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The State of Talent Management

O c t o b e r 2 0 0 9

The State of Talent ManagementCopyright © 2009 Human Capital Institute and Lawson Software. All rights reserved.

i

Introduction ...................................................1

The Driving Need for Talent Management ...........4

The Aging Workforce ......................................5

Planning for an Aging Workforce ......................6

Conclusions .................................................15

About the Authors .........................................16

Contents


1

Workforce Management practices have been developed and modified over the decades to respond to our dynamic economy. Regardless of an employer’s industry or size, those needs have evolved—from Frederick Taylor’s workforce efficiency models during the industrial revolution, to the simultaneous rise of Personnel Management with labor unions, affirmative action and related workers’ movements of the 60s and 70s. Human Resource Management emerged as the information economy grew in the late 70s and throughout the 80s. Today, the prevailing knowledge economy has given rise to strategic Talent Management, which has quickly become a vital component of most American HR organizations.

Talent Management arose in answer to organizations’ needs to “compete on talent.” In the latter half of the 1990s, a war for talent erupted and then clearly waned in the early 21st century, cooled by the slumping economy and global security concerns. However, in the near future, the real battle to attract, develop, motivate and retain talent will heat up again. The aging population— a ticking demographic time bomb—combined with greater demand for skilled workers and leaders will make talent management a top priority for organizations for decades to come.

It is therefore imperative that organizations begin to prepare today for their future talent needs. This is going to require that companies as a whole embrace Talent Management.

Introduction


2

According to a recent survey by the Institute for Corporate Productivity,1 companies that were identified as good talent managers were more likely to integrate talent management practices with other human capital processes and to believe that all managers, not just HR professionals, are responsible for talent management. Respondents identified

management initiative:

• Leadership development

• Career planning

• Development of high-potential employees

• Performance management

• Succession planning

• Learning and training

• Competency management

• Retention

• Professional development

The view of the Human Capital Institute (HCI) is consistent. It isn’t enough for organizations to embrace the components of talent management; they should integrate those components and align them to an enterprise workforce plan, which is itself subordinate and aligned to the corporate strategic plan (as represented in

talent management, starting with planning, are described below.

Jay Jamrog, i4cp’s senior vice president

of research, said: “It’s no surprise to me that

talent management pays performance dividends when it’s done right. As the war for talent heats

up, more companies will

their secret weapon to succeed and ultimately outperform. But it has

to be more than just a buzzword. It has to

become part of the culture of the organization, and

the responsibility has to be borne by groups

outside of the HR department.”2

1 Institute for Corporate Productivity2 “Talent Management—A Vague Concept,” HRMGuide

Internal Mobility

Alig

n

BusinessStrategy Traditional

Contingent

HumanCapitalStrategy

BusinessResults

Mea

sure

External Hires

Plan

Acquire

Engage

Develop

Deploy

Lead

Retain

Evaluate

SOURCE: HCI, 2009

Exhibit 1: Total Talent Management

Talent Management

Exhibit 1). Most of the components of

nine primary components of a talent

be looking at talent management as


3

New Strategies, Tools and TechniquesIn order to integrate the talent management process, new strategies, tools and techniques are necessary. Traditional training models, for example, have moved to the formative phase of web-based learning. The full impact on talent management is yet to be realized. Regardless, HCI learned in a recent study with Lawson3 that new and emerging talent management strategies, tools and techniques are providing real business value, thereby helping HR to elevate its standing within the organization.

Indeed, according to the information gathered, nearly 80 percent of HR professionals now believe that HR has become a strategic contributor to the

management strategies in place are nearly twice as likely to view HR as strategic. Virtually gone are the days of HR being perceived as merely a transac-tional, back-office, tactical function (Exhibit 2).

“Talent management has become a greater strategic priority in our

organization. We’re trying to look at people

from all sides of the equation, and assess

bench strengths. Filling key positions that go

beyond the typical talent pool is important to us.”

Tim Toterhi, Director, Global L&D Strategies

and Solutions Quintiles Transnational

3 Human Capital Institute, The State of Talent Management—A Study for Lawson

Yes

22%78%

No

SOURCE: MANAGESMARTER.COM

Exhibit 2: Has HR become a Strategic Contributor to the Business?

business. In fact, companies with talent


4

Getting the right people with the right skills into the right jobs is the basic people management challenge in all organizations. Even though the top priority tends to be management and executive positions, the issues apply to all key positions.

