talent supply chain

© 2009 Boudreau-Ramstad Partnership. All rights reserved.

John W. BoudreauCenter for Effective Organizations

Marshall School of Business University of Southern California

213-740-9814john.boudreau@usc.edu

SIOP Annual MeetingNew Orleans, LA

April 2, 2009

Evidence-Based Management as a Decision Science:

Considering the Mental Models of Leaders

© 2009 Boudreau-Ramstad Partnership. All rights reserved.

IPO Investors Miss the HR Connection

Companies whose investor communications indicate people are important:At Time of IPO Priced lower

Five years later Valued higher Survival is

higherAverage HR value 70% survivalHigh HR value/rewards 92% survivalLow HR value/rewards 34% survival

Theresa Welbourne & Alice Andrews (1996)

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Manufacturing or technology company High-growth potential in the long term

Strong market demand

Constrained resource: Project engineers to customize the products to

the needs of the clients

Example: Managing the Right Asset?

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Complete certain projects Add six new project engineers

Goals:

Actual: Completed projects Only added three new engineers

Traditional Budgeting Objectives

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Completed all objectives Expenses under budgetMost systems would reward budget goal

But, the expenses saved are minimal They are in a weaker position –

compared with if they had staffed as planned

Typical Performance Appraisal

© 2009 Boudreau-Ramstad Partnership. All rights reserved.

Meet the operating budget for the region

Fill the vacant GM positions

Goals:

Actual: Met the operating budget Hired only GM’s who did not require

paying more than target salary

Actual Example from a Retail Organization

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HR At the Table But Traditional

HR Considered Very Important for its “Strategic Contribution” by 67% of Executives

Source: High Performance Workforce Study, Accenture, 2003

“Strategic Contribution” Is Defined Traditionally Tools for Attraction and Retention Succession Planning Consistency in rewards, training, etc.

© 2009 Boudreau-Ramstad Partnership. All rights reserved.

Leader Talent Sophistication(Lawler & Boudreau, “Achieving Strategic Excellence”

2008)To what extent are these statements true about your organization?(1= little or no extent; 2=some extent; 3=moderate extent; 4=great extent; 5=very great extent)

Average (HR sample)

Average (Non-HR sample)

Strategic Role

(HR sample)

Strategic Role

(Non-HR sample)

Business leaders understand and use sound principles when making decisions about:

Motivation 2.7 3.0 .31** .40*.16 in ’04

Development and Learning 2.8 3.0 .27** .48**.18 in ’04

Labor Markets 2.7 3.1* .18 .33*.28* in ’04

Culture 2.9 3.1 .21* .32*.07 in ’04

Organization Design 2.8 3.1 .32*** .60***.17 in ’04

Compare to more “traditional” management disciplinesBusiness Strategy 3.6 3.7 .22* .15

.15 in ’04Finance 4.0 4.1 .20 -.04Marketing 3.5 3.2 .22* .25Technology 3.3 3.3 .22* .25HR systems educate business leaders

about their talent decisions 2.5 2.6 .28** .69***

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Applying Supply-Chain Principles

To Retention

Are Turnover Rates Too Dangerous to Share with

Non-HR Leaders?

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Typical Turnover Analysis Logic

Spend months defining the right turnover rate Benchmark against industry competitors Report turnover rates and benchmark levels to non-

HR leaders Hold leaders accountable for bringing turnover

down Calculate the costs of separating and replacing

employees to show the millions of dollars saved

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A More Complete Turnover Logic

Starting Workforce ValueQuantity of employees

XQuality of Employees

Change in Workforce

Effect of AcquisitionsQuantity of employees added

XQuality of Employees added

Ending Workforce ValueQuantity of employees

XQuality of Employees

Effect of SeparationsQuantity of employees removed

XQuality of Employees removed

Minus the Transaction Cost of Processing the Separations and Acquisitions

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Talent Supply Chain: Sourcing and Screening

Building and Planning

Improve the number and quality of individuals that might become candidates

Potential Labor Pool

Labor Pool

Applicant Pool

Candidates for further evaluation

Offer Candidates New Hires Productive

Employees

Recruiting

Identify the number of qualified candidates that best suits your organization’s recruiting needs.

Screening

Screen for predictors of performance: Universal metrics as well as specific criteria by company.

© 2009 Boudreau-Ramstad Partnership. All rights reserved.

Talent Supply Chain: Selecting, Landing and Retaining

Selecting

Metrics that provide consistent predictors of performance and reduce human variability (error)

Offering and Closing

Objective is to close a high percentage of the highest potential candidates.

On-Boarding

Establish new person in their position and retain them. How long must employees stay to payout the recruiting costs?

Potential Labor Pool

Labor Pool

Applicant Pool

Candidates for further evaluation

Offer Candidates New Hires Productive

Employees

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Recurring Theme:

The Relationship Between Talent and Organization

Quality,

and Strategic Payoff

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Talentship Approach:“What is Pivotal?

Where would improvements in talent

quality or quantity make the biggest difference in the most pivotal processes for the Disney theme park

business?

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Sweepers • Stop sweeping and talk to

guests• Give accurate information• Create delightful

encounters• Fix problems before they

occur• Bring information to

product design teams

AlignedResponses

“What employee behaviors make the biggest

difference?”

Example: Sweeper at Disney

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Pivotal and Important Are DifferentSt

rate

gic

Valu

e

Performance

WorstMickey Mouse

WorstSweeper

There is more value in improving

Sweepers than Mickey Mouse.

Best Mickey Mouse

BestSweeper