www.advancedcomputersoftware.com/absCopyright Advanced Business Software and Solutions Ltd 2013

It is a great irony that even in these persistently difficult economic times - when so many organisations have scaled back their operations, or gone out of business, leaving swathes of people unemployed - recruiting and hanging on to talented staff remains as challenging as it ever was.

With resources already stretched, employers have less to offer potential recruits, making it harder to lure talented staff onto their payrolls. Now that the pursuit of growth is on the agenda for many companies, they are faced with a problem. Establishing additional operations or expanding teams means finding the right talent to drive the new business – but where is this going to come from, and how can the business attract and secure it?

At the same time organisations need to put in place defensive measures to prevent their own established talent from being poached by competitors or by dynamic new market entrants. It is futile going to all the effort and expense of trying to woo new talent if, simultaneously, star employees are becoming disenchanted and leaving the company.

It is in this context that ‘talent management’ has become one of the hottest disciplines in HR, now also ranked highly on the Board’s agenda. The following white paper discusses the phenomenon and explores how an organisation can maximise its efforts to attract, mould and retain the best people in the current financial climate and as employee expectations continue to change.

What is talent management?A number of theses and articles (see Sources & Resources listing at the end of this paper) have appeared in recent months which seek to explain where many companies are going wrong with talent management. The common thread woven through them is that organisations, by and large, still see their workforce primarily as a cost base. Drive more productivity out of staff, the theory goes, and the ‘return’ will increase. It will also bring down the need to recruit additional team members, thus keeping salary costs down. That the star performers may also become burnt out and leave doesn’t figure in these calculations, which is unfortunate given the high cost – not to mention great difficulty - of replacing good staff.

The discipline of talent management looks to elevate the status of employees and their wider contribution to the business. It recognises that only with the right people - motivated and working in the right way, and developed to their full potential so that they are stretched and satisfied (and appropriately valued) – can a company achieve its goals. It considers what the employee needs to thrive, not just what the employee brings to the company. It also takes in succession planning – ensuring the company’s future by seeing that talent is perpetually being refreshed and moved up the value chain, so that the business’s long-term performance isn’t in the hands of only a few core people.

Talent management in the mid-market: Harnessing the true power of the best people

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In short, talent management recognises and acts on the principle that a business is only as good as its people, their ideas, their experience, the way they do things and their attitude as they do them.

Successful talent management combines a range of management practices. These include measuring and managing employee engagement, performance management, and learning and development.

What talent management is notAlthough talent management might seem to be a HR issue fundamentally, it is much more than that. If a company is failing to attract the right people, is losing staff to its competitors (staff it has spent a lot of time and money training), or has not found the right mentoring/staff development plan to ensure continuity of talent, the repercussions will be felt right at the top of the business. Poor talent management means a great cost and substantial risk to the organisation.

Secondly, talent management should not be simply about strategies for recruitment. If incoming talent is not harnessed, developed or monitored sufficiently well, the company could find that it is paying a lot of money for someone who is not earning their keep. In the worst-case scenario - if the employee is not stimulated and challenged, or if they feel their talents are being poorly used (because they have been shoe-horned into a position which exposes their weaknesses rather than their strengths) – their time at the company is likely to be short-lived, representing a great waste of the recruitment budget.

Failing to invest in training, due to internal cost-cutting, is a mistake too. It undermines employees’ feeling of being valued, whittles away their self-confidence (if they are put in situation they are not equipped for), and removes any sense of progression and personal development. And if talent isn’t brought on, this means the company is failing to develop a succession plan - increasing its risk if senior talent retires or moves on.

Investing in people isn’t something that can be budgeted for.

Talent management in numbersVarious studies have sought to quantify the cost to organisations if they fail to manage talent effectively. According to the Government Department for Business, Innovation & Skills (BIS) Leadership and Management Network Group, poor leadership and management is costing UK businesses an estimated £19 billion+ annually in lost working hours. These capabilities need to be improved if employee engagement is to be turned, BIS claims, citing UK Commission for Employment and Skills’ Working Futures figures which indicate that the UK will need 544,000 new managers by end of the decade.