A 2005 study by Towers Perrin4 highlighted the factors driving the focus on talent management (Exhibit 3).

The competencies that organizations possess, and their resulting success, are shaped by their decisions about talent management—and from the perspective of individuals, these decisions

determine the path and pace of careers.

4 Talent Management: The State of the Art

Factors Driving the Focus on Talent Management% of repondents

3

20

20

20

23

24

24

28

31

48

51Changing competitive landscape requiring

new skills, knowledge, behaviors

Increased focus on employee satisfactionand retention

Need to change culture

Need to reduce costs

Growth through acquisition

Entry into new markets

Business realignment

Geographic growth

Demographic shifts

Need to streamline structure

Departure from existing markets

0% 10% 20% 30% 40% 50% 60%

EXHIBIT 3: SOURCE, TOWERS PERRIN

Exhibit 3: Factors Driving the Focus on Talent Management

The Driving Need for Talent Management


5

Much has been written about the aging workforce. The Bureau of Labor Statistics projects that the 55-to-64 age group will grow by more than 7 million over the next 5 years, and those 65 and older will increase nearly 7 times as fast as the total labor force5 (see Exhibit 4). The current recession is causing many would-be retirees to work longer if they can, thus accounting for some of the increase in the over-65 workforce. Nevertheless, retirement can only be postponed, not avoided.

The U.S. Department of Labor projects that by 2012, the 55-and-older segment of the workforce (many in management positions) will have increased to 19.1 percent due to an annual growth rate of 4.1 percent, almost 4 times the rate of growth of the overall labor force.

Bracing for the eventual swell in retirements, companies are turning to succession planning to ensure their pipelines are full of potential replacements.

5 United States Department of Labor

-20%

% P

opul

atio

n C

hang

e

-10%

0%

10%

20%

30%

40%

50%

14 & Under 15 to 24 35 to 44 45 to 54 55 to 64 65 & older25 to 34

-0.9%

9.5%

-4%

-14%

15.6%

45.3%

12.6%

-20%

% P

opul

atio

n C

hang

e

-10%

0%

10%

20%

30%

40%

50%

14 & Under 15 to 24 35 to 44 45 to 54 55 to 64 65 & older25 to 34

-0.6%

8.5%

2.8%

-13.4%

18.2%

35.1%

12.1%

Projected Change in U.S. Population,2000-2010 by Age Group

Projected Change in U.S. Population,2010-2020 by Age Group

SOURCE: U.S. CENSUS BUREAU

The Aging Workforce

Exhibit 4: The Aging of the Population


6

The best retirement planning, especially among critical and core talent, is done one-by-one, to understand each person’s intentions and to assess the likelihood of convincing the person to delay retirement and the methods (unique to each individual) that might make that possible.

Of course, strategic workforce planning is more than retirement planning. Scenario planning better enables organizations to know where their talent needs will be months or even years out, as opposed to only knowing what today’s urgent needs are. With this knowledge, organizations are better able to recruit proactively. Today’s prevailing reactive approach requires last-minute scrambling to find the resources the organization needs right now. This often results in a poorer quality of hire and greater expense, either through contracting with staffing agencies to source talent and/or an over-reliance on contract personnel whose hourly rates are usually in excess of full-time staff doing the same function.

Succession: Current TrendsAs seen in the statistics on Page 5, Exhibit 4, executive turnover is poised to increase significantly over the next few years as baby boomers retire and the economy recovers. So what was happening just before the recession of 2008-09? Consider the following:

• 57 percent of executives were in transition in 2005, and the ranks of executives who were “employed and actively in a job search” increased to 28 percent, up from 22 percent in 2004 and 14 percent in 2003 (source: ExecuNet).

• Turnover of chief financial officers at Fortune 500 companies increased by 23 percent from 2003 to 2004 (source: Russell Reynolds Associates, 2005).

• The top 100 branded companies had new chief marketers every 23 months on average (source: Spencer Stuart).

• Some of the world’s leading companies stood to lose more than 30 percent of their top employees in 2006-07 (source: Best Practices, LLC research).

