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Whitepaper Research whitepaper Driving Successful HR Leadership: Talent Managements Role in Core Business Strategy A New Study Exploring Whats Working for Organizations Today and the Biggest Gaps to Fill Independent
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Research whitepaper
www.hr.com | 1-877-472-6648 copyright © HR.com November 2012
Driving Successful HR Leadership:
Talent Management’s Role
in Core Business Strategy
A New Study Exploring What’s Working for Organizations Today
and the Biggest Gaps to Fill
Independent research conducted by HR.com and sponsored by
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Research whitepaper
www.hr.com | 1-877-472-6648 copyright © HR.com November 2012
Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
2
The Shift from Transactional to Strategic
Today’s CEOs and executives maintain that there are three key components to a successful
business: 1) you have to have the right strategy, 2) you have to have the operations in place to
execute that strategy, and 3) you have to have the best people in the world to execute those
operations.
Being responsible for one-third of a business’ success already puts HR in a critical role. But it’s
not just about ?nding the best people—it’s about ?nding the best people, at the lowest cost,
with the lowest possible attrition and the best possible performance. And it’s about guiding
your executive team to the right decisions using the language they understand best: numbers.
Talent management—covering everything from recruiting and compensation to ongoing
education and retention—has traditionally been managed in silos, with a series of disparate
systems and disconnected processes and reports. In today’s data-driven world, CEOs demand
more. Given that 55% of the US GDP alone is spent on wages and salaries, it’s not a stretch to
say that the biggest ?nancial decision a company can make each year is the total amount of merit
increase. The strategic HR leader is expected to come to the table with hard numbers justifying
merit increase requests; it’s no longer enough to state industry trends or averages. And that’s
just one piece of the puzzle. Today’s HR leader needs to holistically understand the workforce by
function, category and location. Is R&D attrition in China hurting the company’s bottom line?
Does the company need to offer more competitive packages to retain top performing sales reps
in North America? These types of questions cannot be answered quickly, easily and to a CEO’s
satisfaction if data is scattered across legacy systems and pieced together in rudimentary reports.
It’s clear that a shift is needed. The next generation of HR leadership is not about completing
transactions—it’s about helping drive the CEO to great decisions and using technology to
connect the dots throughout the entire organization. So how are companies doing? In a recent
study conducted by HR.com and sponsored by Oracle, we found some gains and some de?nite
areas for improvement.
For this study, HR.com surveyed over 90 HR leaders from organizations with over 500 employees
in Canada and the United States.
The study explores two main areas: 1) talent management tactics that are working for companies
today and 2) the extent to which companies have been able to integrate talent management
applications and move toward a holistic process.
Key Study Insights
The following emerged as key tactics or trends in talent management based on the
organizations surveyed for the study:
1. Improving sourcing is thought to be the most effective way to decrease time to ?ll, though
tactics like social networking and improved screening are close runners-up.
2. 80% of organizations surveyed focus on one of two tactics to improve retention: better
employee engagement through clear goals and communication, and better career and
succession management.
3. Employee development is the number one tactic used to retain top performers.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
4. Improved data analysis has the most signi?cant impact on improving total compensation
and rewards.
5. Training managers are seen as the most effective way to improve the overall performance
management process.
6. Nearly 80% of organizations do talent reviews and a majority use technology to
support this process.
7. Almost half of the organizations that do talent reviews use the 9-box assessment method.
8. For the majority of organizations, the integration of talent management applications
remains moderate or poor.
9. Executive teams are more likely to focus on performance management over talent scarcity
or retention.
10. CEOs indicate that people management is a primary driver of results, but less than 30%
offer strong support for HR analytics.
In the following sections, we’ll delve into these trends and tactics, covering core areas such
as: talent scarcity and recruitment, talent retention, compensation and learning, performance
management and talent reviews, integration, and business context.
The War for Talent: Talent Scarcity and Recruitment
Technology advances have pushed businesses forward but they’ve also presented new
challenges: ?nding the right people to help you get the right products to market — especially
before your competition — is harder than ever. This is compounded by the advent of online
professional networks. While these networks can help recruiters more easily ?nd new talent,
they also make it possible for top performers to be found by other hungry recruiters and cherry
pick talent for their next great job.
Some jobs are easily ?lled, but all too often the talent the organization needs is scarce and the
skill of recruiters in quickly ?nding and wooing that talent is essential.
This is a matter of strategic importance to the company’s bottom line. Open essential positions
lead to delayed projects, missed targets and overextended teams. And a delayed project is
not just an inconvenience—it can mean the difference between getting a product out before
competitors and being late to market. These vacancies can ultimately contribute to reduced
revenue and loss of market share. Given the impact vacancies can have on the organization,
recruiters must constantly explore new tactics to reduce the time to ?ll openings. So what
works?
