Act (FLSA) Survey

(20 pages, August 2003)28. SHRM/SHRM Foundation 2003 Benefits Survey

(81 pages, June 2003)29. SHRM Job Satisfaction Series: Job Security

Survey (41 pages, June 2003)30. SHRM/NOWCC/CED Older Workers Survey

(53 pages, June 2003)31. March 2003 Current Events Survey (28 pages,

May 2003)32. 2003 FMLA Poll (20 pages, April 2003)33. 2003 Business Ethics Survey (48 pages, April 2003)

34. Employer Incentives for Hiring Individuals WithDisabilities (66 pages, April 2003)

35. Fun Work Environment Survey (56 pages,November 2002)

36. Aligning HR With Organizational Strategy (53 pages, November 2002)

37. Recruiter Cost/Budget Survey (30 pages,October 2002)

38. 2002 SHRM/Fortune Survey on the ChangingFace of Diversity (16 pages, October 2002)

39. Workplace Demographic Trends Survey (37 pages, June 2002)

40. Global Leadership Survey (36 pages, June 2002) 41. SHRM 2002 Benefits Survey Results (57 pages,

April 2002) 42. A Study of Effective Workforce Management

(36 pages, February 2002) 43. Resource Strategies, Stages of Development and

Organization Size Survey (46 pages, January 2002) 44. Job Security and Layoffs Survey (76 pages,

December 2001) 45. World Events Survey—Impact on Global Mobility

(4 pages, November 2001) 46. Religion in the Workplace (58 pages, June 2001) 47. Employee Referral Programs (40 pages, June 2001) 48. Impact of Diversity Initiatives on the Bottom Line

(41 pages, June 2001) 49. 2001 Benefits Survey (59 pages, April 2001) 50. 2000 FMLA Survey (51 pages, January 2001) 51. Workplace Privacy Survey (51 pages, December

2000) 52. Performance Management Survey (43 pages,

December 2000) 53. Impact of Diversity Initiatives Poll (5 pages,

October 2000) 54. 2000 Retention Survey (40 pages, June 2000) 55. SHRM Cover Letters and Resume Survey

(39 pages, May 2000)56. 2000 Benefits Survey (52 pages, April 2000)


www.shrm.org/surveys

SHRM members can download this survey report and many others free of charge at www.shrm.org/surveys. Ifyou are not a SHRM member and would like to become one, please visit www.shrm.org/application.

SHRM®2006 Talent Management Survey Report

$79.95 member/$99.95 nonmember62.17095

2006 talent management survey report

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