Thriving in the new world of talent

Talent and Human Resources Solutions

Thriving in the new world of talentA business-centered framework for managing through good times and bad

Talent and Human Resources Solutions: Talent Management Framework

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In June 2009, The Great Recession had officially ended. Millions of jobs had been lost — 8.5 million in 2008 and 2009 combined. Then the International Labour Organization published a study showing a continued rise in the long-term unemployment rate after the peak of the crisis (2009) — evidence that the jobs crisis remained strong in 2010.1

Employers that were forced to reduce their workforces faced low morale, potential losses in productivity, and the uncertainty of the future. Fear — and eroded retirement assets — caused many employees to remain at work longer than anticipated, but new problems arose to replace the “brain drain.” Among them were increased health care costs for older workers and generational tensions as lingering baby boomers stunted younger workers’ career progression.

Fast forward to late 2011. The US unemployment rate remains at 8.5%, yet employees are more demanding than ever. Values are changing as workforce demographics shift towards the X and Y generations, a third of whom believe the internet is as important as air, water, food and shelter and 60% of whom feel offices are unnecessary for being productive.2 Providing technology to support innovative ways of working and enabling work/life flexibility is the new reality for employers.

The message is clear: In good times and bad, expansion and retrenchment, talent issues are ever-present; employers simply trade one set of challenges for another. It follows, then, that employers need a practical framework to manage talent, whatever the state of the economy. Buck’s Talent Management Framework described in this paper, fulfills those requirements because it begins not with HR programs and principles, but with business needs. Everything organizations need to accomplish with respect to talent falls into three categories or components:

Talent planning: Aligning the workforce strategy with business strategy at the enterprise and business unit level, performing detailed workforce planning to match supply and demand, and using workforce analytics and metrics to discover meaningful patterns and trends, inform talent decisions, and measure and report progress.

Talent deployment: Finding and attracting talent, filling needs at all levels of the organization with employees who have the necessary skills to perform critical jobs, capturing and transferring knowledge, and off-boarding.

Talent engagement: Using performance management, career development, and rewards to align employee behaviors and interests with the organization’s vision, secure employees’ commitment, and inspire them to achieve and exceed business goals.

Each of the three components has a different orientation: talent planning is strategic, talent deployment is operational, and talent engagement is personal. Each has different objectives, audiences, time frames, and data requirements and requires resources with different skills and competencies.

Buck’s framework makes talent management relevant to the organization’s short-term, mid-term, and long-term agendas; eliminates unnecessary complexity by applying a simple organizing principle; and identifies the skills and competencies that make talent goals achievable. It aligns talent management processes, programs, and activities with the needs of the business and its stakeholders, creating significant competitive advantage.

Talent Management Framework™

Thriving in the new world of talent A business-centered framework for managing through good times and bad.

1 International Labour Office (ILO) Key Indicators of the Labour Market (KILM), 20122 Cisco Connected World Technology Report, 2011


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The truth about talent

To be successful, every organization needs to have the right people, with the right skills, in the right place, at the right time, at the right cost. Ideally, talent planning should be an integral part of the strategic planning process, and it should be performed by business and functional leaders including HR. To the extent possible, organizations should look at business and talent needs two to five years into the future, with the expectation that they will make adjustments based on actual progress and outcomes.

Too often, talent strategy is an afterthought. It occurs on a different schedule than business planning and is defined and implemented by HR with little involvement by the business. Many companies bypass scenario planning and talent forecasting. As a result, their information about talent requirements and their workforce’s ability to fulfill them is incomplete. These organizations set goals and manage individual performance without sufficient linkages to business strategy. And they struggle with processes, programs, and technology applications that are not integrated. They do not share data and cannot provide managers with the information they need to make good decisions about talent.

Some companies undertake talent planning only when they are faced with an issue or event that has workforce implications:

• Economic or business shifts that require adjustments to the workforce

• Entrance into new business segments or new markets

• A merger or acquisition

• Shortages in critical jobs

• Impending retirement of a large or critical employee group

These events are undeniably complex, demanding a combination of strategic and operational mindsets as well as a wide range of skills, infrastructure, technology, and change management support in order to achieve desired outcomes.