Who Needs Succession Planning?In an April 2006 report called Talent Management and Succession Planning prepared for the AASHTO Standing Committee on Quality, LaCoya Shelton-Johnson outlined the indicators of a need for succession planning. They include:

• A high percentage of senior talent capable of retiring in the next three to five years.

• The organization lacks the ability to respond to sudden losses of talent.

• Traditional cycle time for finding replacements for key positions is unknown, or takes too long.

• Difficulty in finding people ready to promote.

• Complaints that promotion decisions are made unfairly or capriciously.

• Critical turnover is too high.6

At this point, it is clear that whether preparing for an aging workforce or integrating talent management into the overall strategy of a business, workforce planning and a talent management system are critical to an organization’s success.

6 Shelton-Johnson, LaCoya. Management and Succession Planning, Prepared for the AASHTO Standing Committee on Quality Conference, April 6, 2006

Planning for an Aging Workforce


7

Generational Differences in the WorkforceNo generation of workers can be portrayed as uniform in its attitudes and preferences. Yet most agree that there is truth to the popular notion that each of the four generations in today’s workforce can be roughly classified into types.

For example, Generation Y, otherwise known as the “Millennial” Generation, can be characterized as seeking more work-life balance, flatter organizations, faster promotions and better bosses. They also take more naturally to technology—especially to network and communications tools.

Corporations should focus on training supervisors and managers in talent management skills so that they are better at motivating, coaching and developing the diverse talent that reports to them; they should build clear and transparent career paths for new recruits; and they should offer flexibility in schedules, telecommuting (where possible) and menu-style benefits plans. Organizations that invest in modern human capital technologies will benefit twice: first from improved efficiencies; second by attracting young talent that expects to work with the latest tools.

Talent AcquisitionAccording to Bersin & Associates’ TalentWatch Report published in Fall 2008, the greatest talent shortages exist in the areas of:

• Line managers (43 percent of organizations cite severe or major shortages).

• Executive positions (34 percent of organizations cite severe or major shortages).

• Engineering and technical professionals (cited by 42 percent of organizations, with 14 percent stating their shortages are urgent).7

As the gap in talent supply and demand widens in coming years, it is imperative that HR professionals

establish effective strategies to recruit and retain employees. A recruiting application that's part of a

be strongly considered. Recruiting to meet current and future workforce needs and selecting the right employees are the first steps toward building an effective, sustainable workforce.

Workforce acquisition requires creative recruitment strategies and close collaboration and partnerships with others. Organizations should create forward-looking recruitment strategies and plans that leverage every tool possible. Employee referral programs, talent pool development and well-branded and information-rich career web sites are but a few. Partnerships with local schools, colleges and universities to provide mentoring programs for students can be a good approach. Supplying part-time faculty to colleges in an attempt to boost enrollment and gain first access to graduates is another tactic. These partnerships can be an effective way to fill the workforce pipeline, while also providing career opportunities to students in local communities. Targeting second-career individuals with work experience in other fields has also proven an effective recruitment strategy.

Finally, companies should embrace the contract, contingent and temporary workforces, including offshore workforces, as resources to combat the talent shortages inherent across the workforce. Costs must be controlled, but organizations will only add to their problems if they attempt to make life more difficult for that growing segment of the workforce that can be described as non-traditional. More than ever before, especially at the entry level and among aging baby boomers, the demand for work-life balance and flexible work conditions will propel the growth of contract, agency and other temporary workers. On the other hand, corporations must develop comprehensive workforce and recruitment plans so that they will not have to react to shortages by paying premiums for contractors in last-minute staffing emergencies.

“Many firms are operating with lean teams in which every staff member plays

a key role in the business, making retention a

greater concern,” said Max Messmer, chairman and CEO of Robert Half

International and author of "Human Resources Kit For

Dummies." "Companies that lose top performers

may not only experience declines in productivity

but also incur significant costs in replacing these

professionals.”

7 Investing in Talent Acquisition During Today’s Recsssion?

larger talent management system should


8

OnboardingOrganizations should consider the depth and quality of their new employee onboarding programs. The Saratoga Institute and other research organizations’ conservative estimates of the cost of replacing skilled and professional employees is 150 percent of annual salary. As an example from the healthcare industry, consider a hospital with a 20 percent turnover rate. If that hospital employs 600 nurses with annual salaries of $50,000 and 100 doctors with salaries of $150,000, it will spend over $13,000,000 replacing just doctors and nurses every year.

