Tue, Jul 8, 2008

 

Most large companies have talked about Talent Management also referred to as Workforce Management, but few, if any, have effectively defined and executed a fully integrated plan. Talent Management, once a phrase with meaning is now a muddled statement that carries a different definition based on who you ask. Heidi Sprigi, president of Knowledge Infusion defines Talent Management as:

The process of managing the supply and demand of talent to achieve optimal business performance in alignment with organizational goals

A survey conducted in 2007 by Knowledge Infusion in conjunction with the International Association for Human Resource Information Management (IHRIM) found that approximately half of all respondents said their companies had no integration between systems and Talent Management processes, and only fair to poor organizational alignment of the workforce to business goals.

How Talent Management programs are implemented within an organization will vary, but regardless of the differences, the same core concepts established in this article will apply.

Traditional Understanding of Talent Management

Traditional Talent Management systems have clearly defined components including: training and development, skill inventories, performance management, recruiting, and succession management. According to Kevin Wheeler, internationally known expert in Talent Acquisition and Management, “Most companies perform two or three components of a Talent Management system well, but the total system seems to be elusive without executive level involvement.”

When you consider all of the complexities of human capital and how it impacts organizational performance, the senior executives across the organization should be the sponsors and owners of talent management.

Growing trend in Strategic Talent Management

In a recent article by Dr. John Sullivan called Talent Management Road Kill, Part 2, he says “There is a growing trend of choice HR jobs being awarded to non-HR professionals following years of senior management dissatisfaction with HR in general. Talent management is seen as a strategic task by senior leaders, but the perception is that HR professionals are generally incapable of executing Talent strategies.” While most senior managers may believe that HR lacks the skill set to effectively run a Talent Management Program, most senior management has not determined how to create a fully integrated Talent Management strategy.

A comprehensive Talent Management program needs to include each variable listed in Table A. Approaching Talent Management from a comprehensive view point, companies will be able to analyze, plan, forecast and execute business plans based on accurate workforce and market data. Roles and responsibilities will be well defined and performance measures are designed to reward employees that contribute to the overall well being of the company. Employees are trained or hired for competencies determined by workforce analytics and gap analysis. Training and development complementary to succession planning are aligned to current and future organizational demands and goals. Data, reporting, analysis and forecasting will monitor performance and model scenarios will aid management in their decision making processes.

Components of Strategic Talent Management Planning and Execution
Performance Management measured against contribution to company success	Leadership Development and succession management including accountability and reward for workforce maximization.	Training and Development to improve performance, contribution, and to meet future business goals.	Compensation coordinated with individual impact to cost savings, process improvements, project completion, new business acquisition and other metrics.
Workforce Planning and Forecasting using supply and demand methodologies	Integrated IT systems between HR, Finance, and other Business Systems	Clear Roles and Responsibilities from Management to : Executive Team, Management Team, Individual Contributors, and Suppliers.	Performance Measurements and Metrics for each of the above mentioned components.

Table A

Prioritizing the Business for Talent Management Implementation

Companies should expect that a completely integrated Workforce Plan can take up to five years to roll out. First and foremost, the project must have sponsorship by the executive team. Second, using a traditional project management approach, identify the components that will be included in the plan. One or more governing bodies cutting across all talent initiatives should be formed including employees in a variety of management and non-management positions and business units.

HR professionals comfortable with administrative roles, must adapt to the intensive communication and collaboration required to achieve strategically oriented, integrated talent management. The overwhelming nature of workforce management can be broken down and implemented by first deciding which business component should take priority. Linking the business needs to the workforce plan will again be a collaboration of various team members, but will ultimately be driven by executive management. Consider the following examples when making the decision of where you start the implementation of a talent management program. Most companies start their plan where it can have the greatest impact:

· Organizational Expansion Plans

· Research & Development

· Product or Service Growth or Decline

· Mergers, Acquisitions, Divestitures

· Profitability

· Customer Satisfaction

· Market Demand

· Talent Availability

As we've been pointing out, rolling out a Talent Management plan won't be easy. You should expect some, if not all, of the following challenges as you plan your Talent Management Program.

• Lack of Data or Sparse and Incomplete Data
• Available Data Distributed Throughout Disparate Technologies and Systems
• Data Formats Inconsistent
• Resistance to Release of Data
• Resistance to provide data due to silo'd business models
• Lack of Reports & Dashboard
• Disconnected Business Units & Departments
• Lack of Executive Support for Workforce Data Management
• Lack of Data Analytics & Forecasting Capabilities

All of these items are essential to making good decisions and ensuring optimal performance.

