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THE FUTURE OFTALENT MANAGEMENT

Presentation to

DUBAI HUMAN RESOURCES FORUMJuly 22, 2009

S. P. JAIN CENTER OF MANAGEMENT

DR. LARRY PHILLIPS, SPHR© Larry W. Phillips, 2009

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TALENT MANAGEMENT DEFINED

According to the Society for Human Resource Management, talent management is:

Broadly defined as the implementation of an integrated strategies or systems designed to increase workplace productivity by developing improved

processes for attracting, developing, retaining and utilizing people with the required skills and aptitude to meet current and future business needs.

(Glossary)

Talent Management is:• Holistic and interdependent – includes most HR programs• Cultural and integrative – involves all departments• Strategic – integrates business and HR strategy and driven from the e-

suite (a simultaneous and interdependent process)

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TALENT MANAGEMENT CONCEPTS

• Employee brand management• Employee value proposition (becoming the

employer of choice)• Humanistic but not egalitarian – discriminates

among workers and their value to the organization

• Alumni strategy• Changing psychological contract

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A BRIEF HISTORY

•GE, IBM, and others were the leaders in Talent Management during the mid century.

•The Organization Man philosophy•Chess master approach with planning out 2 – 3 generations•Promotion from within and heavy emphasis on development•Stable economy and markets

•1970’s forecasting systems failed to predict the economic downturn•Recession of the 1980’s led to the demise of lifetime employment, downsizing, hiring from the outside, flattening of hierarchy, and destruction of career pathing•Boom of the 1990’s led to recruiting from competitors and employee retention problems along with decreased need for internal development•Inability to forecast spelled the doom of the “Organization Man” by 2000

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CURRENT STATE OF TALENT MANAGEMENT

• 2006 SHRM Talent Management Survey of HR Professionals– 53% of organizations had a talent management program– 76% indicated talent management a major management concern– But, a disconnect between statements and practice

• HR not in charge of employee development or retention programs• Not adequately preparing employees to take over leadership • Little or no budget

• 2006 research of 50 top executives (Guthridge et. al)– Departmental silos hindered talent movement– 40% indicated succession planning deficient because organization did not truly

understand which positions were critical

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CURRENT STATE (CONTINUED)• 2006 Workforce Management research of HR Managers of 220 firms

(Ruiz, 2006)– Performance management not linked with organizational success– Performance management not linked with succession planning– Performance management automated systems not linked with HRIS or ERP

Given the current state of talent management:

• Where are we headed?• What strategies and programs will get us there?

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CURRENT STATE (CONTINUED)

• Talent management programs develop talent but they are:– Expensive– Risky

• Talent management challenges similar to the product/service challenge:– Forecasting product/service demand = talent demand– Estimating cost-effective production = talent development– Determining what to outsource = external hiring– Timely delivery = succession planning

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CHANGE DYNAMICS• Constant change

– Increased complexity and uncertainty• Globalization

– Search for low-cost labor– Emerging middle class increases potential markets– Transnational operations

• Talent management of multiple cultures• Variations in employment and labor law in countries• Risk of political and economic instability• Corporate ethics (child labor, safety, bribes, etc.)• Security of capital, plant and employees (terrorism, etc.)

• Technology– Changes nature of work and skills required – how to forecast– Bi-polar distribution of jobs/normal distribution of skills

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CHANGE DYNAMICS (2)• Competition

– Doing more with less– New employment arrangements

• Contingent workforce• High involvement socio-technical systems (self directed work teams, lean

manufacturing, quality teams, etc.)– Associated labor strife, brand management, community relations issues– Outsourcing/offshoring

• Demographics– Aging of workforce– Sandwich generation– Diversity (female, minority)– Changing family patterns (dual careers, single parents)– Generation/cohort differences– Immigration– Knowledge management

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CHANGE DYNAMICS (3)

• Economics– Energy costs– Health care costs– Inflation– Security costs– Global variability in economies– Increasing costs of security

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PRINCIPLES OF TALENT MANGEMENT GOING FORWARD*

• Make and buy to manage demand side risk• Reduce the uncertainty in talent demand• Earn a return on investments in development• Balance employee interests by using an internal

labor market

*These principles are contained in Peter Cappelli’s book entitled: Talent on Demand

(Managing Talent in an Age of Uncertainty)Harvard Business Press (2008)

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MANAGING THE TALENT DEMAND RISKThe Make vs. Buy Decision

• Requires accurate planning in terms of demand and supply of talent

• It is possible to have too much talent and to have too little talent

• Cost of not having talent– Lost revenue, clients, and opportunities

• Cost of too much talent developed internally– Wasted skills and no productivity– Turnover (loss of development costs)

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HR Forecastingsource: Mathis and Jackson, Human Resource Management (12th ed.)