Retention is a challenge at all phases of an employee’s career, but most particularly in the first year on the job. First-year retention has been consistently tied to the quality of the onboarding experience. Aside from making sure that a new employee has all the tools and access he or she requires from day one, organizations should create a meaningful experience for an employee’s first

weeks and months on the job. This might include the assignment of a “buddy,” pairing a new employee with a peer who has been in the organization for at least a year, for example. Each new employee might also be paired with a mentor, normally a more senior and tenured person in the organization who can help guide his or her career and acculturation to the organization.

Organizations should do all they can to quickly “socialize” new employees as well. Research has shown that young talent in particular is more likely to leave due to feelings of isolation. A strong onboarding program facilitates fast assimilation of new hires and quickly makes them feel part of the team. Effective onboarding also accelerates productivity. The average new employee might take months to fit into his or her role if left to “sink or swim.” A concerted, well-planned and executed onboarding process can significantly shorten this time so that in addition to better retention, the organization benefits from faster productivity of new hires.

Top Onboarding Strategies

40

3750

Provide an experience that reaffirms the newhire’s employment decision

Best-in-Class All Others

Formalize an onboarding strategy

company culture

Make onboarding smooth and easy

0% 10% 20% 30% 40% 50% 60%

30

3629

2629

SOURCE: ABERDEEN GROUP, JANUARY 2008

Exhibit 5: Top Onboarding Strategies Used by a Wide Range of Organizations

Ensure that new hires are integrated into the


9

RetentionEmployee retention is a process that encourages performing employees to remain with an organization for the maximum period of time or the completion of a project. It is beneficial for both the organization and the employee.

What does it cost when a talented employee leaves an organization for another? According to Dr. Lynn Ware and Bruce Fern in an article for Integral Talent Systems, some of the cost factors are obvious, such as productivity losses due to a vacant position. “However, there are often unseen costs, like the reduced productivity from the departing employee who is inevitably distracted during his or her job search and therefore contributes less during this time period (sometimes called ‘short-timer’s disease’).”8

One technical company in California’s Silicon Valley estimated that, using conservative calculations, it costs them an average of $125,000 when just one employee leaves. Other companies, according to Ware and Fern, calculate that attrition costs them annual productivity losses of 65 percent to 75 percent in the position the employee departs.9 Bill Gates once said that if Microsoft loses a top engineer to a key competitor it is likely to cost Microsoft over $1 billion over the course of that engineer’s career.

A retention strategy is more than a focus on reducing overall turnover. Strategic talent retention involves segmenting the workforce into high performers, high potentials, critical roles, hard-to-replace talent and so on, such that priorities can be set and metrics determined by segment. After all, losing a top-performing potential leader is more damaging than losing a low performer in a non-critical role.

8 Ware, B. Lynn, Ph.D. and Fern, Bruce. “The Challenge of Retaining Top Talent: The Workforce Attrition Crisis9 Ibid.

0% 10% 20% 30% 40% 50% 60% 70%Attraction Factors

3253

2121

2646

3044

4449

5049

4447

3561

5265

Image/profile of the organisation

HR respondents (N=336)

New starters (N=957)

What the organisation does

Reputation as an employer

The calibre of people

The nature of the work itself

Potential for progression through the organisation

Training and development opportunities

The physical working environment

The pay and benefits package

Work-life balance on offer

The degree of autonomy in the role

Mentonring from line-management/other

4337

3225

2310

SOURCE: TALENTDRAIN, 2009

Exhibit 6: Attraction Factors for Employees Staying in an Organization


10

10 Careerbuilder & USA Today Employment Survey 200911 Pennock, Rick, “Retaining Top Talent,” Lab Manager magazine

A June 2008 Employee Engagement Survey by HR Solutions of Chicago indicated that business leaders will experience a lower level of productivity from team members who are disengaged. And based on the research done by Marcus Buckingham for his book, First Break All The Rules (Simon & Schuster, 1999), employees who don’t feel valued are more likely to leave in search of an employer who values and recognizes them for their accomplishments. Low employee engagement can also lead to lower profits and lower levels of customer satisfaction. It’s evident, then, why

employers in today’s economy are “focused more on keeping employees rather than on hiring as they strive to keep afloat,”10 according to a new survey from careerbuilder.com and USA TODAY.