In this study, results varied. Just over one-third of companies point to better sourcing as
the number one tactic in decreasing time to ?ll (Figure 1). Tying for second place were the
use of social tools and improved screening and assessments. Some companies also noted
improvements due to better software and processes. Only 7% of companies said that more
competitive compensation and bene?ts made a difference. This could be because organizations
are unwilling to increase pay or have not considered using non-?nancial rewards to attract
talent. Companies falling into the “other” category reported tactics such as being ?exible in
adhering to job descriptions when sourcing new recruits and relying on their ?rm’s success and
reputation to attract talent.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
The takeaway is that there’s no magic bullet when it comes to decreasing time to ?ll. More
likely, it’s a combination of better sourcing, effectively leveraging social media tools, improving
screening and streamlining software applications and processes. As we’ll see later, some ?rms
are also turning to non-?nancial rewards. Finally, one tactic not mentioned by those surveyed is
using a holistic, analytical approach to better anticipate vacancies—via predicted retirement or
attrition—and prepare before there is an immediate need.
FIGURE 1: What has had the biggest impact on improving the time to ?ll
your open positions?
Filling positions quickly is important but warm bodies do not make for a successful business.
As mentioned earlier, ?nding the best people is one of the three keys to a company’s success.
Recruiters know well that there can be considerable variation in ability even between candidates
who have similar quali?cations. Consistently ?nding the best candidates can have a signi?cant
effect on organizational performance.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
What tactics are most successful in improving the quality of hire? Figure 2 shows that improved
screening and assessments had the biggest impact on quality of hire for almost half of the
respondents. Improved sourcing was cited by 23% of study participants followed by 14% of
respondents who aim to model requisitions after high performing employees or job pro?les.
Getting a better handle on what a high performer looks like is frequently recommended by
consultants, but its weak showing in the survey is not surprising given the poor to moderate
talent management application integration cited by study participants. Without a clear and
consistent view of employee statistics across the organization, it’s nearly impossible to create
data-driven and actionable pro?les of desired candidate attributes.
Several respondents falling into the “other” category pointed to the importance of on-boarding
in improving quality. This is an interesting view; it emphasizes the ability of the organization to
bring out the best in the raw talent they have hired rather than assuming that ability is ?xed
when they bring the employee on board. Another response pointed to the value of having a
specialized recruiter, noting that it is not just the tools or processes an organization has but also
the skill of the person using those tools.
FIGURE 2: What has had the biggest impact on your quality of hire?
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
Nurturing Talent: Retention, Compensation
and Learning
If ?nding the best people is essential to a company’s success, keeping them is even more
important. Just as with customers, ?nding new top talent is more time and resource-consuming
than keeping the top talent you already have.
Compensation and learning are primary factors in employee satisfaction, which ultimately leads
to retention, and they are also examined in this section.
When asked about general retention strategies, 80% of study participants reported focusing on
one of two tactics: better employee engagement through clear goals and communication, and
better career and succession management (Figure 3).
In the book Beyond HR: The New Science of Human Capital, John Boudreau and Pete Ramstad
make a case for sharper focus, such as better needs analysis when it comes to employee
retention. After all, organizations aim to retain top performers and high potentials, not all
employees. Only 10% of respondents listed needs analysis as a top focus, which is in line
with general survey ?ndings regarding talent management application integration and the
embracement of HR analytics. At this point, HR is still likely to be focused on programs for the
general employee population.
Respondents who answered “other” named tactics such as using a combination of these
methods (rather than focusing effort on one) or using better selection as a way to improve
retention. While limiting selection to those anticipated to stay may work when there is a large
pool of quali?ed applicants, in times of talent scarcity, it may be impractical.
FIGURE 3: What are you focusing on most to improve talent retention?
4%
4%
10%
30%
51%
Other
Better total rewards/compensation plans
Better talent retention needs analysis
Better career and succession management
Better employee engagement through
clear goals and communications
0% 10% 20% 30% 40% 50% 60%
This unchanged – label overlaps
but looks ok. H.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
7
Although HR departments tend to focus on the broad employee population, study participants
did emphasize the importance of tactics to retain top performers. Developing employees to their
fullest potential is the most employed tactic. The second most popular tactic was using rewards
and incentives (Figure 4).
FIGURE 4: What is your organization’s main tactic for keeping top
performers?
Compensation is a crucial aspect of employee retention but keeping compensation under
control is also critical to the company’s bottom line. As mentioned earlier, the annual merit
increase is often the most signi?cant ?nancial decision a company will make all year. When
else will a CEO approve a spend reaching into the millions without strong evidence to justify it?
Although HR departments have yet to realize the full power of analytics, when it comes to
reward and compensation effectiveness, organizations have embraced its value: analysis is listed
as the number one improvement tactic for over 40% of respondents (Figure 5).
The other ?nding of note was the effectiveness of non-?nancial rewards. In boom times
companies may have been prone to simply increase compensation levels; in this less certain
economy, we see organizations taking a more creative route. Thirty-four percent of organizations
surveyed named better non-?nancial rewards as having the biggest impact on improving total
rewards and compensation. It is worth recognizing that non-?nancial rewards are not just a
way to save money; employees genuinely value ?exible hours, child care services, and even
time-saving bene?ts such as on-site laundry services. Employees, especially those with child
care responsibilities, ?nd it dif?cult to juggle the many demands on their time and non-?nancial
rewards may make a bigger difference in their life than a slightly bigger paycheck.
