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The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Getting Talent Management on the
Right Track
Rethinking Measurement Tools for Strategic HRM
Ruth Wright, Senior Research Associate
June 18, 2005
Canadian Association of University Business Officers
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Background—Measuring HR Effectiveness Working
Group What is Talent Management? Approaches to measurement
– limitations, challenges, opportunities– an alternative approach
Measuring key people drivers of performance– an engaged workforce– effective leadership– strategy and processes to manage talent
Session Outline
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Session Objective
To provide perspective and stimulate thinking about Talent Management and measurement in the university context
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
The Journey
The Working Group On Measuring Human Resource Effectiveness
Project Objective
To identify and develop together, select measures tied to Human Resources drivers of organizational performance.
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Working Group on Measuring Human Resources Effectiveness
Atomic Energy of Canada Canada Customs &
Revenue Agency Canadian Pacific Railway Government of Ontario Hallmark Canada Hydro One Inc. Imperial Oil
Department of National Defense
Ontario Power Generation Petro-Canada Rogers Communication SaskEnergy Incorporated Sears Canada Inc. Treasury Board of Canada
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Selecting HC Drivers of Firm Performance
Where can we get the biggest “bang” for our human capital investment dollars?
– key drivers will be organization and sector specific
– however, there are some universal drivers of human capital value
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
The Crucial Three…
The Working Group on Human Resources Effectiveness picked three to explore:
an “engaged” workforce effective leaders strategy and processes to manage talent
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Talent Management
“Building human capital at all levels of the organization will be the primary factor in growth and organizational excellence.”
David Ulrich, University of Michigan
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
What is Talent Management?
“A popular and prevalent phrase” whose meaning “is still somewhat fuzzy”– The Conference Board Inc. Integrated and Integrative
Talent Management
“The term is now used like confetti”– Lance Berger Executive Excellence
Definitions range from a narrow focus on top talent to a broader set of integrated and aligned initiatives designed to build workforce capacity overall
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
What Is It?Definitions
“Talent” are those people you want to keep.
TM is a comprehensive and dynamic process of building the talent pool through the development of aligned and integrated processes, practices and shared accountabilities by leaders around the human resource fundamentals of attraction, selection, development and retention of talent.
Source: Working Group on Measuring Human Resources Effectiveness
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Talent Management...
Begins with defining the “business”…no matter whether that is serving the public or manufacturing automobiles
Then creating and aligning the organization’s strategic human resource plan and all people-related practices to the strategic direction of the business
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Characteristics of a Successful Talent Management Organization
Development mindset Performance culture Focus on “linchpin” positions Senior leadership team champions talent
– devote time to coaching, education and mentoring Good tracking system for managers
– where people are– where they should be moved to – can key roles be filled internally?
Source: American Quality and Productivity Centre
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Measurement
Focus on measures that matter
“There is too much focus on measuring what is easy to measure and not what is right to measure. HR professionals should measure the extent to which it is contributing to building organizational capabilities.”
David Ulrich, University of Michigan
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Why the Pressure to Measure?
Organizations are paying more attention to performance management. – Use of balanced scorecard, dashboards and other
performance management tools on the rise
Firm expenditures on people rising– as people become the competitive difference, human
assets absorb more capital dollars
– there is more pressure to account for results
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Where Should HR Focus its Measurement Efforts?
What really matters? An efficient HR organization
– affects about 1% of organizational costs Well-designed HR interventions
– are we pulling the right levers?
Leveraging people to achieve organizational goals – how can we enhance human capability to drive
results?
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Categories of People Measures
“What is the relationship between the changes in the quality of the employees and our competitive success?”Impact
“What is the relationship between our HR practices and the quality of our people?” These metrics should chart changes in employees’ ability, opportunity, motivation, and performance.
Effectiveness
“What is the level and quality of HR practices produced from the resources (time and money) spent?”
Efficiency
Source: John Boudreau and Pete Ramstad, HumanCapital Bridge ™
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Possible Learning & Development Indicators
Impact
Effectiveness
Efficiencynumber of course hours taught
cost of training relative to number of training hours per employee
staff in pipeline with competencies to step up
senior management and executive vacancies filled from within
improved organization performance – e.g., innovation, revenue
Impact
Effectiveness
Efficiency
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Who is Using Metrics Strategically?
% reporting “high” use of metrics to meet strategy
over past three years
% anticipating their strategic use of metrics will increase over next
three years
While strategic use of metrics is not widespread today, it will increase
12%
84%
Source: The Conference Board Inc.
Measuring More Than Efficiency
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The Challenge of Measuring Drivers of HC Value
HC value drivers are constructs
– made up of many things, e.g., there is no one measure of “engagement” or “leadership effectiveness”
– influenced by a variety of factors in the work environment
– they drive a range of employee and organization outcomes
These determinants must be identified, their composite value calculated and tracked against outcomes that are important for your organization
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Measuring Human Capital ValueHR Practices/Org Strategies
Human Capital Value Driver
Determinant II
Determinant V
Determinant I
Determinant IV
Determinant III
Employee Outcomes
• capabilities• attitudes• behaviours
•firm performance•productivity•customer sat•turnover•innovation•quality•safety
Organizational Outcomes
Outcome 1Outcome 2Outcome 3
Measures
Outcome 1Outcome 2Outcome 3
Measures
Measure 1Measure 2Measure 3
Measures
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Employee Engagement
Capture a bigger portion of the employee mindshare
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
Why the Interest in Employee Engagement?