Retention programs vary depending upon the businesses that implement them, says Rick Pennock in an article from Leadership and Staffing,11 but the ideal strategy contains three elements: managers who value their employees, customized employee recognition and opportunities for new challenges.

0% 10% 20% 30% 40% 50% 60% 70%Attrition Factors

3235

1611

1416

4341

41

82

138

729

1613

Wrong vocational choice

HR respondents (N=336)

New starters (N=957)

Mismatch between expectations and reality

Line manager relationship

The nature of the work itself

Relationship with colleagues

Harassment/bullying

The physical working environment

Relationship between employees and management

What the organisation does

The degree of autonomy in the role

Confidence in the organisation

Training and development opportunities

Work-life balance

The pay and benefits package

Potential for progression through the organisation

155

216

267

3110

4016

5510

SOURCE: TALENTDRAIN, 2009

Exhibit 7: Attrition Factors for Employees Leaving an Organization


11

Managers must have a genuine interest in both the professional and personal well-being of their employees. Employees who feel that their manager has their individual best interests at heart and, with them, is looking out for their career interests, will be exponentially more likely to express loyalty to the company, dedicate themselves to excellence in their work and treat others with the same respect and concern.

EngagementYear after year, Gallup Management Group polls find that only about 30 percent of U.S. employees are fully engaged in their jobs. Increased productivity and profitability and reduction of employee absenteeism and turnover are the results of improving employee engagement. Gallup found that engaged employees are builders. They need to know the expectations for their roles so they can meet or exceed them. They are curious about their companies and their places in them and perform at consistently high levels. They use their talents and strengths at work daily. They are passionate about their work and drive innovation to move their organization forward.12

According to engagement expert Leigh Branham, there are several sequential and predictable steps that can unfold in the employee’s journey from disengagement to departure. Says Branham: “Of course, many of our so-called ‘leaders’ are so busy doing two jobs or are so obviously self-interested that they wouldn’t even notice if their employees walked around wearing sandwich boards saying ‘I Hate This Job!’ or ‘Becoming Less Engaged Every Day!’”13 Indeed, in most organizations there appears to be an incredible gap between what employers believe motivates talent and what that talent actually says motivates them (see Exhibit 8 for one example).

Engagement is a leading indicator of financial performance, according to a WorkAsia 2007-2008 Survey Report. Watson Wyatt quantified this relationship by performing an analysis to explain current financial performance (measured as the market premium) as a function of various factors. They found a significant relationship between current financial performance and past engagement even after controlling for past financial performance, industry and other considerations: A significant (one standard deviation) increase in the level of past employee engagement is associated with a 1.5 percent increase in current market premium. For the typical company in the sample, with a market value of $14 billion, that represents an increase in market value of 1.7 percent, or more than $230 million.14

12 “Motivating and Retaining Top Talent Through Employee Engagement, Insala13 Branham, Leigh. “How Employees Disengage and Quit”14 Watson Wyatt Work Asia 2007-2008 Report

11%89%

More Money

What Leaders Believe What Employees Say

12%88%

Other Reasons

SOURCE: KRAFT

Exhibit 8: What Motivates Talent?


12

No wonder—the Gallup Management Group has calculated that engaged employees have:

• 51 percent lower turnover

• 27 percent less absenteeism

• 18 percent more productivity

• 12 percent higher profitability15

Further, The Best Companies Guide UK 2008 featured eight organizational factors16 that can improve employee engagement:

• Leadership: good leadership leads to a happy team.

• My company: how much people value their company, and are proud to work there.

• Personal growth: whether employees feel challenged by their jobs.

• My manager: the employee-manager relationship.

• Giving something back: community service and volunteering opportunities.

• Fair deal: how well employees are treated in terms of pay and benefits compared to similar organizations.

• Well-being: balance between work and home life.

Training and DevelopmentAmong the most powerful tools in talent attraction, engagement and retention are training and development. Successful employee development requires a balance between an individual’s career needs and goals and the organization’s need to get work done. Employee development programs make positive contributions to organizational performance. A more highly skilled workforce can do more as employees gain experience and knowledge. Despite the shortages of workers, and despite the fact that many companies are understaffed, organizations must find ways to invest in the development of their critical employees. Tuition reimbursement, time off for training, investments in on-the-job training and stretch assignments, coaches, mentors and action learning are proven methods that work in every industry.