Among the 11% of respondents answering “other,” some mentioned ?nding out what
mattered most to employees, others discussed better managing pay grades, while yet others
said they had made no improvements.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
8
FIGURE 5: What has had the biggest impact on improving your total rewards
and compensation?
It’s important to remember that top performers aren’t just out for a paycheck. Particularly with
younger workers, the chance to continually learn on the job is a major factor in retention.
So what are organizations doing to improve learning? The most common tack taken by this
study’s participants is improving their training needs analysis to understand how and where to
spend money (Figure 6). Getting nearly as much attention is e-learning, an increasingly popular
training model due to its lower cost and increased ?exibility for both companies and employees.
Those who responded “other” mentioned a number of tactics including better follow up, more
in-person training, and better documentation.
FIGURE 6: What are you focusing on most to further improve learning?
10%
14%
19%
27%
30%
Other
Better informal / social learning
Better learning mgmt software/processes
Better e-learning
Better training needs analysis
0% 5% 10% 15% 20% 25% 30% 35%
6
11%
6%
8%
34%
41%
Other
Better comp. mgmt software/processes
Better cash rewards
Better non-financial rewards
Better total rewards/comp. analysis
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
Measuring Talent: Performance Management and
Talent Reviews
End-to-end talent management encompasses three main pillars: recruitment, learning and
performance management. Performance management is a crucial element of maintaining the
best possible workforce as it enables companies to identify high performers and high potentials
while also understanding issues of under-performance. From there, companies can better
strategize merit increases, retention efforts and more.
Figure 7 shows where organizations surveyed have had success in improving performance
management and what they are focusing on to improve it further.
Organizations indicated that training managers in performance management has brought them
the most success; this is also the area of greatest focus for continued improvement. The other
two successful practices have been better alignment between goals and better goal setting.
Respondents who answered “other” pointed to the importance of making performance
management part of the culture and ongoing employee-manager communication.
FIGURE 7: Performance management, what has worked and what are you
working on?
One of the most important elements of talent management is to go beyond the individual
performance appraisals and look closely at the talent pool to identify and develop key talent.
This process is typically called a talent review, and is handled by a committee of senior managers.
Just over 20% of organizations reported that they did not use talent reviews. If we focus on the
nearly 80% that did, we ?nd that close to half of those only use paper-based reviews (Figure
8). Given the ease with which talent review committees can sort through and evaluate a global
workforce using an integrated talent management system, it seems likely the number using
manual processes will shrink in the years ahead. Stand-alone technology (instead of integrated
technology) is surprisingly prevalent; it is used by well over half of the organizations that use
technology for talent reviews.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
10
FIGURE 8: What is your company’s adoption of talent reviews?
One classic tool for talent reviews is the 9-box model. This model attempts to distinguish between
performance and potential. The dream employee is one who is both a high performer and has
high potential. The 9-box model draws attention to the fact that there may be employees who
do very well in their current job but wouldn’t do well if promoted, and possibly other employees
who are full of potential but for some reason are not yet performing well in their current role.
The model generally looks like this:
POTENTIAL HIGH
MEDIUM
LOW
LOW MEDIUM HIGH
PERFORMANCE
Figure 9 shows that nearly half of the respondents who do talent reviews use the 9-box model.
Of those using the model, two-thirds use it to look back on the historical record while one-third
also use it to get a handle on future talent outcomes.
FIGURE 9: Do you use the 9-box to perform talent reviews?
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
11
Managing Talent: The Advent of Integration
Soon after adopting new talent management applications, most organizations realize the need
for integration. Technology investments are often made to streamline processes and improve
data accuracy. But the full power of technology cannot be realized when companies have
multiple systems of record with disconnected data streams and con?icting processes. Moving
data from one system to another and ultimately needing to process the information in a manual
application, like a spreadsheet, leads to inaccuracies, frustration and wasted manpower.
Our study shows that HR has a long way to go when it comes to integration. The majority
of organizations surveyed report poor to moderate integration of their talent management
applications. Performance management is a bit more likely to be well integrated than the other
pillars of talent management, although even there the number with poor integration greatly
outnumbers those with good integration.
Talent management is increasingly becoming a priority for companies and CEOs have new, more
strategic expectations of their HR leadership. At the same time, HR leaders strive to be seen as
more than transactional contributors and push for a seat at the executive planning table. To
elevate their roles and present CEOs with the thoughtful, proven talent intelligence demanded,
HR leaders will need to make systems integration and clean, consistent data greater priorities.
FIGURE 10: How well integrated are your talent management applications?
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
12
Note: The study gave examples of what was meant by poor, moderate and good integration;
here are the illustrations used in the survey:
Very poorly Moderately Very well
Performance
Management
Performance
management software is
manual or the software
is not connected to HRIS
etc.