No one said it would be easy

Talent management is a complex discipline. Surprisingly, most models oversimplify it by reducing it to a single perspective, typically the employer’s. Figure 1 illustrates a common model — a continuous circle of activities “done to” employees, primarily by HR, in the familiar hire-to-retire cycle. Models like this have three shortcomings:

• First, a career with one employer is now rare.

• Second, the actions required to plan for talent, deploy talent, and engage talent occur at different times, on different cycles. Consider workforce planning versus salary or incentive cycles or performance reviews, and more frequent activities like training.

• Third, these models do not take into account the employee’s perspective — his or her needs, preferences, interests, and goals.

Figure 1: “Hire to Retire” Talent Life Cycle

Hire

Develop

Reward

Retain

Exit


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At the other extreme are elaborate models (Figure 2) — horseshoes, quadrants, hexagons, multi-level pyramids, interlocking puzzle pieces, and trees with talent branches. In our experience, these are creative conceptual frameworks but they do not help organizations actually manage their talent day-to-day. They fail to delineate the critical connections between talent management programs and do not identify practical applications. More importantly, these models begin in the wrong place: they are built primarily for HR, not for the business.

Figure 2: Complex Talent Management Models

An effective framework begins with the organization’s overall business strategy and translates it into talent capabilities — a talent strategy. Buck’s approach, depicted in Figure 3, is such a framework. It identifies the primary objectives — planning for, deploying, and engaging the workforce — and aligns talent management programs and activities to achieve them.

Figure 3: Buck Consultants Talent Management Framework

The components of the framework and their differences are described below and in Figure 4 in terms of their orientation, objectives, elements, primary owners, key audiences, and time frames. Each component serves a different purpose and must be supported by different skills and technologies. A full understanding of each component is required to successfully execute the organization’s talent strategy.

Workforce StrategyWorkforce PlanningWorkforce Analytics

Attraction & OnboardingDeployment & RedeploymentKnowledge TransferOffboarding

Training & DevelopmentPerformance ManagementRewards & Recognition

HR Service Delivery

Business StrategyTalent Planning

Process

Talent Capability

Talent Engagement

Ta

lent D

eplo

ymen

t

Technology Inte

llige

nce

Workforce StrategyWorkforce PlanningWorkforce Analytics

Attraction & OnboardingDeployment & RedeploymentKnowledge TransferOffboarding

Training & DevelopmentPerformance ManagementRewards & Recognition

HR Service Delivery

Hire

Develop

Reward

Retain

Exit


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Talent planning

The objective of talent planning is to translate the organization’s business strategy into the capabilities and skills required for the organization to succeed. Organizations that embrace talent planning understand that “find me the best and brightest” is not a talent strategy. The Coca-Cola Company, Microsoft, and Wal-Mart have different business strategies and different definitions of “critical skills.” The skills required to develop a new beverage or promote it to the consumer market are not the same as the skills needed to mastermind transportation and distribution systems. Likewise, the capabilities required to perform in the absence of a team as a police officer or pilot are different than the collaborative skillsets valued by most other organizations.

Talent planning encompasses the strategic activities that result in the right workforce with the right skills at the right cost in the future. The time horizon is typically greater than one year, even though many organizations argue that the future is impossible to predict. However difficult planning may be, the information derived from it is the foundation for insight, preparedness, and the agility to respond to changing circumstances.

True talent planning is based on factors and trends inside and outside the organization. Internal factors include the labor supply and demand, both current and forecast; the impact of changes in business direction; and workforce demographics. External factors include labor market trends such as skill shortages or the substitution of technology for labor; economic, social, and demographic phenomena (e.g., recessions or the impact of an aging, multigenerational workforce); political risks like terrorism or unstable governments; and competitor actions (e.g., expansion, bankruptcy, and talent “poaching”).

Just as in business planning, organizations should consider multiple scenarios. Modeling and predictive analytics demonstrate the short-term and long-term implications of possible choices and best-case/worst-case circumstances. Although some organizations roll up business unit planning results to maintain a “big picture” view, talent planning need not be done enterprise-wide. Talent issues vary

by business unit or location, the type and severity of competition, the nature of critical jobs, and other aspects of the business and workforce. Likewise there are variations in the urgency of the need and the skills and resources available to address them.