An IBM 2008 Human Capital Study outlined the most popular employee development techniques used by organizations. Companies still report great effectiveness from traditional forms of learning, such as on-the-job training (OJT) and instructor-led classroom experiences. It is not surprising, then, to see that 52 percent of companies struggle to rapidly develop skills. Both OJT and classroom training are time- and resource-intensive, making them costly to the business and potentially slow to respond to shifts in the market. In an increasing number of organizations, learning is becoming more interactive through the use of Web 2.0 platforms, even to the extent that in some companies, most new courses are authored by the employees themselves (Exhibit 9).

15 Demovek, Darla, “Engaged Employees, Credit Union Magazine, May 200816 “Motivating and Retaining Top Talent Through Employee Engagement, Insala


13

Leadership PlanningAs important as talent management is, organizations have devoted too little time to creating a legacy of leadership. Many have no formal plans to identify and develop individuals for future roles, nor do they have a transition strategy should leaders make a planned or unplanned departure.

Most companies do a poor job of developing their executives, says a recent McKinsey Survey. Only 3 percent of the 6,000 executives who responded to the survey strongly agreed that their organizations developed talent quickly and effectively. According to research by Forrester Research, “Leadership ranks will be among those hardest hit by the [retirement] exodus, since corporate leadership is often comprised of older and more experienced staff. Current economic conditions may slow the retirement wave, but as the population ages it inevitably will occur.”17

It is obviously imperative that managers survey their talent rosters and plan for leadership continuity in order to avoid these issues. Surveying current and future talent for the next generation of leaders and developing an effective succession plan are key to organizational longevity. With the current war for talent and the future shortage of workers, these are issues of survival.

Due to Sarbanes-Oxley and other legislation aimed at making privately-held companies more accountable and transparent, board members in some of the nation’s largest companies are focusing more of their efforts on guaranteeing “continuity” in the organizations they advise. Indeed, any privately held company today that does not have a succession plan in place for key executives risks being found negligent by its shareholders.

17 Blashka, Susan Elliott. “Developing Executives Through Job Rotation,” APQC

On-the-job training

Classroom instruction provided byyour organization

Classroom instruction provided by vendors/institutions outside your organization

Job rotation

Blended learning—combination ofclassroom and web-based learning

Mentoring

Educational reimbursement

Self-managed computer or web-based training

Virtual-classroom-based trainingdelivered over the web

Self-study (not computer-based)

Correspondence course

0% 20% 40% 60% 80% 100%

Very effective Somewhat effective Neither effective nor ineffective Not very effective Not at all effective N/A or don’t know

SOURCE: IBM GLOBAL HUMAN CAPITAL STUDY 2009

Exhibit 9: Employee Development Techniques Used by Organizations


14

While choosing the best talent for leadership positions is critical to organizational success, placing the wrong person in a leadership role can create devastating problems impacting talent engagement, retention and productivity.

In spite of the economic downturn, however, the demand for qualified and skilled leaders far exceeds the supply in almost every industry. This has created a mobile workforce that can find positions across industries, making it even more challenging to retain talented leaders. Even so, efforts must be made to succeed by combining sound succession planning procedures with effective leadership identification and development activities. Organizations can and must create a long-term process that will provide them with a leadership pipeline for the future, to diminish the ill effects of a shrinking high-level leadership workforce.

Performance ManagementHewitt Associates, a global human resources services firm, surveyed 129 major U.S. corporations in 2005 and found that although they rely heavily on performance plans to determine employee pay increases (66 percent) and bonuses (47 percent), few organizations measure whether these performance plans are positively impacting

their business. Instead, many organizations simply measure their success by tracking whether paperwork is submitted on time (44 percent) or if their employees are satisfied with the program (36 percent). Meanwhile, nearly a third (30 percent) don’t measure the success of these programs at all.18

In an article on “Implementing a Global Performance Measurement System,” Mercer says when decisions and actions with performance measures are created for individuals at every level of an organization and within each region and business unit, then HR will have assisted in building the “last mile” of a performance measurement system. This will enable management to understand clearly how individual behaviors affect business results and how these results will be rewarded.