Performance
management just tracks
ratings
Performance
management software
fully integrated into
talent management
suite for outcomes
such as learning or
compensation
Compensation Compensation software
is not connected to HRIS
etc.
Compensation system
has no HR connection
beyond contact info and
payroll
Compensation software
is fully integrated into
talent management suite
with performance ratings
Learning Many disparate,
unconnected systems
Single learning system
with no HR connection
beyond contact
information
A single integrated
system for learning data
Recruiting Recruiting software not
connected to HRIS etc.
Recruiting software is just
connected to core HR
Recruiting software fully
integrated into talent
management suite
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
13
View from the Top: The C-Suite Weighs In On
Talent Management
According to study participants, when it comes to talent management, their executives focus
mainly on performance management (Figure 11). The reason performance management is so
often on the front-burner is that organizations are striving to get more out of the people they
already have, rather than adding headcount. The business imperative at many ?rms is simply
being more productive and that is what good performance management ought to deliver.
Signi?cant numbers of respondents also reported a primary focus on talent retention/
compensation/learning and talent scarcity/recruiting. Those that responded “other” pointed to
various issues such as “succession planning” or more worryingly, “business survival.”
FIGURE 11: Which of the areas is management focusing on the most?
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
The previous ?gure showed what areas of talent management organizations are focusing on;
the next ?gure (Figure 12) shows why. The data shows that the area of focus is just as likely
to be in good or very good shape as it is to be a weak area in need of ?xing. In the case of
performance management, we see that 11% felt that their system was already strong and 39%
rated it as good, but it was suf?ciently critical that it remained the priority. It is an encouraging
sign that many organizations, in all three of the areas we examined, are aiming to go from good
to better.
FIGURE 12: Why is this area the focus?
Perhaps one of the most important pieces of context for HR is the top management’s attitude
towards HR analytics. If HR analytics are seen as low priority, then that may be a signal that top
management views HR as mainly transactional. On the other end of the scale, if top management
values HR analytics then HR is more likely to be seen as able to drive business success.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
Figure 13 shows top management being “somewhat supportive” of analytics narrowly edging
out “analytics is not a priority at this time” as the most common response. Only 8% said that
management had already made sure HR had the analytics tools they needed. These ?gures
contradict other recent studies showing that CEOs expect more out of their HR leadership,
especially when it comes to making data-driven decisions. This should be a call to action for HR
to better present the value of new analytics solutions and the ability of their departments to
leverage them.
FIGURE 13: What best describes top management’s attitude towards HR
analytics?
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
We also asked directly about whether business unit heads and the CEO indicate that people
management is a primary driver of results. In Figure 14 we see an interesting ?nding that is
somewhat at odds with the data in the previous chart.
Only a few strongly disagree with the statement that “The CEO indicates that people
management is a primary driver of results.” If top management usually agrees that HR is a
primary driver of results but is not supportive of HR analytics, then there clearly is work to
do when it comes to demonstrating the capabilities of today’s HR analytic solutions and their
ability to optimize people management. Of course the success of HR analytics rests on a tighter
integration of talent management applications, something that is lacking at the majority of
organizations interviewed.
Figure 14: The CEO/ Business Unit Heads indicate that people management
is a primary driver of results
Note: the average was calculated by giving four points for strongly agree, three points for
agree and so on, down to zero points for those who strongly disagree that HR is a primary
driver of results.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
Conclusion
The talent management game has changed. Slower economic growth combined with a scarcity
of talent to ?ll crucial positions, the advent of social networking and a new generation of digital
natives, AND increased expectation from the top, mean that the days of transactional HR have
long passed. HR leaders want a seat at the strategic table and CEOs want to give it to them. But
to be able to make this leap from transactional to strategic, HR leaders need to put greater focus
on tools, process and integration and stop addressing talent management in silos.
While tactics for decreasing time to ?ll, maximizing the effectiveness of compensation and
rewards, and retaining top performers vary among companies, one thing is constant: easy
access to workforce intelligence is key. Without access to clean, consistent data, HR leaders
cannot act with the certainty and speed to get the best people at the lowest cost and ensure the
best performance and lowest attrition. Moreover, HR will lose the opportunity to be true leaders
in the business and help guide the CEO in decisions based on future business impact. How many
top performers will you lose to retirement in the next ?ve or ten years? What skill demands are
on the rise? Which regions, categories and functions need greater attention? What will be the
bottom line impact of giving merit increases to top performers only vs. all employees? This is all
insight that the HR leader can and should provide.
One of the three crucial elements of a successful business is having the best people in the world.