Workforce strategy and action plans address the “who” and “how” of acquiring people with the necessary skills — where they will come from, what benefits and cultural attributes of the organization will attract them, and which approaches will be most effective in closing talent gaps. Finally, it is vital to measure activities and results in both quantitative and qualitative terms. For example, how quickly open positions are being filled and at what cost are important considerations, but they must be balanced against new hires’ performance relative to standards set by the organization, speed to productivity, and contribution to business success.

Technology plays an important role in modeling alternative scenarios and in tracking resources and results through a dashboard or scorecard. Talent planning is not a static activity — senior leaders must regularly monitor the data elements that are most relevant to their business. Viewing human capital metrics side-by-side with business metrics allows organizations to spot undesirable results or disturbing workforce trends and model new scenarios for the short, medium, and longer term. This validation process enables organizations to assess their return on investment using metrics on quality, service, and manager and employee satisfaction.

Confusion about who is accountable for talent planning has been a major barrier to its accomplishment. This framework is built upon the involvement of all business and functional leaders including HR. Successful talent planners must possess business knowledge as well as the ability to think strategically and facilitate meaningful discussion between individuals with varied perspectives and agendas to reach a shared vision. Because the need to enlist the business leadership in talent management may represent a new way of thinking, change management and communication skills also are critical capabilities.


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Figure 4: The Dimensions of Talent Management

Talent planning Talent deployment Talent engagement

Orientation Strategic Operational Personal

Primary objective Align talent strategy with business strategy at the corporate and business unit level

Elements • Workforce strategy• Workforce planning• Scenario modeling• Workforce analytics• Talent reviews• Succession planning• HR metrics

• Attraction/selection/hiring• Onboarding and orientation• Deployment/redeployment• Knowledge transfer• Offboarding

• Training and development• Performance management• Goal setting• Coaching and mentoring• Rewards and recognition

Primary owners Joint effort of senior management and HR leadership

HR, managers Managers/direct supervisors, employees

Key audiences Business leaders, HR, Finance, IT

HR, candidates, employees, managers, alumni

Managers, employees, alumni, candidates

Time frame Three- to five-year horizon, with updates annually or when business strategy changes

Overall, one to two years Periodic: monthly, quarterly, by project

Ongoing/daily with regular milestones (e.g., annual/semi-annual performance review), all within an annual framework

Technology capabilities Dashboarding and forecasting internal and external business, economic, and social scenarios

Translating business needs into human capital requirements and allocating and tracking resources appropriately; providing ongoing self service

Collecting and sharing data to support managers’ decisions about employees and employees’ decisions about their career, health, and wealth; providing social media opportunities to connect and share information across the organization

Data requirements Economic trends and forecasts, market trends, demographics, employment trends, attrition rates

Skills inventory, project requirements, plans and schedules, logistics, payroll, HRIS

Performance ratings, learning history and plans, compensation data, career plans, rewards preferences, benefits data

HR skills and competencies Strategic thinking, business acumen, facilitation, change management

Organization and job design, process development, administration, technical competency, functional competency

Training and coaching, motivation and rewards, program design, relationship management


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Talent deployment

Talent deployment is the operational execution of the talent strategy. It ensures that resources are in the right place at the right time. Activities include:

• Attracting the right employees to the organization, sourcing, screening, and selecting them. Effective talent deployment begins with effective selection. Corporate career web sites and online employer branding support the talent strategy. Increasingly, career micro-sites are tailored to target hard-to-fill jobs or focus on specific job categories, job locations, or generational segments. Technology also plays a vital role in scheduling, managing, and tracking the myriad steps required to effect an individual’s employment.

• Onboarding, orienting, and assimilating employees into the organization or into new assignments. Studies show the importance of an organization’s orientation and onboarding programs in engaging and retaining employees. The first 30 days of employment are critical to individuals’ decisions to commit to and remain with an organization, and the first 90 days have a disproportionate impact on their long term productivity.

