unified talent management: key for u.s. business …...unified talent management: key for u.s....

An Oracle White Paper July 2012

Unified Talent Management: Key for U.S. Business Performance


Introduction ....................................................................................... 1 Unified Talent Management Survey Key Findings ............................. 2 Talent Management Is Essential for Business Success ..................... 2 Talent Shortages Persist ................................................................... 4 Focus and Execution ......................................................................... 7 Unification of Talent Management Systems ....................................... 9 Talent Management Challenges ...................................................... 11 Talent Management Measures ........................................................ 12 Opportunities for Talent Management Enhancement ....................... 13 Conclusion ...................................................................................... 14


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Introduction

Businesses in the U.S.—like their counterparts around the world—are under increasing pressure to optimize their processes and assets. Today, organizations have fine-tuned many aspects of business management. Manufacturing processes have undergone scrutiny to maximize efficiencies, finance departments depend on complex systems and comprehensive reporting, and IT activities are streamlined through technology developments that include software as a service (SaaS) application delivery methods.

The technology systems for many human resources transactional processes such as payroll and benefits administration have matured as well. However, the optimization of an organization’s single largest asset and expense—its workforce—is just now emerging as the next and arguably the most significant area to realize business gains. That potential is driven by the strategies and practices of talent management.

Taleo Research1 and the Human Capital Institute (HCI) completed the Unified Talent Management Survey2

1 Taleo was acquired by Oracle in June 2012.

, a poll of 468 U.S. business professionals predominantly from midsize to large enterprises. Nearly half of respondents were at the director level or above in a variety of industries. This white paper analyzes the results of that survey and examines respondents’ views on the importance, execution, and challenges of talent management and talent practices in the context of high-pressure economic conditions. In addition, it reports on the pervasive desire among professionals and the potential in many industries to improve business performance through strategies supported by unified talent management technology systems.

2 Taleo Research and Human Capital Institute, “Unified Talent Management Survey,” 2008.


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Unified Talent Management Survey Key Findings

Key survey findings show that talent management is acknowledged to be of high importance and critical to business success, yet talent management presents both execution and technology challenges for most U.S. organizations. Consider the following finding:

• A majority of survey respondents (51 percent) consider talent management essential for business success. However, nearly all respondents (86 percent) find it challenging to clearly link talent management goals to business goals.

Additionally, the shortage of talent is superseding economic conditions among factors that have a significant impact on business success. Consider the following findings:

• Professionals report that talent shortages are having a considerable impact on U.S. businesses in key areas. 82 percent of respondents report an impact on leadership development, 80 percent report an impact on growth, 78 percent report an impact on productivity, 76 percent report an impact on innovation, and 67 percent report an impact on customer satisfaction.

• Most respondents (86 percent) either expect a continuation of the current talent shortage conditions or an increase in the shortage of talent, with 47 percent expecting a continuation and 39 percent expecting an increase. Only 9 percent anticipate a decrease in talent shortages.

The negative impacts of talent shortages emphasize the business priority of talent management.

Two criteria emerge as the most important for organizations using a talent management solution:

• Usability for managers and employees was ranked #1 in importance for organizations using a talent management solution.

• A unified or integrated talent management capability was rated as second-most important; however, only 2 percent of respondents consider the current implementation of their talent management systems to be unified. 93 percent of respondents consider developing a unified or integrated approach to managing talent as challenging or very challenging for their organization.

What is the bottom line? The shortage of talent and lack of unified talent management systems and strategies are significantly—and negatively—affecting U.S. businesses. Without attention to these critical issues, businesses are putting their short-term and long-term goals at risk.

Talent Management Is Essential for Business Success

According to survey responses, U.S. business professionals consider talent management—defined as including at least recruitment, performance management, and succession planning—and possibly also onboarding, goals management, career planning, learning, and compensation—key for their organizations. In fact, a majority of survey respondents (51 percent) consider talent management essential for business success (see Figure 1).


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Figure 1. A majority of survey respondents consider talent management essential to business success.3

However, only a minority of respondents (39 percent) reportedly have a documented talent strategy in place. It is encouraging to note that another 22 percent have plans to document a talent strategy in the next year. More than one-third (39 percent) have not established a formal talent strategy and don’t have plans for one (see Figure 2).