It is a war to ?nd, develop and retain the best people, but it’s one that can be won with the
right tools at hand.
doc_265448862.pdf
Whitepaper Research whitepaper Driving Successful HR Leadership: Talent Managements Role in Core Business Strategy A New Study Exploring Whats Working for Organizations Today and the Biggest Gaps to Fill Independent
WP_DrivingSuccessfulHRLeadership_1128.indd
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Research whitepaper
www.hr.com | 1-877-472-6648 copyright © HR.com November 2012
Driving Successful HR Leadership:
Talent Management’s Role
in Core Business Strategy
A New Study Exploring What’s Working for Organizations Today
and the Biggest Gaps to Fill
Independent research conducted by HR.com and sponsored by
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Research whitepaper
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
2
The Shift from Transactional to Strategic
Today’s CEOs and executives maintain that there are three key components to a successful
business: 1) you have to have the right strategy, 2) you have to have the operations in place to
execute that strategy, and 3) you have to have the best people in the world to execute those
operations.
Being responsible for one-third of a business’ success already puts HR in a critical role. But it’s
not just about ?nding the best people—it’s about ?nding the best people, at the lowest cost,
with the lowest possible attrition and the best possible performance. And it’s about guiding
your executive team to the right decisions using the language they understand best: numbers.
Talent management—covering everything from recruiting and compensation to ongoing
education and retention—has traditionally been managed in silos, with a series of disparate
systems and disconnected processes and reports. In today’s data-driven world, CEOs demand
more. Given that 55% of the US GDP alone is spent on wages and salaries, it’s not a stretch to
say that the biggest ?nancial decision a company can make each year is the total amount of merit
increase. The strategic HR leader is expected to come to the table with hard numbers justifying
merit increase requests; it’s no longer enough to state industry trends or averages. And that’s
just one piece of the puzzle. Today’s HR leader needs to holistically understand the workforce by
function, category and location. Is R&D attrition in China hurting the company’s bottom line?
Does the company need to offer more competitive packages to retain top performing sales reps
in North America? These types of questions cannot be answered quickly, easily and to a CEO’s
satisfaction if data is scattered across legacy systems and pieced together in rudimentary reports.
It’s clear that a shift is needed. The next generation of HR leadership is not about completing
transactions—it’s about helping drive the CEO to great decisions and using technology to
connect the dots throughout the entire organization. So how are companies doing? In a recent
study conducted by HR.com and sponsored by Oracle, we found some gains and some de?nite
areas for improvement.
For this study, HR.com surveyed over 90 HR leaders from organizations with over 500 employees
in Canada and the United States.
The study explores two main areas: 1) talent management tactics that are working for companies
today and 2) the extent to which companies have been able to integrate talent management
applications and move toward a holistic process.
Key Study Insights
The following emerged as key tactics or trends in talent management based on the
organizations surveyed for the study:
1. Improving sourcing is thought to be the most effective way to decrease time to ?ll, though
tactics like social networking and improved screening are close runners-up.
2. 80% of organizations surveyed focus on one of two tactics to improve retention: better
employee engagement through clear goals and communication, and better career and
succession management.
3. Employee development is the number one tactic used to retain top performers.
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Driving Successful HR Leadership: Talent Management’s
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4. Improved data analysis has the most signi?cant impact on improving total compensation
and rewards.
5. Training managers are seen as the most effective way to improve the overall performance
management process.
6. Nearly 80% of organizations do talent reviews and a majority use technology to
support this process.
7. Almost half of the organizations that do talent reviews use the 9-box assessment method.
8. For the majority of organizations, the integration of talent management applications
remains moderate or poor.
9. Executive teams are more likely to focus on performance management over talent scarcity
or retention.
10. CEOs indicate that people management is a primary driver of results, but less than 30%
offer strong support for HR analytics.
In the following sections, we’ll delve into these trends and tactics, covering core areas such
as: talent scarcity and recruitment, talent retention, compensation and learning, performance
management and talent reviews, integration, and business context.
The War for Talent: Talent Scarcity and Recruitment
Technology advances have pushed businesses forward but they’ve also presented new
challenges: ?nding the right people to help you get the right products to market — especially
before your competition — is harder than ever. This is compounded by the advent of online
professional networks. While these networks can help recruiters more easily ?nd new talent,
they also make it possible for top performers to be found by other hungry recruiters and cherry
pick talent for their next great job.
Some jobs are easily ?lled, but all too often the talent the organization needs is scarce and the
skill of recruiters in quickly ?nding and wooing that talent is essential.
This is a matter of strategic importance to the company’s bottom line. Open essential positions
lead to delayed projects, missed targets and overextended teams. And a delayed project is
not just an inconvenience—it can mean the difference between getting a product out before
competitors and being late to market. These vacancies can ultimately contribute to reduced
revenue and loss of market share. Given the impact vacancies can have on the organization,
recruiters must constantly explore new tactics to reduce the time to ?ll openings. So what
works?
In this study, results varied. Just over one-third of companies point to better sourcing as
the number one tactic in decreasing time to ?ll (Figure 1). Tying for second place were the
use of social tools and improved screening and assessments. Some companies also noted
improvements due to better software and processes. Only 7% of companies said that more
competitive compensation and bene?ts made a difference. This could be because organizations
are unwilling to increase pay or have not considered using non-?nancial rewards to attract
talent. Companies falling into the “other” category reported tactics such as being ?exible in
adhering to job descriptions when sourcing new recruits and relying on their ?rm’s success and
reputation to attract talent.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
The takeaway is that there’s no magic bullet when it comes to decreasing time to ?ll. More
likely, it’s a combination of better sourcing, effectively leveraging social media tools, improving
screening and streamlining software applications and processes. As we’ll see later, some ?rms
are also turning to non-?nancial rewards. Finally, one tactic not mentioned by those surveyed is
using a holistic, analytical approach to better anticipate vacancies—via predicted retirement or
attrition—and prepare before there is an immediate need.