Talent management is an intrinsic part of the problem and solution. According to the Chartered Institute of Personnel and Development, staff are far more likely to leave a position of employment if they have little trust in senior management. Its quarterly Employee Outlook survey in early 2013 found that 47% of workers who strongly distrust their senior management team are currently seeking alternative employment. This compares with just 8% who strongly trust their senior leaders.

Additionally, those who are under excessive pressure in their roles on a daily basis have a 39% chance of looking for a new job, compared with 21% of those who experience such pressure once or twice a month.

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Commenting in an article appearing on NatWest’s Business Sense online hub, Claire McCartney, resourcing and talent adviser at CIPD, notes that organisational culture and values are taking more of a back seat due to the depressed economic climate, which means that many companies are focusing more on competing and surviving.

This is a short-sighted perspective for businesses to take. A survey published in September 2012 by the Economist Intelligence Unit for Chartered Global Management Accountant (Talent Pipeline Draining Growth: Connecting Human Capital to the Growth Agenda) suggests that companies are missing out on performance targets and growth opportunities because of inadequate strategies for talent management. The research, conducted among more than 300 CEOs, CFOs and HR directors, points to missed financial targets (cited by 43% of respondents) and failure to innovate (40%) as direct effects of these shortcomings.

At the same time, more than a third of respondents recognised that the ability to effectively attract, retain and deploy the right talent is the main competitive advantage for their organisation.

A study by Ernst & Young has blamed ineffective talent management for creating barriers to international growth, as companies try to take advantage of opportunities in emerging markets. Their survey Growing Pains: Companies in Rapid Growth Markets Face Talent Challenges as They Expand revealed that just 20% of business executives believe their company manages talent effectively across all markets and only 23% think their company is good at retaining key global talent.

Small and mid-size companies have an even greater disadvantage. They must try harder than larger brands to recruit the best people - to compensate for their lack of size, the candidate’s perceived progression/salary prospects and any concerns about the organisation’s long-term stability. Mid-market organisations are having to be smarter and more creative with their strategies and solutions to overcome this challenge. Conversely the nature of mid-market organisations often allows greater flexibility within the talent management strategy than is available within larger, multinational organisations.

It’s not (always) about the moneyToday, attracting and holding onto the best staff is rarely just about the salary and perks on offer. Increasingly, and especially as younger generations come up through the ranks, other factors are becoming important to employees. These include flexible hours, the ability to work from home, the technology they will be able to use, the formality of the workplace, the ‘spirit’ of the company, and the level of fulfilment and personal development they will experience. Keeping staff engaged, interested and motivated means meeting their needs – so that they in turn perform at their best for the company. Invest in the right technology and get the talent culture right and the latter will follow.

Empowering staff to learnOne aspect of talent management that is often downplayed is the way that staff learn – and are allowed/encouraged to learn - according to the Chartered Institute of Personnel and Development (CIPD). It claims that some of the most popular learning and development practices promoted in the workplace could be having a detrimental effect on employees’ ability to think freely.

A report on HR and its role in innovation, published in April 2013 by CIPD and the University of Bath, suggests that collaboration within, across and outside an organisation can be the best way to develop an innovative culture, with job rotation and shadowing cited as the most effective learning and development practices.

Increasingly, advanced used of employee self-service, social media, bite-size video clips and collaboration/knowledge-sharing forums has been shown to help employees feel more empowered and confident in their jobs, and more included, engaged and valued in the broader business.

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Aligning talent management with the business strategy It is not just a lack of focus on talent management that is holding companies back in their efforts to maximise human resources. The Economist Intelligence Unit survey shows that while most companies understand the importance of human capital, they do not appear to have the right systems, processes and information in place to manage talent effectively. Without the right technology in place to automate the administration and implementation of the talent strategy, HR departments often lack the man hours, resources and real time information to make meaningful changes to the company’s talent management strategy.

Improving talent management starts with recognition of the need, then requires that the discipline is brought out of the HR department and made a strategic business priority in line with the broader goals of the organisation. To maintain this alignment, and drive improvement, organisations need to have good processes and systems in place.