Strategic Workforce Planning

Workforce Planning is one component of Talent Management but an essential component. Mary B. Young, a senior researcher at New York based The Conference Board Inc., studies companies that do strategic workforce planning and recently published a report entitled, “Strategic Workforce Planning, Forecasting Human Capital Needs to Execute Business Strategy.” She concludes that companies need to be more selective in areas where they are vulnerable and they cannot understand where they are vulnerable without doing the analysis. Workforce planning exposes these vulnerabilities by translating business strategy into talent management activities. (1)

Comprehensive workforce planning requires the integration of all systems including HRIS, Business forecasting systems, Talent Supply and Demand forecasting systems, clearly defined job descriptions with skills, cost variables including on-boarding and employee terminations, and Skills, Knowledge and Abilities ( SKA's) of the existing workforce in order to create accurate gap analysis for training and hiring plans. This is further complicated but necessary in the event of a merger or acquisition.

We define workforce planning & management in the following way:

“Managing and analyzing data, planning, forecasting and executing a business strategy and plan that accounts for the most expensive asset that an organization has in order to yield the maximum return on human capital.”

Components of Strategic Workforce Planning
Systematic and accurate updating of internal skills, knowledge, and abilities	Training plans to close skill gaps or enhance future business or employee movement plans	Clearly defined job descriptions and SKA's
Supply and demand cost of talent	Comprehensive understanding of the cost of new talent hires	Cost of employee loss depending on position
Talent supply and demand forecast	Business forecasting with resource loading	Acquisition, merger, and divestiture data systems

 

 

 

 

 

 

Table B

Workforce Planning Process

Workforce management and planning requires clearly defined business goals and metrics for success that have been defined by the management team. These goals and expectations are ideally a bi-product of an understanding of what makes the organization successful.

Although focusing on what makes your organization successful is important, it's critical to high-light that what actually goes into the workforce planning, execution and management is far more complicated and includes:

Defining the Master Plan:

• A clearly defined and communicated set of values to build core competencies with employees
• Alignment and consistency in core values
• Clearly defined executive sponsorship to ensure that the values are maintained and made real to all employees
• Measurable business goals
• Measurable department goals
• Measurable management goals
• Measurable individual contributor goals

Managing the Workforce Plan:

• Communications plans
• Learning and development plans
• Scheduled reviews of measured and timely results
• Appropriate compensation and incentives
• Career paths and succession programs plans
• Recruiting plans
• Diversity Plans

Analyzing and Refining the Workforce Plan:

• Technology Systems Plan
• Data Capture & Reporting Plan
• Data Analysis & Forecasting Plan

There are many subcomponents associated with the items listed here.  

How Workforce Planning Directly Impacts the Bottom Line

Government organizations that require security clearances have added complexities to workforce planning. New hires sometimes can wait up to two years to receive a clearance. For highly trained scientist, engineers, and technicians, on-the-job training is critical before employees can contribute in a government security environment. This requires very accurate and long term forecasting. It can take one and in some cases two years after clearances are awarded before employees contribute at 100% capacity. It's expensive to keep employees that long without any return on investment but essential for longer term pipelining purposes.

Government isn't the only business with lengthy planning and training needs. Oil and gas companies, utilities, and any proprietary based product companies can have lengthy new hire orientation and training times.

A study conducted some years ago by a high security government contracting firm, estimated that the cost of hire including time for clearance and training could be up to $800,000 per hire for several highly sensitive technical disciplines.

The decision to hire a new college graduate in this environment needs to take into consideration the cost as well as the risk of losing the new employee after 3-5 years. After the study, the firm decided that there would be a greater emphasis on sourcing and hiring employees with active clearances and fewer new graduates for pipelining purposes. Just two experienced, cleared, hires, saved the company over $500,000 because the new hires could begin to contribute after six months of training. This does not take into account the added benefit of milestones being met in a shorter time frame.

This study also validated a major effort between two Department of Energy contractors, one was downsizing skills the other needed to hire for a major time sensitive project. Through coordinated efforts critical skills were maintained within the DOE complex. These items are key examples of workforce planning.

Complexities of Talent Management Systems and Workforce Planning

Another recent project focused on the capture of all the components of workforce planning reinforced the complexity that organizations face. After many hours of interviewing and validating with subject matter experts in HR, Business, IT departments, and technical management groups there were over 100 components identified across the entire company that had an impact on workforce management and planning. Ideally the HRIS system should integrate with the accounting systems, the payroll systems, and the project resource systems as they develop. The project is a good example of a grass roots effort with good intentions but without the backing of senior management it subsequently failed.