FIGURE 1: What has had the biggest impact on improving the time to ?ll
your open positions?
Filling positions quickly is important but warm bodies do not make for a successful business.
As mentioned earlier, ?nding the best people is one of the three keys to a company’s success.
Recruiters know well that there can be considerable variation in ability even between candidates
who have similar quali?cations. Consistently ?nding the best candidates can have a signi?cant
effect on organizational performance.
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Driving Successful HR Leadership: Talent Management’s
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What tactics are most successful in improving the quality of hire? Figure 2 shows that improved
screening and assessments had the biggest impact on quality of hire for almost half of the
respondents. Improved sourcing was cited by 23% of study participants followed by 14% of
respondents who aim to model requisitions after high performing employees or job pro?les.
Getting a better handle on what a high performer looks like is frequently recommended by
consultants, but its weak showing in the survey is not surprising given the poor to moderate
talent management application integration cited by study participants. Without a clear and
consistent view of employee statistics across the organization, it’s nearly impossible to create
data-driven and actionable pro?les of desired candidate attributes.
Several respondents falling into the “other” category pointed to the importance of on-boarding
in improving quality. This is an interesting view; it emphasizes the ability of the organization to
bring out the best in the raw talent they have hired rather than assuming that ability is ?xed
when they bring the employee on board. Another response pointed to the value of having a
specialized recruiter, noting that it is not just the tools or processes an organization has but also
the skill of the person using those tools.
FIGURE 2: What has had the biggest impact on your quality of hire?
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Driving Successful HR Leadership: Talent Management’s
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Nurturing Talent: Retention, Compensation
and Learning
If ?nding the best people is essential to a company’s success, keeping them is even more
important. Just as with customers, ?nding new top talent is more time and resource-consuming
than keeping the top talent you already have.
Compensation and learning are primary factors in employee satisfaction, which ultimately leads
to retention, and they are also examined in this section.
When asked about general retention strategies, 80% of study participants reported focusing on
one of two tactics: better employee engagement through clear goals and communication, and
better career and succession management (Figure 3).
In the book Beyond HR: The New Science of Human Capital, John Boudreau and Pete Ramstad
make a case for sharper focus, such as better needs analysis when it comes to employee
retention. After all, organizations aim to retain top performers and high potentials, not all
employees. Only 10% of respondents listed needs analysis as a top focus, which is in line
with general survey ?ndings regarding talent management application integration and the
embracement of HR analytics. At this point, HR is still likely to be focused on programs for the
general employee population.
Respondents who answered “other” named tactics such as using a combination of these
methods (rather than focusing effort on one) or using better selection as a way to improve
retention. While limiting selection to those anticipated to stay may work when there is a large
pool of quali?ed applicants, in times of talent scarcity, it may be impractical.
FIGURE 3: What are you focusing on most to improve talent retention?
4%
4%
10%
30%
51%
Other
Better total rewards/compensation plans
Better talent retention needs analysis
Better career and succession management
Better employee engagement through
clear goals and communications
0% 10% 20% 30% 40% 50% 60%
This unchanged – label overlaps
but looks ok. H.
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Driving Successful HR Leadership: Talent Management’s
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Although HR departments tend to focus on the broad employee population, study participants
did emphasize the importance of tactics to retain top performers. Developing employees to their
fullest potential is the most employed tactic. The second most popular tactic was using rewards
and incentives (Figure 4).
FIGURE 4: What is your organization’s main tactic for keeping top
performers?
Compensation is a crucial aspect of employee retention but keeping compensation under
control is also critical to the company’s bottom line. As mentioned earlier, the annual merit
increase is often the most signi?cant ?nancial decision a company will make all year. When
else will a CEO approve a spend reaching into the millions without strong evidence to justify it?
Although HR departments have yet to realize the full power of analytics, when it comes to
reward and compensation effectiveness, organizations have embraced its value: analysis is listed
as the number one improvement tactic for over 40% of respondents (Figure 5).
The other ?nding of note was the effectiveness of non-?nancial rewards. In boom times
companies may have been prone to simply increase compensation levels; in this less certain
economy, we see organizations taking a more creative route. Thirty-four percent of organizations
surveyed named better non-?nancial rewards as having the biggest impact on improving total
rewards and compensation. It is worth recognizing that non-?nancial rewards are not just a
way to save money; employees genuinely value ?exible hours, child care services, and even
time-saving bene?ts such as on-site laundry services. Employees, especially those with child
care responsibilities, ?nd it dif?cult to juggle the many demands on their time and non-?nancial
rewards may make a bigger difference in their life than a slightly bigger paycheck.