Forward thinking employers are using self-service and tailored KPI dashboard to make employees more aware of their direct contribution to the goals of the business, and giving them easier access to the resources that can empower them to develop their knowledge and skills and achieve more.

Achieving a single, unified approach to talent managementAs has become evident talent management is a very broad discipline, spanning recruitment, retention and staff development strategies and including employee engagement, performance management and succession planning. Achieving step-change improvements requires that talent management is tackled holistically, as an integrated strategy with linked processes, systems and outcomes.

Online recruitment network ERE.net paints the following picture of what integrated talent management looks like:

• TalentStrategyandWorkforcePlanAreTiedtoCorporateStrategy: An integrated function is meant to help the business meet the human capital needs of the corporate strategy. As a result, an explicit talent strategy and workforce plan are key to ensuring that talent management activities are aligned with the business. Workforce planning also allows an integrated function to rapidly adjust to changing business needs.

• TalentManagementProcessesareAlignedtotheTalentStrategy: The talent strategy and workforce plan should drive all talent management activities. In an integrated function, the talent strategy and workforce plan are the puppet-master, and the talent management processes the puppets.

• TalentManagementProcessesShareInputsandOutputs: This is a crucial aspect of breaking down the silos of talent management. All three of the examples of siloed behaviour discussed above can be partly attributed to a lack of data sharing: succession planning not sharing bench successors with talent acquisition; workforce planning not sharing scenario-based hiring needs with talent acquisition, learning & development, and succession planning; talent acquisition not sharing hiring evaluations with learning & development.

• CompetencyModelasaCommonLanguage:Each talent management process performs an evaluation of talent. A consistent competency model ensures that each process can share evaluative data with other processes by ensuring that those evaluations are using a common language. If talent acquisition is using a different competency model than learning & development, the value of hiring evaluations in the development planning process is greatly reduced. One system that brings all processes and evaluations together is invaluable to the joined up strategy.

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• TechnologyEnablementforTalentManagement:The sharing of data across processes in talent management is essential, and is not solely reliant on technology support and software. There must also be cross-functional participation in meetings, or paper and email communication. However, the right choice of technology is critical to ensure these interfaces are scalable as a company grows.

• ChangeManagementasaFoundation:The journey to integrated talent management is transformational, not incremental. A detailed and pervasive change management effort is absolutely essential to ensure that your business is able to follow your lead on that journey.

The role of technologyThe ERE.net commentary highlights the growing importance of technology in keeping talent management strategies on track.

The right tools can help organisations take greater control of their recruitment process, allowing them to reduce time-to-hire and cost-per-hire. Sophisticated solutions, which can be sourced as hosted services, can now automate the full requisition-to-hire process for graduates and experienced talent for example - including holiday cover, talent attraction, candidate selection, induction/integration, and detailed management information.

In November 2012 Forbes magazine in the US published its fifth annual research study of the fast-growing talent management software market, reporting a 20% increase in related revenues for 2012 and commenting that “Talent management software has now become a mandatory part of corporate HR infrastructure. Only a few years ago these tools were ‘nice to have’. In today’s global, constrained and highly connected talent marketplace, companies need these systems to operate.”

In line with the need for companies to take a more holistic approach to talent management, products are now becoming highly integrated, Forbes notes. There is now a growing focus on mobile solutions, more social features, directory features, and new features for workforce management (time and attendance). The definition of talent management software keeps expanding too. Until now, Forbes has defined talent management solutions as encompassing recruitment, performance and succession management, compensation management, and learning management. But now, in addition to mobile tool sets, the scope is expanding to include social learning and recruitment features, candidate relationship management and workforce management and optimisation tools.

At the same time many organisations are now looking for a toolset that integrates talent management with HR management and payroll systems, so that processes are fully joined up, add maximum value to the business and provide complete visibility of costs, performance and progression planning.

The ROI of successful Talent ManagementExamining the value of having an integrated talent management function, ERE.net highlights the direct and measurable business results that are possible.