• Assigning individuals to jobs and designing work processes, defining reporting relationships and providing tools and technology to allow work to be performed efficiently. Filling jobs with employees who have the right skills, and moving resources among locations, departments, and projects blends qualitative and logistical factors. How work is accomplished — by individuals or in teams, face-to-face or virtually, by employees or alternate types of labor — impacts cost and efficiency and also determines the appropriate structures and support.

• Capturing, sharing, and transferring knowledge before an employee leaves or transfers to a new assignment. Increasingly employers are recognizing that knowledge and relationships can be compromised when employees change jobs. Multiple approaches, from direct transfer (e.g., job shadowing, mentoring) to content management and collaboration tools, are needed to capture workers’ knowledge and ensure that it is passed on to others.

• Enabling an employee’s exit, whether voluntary or involuntary. Effective off-boarding ensures that departing employees are treated fairly and with compassion, minimizes the potential for litigation, and maintains the possibility of rehiring an employee at some point in the future. Components include benefits processing and COBRA, unemployment and severance benefits, exit interviews, outplacement support, and alumni networks to maintain good relationships with departed workers.

Talent deployment requires consistent, efficient processes. The primary interaction is between business managers and HR, with the goal of establishing people requirements that meet the needs of the business through tools such as quarterly staffing plans. Technology is essential to maintain an inventory of workforce skills and to match them to business or project requirements. Administration of the onboarding process, leave programs, knowledge management, severance benefits, and alumni programs are other activities requiring technology support.

To execute the activities of talent deployment, managers and HR must be capable of organization and job design, program management and process development, and be comfortable using technology.


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Talent engagement

Most organizations realize that a highly skilled, focused, and committed workforce is one of the few remaining sources of competitive advantage that cannot be easily replicated.

Employers that successfully engage employees create a work environment that values and utilizes their strengths and empowers them to make decisions that affect their jobs.

Talent engagement encompasses the elements of the work experience that connect with the hearts and minds of employees. Training and development, goal setting, performance feedback and coaching, and rewards and recognition help secure employee commitment to the employer and its business objectives. The primary interaction is ongoing between the manager and employee, assisted by HR, and helps assure alignment between employee behavior and organization goals.

The focus in this component is personal, and the objective is to motivate employees — individuals, groups, and the workforce as a whole — to perform in a manner that achieves desired business results.

The most important consideration is creating programs that can, as required, be customized to appeal to employees of different generations and life stages. A one-size-fits-all approach is no longer adequate — especially given a global environment and a workforce that is more diverse than ever before. This includes:

• Training and development opportunities. Career choices within a company, job mobility, and/or enrichment assignments, and the ability to learn and utilize new skills and competencies are key elements of individual commitment and engagement. Matching company and individual needs yields the best results.

• Performance feedback. Best practices prescribe frequent, ongoing performance communication and establishing clear goals and expectations. However, employees have different personalities and styles. Managers who tailor their approach to personal factors are most successful.

• Recognition and rewards. In addition to reflecting performance differences, compensation, retirement, and health and wellness programs need to accommodate groups’ and individuals’ needs and preferences.

Technology enables the collection of employee data such as performance ratings, historical and planned training and development activities, and career interests. The ability to share data among related systems allows managers and employees to make informed decisions, such as aligning rewards with performance or selecting development opportunities that correspond with employees’ career goals. Technology can then support both the individual’s career development plans and the organization’s talent planning and succession planning objectives. Social media, blogs, smart phone and tablet applications in corporate environments provide opportunities for employees to share ideas and materials with peers locally and globally and stay connected to the organization in the case of remote work arrangements or geographic dispersion of the workforce.

Support of talent engagement activities demands an understanding of motivation and rewards, as well as capabilities in training, coaching, and change management.


