White paper: Is Strategic Talent Management the key to a seat in the
Boardroom for Human Resources Leaders?
Author: Pasquale Mazzuca – Hamilton Davenport partners
Date: November 2007
A recent survey conducted by the
Gartner Group shows that the Chief
Information Officer is mostly near
the end of the line for a ticket to
the boardroom. The Chief Human
Resources officer is almost always at
the end of the line. Today in around
9 out of 10 companies, the Human
Resources function does not have a
seat on the board room “top table”.
Just what should the human
resources professional be doing to
influence that situation? The answer
could lie in Strategic Talent
Management.
The economy is heating up once
again, the phrase “war for talent”
coined during the dotcom era, is
suddenly back in fashion. A recent
example of this is the Group Suez, a
major Global energy player
announcing that it needed to recruit
almost 20,000 people . Other
organisations are also pulling out all
the stops to attract top talent. Most
of them are using traditional methods
to recruit but others are being far
more creative and poaching whole
teams that will bring hung chunks of
business.
In the hi-tech industry the big guns
have also ramped up their talent
acquisition efforts, IBM announced
that it has over 18,000 vacant
positions. Microsoft for instance is
also attracting top talent with PhD
level qualifications in computing. All
this hiring also comes at a cost, it is
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estimated that hiring a “star” can cost
the organisation anywhere between
EURO 500,000 – EURO 1,000.000 –
figures based on; hiring agency fees,
time spent by management in
interviewing, and the loss of business
continuity. These are staggering
figures, especially when you consider
that one in every three new hire will
leave within 12 months.
More than ever organisations need to
pay some serious attention to the
manner in which they recruit, retain
and develop the “stars”. After all, if
you attract and develop the “A”
players that would have a direct
impact on business results such
company’s profits, and bonus pool–
right?
Raising the awareness level
Do you realise the impact of talent on
your organisation’s success? Is your
CEO aware of what you need to
ensure that you attract and retain the
best talent (from designated groups)
to meet your organisation’s critical
skills demand? Despite fluctuating
unemployment rates, the competition
to source, hire and retain top notch
candidates has remained consistent
and fierce across most industries.
As a HR professional, you have the
day-to-day experience and knowledge
it takes to create the ideal talent
management strategy. What many HR
departments fail to do is engage the
CEO and secure executive backing for
their strategic initiatives.
By gaining executive level support,
however, you can raise your profile—
and that of HR as a whole—within your
organisation.
Following are five key points that you
can take to the executive table. They
will not only help you think
strategically; they’ll also provide
some valuable approaches that every
CEO should address in order to
become a leading talent management
organisation.
1. Effective talent management
starts at the top
Attracting, developing, and retaining
talented people are the stuff of
competitive advantage. HR leaders
have a strategic role to play in the
years ahead, arguably one equal to
that of any other executive leader in
an organization. The impact of your
decisions and the success of your
strategies has as much of an effect on
the bottom line as the activities of
any other department—because
without you, there wouldn’t be any
other departments.
Set the course for strategic success by
partnering with hiring managers. Seek
to understand their needs and offer
guidance in strengthening their talent
pool. Take an active role in enforcing
the quality of their selection
decisions. You’re in a unique position,
responsible for serving departments
across the company, to have a lasting
impact on the quality of people you
hire.
You should also forge the link
between business strategy and talent,
serve as a thought leader in
understanding what it takes to attract
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great talent, facilitate the talent
review process and help leaders
execute action plans, and become an
architect of the development strategy
for the company's top managers.
Finally, take it to the top. Make sure
your CEO understands the key points
of what it takes to run a cutting-edge
recruiting and staffing function. Show
that you are capable of setting up the
critical channels and pathways—and
demand that you be given the
authority to do so.
2. Strategic Talent Management
impacts profits
A Hay Survey of 13,000 executives at
more than 120 companies and case
studies of 27 leading companies have
revealed the following; those
organisations that do a better job of
attracting, developing, engaging, and
retaining their talent, on average,
experience an average increase of 22%
shareholder return in a 12 month
period. It’ll be hard for any CEO to
argue that this statistic doesn’t point
to the strategic importance of talent.
The implementation of a talent-
focused strategy must start at the
top. In the same survey, among the
highest-ranked companies, improving
the strength of the talent pool was
found to be among the top three
priorities for senior executives. Just
seven percent of the survey's
respondents strongly agreed that their
companies had enough talented
managers to pursue all of their most
promising business opportunities.
Strategic Talent Management isn't the
only driver of such performance, but
it is clearly a powerful one. Talent
management is a broad mandate.
What does it mean for you? It means
finding the best processes and systems
that support the broad corporate
objective of hiring and retaining only
the best people. It’s a question of
selecting and implementing software,
identifying the most productive
sourcing channels, and creating a
feedback loop that links employee
performance to the selection process.
It’s about formulating a
comprehensive hiring forecast and an
analysis of how you can keep your
workforce fully staffed. And
ultimately, it’s about showing your
CEO that you can do this with
authority and a clear vision—not just
for filling a requisition tomorrow, but
for developing a lasting answer to a
critical challenge.