Among the 11% of respondents answering “other,” some mentioned ?nding out what
mattered most to employees, others discussed better managing pay grades, while yet others
said they had made no improvements.
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Driving Successful HR Leadership: Talent Management’s
Role in Core Business Strategy
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FIGURE 5: What has had the biggest impact on improving your total rewards
and compensation?
It’s important to remember that top performers aren’t just out for a paycheck. Particularly with
younger workers, the chance to continually learn on the job is a major factor in retention.
So what are organizations doing to improve learning? The most common tack taken by this
study’s participants is improving their training needs analysis to understand how and where to
spend money (Figure 6). Getting nearly as much attention is e-learning, an increasingly popular
training model due to its lower cost and increased ?exibility for both companies and employees.
Those who responded “other” mentioned a number of tactics including better follow up, more
in-person training, and better documentation.
FIGURE 6: What are you focusing on most to further improve learning?
10%
14%
19%
27%
30%
Other
Better informal / social learning
Better learning mgmt software/processes
Better e-learning
Better training needs analysis
0% 5% 10% 15% 20% 25% 30% 35%
6
11%
6%
8%
34%
41%
Other
Better comp. mgmt software/processes
Better cash rewards
Better non-financial rewards
Better total rewards/comp. analysis
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
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Driving Successful HR Leadership: Talent Management’s
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Measuring Talent: Performance Management and
Talent Reviews
End-to-end talent management encompasses three main pillars: recruitment, learning and
performance management. Performance management is a crucial element of maintaining the
best possible workforce as it enables companies to identify high performers and high potentials
while also understanding issues of under-performance. From there, companies can better
strategize merit increases, retention efforts and more.
Figure 7 shows where organizations surveyed have had success in improving performance
management and what they are focusing on to improve it further.
Organizations indicated that training managers in performance management has brought them
the most success; this is also the area of greatest focus for continued improvement. The other
two successful practices have been better alignment between goals and better goal setting.
Respondents who answered “other” pointed to the importance of making performance
management part of the culture and ongoing employee-manager communication.
FIGURE 7: Performance management, what has worked and what are you
working on?
One of the most important elements of talent management is to go beyond the individual
performance appraisals and look closely at the talent pool to identify and develop key talent.
This process is typically called a talent review, and is handled by a committee of senior managers.
Just over 20% of organizations reported that they did not use talent reviews. If we focus on the
nearly 80% that did, we ?nd that close to half of those only use paper-based reviews (Figure
8). Given the ease with which talent review committees can sort through and evaluate a global
workforce using an integrated talent management system, it seems likely the number using
manual processes will shrink in the years ahead. Stand-alone technology (instead of integrated
technology) is surprisingly prevalent; it is used by well over half of the organizations that use
technology for talent reviews.
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Driving Successful HR Leadership: Talent Management’s
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FIGURE 8: What is your company’s adoption of talent reviews?
One classic tool for talent reviews is the 9-box model. This model attempts to distinguish between
performance and potential. The dream employee is one who is both a high performer and has
high potential. The 9-box model draws attention to the fact that there may be employees who
do very well in their current job but wouldn’t do well if promoted, and possibly other employees
who are full of potential but for some reason are not yet performing well in their current role.
The model generally looks like this:
POTENTIAL HIGH
MEDIUM
LOW
LOW MEDIUM HIGH
PERFORMANCE
Figure 9 shows that nearly half of the respondents who do talent reviews use the 9-box model.
Of those using the model, two-thirds use it to look back on the historical record while one-third
also use it to get a handle on future talent outcomes.
FIGURE 9: Do you use the 9-box to perform talent reviews?
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Driving Successful HR Leadership: Talent Management’s
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11
Managing Talent: The Advent of Integration
Soon after adopting new talent management applications, most organizations realize the need
for integration. Technology investments are often made to streamline processes and improve
data accuracy. But the full power of technology cannot be realized when companies have
multiple systems of record with disconnected data streams and con?icting processes. Moving
data from one system to another and ultimately needing to process the information in a manual
application, like a spreadsheet, leads to inaccuracies, frustration and wasted manpower.
Our study shows that HR has a long way to go when it comes to integration. The majority
of organizations surveyed report poor to moderate integration of their talent management
applications. Performance management is a bit more likely to be well integrated than the other
pillars of talent management, although even there the number with poor integration greatly
outnumbers those with good integration.
Talent management is increasingly becoming a priority for companies and CEOs have new, more
strategic expectations of their HR leadership. At the same time, HR leaders strive to be seen as
more than transactional contributors and push for a seat at the executive planning table. To
elevate their roles and present CEOs with the thoughtful, proven talent intelligence demanded,
HR leaders will need to make systems integration and clean, consistent data greater priorities.
FIGURE 10: How well integrated are your talent management applications?
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Note: The study gave examples of what was meant by poor, moderate and good integration;
here are the illustrations used in the survey:
Very poorly Moderately Very well
Performance
Management
Performance
management software is
manual or the software
is not connected to HRIS
etc.