Mercer further contends that HR and Finance leaders do not need to have all the answers up front when designing a performance measurement system. There will always be gaps, and the system will need to evolve as the business and the environment evolve. However, failing to at least align the performance measurement system with the business and human capital strategies can greatly limit a company’s success.19 Exhibit 10 shows the performance measurement process by Mercer.

18 Success Performance Solutions19 Mercer, Implementing an Effective Global Performance Measurement System

Performance measurement system

Investment and operating decisions; behaviors

Shareholders

Businessstrategy

Humancapitalstrategy

Expectations Results

How do we suceed? Are we doing it?

SOURCE: MERCER

Exhibit 10: Performance Measurement System Model


15

Conclusions

dollars are still flowing into the economy and the recession has been declared officially over. While unemployment rates remain high, most economists

2010 and beyond.

employment growth. Others include an inevitable requirement for more skilled technicians, profession-als, managers and executives to respond to demand as the recovery picks up momentum. To prepare, organizations must:

• Build and maintain a strong employer brand and cooperate to build a strong brand for the industry.

• Practice strategic and ongoing workforce planning.

• Create strategic recruitment plans and use all the tools at their disposal to attract talent.

• Build effective onboarding processes.

• Create “great places to work” so that talent will remain.

• Identify and develop leaders at all levels. Choose and develop leaders for their talent management skills.

• Communicate the plan of action to employees.

• Reward talent with strategic employee recognition.

even cultural change in many organizations, but it

management can benefit organizations by assist-ing human resource departments in managing and maintaining core aspects of ever-changing local and global workforce conditions, including the

acquisition, for example, can become proactive and strategic, aimed at beating the competition to top talent in the industry. This is next to impossible

strategy that can help attract, source, select, hire and onboard talent ahead of demand.

With technology and best practices in place to evaluate and measure workforce performance, organizations can better recognize, retain and reward top performers while reducing attrition and flight risk. In essence, successfully run organiza-

organizational workforce plans and techniques to project demand, manage current needs, increase engagement, deploy talent optimally, drive better performance, identify leaders, manage compensa-tion strategically and reduce attrition. Organizations that fail in this regard put themselves at a disadvan-tage in the persistent war for talent.

Business and industry leaders have little choice but to rise to the occasion and undertake the transitions and transformations necessary to bring their organi-zations to a level that will not only attract but retain top talent in the years to come.

within a talent management framework.

project modest and then increasing job creation in without the use of recruiting tools and a

tions use talent management to establish

Each of the above can and should be accomplished

talent management suite requires structural and A

The aging population will be but one accelerator of

As of October 2009, billions of economic stimulus increasingly important contingent workforce. Talent

is wor th the trouble and expense. Talent


16

About the AuthorsLawson Software (www.lawson.com) provides software and service solutions to 4,500 customers in equipment service management and rental, fashion, food & beverage, healthcare, manufacturing & distribution, public sector (United States), service industries, and strategic human capital management across 40 countries. Lawson Software is a global provider of enterprise software, services and support to customers primarily in three sectors: services, trade and manufacturing/distribution. Lawson’s solutions include Enterprise Performance Management, Strategic Human Capital Management, Supply Chain Management, Enterprise Resource Planning, Customer Relationship Management, Manufacturing Resource Planning, Enterprise Asset Management and industry-tailored applications. Lawson solutions assist customers in simplifying their businesses or organizations by helping them streamline processes, reduce costs and enhance business or operational performance. Lawson is headquartered in St. Paul, Minn., and has offices around the world. For Lawson’s listing on the First North exchange in Sweden, Remium AB is acting as the Certified Adviser.

The Human Capital Institute (www.hci.org) is a catalyst for innovative new thinking in talent acquisition, development, deployment and new economy leadership. Through research and collaboration, our global network of more than 160,000 members develops and promotes creativity, best and next practices, and actionable solutions in strategic talent management. Executives, practitioners and thought leaders representing organizations of all sizes, across public, charitable and government sectors, utilize HCI communities, education, events and research to foster talent advantages to ensure organizational change for competitive results. In tandem with these initiatives, HCI’s Human Capital Strategist professional certifications and designations set the bar for expertise in talent strategy, acquisition, development and measurement.

Human Capital Institute | 1250 Connecticut Avenue | Washington, D.C. | 866.538.1909

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