Last frontier of productivity improvement– TQM, technology improvements--”been there, done that”
Employee satisfaction insufficient– it only buys you bodies
Engaged employees drive bottom line results– improves customer sat, boosts sales, improves retention
– Watson Wyatt HCI attributes 9% improvement in market value with 1STD improvement in“collegial, flexible workplace”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What is Employee Engagement?
A Working DefinitionEngagement is the state of emotional and intellectual
commitment to an organization. Employees are willing to act personally to carry out the
organization’s strategy; they go beyond what is expressly required and frequently make discretionary
decisions that contribute to organization success.
Working Group on Measuring Human Resources Effectiveness
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What is Employee Engagement? Multidimensional construct Emotional attachment to, identification with and
involvement in the organization and the job– emotional (affective commitment)– cognitive (thinking)– behavioral (action oriented)
Multiple attachments beyond organization, including peers, supervisors, senior leaders and customers.
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
How Does an Engaged Employee Behave?
Discretionary behaviour– beyond what is required – extra-citizenship
behaviour Extra role behaviour
– helpful, voluntarism, sharing. Prosocial behaviour
– ethical, self-improvement, spreads good will.
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What Engages Employees? Perceived Organizational Support Beliefs about how much the organization values
employees’ behaviour– Perception that leaders consider a range of employee needs– Sense of job security– Open, trusting environment– Belief that the organization is well-managed
“The organization values my contributions and cares about my well-being.”
“I have the resources I need to do my job well.”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What Engages Employees? Perceived Supervisor Support Perceived care and concern exercised by a manager for the
well-being of his/her reports– Participation in decision-making– Manager consideration of work-life balance– Visibility/accessibility on a personal level– Support for employee development
“My supervisor seems willing to listen to my problems.”
“I really feel as if my supervisor’s problems are my own.”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What Engages Employees? Nature of the Job/Perceptions of Competence The extent to which the job includes core job characteristics
such as variety, significance, identity, feedback, and autonomy
– Challenging work– Latitude or discretion over activities– Autonomy– Job scope
“I have the authority to make decisions necessary to do my job well.”
“I believe the work I do is important.”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What Engages Employees? Rewards, Recognition and Opportunities for
Growth The extent to which employees believe that there are
favourable opportunities for recognition, pay and advancement– People have natural need to grow, to achieve and to be recognized– Sense of gratification more important than absolute reward
“At work, my opinion counts.”
“I am truly appreciated for the contribution I make to the organization.”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What Engages Employees? Sense of Fit and Belonging People perform best in roles they are suited to, comfortable with
and which align their needs with those of the organization, their leaders and peers.
– Interests, values and goals are congruent – Employees enjoy friendship and camaraderie of peers– Employees relate well to manager– Work with a supportive team
“I can rely on those I work with in this group.”
“I have a good understanding of this company’s goals and objectives.”
“I talk up this company to my friends as a great place to work for.”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
What Engages Employees? Perceptions of Justice and Fairness Policies and procedures used to determine distribution of
rewards are trusted and viewed as fair (procedural justice) The outcomes (wages, benefits, promotions) are viewed as
fair (distributive justice)
“The decision-making procedures used to determine rewards are applied consistently to all.”
“My rewards reflect the effort I put into my work.”
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
Model of Employee Engagement
OrganizationEffectiveness
EmployeeOutcomes
Justice/FairnessJob
Characteristics
Supervisor Support
RewardsOrganization
Support
Employee Engagement
Job and oOrganization Fit
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Basic Needs
Self Esteem & Worth
Self Actualization
Growth
Affiliation
Basic Needs
Remember Maslow?
Providing for employees’ natural needs
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
The Sum of the Whole is Greater Than the Sum of its Parts
Gallup’s Psychological Mountain – You can’t reach the summit without first getting to base
camp Aon’s Performance Pyramid
– Productivity, Pride and Retention
– Employers are failing to satisfy basic security needs
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Leadership
The “difference maker” in a turbulent, competitive marketplace.
John Wetmore, Former CEO, IBM Canada. Ltd.
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
There is a Perceived Crisis in Leadership
Less than 1/3 of survey participants rated leaders as highly effective across a range of indicators
Less than 2% believed that their organizations had the leadership capacity to implement major change successfully
Source: The Conference Board of Canada
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
The Essence of Leadership has Fundamentally Changed
Leaders must still deliver results
Need for commitment and collaboration across a broad network requires relational skills
“The root of the perceived crisis in leadership reflects company-wide breakdown rather than the actions or
failure of one person.”
