paradigm shift - building a new talent management model to boost growth
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Nearly five years after the financial crisis erupted, a sustained global economic recovery remains elusive. Nothing less than a fundamental change in thinking is required to tackle the talent shortfall. http://www.ey.com/GL/en/Issues/Driving-growth/Growing-Beyond---Paradigm-Shift---Overview Our Growing Beyond program explores opportunities across expanding into new markets, finding new ways to innovate & implementing new approaches to talent. www.ey.com/growingbeyondTRANSCRIPT
Paradigm shift
Building a new talent management model to boost growth
November 2012
Paradigm shift Page 2
Introduction
► Growth is at the top of every organization’s agenda.
► Competitive advantage is hard to find.
► Talent : an untapped opportunity.
► Investment in talent often requires deep organizational changes.
► High performing companies invest more in talent management.
► It’s time for a “paradigm shift”.
Paradigm shift Page 3
Agenda
► About the survey
► Survey highlights
► In search of a new talent paradigm:
1. Corporate workforces are becoming more global, but talent management is not
keeping pace.
2. Companies struggle to invest strategically in talent management
3. Measuring the effectiveness of talent management remains a challenge.
4. The skills and competencies required by future business leaders are changing.
5. Companies lack robust succession plans to identify the next generation of
leaders.
► Business implications
► Responses to business implications
► Does your talent model measure up?
Paradigm shift Page 4
About the survey
The survey of 596 executives was conducted and analyzed as follows:
Survey demographics:
► 1/3 of respondents were from the Asia-Pacific region
► 1/3 from Western Europe
► 1/3 from North America
► 10% were from Latin America, the Middle East and Africa, and Eastern Europe.
► 53% percent of the respondents were CEOs, CFOs or other C-level executives.
► 44% percent of the companies surveyed reported revenues of US$1 billion or more.
Analysis:
► Compared findings from rapid-growth market and developed markets.
► Compared findings from high-performers with low-performers.
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Survey highlights
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Survey Highlights Differences between high and low-performers
► High-performers:
► Place greater emphasis on linking pay with performance
► Provide more customized training and development
► Invest in talent management to meet the organization’s financial targets
► Choose people who can lead effectively in an international business environment
► Have a stronger pipeline of future leadership talent
► Build more robust succession plans and future leaders with diverse backgrounds
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Survey highlights Differences between developed and rapid-growth markets
► Businesses in rapid-growth markets are more likely to:
► Offer variety in job descriptions and responsibilities
► Offer opportunities for employee mobility across functions
► Encourage working in different countries and offer greater freedom
to direct reports to make decisions
► Adopt an equal (less of a top-down) style of management
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In search of a new talent paradigm
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Scarcity of talent is becoming a key obstacle to growth
► In India, the percentage of employers jumped 51% in 2011.
► 60% of organizations were experiencing a leadership shortage, an
increase of 40% from the previous year.
► 72% of respondents reported difficulty finding and keeping the high-
potential employees essential to boost their global competitiveness.
Source: Corporate Executive Board 2012 survey.
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Five key talent management challenges
1. Corporate workforces are becoming more global, but talent
management is not keeping pace.
2. Companies struggle to invest strategically in talent management.
3. Measuring the effectiveness of talent management remains
a challenge.
4. The skills and competencies required by future business leaders
are changing.
5. Companies lack robust succession plans to identify the next
generation of leaders.
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The challenges
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Challenge 1: Corporate workforces are becoming more global, but talent management is not keeping pace
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It’s hard to find a company that isn’t global
9
34
23
17
10
7
4
24 22
22
18
10
0% 1%-20% 21%-40% 41%-60% 61%-80% 81%-100%
What percentage of your organization’s workforce is based in a country other than where the corporate headquarters are located?
Now In three years
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But talent management is not keeping up
68%
56%
46%
41%
50%
37%
60%
56%
45%
Adapting talent management policies to changes in the business environment
Understanding clearly the relationship between employee performance and company performance (e.g., revenue growth)
Investing adequately in talent management to meet organization's financial targets
How effective is your organization at the following aspects of performance and talent management?