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The framework in action

Buck’s talent framework was designed to provide a systematic approach to address talent issues in any complex business situation. For example, in an economic downturn organizations are concerned with:

• Reducing workforce costs while maintaining quality and service — and ensuring flexibility for better times

• Finding ways to engage and retain high performers, especially high potentials, who have employment choices even in a down economy

• Targeting tightened HR funding to fill critical gaps in capabilities and skills

• Setting specific goals that are aligned with company goals, differentiating performance, and managing underperformance

• Preserving and even boosting productivity among workers who feel nervous and insecure

• Capturing knowledge that may be leaving the organization due to reductions in force

To see how the framework can simplify, clarify, and streamline talent decisions, consider a manufacturer of construction equipment that suffered a loss of $45 million in the third quarter of its fiscal year. In an attempt to salvage year-end results, the CEO issued a company-wide mandate to reduce headcount by 15%.

Never in its 40-year history had the company resorted to a layoff. As senior leadership gathered in the board room to determine which employees to retain and which to release, their questions and concerns demonstrated how inexperienced and unprepared they were to deal with the task at hand.

• Can’t HR find other ways to cut costs besides a layoff?

• Does someone here have a list of orders and production schedules so we know what we committed to for the next three to six months?

• I heard there are open positions in some of our plants. Can we move people around?

• How can we avoid losing the technical knowledge of the few people who know how to operate legacy equipment?

• Are we sure we know who our best and worst performers are? Remember, we’ve allowed some managers to treat annual reviews as optional.

• What’s our severance policy? It’s so rare that we let someone go, do we even have one?

• Won’t our best performers leave a sinking ship as soon as they get the chance?

• Will any departures damage our most important business relationships?

• Won’t the people who are left be demoralized and unproductive?

• When conditions improve, will we have enough people with the skills we need?

• Is it better to retain people in critical jobs even if we don’t need them now? What if they aren’t available when we come out of this slump?

• What are our critical jobs? What skills do we absolutely have to have, no matter how bad things are?

Without a diagnostic framework, the company might have resorted to across-the-board cuts with disastrous results. Instead, senior leaders applied the framework to organize their thinking. Their questions fell naturally into the components defined by the framework and prompted additional questions (Figure 5).


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Figure 5: Applying the framework to a workforce downsizing

Confident they had identified the right issues, senior leaders formed a task force and assigned sub-teams with the appropriate skills and knowledge to analyze key data and make recommendations for talent planning, talent deployment, and talent engagement. Business and HR strategists dealt with talent planning, considering present and future needs, while those with the best knowledge of talent requirements across the business units focused on redeployment and retraining. A cross-functional team of managers and HR/OD specialists identified gaps in the performance management and rewards system and discussed communications strategies to deliver important messages and ensure retention and engagement of critical personnel.

After a general briefing, the sub-teams dispersed to develop their proposals, then convened to review results, share ideas, and incorporate them into a comprehensive plan. As a result, the actions they took were focused, aligned, and unlikely to cripple the organization for the future. They were able to communicate to the workforce with confidence and honesty, putting rumors to rest and calming fears.

Talent planning

• What conditions will affect the depth of the downturn? What are the potential scenarios and how will they affect our business?

• Which skills and competencies are critical and core to the business?

• What projects or orders are in our pipeline? If we win them, will we have enough people with the required skills?

• How can we manage our workforce costs and still be positioned for the future, when business improves?

• Can we reduce our labor costs by using contingent workforces, temporary or contract labor?

• Which functions could we outsource to make our organization more flexible?

Talent deployment

• Where are our resources assigned?

• When will they complete assignments and become available?

• Which employees can be retrained or redeployed into new roles or open positions?

• Do we have a ready supply of contract and contingent labor?

• What alternative work arrangements could we utilize — e.g., unpaid leave, reduced schedules?

• Do we have a plan to capture workers’ essential knowledge before they leave?

Talent engagement

• Do we know who our best performers are, so we can protect them?

• Do we know who our worst performers are, so we can sever them first?

• What must we do to retain our high-potential group?

• Do we have a humane and costeffective severance program for employees who are no longer needed?

• What communication strategy will we employ to announce this action to the workforce?

• What actions can we take to calm insecurities and keep our workers engaged?


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Strategic implications

Organizations pay a high price for underestimating the business implications of weak leadership, poor workforce planning, or subpar recruitment. Many studies have demonstrated the impact of effective talent management on business performance and productivity. For example, employee engagement — an outcome of effective talent management — has been linked to customer satisfaction, profitability, and shareholder value. Thorough succession planning is believed to increase stock price because of its positive effect on business continuity. A company’s business performance will suffer if its competitors are better at attracting, engaging, and retaining critical talent.