3. Strategic attraction and retention
of top talent boosts cost savings
Employee turnover has significant
costs for every company. On the low
end, the departure of a blue collar
worker equivalent to EURO 30,000 per
year costs a company EURO 10,000.
On the high end, turnover among
white collar employees can cost
companies up to 150% of base salary,
when you count the costs of lost
productivity, training, lost business,
and sourcing a replacement, not to
mention the impact on morale.
Organisations can dramatically reduce
employee turnover by improving the
quality of their selection decisions,
developing a strategic retention
strategy, and implementing a
competitive and creative salary and
benefit structure. If you’re able to
source, screen, and select better
people in the first place, you will see
benefits in the form of increased
retention rates. As an HR professional,
you have the data to show your CEO
the linkage between turnover and
cost—and make a clear business case
for why you need the tools and
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systems to support your highly
strategic efforts at retention.
Jack Welch the retired General
Electric CEO and very famous in
Leadership circles, used to develop a
very simple process the measure a
managers effectiveness at making the
right hiring decisions. He compared
the process to batting averages used
in when playing baseball, used to
measure the performance of the
players. He called it the: “Hiring
Batting Average” or HBA for short.
Every candidate for a job at your
company must be interviewed by at
least three people in the organization
beyond the hiring manager, and each
interviewer must sign off with a "Hire"
or "Don't Hire" vote. No maybes
allowed. Fast-forward six months.
Every new hire gets evaluated by his
manager on how he has performed
against expectations: below, meets,
or exceeds. Soon enough, and with
enough critical mass, you can start to
compare every interviewer's "Hire"
recommendations with actual
performance. For instance, say a
manager named Emily has approved
10 candidates and, six months out,
eight of them are performing at or
above expectations. Emily's HBA
would be .800. That impressive score
lets you know Emily is a first-rate
evaluator of talent, and she should be
rewarded accordingly. By contrast,
say Emily's colleague John has given
the OK to 12 hires and, after six
months, only four are working out, for
an HBA of .333. John will probably
need to develop his hiring skills by
attending specially designed
“Effective Recruitment Techniques”
workshops!
4. Understanding the needs of your
talent pool
It is increasingly evident that the
appropriate management of a diverse
workforce is critical for organisations
seeking to improve and maintain
competitive advantage. Beyond
meeting regulatory requirements,
having a diverse employee base means
your products, your marketing, and
your value will be more informed by
diverse perspectives, and better
aligned with your target market. Does
your CEO recognise the importance of
a diverse workplace?
One of the bigger budget items for
every organisation is the amount it
spends on headcount: salaries,
benefits, training, development, and
recruitment. It’s your investment in
human capital. In order to get a
healthy return on this investment you
need to understand what it takes to
foster a productive work environment.
It’s called the "Employee Value
Proposition" (the EVP) – those things
you offer to employees to make their
employment engagement work for
them.
Beyond simply putting the right
people in the right place and
compensating them, your CEO should
be aware of the need to focus on the
elements of an attractive EVP;
flexible schedules and benefits,
childcare and family-friendly policies,
and so on. Failing to do this can result
in lost commitment and productivity,
time wasted on conflicts and
misunderstandings, and in the worst
case, money spent on legal
settlements. Seek an environment
where all employees feel included and
valued, where you maximise
commitment and motivation, and
where you spend fewer resources on
training, turnover and grievances.
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5. Workforce planning and
development are critical
Virtually every business forecasts
demand and then adjusts production
or service delivery targets
accordingly. You can guess with a high
degree of certainty that air
conditioning manufacturers scale back
production when it’s cold outside. So
why don’t organisations do this with
talent?
It may seem to be a perfectly logical
step, but HR simply does not tend to
create accurate workforce plans. Yet
imagine how your job would change if
you were able to behave proactively,
rather than reactively? With a little
bit of effort you can implement a plan
that looks at all of the existing
factors. Anticipating that a key
position will open up between two
and four times during the year…
shouldn’t you build a pipeline to fill
that position? Suspecting that a few of
your top employees may receive
promotions… wouldn’t it be smart to
line up replacements to succeed
them?
Employee development, too, is
critical. Unfortunately, most
companies don't do it well. Companies
need to fundamentally change the
way they develop people by
accelerating development and making
it happen every day. It means creating
a better, more deliberate match
between people and their jobs to
optimise both development and
performance. It means encouraging
frequent and candid feedback and
mentoring. Perhaps most importantly,
it means conducting manager training.
Again, it all comes down to making
the case. Show your CEO a well-
reasoned workforce and development
plan, and chances are you will be
given a "seat at the table".
Organisations that will succeed and
move forward through demographic
change and ongoing talent shortages
will make Strategic Talent
Management one of their top three
priorities— because they understand
the costly effects of failing to do so.
You should spend time and energy on
achieving your business goals and
objectives effectively and efficiently.
As this War for Talent becomes even
more intense, the gap between those
who will win and those who will lose
will certainly widen and have a far-
reaching impact.
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By gaining executive level support
now and building the talent
management strategy that best fits
your goals, you can raise your
competitive profile and rise to
become a leading talent management
organisation.
Pasquale MAZZUCA
©Hamilton Davenport
www.hamiltondaveport.com