Integrating Talent Management Integrating Talent Management Practices and MeasuresPractices and MeasuresDavid C FormanChief Learning OfficerHCI

The Value of IntangiblesThe Value of Intangibles

Year Intangible % Tangible %

1982 38% 62%

1992 62% 38%

2000 85% 15%

The Talent AgeThe Talent Age

• Iron to Industrial to Knowledge to Talent Age• Enduring competitive advantage is not

resources, location, technology or processes—these can all be emulated or bought

• It is the knowledge, skills, performance and culture of the organization that is the most vital differentiator

• Global and demographic trends only make this advantage even more significant

So They SaySo They Say

“The only unique asset that a business has for gaining a sustained competitive advantage over rivals is its workforce—the skills and dedication of its employees. There is no other sustainable advantage in the modern, high-tech, global economy.”

Robert Reich

“The empires of the future will be empires of the mind.” Winston Churchill

1. Why is Talent So Important Now?1. Why is Talent So Important Now?

• Not just the right thing to do, it’s the right business thing to do

• Strong data showing the relationship between effective talent practices and financial returns

• Three primary drivers: critical readiness; workforce productivity and lost money

• Talent management or mismanagement?

Talent Adds Value Talent Adds Value

Value of Top Performers – Two to four times the performance of average employees

Google says one top software engineer is worth 300X

Variance in performance increases with the complexity of the job. For software engineers in general, top performers are 12 times more productive

Top talent tends to cluster together15 composers account for 50% of played

symphonies

Talent Mismanagement and Lost MoneyTalent Mismanagement and Lost Money

Cost of Losing Talent – 1 ½ times burdened salary. Cisco loses $250K for each talented engineer it loses. Bristol Meyers Squib loses $500K for each senior leader lost

Cost of Poor Hire -- $300K impact

Impact of “bad fit” hires – 40% fail within the first 12 months

Cost per Day --$7000 a day for operating without a key player

Critical ReadinessCritical Readiness

• 70% of organizations say that they have an insufficient pipeline of talent for critical jobs

• The leadership pipeline is insufficient in 67% of companies

• Failure rates for imported as opposed to grown talent is two to three times higher

• Serious readiness shortage pertains and companies are at risk

ProductivityProductivity

Engagement Levels – Only approximately 25% to 55% of employees are engaged. Employees who are most committed perform 25% better

Breakeven Point – 6.2 months for a manager to become productive in a new job.

Deployment – Only about 17% of employees do what they do best at work

Performance Expectations – Less than 50% of employees know what is expected of them at work

Organizational Learning – Few organizations share knowledge and learn from experience

Someone is LookingSomeone is Looking

More C-level executives understand that talent is the major competitive advantage

Talent is a board-level issue for 50% of companies

Key metrics: engagement, turnover, bench strength, % of people with ILP and IRP

Accountability is becoming clear– CEO is responsible for senior talent pools– Managers are accountable for developing

their employees

A Look into the FutureA Look into the Future

“All companies registered in Denmark will be required to include in their annual reports information about customers, processes and human capital. A minimum of five measures for each is required and comparisons with the previous two years must be shown. Information for investors about intellectual capital both current and future should occupy at least one third of the report”

2. Integrated Talent Management2. Integrated Talent Management

Plan

Acquire

DevelopDeploy

Lead

Retain

Engage

EvaluateHuman Capital

So They SaySo They Say

“The only way to generate enduring profits is to begin by building the kind of work environment that attracts, focuses and keeps talented employees.”

Marcus Buckingham and Curt Coffman

DefinitionsDefinitions• Talent is more than just future leaders and A talent• Talent is not an inherent quality, it can be developed

and nurtured• Talent pertains to people that add value to the

organization and its customers• Kimberly Clark: “Our goal is to improve the company’s

overall effectiveness so that every business, every function, every region and every person has maximum impact.”