Knowing this, Buck developed its talent management framework around what the business needs, not how HR traditionally operates. This perspective reveals three common, but debilitating, beliefs about talent management:

• HR owns talent management. Buck names the business as co-owner of talent management. This is distinct from the view that “there are areas where HR needs business input.”

• The hire-to-retire cycle is still a valid basis for managing talent. Because individuals work for many employers during their career, the traditional “employee-for-life” model is obsolete.

• Talent management is a simple discipline that requires a single set of HR skills. Each of the three components requires a different mindset and a different set of skills for successful execution — and it is difficult for HR practitioners to excel at all of them.

Organizations that continue to operate by outdated rules rather than adapt to the new reality will underperform and will alienate and lose key talent.

Conclusion

Talent management is a complex discipline with many moving parts that — until now — have been difficult to fit into a logical and practical framework. Buck’s approach gives organizations the ability to proactively manage workforce issues.

• It makes talent management relevant by embedding it in a business context.

• It makes talent management simple by organizing all talent-related activities against three primary objectives: talent planning, talent deployment, and talent engagement.

• It makes talent management achievable by identifying the three different mindsets and skill sets — strategic, operational, and personal — required for effective talent decisions.

Buck’s framework helps organizations align talent management processes, programs, and activities with the needs of the business and its stakeholders, creating significant competitive advantage.

For more information, contact:

Steve Coco, 212.330.1048 or [email protected].

Scot Marcotte, 773.425.7987 or [email protected].


12© 2012 Buck Consultants, LLC. All rights reserved.

Services

talent planning, deployment, and engagement • solutions architecture • workforce planning, analytics, and measurement • talent assessment • HR and vendor assessment • HR process and program design • vendor transitions • project and program management • change management

TMF—THRS, Jan. 2012

Figure 6: Buck’s Career, Health, and Wealth™ Portal

www.buckconsultants.com

Enabling talent through technology

Organizations cannot manage talent effectively without technology and tools that collect, organize, store, and deliver employee information, track skills and capabilities against job requirements, and enable decisions about talent. Users of stand-alone modules or manual systems will struggle to manage talent information, while an integrated approach to technology enables sharing of business, workforce, and employee data. One major benefit of the framework above is that it helps to highlight the priorities for system integration: for example, within the component of Talent Engagement, applications for performance management, rewards, learning and development and career planning must “talk to” each other so that managers have all the data elements required to manage the employee’s full relationship with the organization.

An integrated suite of talent-related applications, whether they are purchased from a single vendor or multiple vendors, trumps disparate applications with limited functionality and integration. Self-service and automation improve efficiency and accuracy; and talent management metrics and reports that are linked to business outcomes provide valuable insights to improve decisionmaking. Activities that fall within technology and information require specialized resources to interact with HR and business leaders to ensure that talent applications provide the necessary functionality and solve talent management problems.

No matter where the applications reside, a single-user experience for all audiences is crucial. A “Career, Health, and Wealth™” approach to self service brings all compensation, benefits, and other HR programs into a single experience. Figure 6 below shows how the administration of various programs can be consolidated for users under this framework.

Career

• Skills Inventories and Collaboration

• Learning and Development

• Performance Management

• Knowledge Management

• Compensation Planning

• Diversity Management

• Mobility Management

• Succession Planning

• Exit Administration

• Planning and Decision Support

Health

• Health & Welfare Administration

• Health Risk Assessments

• Biometric Screenings

• Claims Information Tracking

• Wellness Program Management

• Paid Time Off Administration

• Company Discounts

• Employee Assistance Programs

• Leave Administration


Wealth

• Defined Benefit Administration

• Defined Contribution Administration

• Nonqualified Plan Administration

• Payroll Administration

• Short-Term Incentive Administration

• Long-Term Incentive Administration

• Equity Program Administration

• Health Savings Account Management

• Survivor Program Management


Thriving in the new world of talent

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