Employee Engagement a Key Success Factor in Talent Management

A consistent complaint we hear from employees is that the same employees are chosen over and over to work on projects while others are underutilized. Managers tend to choose contributors they have worked with in the past when a higher qualified employee could have been utilized. Other examples of underutilized employees pervade the business world and the effects include a lack of employee engagement, average results, and higher turn-over, all of which could have been addressed with an appropriate workforce plan.

CEOs now have quantifiable measures for what had once been mostly anecdotal evidence, comparison to industry benchmarks and flat-out guesswork.

The Gallup Organization's 2002 analysis of 309,000 employees across 11,000 business units in 51 countries throughout 23 industries directly linking employee engagement to financial results. According to Curt Coffman, global practice leader for Gallup's Workplace and customer Consulting, highly engaged business units boast an employee-retention rate 1.44 time higher than the average, productivity levels 1.5 times higher, customer outcomes 1.56 times higher and profitability spiking 1.33 times the norm.(2)

So once again does Talent Management belong in HR?

No, it belongs to every manager and executive that uses human capital to perform work regardless of their level and function. Is there a software platform in existence that correlates business development with internal resource loading and the ability to conduct a gap analysis for its human capital? Some companies claim to have their own proprietary software. Some companies export information onto a series of Excel spreadsheets and manipulate data to model future scenarios. No one company seems to have Talent Management mastered yet, but some are moving down the right path and expect to see exponential improvements over the next five years.

Talent Management can be modeled using concepts from operations research, decision analysis and supply management. The results of these types of analytic methods allow the Executive level management to better understand their resources prior to making business commitments. HR must be held accountable the same as any other critical business unit if they are going to have an impact. HR's accountability needs to be mapped to business results. This includes:

• New HR program impacts on organizational business performance
• HR Efficiencies and operations analysis
• HR Technology investments analysis
• Quantitative workforce data analysis
• HRIS integration into other business systems
• Workforce forecasting based not just on historical HR data but future business scenarios and market analysis.

Jim Hazboun, Senior Director at Resources Global Professionals, defines the “New HR” as including “The direct alignment of HR to business strategies and the ability to quantify and measure the value of key human capital management activities to the business.” (3) He also noted that HR will need consultative, business-minded professionals that can drive business results by helping organizations better manage change, improve individual and organizational efficiency, and working with leaders to better plan for and understand their workforce options (e.g. employment, nontraditional workforce, outsourcing, offshoring, M&A, etc.).

Jim goes further to point out that while workforce management programs should be facilitated and driven by HR, business leaders will become increasing accountable for the performance of their human “resources” as they would for their financial “resources.” Seeing their workforce as a competitive advantage in a pending global skilled labor shortage, businesses will invest more time and money in developing and acquiring tools and technologies that will help facilitate the planning, acquisition, alignment, measurement, development, and retention of their talent.

This is a complex challenge that we believe requires a unique approach for every organization. However, the core principles of identifying the right approach for your organization are essentially the same regardless of the industry or sector that you serve. It ultimately comes down to data capture, tracking, reporting, and analysis that is timely and can be continuously referenced for the effective management of your business. It does not matter whether or not your data is housed in one system. What's important is that you are consolidating that information and using it for successful business management and execution.

Opportunities & Benefits of Integrating Workforce Planning with Business Strategy

In summary there are many benefits associated with taking on the complicated multilayered project of creating an integrated Talent Management and Workforce Planning structure.

· Predictability of Performance

· Higher Customer Satisfaction Rates

· Lower Employee Turn-Over

· Increased Profits as Result of Right People/Right Time

· Increased Revenue as Result of Efficiencies

· Increased Employee Engagement

· Assurance of Stable Management Team Today and In Future

Risks of Not Integrating Workforce Planning with Business Strategy

· Lack of Visibility of Potential Top Performers

· Increased Costs

· Decreased Revenue

· High Employee Turn-Over

· Wasted Human Assets

· Decreased Employee Engagement

· Unpredictable Performance

· Unstable Management

Note: The purpose of this paper is for the advancement of Human Resource professionalism and contribution to business success.

References

Larry Bossidy and Ram Charan “Execution, The Discipline of Getting Things Done” 2002,147,148,149

Charles A. O'Reilly III and Jeffrey Pfeffer , “Hidden Value, How Great Companies Achieve Extraordinary Results with Ordinary People”, Harvard Business School Press, 2000, 232, 233

Author Interview with Kevin Wheeler: May 2008

(1) SAP Report, Business Week, “Talent Management, The New Business Imperative” August 2007

 

(2)Catherine Fredman, CEO Magazine, “HR Takes Center Stage”, November 2003

Consultant Interview with Jim Hazboun: June 2008