Current State of Integrated Talent Current State of Integrated Talent Management in Most OrganizationsManagement in Most Organizations

• Several functions are done well• Responsibilities are spread across the enterprise• Unclear where authority resides• Execution and implementation are inconsistent• The relationship among talent functions is rare and left

to chance• HCI assessment

3. Organizational Transformation3. Organizational Transformation• From Silos to Seamless• It’s the network, not the node• How organizations are adjusting• Familiar processes and the failure of the tweak and

incremental change

From Silos to SeamlessFrom Silos to Seamless• Silos are first generation structures that are a huge

barrier for third generation companies• Silos are not conducive to such new company

practices such as collaboration, team work and borderless innovation

• Must look at incentives and cultural values that support old habits and comfortable practices

• Mindsets must change before behavior does

It’s the Network, Not the NodeIt’s the Network, Not the Node• A market changing idea from the computer industry• Biggest source of talent mismanagement is what falls

between the various talent practices and processes• Cannot view talent management as a series of

separate activities that do not speak or relate to each other

• Think about the employee perspective—a full lifecycle experience

• Weave the practices together

How Organizations Are AdjustingHow Organizations Are Adjusting• Old titles and roles are not sufficient to address

strategic talent management issues• Emerging titles and roles

– Chief People Officer– Chief Human Capital Officer (CHICO)– Vice President of Talent Management– McKinsey’s People Committee– Cross-functional talent advisory committees

Familiar ProcessesFamiliar Processes• Many talent processes such as performance

management, leadership development and recruiting have existed for decades

• It’s tempting to think that talent management is a tweak of the same practices and will not require significant organizational change

• A transformation—not a tweak- is needed to move to a third-generation, talent-driven organization

• The biggest issue with talent management is in our minds

4. Driving a Third Generation Culture4. Driving a Third Generation Culture

Reinforce

RecognizeMetrics

Accountabilities

Talent Culture

ReinforceReinforce

• Individual actions that model desired behaviors

• Respected role models endorse the change• Highly respected informal leaders continue to

sign up• Communicate through action, not words—

moving beyond rhetoric • Evangelists to spread the message

Examples of ReinforcementExamples of Reinforcement

• CEO addresses talent issues at each staff meeting

• Senior leaders are very visible in the talent review process and in teaching courses

• CEO posts his or her own individual learning plan on the intranet

• Talent metrics are discussed in company meetings

• Managers are given training on developing workplace learning activities

RecognizeRecognize

• The accomplishments of others who demonstrate desired behaviors

• Nonfinancial incentives• SSIP formula: Recognition is especially

meaningful if it is SSIP—sincere, specific, immediate and personal

• Recognition by executives, managers and colleagues

Examples of RecognitionExamples of Recognition

• Managers are recognized for excellence in developing and retaining their employees

• Senior mentors and coaches are honored in company meetings

• Collegial awards for employees sharing knowledge and expertise

• Highest rated managers are asked to teach at the leadership institute

• Managers of high performing and high potential employees receive a personal note from the CEO

AccountabilitiesAccountabilities

• Beyond general statements of what should be done

• Beyond general statements of responsibilities• Directly tied to measurable performance

objectives or bonus criteria• A person’s evaluation rating, promotion or

pay is tied to performance of desired behavior

Accountabilities: ExecutivesAccountabilities: Executives

• Activities– Spend 25% of time on talent issues– Be involved actively in the talent review process– Teach and mentor talent– Be chief talent officers

• Results– Achieve specific targets for engagement, retention

and depth of bench for key positions– Hold others accountable for achieving talent-related

objectives

Accountabilities: ManagersAccountabilities: Managers

• Activities– Spend 25% of their time teaching, coaching and on

talent responsibilities– Participate in talent review sessions

• Results– Complete developmental plans for all employees– Work with employees to achieve developmental plan – Show positive engagement results– Achieve Retention targets – Hold individual retention discussions regularly – Promote and move employees to other company

positions

MetricsMetrics

• Easy and right• Critical few and inconsequential many• One time and ongoing• Summary and segmented• Visibility and action

“Just because something can be counted, it doesn’t mean that it counts.” Albert Einstein

Top Five Overall Talent Top Five Overall Talent IndicatorsIndicators• Segmented engagement levels• Segmented turnover data• Readiness levels for key positions• Talent quotient• Percentage of inside vs. outside hires for

critical jobs

More Specific Contributing More Specific Contributing MeasuresMeasures• Quality of incoming candidates• Quality of hire• Segmented turnover within first two years• Time to proficiency in new job• Depth of talent pools for key and feeder

positions

More Specific Contributing More Specific Contributing MetricsMetrics• Percentage on employees participating in

referral programs• Percentage of employees with an ILP• Percentage of employees completing ILP• Percentage of employees having individual

retention discussions or plans

Integrated Talent ManagementIntegrated Talent Management

Plan

Acquire

DevelopDeploy

Lead

Retain

Engage

EvaluateHuman Capital