Yes

Develop programs to

increase supply or reduce demand

Develop programs to

decrease supply or increase

demand

NoMatch?

Forecast HR requirements

(demand)

Forecast HR availability

(supply)

Strategic HR Planning

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MAKE VS. BUY (continued)

• The greater cost is too much talent!!!• The strategy in the future is to undershoot the forecast in demand

through internal development– Meet the undersupply through

• Contingent workforce• External hiring

• External hiring necessary if skills not available within and needed immediately

• Change needed– Yes – external hiring– No – internal development

• Internal development is desirable from a retention and recruitment perspective and might me required– Proprietary knowledge/technology not available in the labor market– Strong culture

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REDUCING THE UNCERTAINTY AND COSTS IN TALENT DEMAND

(Internal Development)• Forecasting techniques are increasingly sophisticated and

there is greater access to data– ERP’s– Simulations– Modeling

• Yet they are less accurate!!!!– Could we have predicted the current economic crisis?– Solution – shorter forecasts

• Decentralized development in SBUs– Increases potential of too much talent– Does not serve headquarters needs– Solution – portfolio approach

• Teach common competencies first

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INTERNAL DEVELOPMENT (Continued)

• Improve responsiveness (speed) of internal development– Get rid of “Herbies”, increase capacity or find

alternative source– Queuing – break up lockstep programs into

smaller steps and smaller batches– Quality problems – consider rework rather than

scrap

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Succession Planningsource: Mathis and Jackson, Human Resource Management (12th ed.)

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INTERNAL DEVELOPMENT(Succession Planning)

• Talent management at the individual worker and job level

• Clearly there are benefits to having replacements ready for critical jobs but– Research does not indicate that the process is more

successful than external hiring and the cost is likely higher!!

• Reasons– Job requirements change too fast for development

process to keep up– Event triggering requirement may signal need for

change (dismissal of executive)

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SUCCESSION PLANNING(Continued)

• Solutions– Just-in-time (job posting)– Benchmarking against potential external

candidates (hire a search firm)– Portfolio approach using talent pools vice specific

succession plans

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EARNING A RETURN ON INTERNAL DEVELOPMENT

• Compare with ROI of alternative investment opportunities• ROI is increased by

– Lowering cost of development or– Increasing productivity of those being developed

• If possible, develop employer specific skills first• Lowering costs/increasing productivity

– Online development– Action learning– Learning from peers– Development consortiums– Loaning to customer or philanthropic organization– After hour development– Tuition assistance– Development employment contracts– Hire after development (MBA, CPA, SPHR)– Promote and then develop– Increase retention

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MANAGING AN INTERNAL JOB MARKET TO MATCH TALENT TO JOBS• The changing psychological contract results in

employee responsibility for managing their own career• Yet it is important for employers to have viable

internal candidates for openings• Solution– Internal job boards– Empowers employees to manage their careers– Provides candidates for employer

• Problem – Motivating managers to release their high po’s– Doesn’t really deal with the development issue

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SUMMARY• Can no longer evaluate talent management against the

“Organization Man” paradigm• Must think differently about talent

– Must recognize that there are limits on the ability to forecast • Must assess the likelihood that the forecast is wrong and the costs of

being wrong• Talent management must be more adaptable and able to respond quickly

rather than assuming that uncertainty can be planned around– Must consider a talent management model that includes both “make”

and “buy” strategies– Must think differently about how to match candidates with jobs and

development opportunities• Centralization/portfolio• Projects vice jobs

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QUESTIONS?

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THANKS FOR ATTENDING THIS PRESENTATION

DR. LARRY PHILLIPS, SPHRlwphilli@iusb.edu