Refocusing on Talent Management

As the recovery inches on, HR leaders are rethinking how to fit talent-management strategies to a new business environment. Leadership development and succession planning are among the top-rated concerns of employers. But too many HR executives focus on whether a program is executed competently, rather than whether the program achieved the desired result. By Tom Starner If employers considered talent management a critical success factor prior to the recession, it packs an even more powerful punch now. Two recent surveys indicate that HR leaders are focusing more on talent management in this post-recession business climate. And that includes taking a more sophisticated, global approach to such programs, according to an Ernst Young survey of 340 CEOs, CFOs, COOs and HR vice presidents at Fortune 1000 companies. The report, entitled Managing Today's Global Workforce: Elevating Talent Management to Improve Business , says leading companies have developed a strategically aligned and integrated way of managing talent on a global level, using such programs to successfully execute their overall business strategy and ultimately drive revenue. Some employers got smart in this severe economic downturn, and those that are ahead of the pack are seeing improvements faster because they took a strategic view of talent management, says Bill Leisy, a principal with Ernst Young's Performance Reward practice in the Atlanta area and an author of the company's report. Another recent study, this one from New York-based Mercer, surveyed HR and talent-management leaders at more than 400 U.S. organizations, found that employers are planning to reshape their talent programs as the economy shifts out of the recession. Jason Jeffay, a partner in Mercer's human capital business and global leader of the firm's talent management consulting practice, notes that the downturn forced organizations to make fairly dramatic changes to their workforces and talent programs. Now organizations are planning further changes, but the aim is not to revert to what they had before the downturn, Jeffay says. It's a different business environment now. We're looking ahead to a period of positive but slower growth, which translates into different talent needs. Talent programs need to be reviewed and tailored to fit this new reality. Leisy says one of the new directions organizations are taking is focusing strategic HR initiatives on increasing employee engagement by building in flexibility to address the needs of today's diverse pool of talent. According to the E Y survey, the top three talent-management initiatives respondents plan to implement include: * Building their internal-talent pipeline to fill critical future needs (64 percent). * Understanding and coordinating global talent resources to fill key positions (33 percent). * Offering flexible-work strategies, such as job sharing, telecommuting, flex hours and phased-in retirement (31 percent). Leisy says global organizations must understand the needs and motivations of their people in order to provide opportunities that not only appeal to different generations and cultures, but help companies retain the necessary skills and competencies they will need to emerge stronger down the road. The recent recession was so severe, he says, that past quick and easy initiatives such as reductions and resizings were inadequate. This time, employers had to go very deep many times, and eventually, many got down to the core of their business. They essentially ran out of easy solutions because this was a much different, deeper recession than we've ever had before, Leisy says. As the recovery continues, global employers will need to use much more discipline in their talent-management efforts -- especially in terms of adding new people, he says. But, because it will be slow recovery, they will have the time to proceed with caution. Employers can take a hard look at where they really need people, what competencies are needed to meet their strategic goals, he says, adding the survey results indicate they will also take a much harder look at developing their internal pipeline. They need to do a better job regarding succession planning among mid-level management, Leisy says. According to Mercer's survey, the Future of Talent Management , most organizations are at different stages in terms of identifying and implementing changes to their talent programs. Half (51 percent) of the employers surveyed by Mercer rate talent management as a top priority at their organization today, while 76 percent expect it to be a top priority within the next three to five years. The majority plan to make changes in the upcoming year to leadership training (88 percent), workforce training (85 percent), employee engagement (85 percent), recruiting (80 percent), retention (80 percent), rewards (76 percent) and performance management (76 percent) programs. When asked about priorities for the next three to five years, they chose (from

14 choices) leadership succession as No. 1, followed by leadership training/development, overall succession planning, key talent/high potentials, workforce planning and employee engagement. It's no surprise that leadership tops the list of priorities, Jeffay says. Talent management starts at the top you can't build a strong talent base without strong leadership. And right now, organizations are not sure that they have the quantity and quality of leaders they will need for the future. It's no surprise that leadership tops the list of priorities, Jeffay says. Talent management starts at the top you can't build a strong talent base without strong leadership. And right now, organizations are not sure that they have the quantity and quality of leaders they will need for the future. Two factors are at play, he says. First, demographic changes are working against organizations as the current generation of leaders approaches retirement. Second, the layoffs and reorganizations necessitated by the recession damaged leadership pipelines. Organizations now need to be more concerned than ever about actively managing the entire leadership development and succession process, he says. Mercer's survey also found that only 5 percent of respondents believe their organizations are very effective in measuring the impact of talent decisions and investments. Slightly more than half, 54 percent, said their organizations are somewhat effective and 41 percent said their organizations are not at all effective with respect to measurement. In fact, the ability to use quantitative analysis to measure an organization's investment in talent provoked the biggest concern, from among a range of

10 key talent challenges, with 41 percent not at all confident in their ability to do so; 44 percent, somewhat confident; and only

15 percent, very confident. Jeffay says many organizations tend to focus on program execution (asking Is it done well? ) rather than on program outcomes/results (asking Does it have the desired result? ). Organizations tend to focus most on program execution for their mobility, careers and training/development programs, he says. In contrast, they tend to focus more on outcomes/results for their engagement, retention, recruiting and performance-management programs. Organizations historically have chased best practices or the newest big idea as a substitute for solid talent strategies and measurement techniques, Jeffay says. But that's no longer enough -- you can't manage what you can't measure. Leading organizations have shown to be more effective at tailoring talent-management practices to fit their own business models, then taking a more quantitative, fact-based measurement approach and steadily driving improvemen