Figure 2. 39 percent of survey respondents say they do have a talent strategy in place, 22 percent say they will do so in the next year, and 39 percent say they do not plan to develop such a strategy.

3 Some data in graphics presented in this document may not add up to 100 percent due to rounding, and some survey questions allowed multiple responses (“check all that apply”).


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In many organizations, talent management issues are garnering the attention of leadership outside of the human resources (HR) department. Among respondents from organizations with a current or planned talent strategy, 66 percent say the mandate for development came primarily from executive leadership, 4 percent say it came from the board, and less than one-third (30 percent) say it was driven by HR (see Figure 3).

Figure 3. Executive leadership is by far the greatest driver in developing a talent strategy.

This attention to talent by leadership may be motivated by the realization that talent management has direct bearing on the company’s operational capability and should not be confined to HR’s purview.

Talent Shortages Persist

Survey results further reflect a profound understanding of the relationship between talent and corporate operations. Talent shortages are having a significant impact on U.S. businesses, especially in the areas of leadership development and productivity. Consider the following proportions of respon-dents who report an impact of talent shortages on particular aspects of their business (see Figure 4):

• 82 percent report an impact or high impact on leadership development

• 76 percent report a strong impact on innovation

• 80 percent report an impact on their growth plans

• 78 percent report an impact on productivity

• 67 percent report an impact on customer satisfaction


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Figure 4. Talent shortages have a significant impact on many critical aspects of an organization.

When viewed in the context of business performance, the impact of talent shortages on each business aspect represents serious risk. Leadership development may be categorized as having more of an effect on long-term business operations. However, productivity, growth, innovation, and customer satisfaction are vital aspects of both short-term and long-term organizational success. Today’s dynamic and competitive marketplace requires organizations across industries to finely hone their capacities in these areas. The negative impacts of talent shortages emphasize that talent management must be a business priority.

Even in the midst of today’s economic uncertainty, the expectation for talent shortages that respondents report they have for the next 12 months is severe. Only 9 percent of respondents anticipate a decrease in talent shortages; the remaining respondents either expect a continuation of the current talent shortage conditions or an increase in the shortage of talent. 47 percent of respondents expect the talent shortage to remain the same, while 39 percent expect it to worsen (see Figure 5)


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Figure 5. The survey shows that the vast majority of business professionals do not expect talent shortages to decrease.

Talent management strategies and practices take place amidst the backdrop of talent shortages and the broader landscape of economic conditions. Survey respondents affirmed the critical need for talent management in both a low-growth and high-growth economy, especially as it relates to top performers and employee retention.

In either a low-growth or high-growth economy, two-thirds of respondents see an increased need to retain top performers by driving a focus on performance management and career planning. Nearly half of the respondents think succession planning and internal mobility programs can maximize value from current employees.

The quality of each hire is even more important in a low-growth economy, perhaps because—although there may be fewer new hires—each one must be highly productive (see table below).

TABLE 1. CONDITIONS IN LOW-GROWTH VERSUS HIGH-GROWTH ECONOMY

SURVEY STATEMENT IN LOW-GROWTH ECONOMY IN HIGH-GROWTH ECONOMY

Increased need to retain top performers drives focus on

performance management and career planning.

65% agree 64% agree

Succession planning and internal mobility programs

maximize value from current employees.

47% agree 47% agree

Importance of quality of hire increases. 69% agree 57% agree

Candidate relationship management and performance management practices also play an important role in any economy. As candidates, future employees experience recruitment through the career site and application process. As employees, they experience the performance management process through annual paper reviews, spreadsheets, or ongoing online performance feedback. Employers that offer


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end-to-end online recruitment with data capture at the door, in tandem with an advanced performance management system, reap the benefits of an automated unified talent management approach that can measure quality of hire.

Tightly integrated systems that close the loop between performance data and the recruiting process are a state-of-the-art development. They enable staffing to recognize a best-fit performer and then to optimize the process and hire more employees of that quality. This can only be accomplished when a closed-loop process is in place.

Focus and Execution

Organizations vary in the focus of their talent strategy and in whether it applies to select groups of employees or extends to their whole workforce. Although technology tools exist, and many studies confirm the importance of all workforce members driving toward aligned business goals, a small minority of respondents report their talent strategy involves all staff. Only 31 percent of respondents report their talent strategy encompasses their whole workforce (see Figure 6).