Performance
management just tracks
ratings
Performance
management software
fully integrated into
talent management
suite for outcomes
such as learning or
compensation
Compensation Compensation software
is not connected to HRIS
etc.
Compensation system
has no HR connection
beyond contact info and
payroll
Compensation software
is fully integrated into
talent management suite
with performance ratings
Learning Many disparate,
unconnected systems
Single learning system
with no HR connection
beyond contact
information
A single integrated
system for learning data
Recruiting Recruiting software not
connected to HRIS etc.
Recruiting software is just
connected to core HR
Recruiting software fully
integrated into talent
management suite
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Driving Successful HR Leadership: Talent Management’s
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View from the Top: The C-Suite Weighs In On
Talent Management
According to study participants, when it comes to talent management, their executives focus
mainly on performance management (Figure 11). The reason performance management is so
often on the front-burner is that organizations are striving to get more out of the people they
already have, rather than adding headcount. The business imperative at many ?rms is simply
being more productive and that is what good performance management ought to deliver.
Signi?cant numbers of respondents also reported a primary focus on talent retention/
compensation/learning and talent scarcity/recruiting. Those that responded “other” pointed to
various issues such as “succession planning” or more worryingly, “business survival.”
FIGURE 11: Which of the areas is management focusing on the most?
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Driving Successful HR Leadership: Talent Management’s
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The previous ?gure showed what areas of talent management organizations are focusing on;
the next ?gure (Figure 12) shows why. The data shows that the area of focus is just as likely
to be in good or very good shape as it is to be a weak area in need of ?xing. In the case of
performance management, we see that 11% felt that their system was already strong and 39%
rated it as good, but it was suf?ciently critical that it remained the priority. It is an encouraging
sign that many organizations, in all three of the areas we examined, are aiming to go from good
to better.
FIGURE 12: Why is this area the focus?
Perhaps one of the most important pieces of context for HR is the top management’s attitude
towards HR analytics. If HR analytics are seen as low priority, then that may be a signal that top
management views HR as mainly transactional. On the other end of the scale, if top management
values HR analytics then HR is more likely to be seen as able to drive business success.
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Driving Successful HR Leadership: Talent Management’s
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Figure 13 shows top management being “somewhat supportive” of analytics narrowly edging
out “analytics is not a priority at this time” as the most common response. Only 8% said that
management had already made sure HR had the analytics tools they needed. These ?gures
contradict other recent studies showing that CEOs expect more out of their HR leadership,
especially when it comes to making data-driven decisions. This should be a call to action for HR
to better present the value of new analytics solutions and the ability of their departments to
leverage them.
FIGURE 13: What best describes top management’s attitude towards HR
analytics?
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Driving Successful HR Leadership: Talent Management’s
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We also asked directly about whether business unit heads and the CEO indicate that people
management is a primary driver of results. In Figure 14 we see an interesting ?nding that is
somewhat at odds with the data in the previous chart.
Only a few strongly disagree with the statement that “The CEO indicates that people
management is a primary driver of results.” If top management usually agrees that HR is a
primary driver of results but is not supportive of HR analytics, then there clearly is work to
do when it comes to demonstrating the capabilities of today’s HR analytic solutions and their
ability to optimize people management. Of course the success of HR analytics rests on a tighter
integration of talent management applications, something that is lacking at the majority of
organizations interviewed.
Figure 14: The CEO/ Business Unit Heads indicate that people management
is a primary driver of results
Note: the average was calculated by giving four points for strongly agree, three points for
agree and so on, down to zero points for those who strongly disagree that HR is a primary
driver of results.
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Driving Successful HR Leadership: Talent Management’s
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Conclusion
The talent management game has changed. Slower economic growth combined with a scarcity
of talent to ?ll crucial positions, the advent of social networking and a new generation of digital
natives, AND increased expectation from the top, mean that the days of transactional HR have
long passed. HR leaders want a seat at the strategic table and CEOs want to give it to them. But
to be able to make this leap from transactional to strategic, HR leaders need to put greater focus
on tools, process and integration and stop addressing talent management in silos.
While tactics for decreasing time to ?ll, maximizing the effectiveness of compensation and
rewards, and retaining top performers vary among companies, one thing is constant: easy
access to workforce intelligence is key. Without access to clean, consistent data, HR leaders
cannot act with the certainty and speed to get the best people at the lowest cost and ensure the
best performance and lowest attrition. Moreover, HR will lose the opportunity to be true leaders
in the business and help guide the CEO in decisions based on future business impact. How many
top performers will you lose to retirement in the next ?ve or ten years? What skill demands are
on the rise? Which regions, categories and functions need greater attention? What will be the
bottom line impact of giving merit increases to top performers only vs. all employees? This is all
insight that the HR leader can and should provide.
One of the three crucial elements of a successful business is having the best people in the world.
It is a war to ?nd, develop and retain the best people, but it’s one that can be won with the
right tools at hand.
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