It cites evidence from Bersin & Associates’ Talent Management Factbook (2010), showing that companies with ‘strategy-driven integrated talent management functions’ have significant advantages over counterparts that still manage the component disciplines in silos. These include:

• 26% higher revenue per employee

• 28% less likely to have downsized (during previous 2 years)

• 40% lower turnover among high performers

• 17% lower overall voluntary turnover

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• 87% greater ability to “hire the best people”

• 156% greater ability to “develop the best leaders”

• 92% greater ability to “respond to changing economic conditions”

• 144% greater ability to “plan for future workforce needs”

Taking steps to changeJust as Rome wasn’t built in a day, companies cannot become experts in talent management overnight. Awareness of the issues is the vital first step, followed by a willingness to change that is driven from the very top of the organisation.

Advanced Business Solutions offer the following advice to organisations as they strive to turn around their ability to attract, keep and mould the best staff to sustain and grow their businesses:

• Ensure talent management is aligned with business strategy – connected to real goals and with the buy-in of senior management across the organisation.

• Integrate all aspects of talent management. There is little point investing solely in recruitment and on-boarding if the same attention isn’t devoted to performance management. Integration also requires someone at a high level in the organisation to oversee all of the various components.

• Acknowledge gaps in expertise when it comes to talent management. Bringing in an external specialist to deliver training or to benchmark salaries is often the sensible thing to do.

• Ensure accountability and capability. Even with the best-designed talent management cycle, efforts will quickly fall apart if managers in the business do not feel accountable for the development of the people they manage or do not have the skills to do this effectively.

Get each of the facets of talent management right, and there is much to play for. HR research firm Aon Hewitt has found that high levels of employee engagement can dramatically influence an organisation’s growth rate, operating income and total shareholder return (TSR).

It examined the relationship between employee engagement and financial performance using data from 94 global companies representing almost 9 million employees from 2008 to 2012. It found that organisations within the top quartile of employee engagement levels — where 72% or more of employees are engaged — attained a total shareholder return that was 50% higher than that of the average organisation. Companies in the bottom quartile engagement group, by contrast - where fewer than 46% of employees are engaged — had a total shareholder return that was 50% lower than the average.

Which all goes to show that commitment to talent management does pay, and pays well.

FormoreinformationontalentmanagementsolutionsfromAdvancedBusinessSolutionspleasecall01582714810orvisitourwebsitewww.advancedcomputersoftware.com/abs

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Sources & resourcesGrowing the talent garden, Telegraph Business Reporter, December 2012: http://business-reporter.co.uk/2012/12/growing-the-talent-garden/

Managing today’s global workforce: Elevating talent management to improve business, Ernst & Young, May 2010: http://www.ey.com/Publication/vwLUAssets/Managing_Todays_Global_workforce/$FILE/Managing_Todays_Global_workforce.pdf

3 Myths of Talent Management, Harvard University Extension Hub, January 2013: http://www.extension.harvard.edu/hub/blog/extension-blog/3-myths-talent-management

HR, Leadership, Technology, and Talent Management Predictions for 2013, Forbes, January 2013: http://www.forbes.com/sites/joshbersin/2013/01/11/hr-leadership-technology-and-talent-management-predictions-for-2013/

Aligning performance management with business strategy, HR Magazine, October 2011: http://www.hrmagazine.co.uk/hr/features/1020252/aligning-performance-management-business-strategy

Talent pipeline draining growth: Connecting human capital to the growth agenda, Chartered Global Management Accountant Report, September 2012: http://www.globalaccountantweb.com/wp-content/uploads/2012/09/120917-CGMA-Talent-pipeline-report-draft-FINAL_LR.pdf

Global survey reveals talent management challenges for rapid growth market multinationals, Ernst & Young, July 2012: http://www.ey.com/GL/en/Newsroom/News-releases/News_Global-survey-reveals-talent-management-challenges-for-rapid-growth-market-multinationals

Poor management will cost you talent, NatWest Business Sense: http://www.nw-businesssense.com/Poo-management-will-cost-you-talent.html

Top Ten Reasons Why Large Companies Fail To Keep Their Best Talent, Forbes, December 2011: http://www.forbes.com/sites/ericjackson/2011/12/14/top-ten-reasons-why-large-companies-fail-to-keep-their-best-talent/