Figure 6. Despite its importance, a minority of professionals report involving the entire workforce in talent strategy.

One of the returns from talent management is retention. Career planning opportunities and meaningful performance reviews—along with a well-designed internal mobility program—can make the difference between losing a top performer and enhancing an ongoing valuable contribution.

Succession planning has long been in place for executives in organizations. But today’s flattened organizations and slim profit margins call for optimum performance from all employees. Organizations can no longer afford to incur opportunity costs associated with open positions due to voluntary turnover or attrition.


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Ongoing performance management has been difficult for managers. Performance reviews, for instance, are often relegated to an annual and arduous process. Now, technology tools enable visibility into performance and goals alignment throughout the year for managers as well as employees.

The expansion of talent management practices from the top down serve an organization’s overall talent needs. Today’s technology developments provide opportunities to support better adoption of talent management strategies across the entire workforce.

According to survey respondents, talent strategy execution is a shared responsibility between HR and line-of-business management for a majority (69 percent) of organizations with talent management strategies. Only 20 percent of respondents indicate that HR is the sole executor of talent strategy (see Figure 7).

Figure 7. In the majority of organizations, HR and line-of-business management share talent strategy responsibilities.

The survey also assessed who uses the talent management systems. 30 percent of respondents report that talent management systems are used by HR and 18 percent say systems are used by all staff (see Figure 8).

Figure 8. The majority of talent management systems are used by HR.


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One criterion emerged as the single most important for organizations using a talent management solution—usability. 29 percent selected usability for managers and employees as #1 in importance for organizations using a talent management solution (see Figure 9).

The endorsement of usability as topmost in importance for a talent management solution—exceeding unification, return on investment (ROI), and even cost—is a reaction to the perennial issue of low adoption for many existing systems. Quite simply, positive talent management results can’t be achieved through the use of a talent management system if its use is not adopted.

Talent management systems with intuitive, easy-to-use interfaces that draw on familiar Web 2.0 functionality—think consumer products such as Amazon, Google, and eBay—offer an unprecedented opportunity for acceptance and self-service among employees, line-of-business managers, and executives. To embed optimized talent management processes throughout the talent lifecycle—from recruitment through onboarding and development—it is necessary to use solutions that are, at their core, usable by all stakeholders.

Figure 9. Usability and the capability to integrate top the wish list of professionals asked about a talent management system.

Notably, the next-highest response in importance for a talent management solution is having a unified or integrated talent management capability. 22 percent of respondents identified this capability as second-most important.

Unification of Talent Management Systems

Historically, HR processes have resided in silos. For example, recruitment has been separate from performance management; succession planning has been distinct from career planning. Survey respondents realize the value that unified talent management systems and processes deliver.

Although there are many components of a full talent management suite, the implementation of all the components is generally neither simultaneous nor even truly available today. Recruiting and performance management are the key applications and backbone processes of talent management. They are described as follows:


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• Recruiting is the system that manages the selection of external talent and movement of internal talent throughout an organization.

• Performance management is the system that measures, develops, and optimizes talent throughout an organization.

Processes and solutions that work for performance management include those supporting goals and succession, which are critical to accomplishing business objectives. In addition, processes that support compensation and learning are linked to motivation and retention.

Departments responsible for recruiting stand to gain tremendously from the information available via the performance management process and vice versa. Technology that unifies the business processes of recruiting and performance management can lead to successful implementation of performance-powered recruiting and all the benefits it brings.

To illustrate, the benefits of performance-powered recruiting exist at all levels of the performance process, including:

• Faster candidate identification

• Improved employer branding

• Improved evaluation for quality of hire

• Access to external succession candidates

• Increased job visibility for employees

• More-effective external candidate search and screening

• Better use of internal talent

• Comprehensive talent profiles

Although many respondents identified a unified or integrated talent management capability as highly important in a talent management solution, very few respondents rated as “unified” the implementation of their current talent management systems. In fact, only 2 percent of respondents consider the current implementation of their talent management systems to be unified (see Figure 10).


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Figure 10. A drastically low number of organizations have a unified talent management system.