Ram Charan et alBuilding the Leadership Pipeline
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Building a Leadership Pipeline: Implications for HR
Develop internally—buying may not be an option Update curriculum Update approach to learning Boost emphasis on middle and first-line managers Be clear about executable tasks of leadership
Organizations need to be more intentional & articulate about the leadership skills they require & more creative in
designing experiences that help employees acquire them
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
A Model of Leadership Effectiveness
Leadership Development
Leadership Capabilities
Leadership Effectiveness
Employee Outcomes
Organization Outcomes
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca www.conferenceboard.ca
Leadership Culture Audit Tool
Leadership Development
Leadership Capabilities
Leadership Effectiveness
Three parts of LCA tool reflect three stages of the model: key training and other development
activities that foster leadership capabilities
attainment of critical skills and competencies; influenced by selection and development practices
executing on the tasks of leadership and achieving tangible results that drive organizational performance outcomes
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Begin with the end in mind...
LEADERSHIP CAPABILITIES
For Example Communicating and
listening Planning and decision-
making Motivating others
LEADERSHIP DEVELOPMENTFor ExampleCoaching and mentoringSpecial work assignmentsAssessmentDevelopment plans
LEADERSHIP EFFECTIVENESS
For Example High trust levels Employees feel valued Increased innovation Organization successful,
more competitive
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
What Do Effective Leaders Do? Building and leading teams Enhancing organizational performance Providing clear objectives Achieving unit goals Managing creative talent Gaining employee commitment Making employees feel valued Generating enthusiasm, pride and loyalty Defining corporate purpose (vision
mission, values) Identifying long term opportunities Building Trust
Capitalizing on employees’ talents and capabilities Changing and developing culture Nurturing stakeholder relations Increasing speed and flexibility Increasing innovation Building/maintaining a strong top
leadership team Building capacity to deploy Defining new business strategy Enhancing organizational competitiveness
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Integrated Talent Management: Strategy and Processes
“The single most important driver of organizational performance and individual managerial success is talent.”Bradford Smart, Topgrading
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Can Talent Management be Measured? Research shows that high performance work
systems drive value– reduces turnover– raises productivity– boosts market value
• Working group developed two complementary approaches
– Audit of TM strategy processes and effectiveness– Good metrics at each point in the continuum of TM
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Organizational Effects of Talent Management
TALENT MANAGEMENT STRATEGIES & PROCESSES
Strategies- Human resource- Talent management
Components / Processes Recruitment & selection Performance management Incentive compensation Learning & development Career management Employee wellness
BETTER TALENT
e.g., high retention of top performers
ORGANIZATIONAL
SUCCESS
e.g., high innovation
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The Talent Management Index (TMI)
HR Strategy dimension
Extent to which: HR is involved in corporate strategic planning HR strategy is aligned with organization strategy to
achieve objectives HR strategies align with and reinforce each other
How Effective? HR helped organization achieve its objectives HR strategy and associated practices have contributed to
organization success
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
TMI—Talent Management strategy dimension Extent to which:
TM strategy is in place to attract, motivate, develop and retain the best talent possible
talent is viewed as critical to success resources have been targeted at key leverage roles managers are accountable for talent
How Effective? attracted and hired the best talent available optimal training and development of workforce critical talent retained workforce is a key driver of organization success
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TMI—Process and Practice Dimensions
Human Capital Acquisition Performance Management Incentive Compensation Learning and Development Career Management Employee Support and Wellness
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TMI—Process and Practice Dimensions
Process and practices to support strategy in place
Effective in building workforce capabilities Possible metrics Sources of data to complete the TMI
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An Example—Talent AcquisitionHow the organization recruits and selects Selection techniques are valid
– based on job analysis information– validated employment testing– structured interviews
Proactive recruiting of people with diverse backgrounds– multiple approaches and venues used
Efforts to attract best talent available
Managers responsible for recruiting and hiring best talent available
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TMI—Talent AcquisitionHow effective is the organization at hiring and recruiting talent? We get more qualified applicants than we can hire
The most qualified job applicants almost always accept job offers in this organization
Most new hires are retained a year after they have been hired
Performance of new hires is excellent
New hires that receive high ratings during selection also turn out to be best employees
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
TMI—Talent AcquisitionSample Metrics
Average number of days to fill positions. Ratio of offers made to number of applicants. Ratio of acceptances to offers made. Average test scores for new hires. Turnover rate of new hires after one and three years’
service. Percent of new hires that receive top performance ratings
after one year and three years’ service
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
TMI ― Scoring
HUMAN CAPITAL ACQUISITION
Audit Score ___/45 Effectiveness Score ___/30
Calculate score as % of 100 ___% Calculate score as % of 100 ___%
Record % scores on “Report Card” at end of questionnaire
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
In Closing
The 21st century will belong to HR
Human capability is the next frontier of productivity improvement and competitive advantage
HR leadership can make a critical contribution to organizational value
Workforce capability begins with the individual
Measurement provides focus
Measurement matters if you measure the right thing!
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
A Final Thought
“There is too much focus on measuring what is easy to measure and not what is right to measure. HR professionals should measure the extent to which it is contributing to building organizational capabilities.”
David Ulrich, University of Michigan
The Conference Board of CanadaThe Conference Board of Canadawww.conferenceboard.ca
Thank You !