Overseas workforce <40% Overseas workforce >40% All respondents
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The link between autonomy and performance
9
34
23
17
10
7
4
24
22 22
18
10
0% 0-20% 20-40% 40-60% 60-80% 80-100%
In the past three years, what changes has your organization made to the way in which managers manage direct reports?
Now In three years
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Not enough opportunities for overseas experience
64%
59%
57%
55%
53%
48%
42%
41%
58%
50%
52%
47%
47%
46%
39%
42%
Create opportunities for employee mobility across functions
Put greater emphasis on linking pay and performance
Introduce greater varierty of responsibilities in job descriptions
Provide customized training and development
Create opportunities for employees to work in other countries
Encourage flexible working
Encourage employees to join mentoring programs
Offer pension schemes, health care and other benefits
Which of the following are part of your organization's strategy to manage a multicultural or international workforce?
Low perfomers High performers
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Challenge 2: Companies struggle to invest strategically in talent management
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Companies struggle to make the right investments in talent
66%
56%
46%
61%
50%
37%
Adapting talent management policies to changes in the business environment
Investing adequately in talent management to meet organization's financial targets
Understanding clearly the relationship between employee performance and company performance (e.g., revenue growth)
How effective is your organization at the following aspects of performance and talent management?
High performers Low performers
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Challenge 3: Measuring the effectiveness of talent management remains a challenge
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A focus on the wrong metrics?
53%
45%
40%
38%
34%
31%
26%
57%
42%
36%
41%
40%
25%
18%
Employee satisfaction
Retention rates
External reputation of organization as an employer
Employee productivity
Level of cross-functional collaboration
Diversity of management team
Extent of skills gaps in workforce
Which of the following metrics do you consider to be the most important determinants of an effective talent management program?
Low perfomers High performers
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Challenge 4: The skills and competencies required by future business leaders are changing
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It’s the soft skills that matter most
47%
44%
38%
33%
33%
30%
21%
12%
37%
37%
40%
37%
27%
32%
27%
13%
Can lead effectively in an international business environment
Can articulate and embody the values and culture of the organization
Can command the respect of colleagues and reports
Can engage effectively with multiple internal and external stakeholders
Decisiveness
Has industry expertise
Has strong grasp of financials
Is a good risk manager
What do you consider to be the most important attributes for potential C-level leaders of your organization?
Low perfomers High performers
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Challenge 5: Companies lack robust succession plans to identify the next generation of leaders
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Concerns about the next generation of leaders
78%
54%
48%
45%
43%
70%
43%
33%
36%
38%
Current crop of leaders with the right attributes and experience
A strong pipeline of future leadership talent
Robust succession plans for key leadership roles
Future leaders with sufficiently diverse experience and backgrounds
A clear set of qualification metrics for leadership candidates
To what extent do you agree that your organization has the following aspects of leadership development in place?
Low perfomers High performers
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Business implications
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1. Align and integrate talent management across the business
► Companies need to make sure that:
► They align talent management with culture, values and
strategic goals.
► They recruit and retain a workforce in a way that
supports their key objectives.
► Their HR function is embedded in the business and
serves as a partner to it.
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2. Rethink approaches to international talent
► Companies need to review their approach to international mobility
and re-integration:
► Embedding mobility into their leadership and high-potential programs
► Adopting a strategic approach: overseas experience as part of long-term
leadership development programs
► Developing repatriation plans to take the executives to the next stage in their
career
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3. Create the right blend between global and local talent management
► Most companies try to standardize and globalize their talent
management practices.
► The one-size-fits-all model will not work.
► Some standardization is desirable.
► But companies need to think locally about how to attract and retain
talent.
► Companies should develop a framework that combines fixed and
flexible components.
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4. Use analytics to identify talent gaps and better understanding of workforce behavior
► Effective workforce analytics start with:
► Accurate data
► Complete data
► The ability to aggregate it
► Workforce analytics offer the opportunity to:
► Identify skills gaps
► Link talent management decisions with broader performance objectives
► Some companies are using analytics to:
► Forecast talent shortages or surpluses
► Assess how cycles will affect the availability of human capital resources
► Companies need to recognize that technology is a support
mechanism and not the solution to everything.