Many respondents noted that their current talent management systems could not fully benefit from data exchange and intelligence across and between talent management activities. Consider the following findings regarding the reported capabilities of respondents’ current systems:

• Just 35 percent can model skills profiles for roles based on performance data

• Only 42 percent can assess quality of hire based on performance data

• Fewer than half (45 percent) can consider external candidates as part of a succession plan

With unified talent management, single data entry and data integration certainly can add cost-saving efficiency, but the benefits of establishing a single talent system of record are even more substantial in driving business performance.

Talent Management Challenges

Despite the clear benefits of doing so, the great majority of respondents indicated that developing a unified approach to talent management presents a significant challenge (see Figure 11):

• 93 percent of respondents consider developing a unified or integrated approach to managing talent as challenging or very challenging for their organization

• 86 percent of respondents who rated the talent-related challenges of their organization reported that clearly linking talent management goals to business goals is very challenging (22 percent) or challenging (64 percent)

• More than three-quarters (85 percent) of respondents find that having technology systems that enable their talent management is challenging (48%) or very challenging (37%)

Another significant challenge is the internal struggle to have managers and executives make talent management a top priority and main concern:


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• A large majority of respondents—88 percent—regard getting managers to accept responsibility for talent management as challenging (44 percent) or very challenging (44 percent)

Figure 11. Numerous and significant challenges exist in implementing talent management systems.

Consequently, 35 percent of survey respondents identified weak line-of-business management buy-in as a significant barrier to successful talent management. However, half pointed to the lack of a unified talent management system as the most significant barrier to successful talent management.

A number of respondents (34 percent) noted that poor talent management reporting and analytics, along with an absence of agreed measures and metrics (32 percent), create barriers for their organization’s talent management.

Figure 12. Lack of a unified talent management system is reported to be the greatest barrier to successful talent management.

Talent Management Measures

Professionals report that the most common metrics used to measure outcomes are individual performance (72 percent), retention levels (68 percent), and business goal achievement (61 percent). These are followed by engagement (38 percent) and quality of hire (32 percent) as shown in Figure 13.


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Figure 13. Performance and retention are the top metrics used to assess outcomes.

Opportunities for Talent Management Enhancement

Respondents provided a variety of insightful responses to the question, “What do you see as the biggest opportunity for enhancing talent management in your organization?” Some responses included:

• The opportunity to develop a fully implemented performance management process that identifies both performance and skills gaps and which, in turn, feeds the recruitment and retention processes

• The opportunity to drive a consistent, transparent talent management process that will support the organizational goal of increasing employee engagement and the objective of becoming a “top 100 place to work”

• The opportunity to get executive management to understand the importance of ongoing talent management, not just its importance when a higher-level position is difficult to fill

• The opportunity to link talent management and succession planning goals to performance management reviews and to emphasize the importance and shared accountability for identifying and cultivating high potential at all levels of management

• The opportunity to stabilize the talent management process and embed it within a stable organizational culture


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Conclusion

The analysis of the Unified Talent Management Survey findings paints a picture with many disconnects. 51 percent of respondents indicate that talent management is essential for business success, yet most do not have a formal talent management strategy in place. Moreover, 86 percent of respondents find it especially challenging to clearly link talent management goals to business goals.

The usability and the unification/integration of talent management systems are the two criteria considered to be most important for organizations using a talent management solution. Further, only 2 percent of respondents consider the current implementation of their talent management systems to be “unified.” Notably, 93 percent of respondents consider developing a unified or integrated approach to managing talent to be challenging or very challenging for their organizations.

The acknowledgement of the damaging impact of talent shortages on business performance—which impedes leadership development, innovation, growth, productivity, and customer satisfaction regardless of economic turbulence—reinforces the criticality of successfully addressing talent management in U.S. organizations. Whether in good or bad economic times, the pressure to recruit and retain top performers is constant.

There is a looming crisis in the failure of U.S. organizations to improve talent management practices, given that the vast majority of polled professionals expect talent shortages to either worsen or remain the same. What are the starting points for your organization to avoid this nationwide crisis? Define a strategy, implement a usable and unified talent management system, and obtain strong buy-in throughout the organization from employees, line-of-business management, executive leadership, and the board. Decisive action today on organizational talent management initiatives will positively impact your business tomorrow.

Unified Talent Management: Key for U.S. Business Performance July 2012

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