The sharp end of poor talent management: How do you get the best from your people while avoiding unnecessary HR risks, Audit & Risk, July/August 2012: http://media.caspianmedia.com/document/9d0bf5c0b6f1f7f77b40d199ac637b23.pdf

Talent Management’s Perfect Storm, Forbes, January 2013: http://www.forbes.com/sites/sylviavorhausersmith/2013/01/28/talent-managements-perfect-storm/

OD problems present “brilliant” talent management opportunities, says Hanover Housing Group L&D manager, HR Magazine, April 2013: http://www.hrmagazine.co.uk/hro/news/1077044/od-brilliant-talent-management-opportunities-hanover-housing-group-l-d-manager

Challenges facing talent management in emerging markets, HR Magazine, August 2012: http://www.hrmagazine.co.uk/hro/features/1074370/talent-management-challenges-emerging-markets

In the hiring line (The risks associated with poor talent management are huge, ranging from lost productivity and reputation to high recruitment costs. Yet, while talent management is high on many organisations’ priority lists, assessing HR risks is not), Audit & Risk, July 2012: http://auditandrisk.org.uk/features/in-the-hiring-line-

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Leadership & Management in the UK – The Key to Sustainable Growth: A summary of the evidence for the value of investing in leadership and management development, BIS, July 2012: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32327/12-923-leadership-management-key-to-sustainable-growth-evidence.pdf

Ineffective management is predicted to cost UK businesses £19 billion this year in lost working hours, Chartered Management Institute blog, March 2013: http://www.managers.org.uk/practical-support/management-community/blogs/did-you-know-ineffective-management-predicted-cost-uk-b

HRD 2013: Favoured learning & development practices could be thwarting innovation, warns CIPD, April 2013: http://www.cipd.co.uk/pressoffice/press-releases/hrd2013-favoured-LD-practices-could-thwarting-innovation-250413.aspx

Financial Benefits of Talent Management, Management Study Guide: http://www.managementstudyguide.com/financial-benefits-talent-management.htm

Essential Tools of Talent Management, Forbes, April 2013: http://www.forbes.com/sites/forbesinsights/2013/04/24/essential-tools-of-talent-management/

Integrated Talent Management: What Is It and Why Should You Want It?, ERE.net, May 2012: http://www.ere.net/2012/05/15/integrated-talent-management-what-is-it-and-why-should-you-want-it/

The Talent Management Software Market Continues to Explode, Forbes, November 2012: http://www.forbes.com/sites/joshbersin/2012/11/29/the-talent-management-software-market-continues-to-explode/

Talent Management Factbook 2010: Best Practices and Benchmarks in US Talent Management, by Karen O’ Leonard, Stacey Harris (Bersin & Associates/Deloitte) July 2010: http://marketing.bersin.com/Talent_Management_Factbook_2010_ExecSummary.html

Analysis: Improving Employee Engagement Can Boost Revenues, Profits, Talent Management magazine, May 2013: http://talentmgt.com/articles/view/analysis-improving-employee-engagement-can-boost-revenues-profits

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About Business SolutionsAdvanced Business Solutions, an Advanced Computer Software plc company, provides leading integrated business applications and services that enable public, private and third sector organisations to retain control, improve visibility and gain efficiencies whilst continually improving corporate performance. It’s award-winning software systems comprise core financial management, procurement, human resource and payroll systems, integrated with a range of collaborative, document management and business intelligence solutions . It also provides managed and bureau service options.

Advanced Computer Software plc is the UK’s leading supplier of software and IT services to the health, care and commercial sectors. It comprises 3 main divisions and has 7000 customers and 800 staff worldwide.

For more informationAdvanced Business Solutions is a brand name of Advanced Business Software and Solutions Ltd. registered in England, company number 03214465. Registered office: Munro House I Portsmouth Road I Cobham I Surrey I KT11 1TF. t: +44 (0) 01582 714 810 f: +44 (0) 1932 584 001 e: marketing@advancedcomputersoftware.com www.advancedcomputersoftware.com/abs

Advanced Business Software and Solutions Ltd. recognises the trademarks of other companies and their respective products in this document.