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5. Take a long-term approach to developing the next generation of leaders
► Companies should:
► Take a long-term approach to leadership development
► Extend succession planning beyond the immediate top team
► High potential programs can be valuable, but there is
a risk that they could turn into training grounds for the
competition.
► Companies must also be aware that past performance
is not always a predictor of future potential.
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Responses to business implications
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Business implications and responses
1.Align and integrate
talent management
across the business
► Align talent management with company culture, values and strategic goals
► Recruit, retain and reward employees in a way that supports key objectives
► Integrate talent management programs across the entire organization and
adapt to keep pace with changes in the business environment
► Embed HR into the business, establishing a more strategic partnership with
the function
2.Rethink approaches to
international mobility
as well as re-
integration
► Build mobility programs into long-term leadership development, providing
high-potential executives with exposure to different markets to broaden
their knowledge and appreciation of different cultures
► Create a multi-directional flow of talent across developed and
rapid-growth markets
► Include a robust repatriation plan for international assignees
3.Create the right blend
of global and local
talent management
► Establish the right balance by which talent management decisions will be
made: centrally versus locally
► Think locally about how to attract and retain talent, as well as how to
position the company as an attractive place to work
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Business implications and responses
4.Use analytics to
identify talent gaps
and gain a better
understanding of
workforce behavior
► Evaluate which metrics are most effective in supporting corporate
performance objectives
► Use data to understand where skills gaps might exist
► Look ahead to predict availability of talent (e.g., within an industry)
► Understand the link between company and employee performance
5.Take a long-term
approach to
developing the next
generation of leaders
► Consider the gap between current and future leaders, focusing on
the right attributes and experience
► Build a strong pipeline of future leadership talent
► Include succession planning that expands beyond top leadership in your
approach
► Establish an effective process for choosing a new leader, defining a
set of qualification metrics for these candidates
► Consider soft skills, which may be more important than having deep
subject-matter knowledge
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Three key strategies for maximizing your return on talent
Think long term
► Investing in talent has a long-term outcome
► Look beyond the short-term expense of mobility, performance management
and recognition and rewards; instead focus on the long-term investment,
such as providing critical market experience
Measure the right
outcomes
► Move away from traditional measures, such as employee satisfaction,
productivity, engagement, collaboration and retention
► More effective measures include filling positions with internal candidates,
developing job-specific employee skills and competencies, assessing and
validating recruitment and selection processes, and evaluating talent
according to business-performance standards
Adopt a disciplined
approach
► Align your approach with the business strategy
► Integrate programs across the organization
► Measure results to validate business strategy execution
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Does your talent model measure up?
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Does your talent model measure up?
Three key takeaways from today’s event:
1. Think long term. Remember that investing in talent has a long-term
outcome, and it may be years before your company sees the results.
2. Measure the right outcomes. Move beyond traditional measures
such as employee satisfaction, productivity and engagement.
3. Adopt a disciplined approach. Treat talent management as a
disciplined process involving alignment, integration and
measurement.
Paradigm shift Page 37
Ernst & Young
Assurance | Tax | Transactions | Advisory
About Ernst & Young
Ernst & Young is a global leader in assurance, tax,
transaction and advisory services. Worldwide, our
167,000 people are united by our shared values and an
unwavering commitment to quality. We make a
difference by helping our people, our clients and our
wider communities achieve their potential.
Ernst & Young refers to the global organization of
member firms of Ernst & Young Global Limited, each of
which is a separate legal entity. Ernst & Young Global
Limited, a UK company limited by guarantee, does not
provide services to clients. For more information about
our organization, please visit www.ey.com.
© 2012 EYGM Limited.
All Rights Reserved.
EYG No. EX0157
This publication contains information in summary form and is therefore
intended for general guidance only. It is not intended to be a substitute
for detailed research or the exercise of professional judgment. Neither
EYGM Limited nor any other member of the global Ernst & Young
organization can accept any responsibility for loss occasioned to any
person acting or refraining from action as a result of any material in this
publication. On any specific matter, reference should be made to the
appropriate advisor.
ED None
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