Comp Outlook 2002

1
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
2

Session Outline

• BackgroundMeasuring 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

3
Session Objective

• To provide perspective and stimulate thinking
  about Talent Management and measurement in the
  university context

4
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.
5
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

6
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

7
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

8
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

9
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

10
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
11
Talent Management...

• Begins with defining the businessno matter
  whether that is serving the public or
  manufacturing automobiles
• Then creating and aligning the organizations
  strategic human resource plan and all
  people-related practices to the strategic
  direction of the business

12
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
13
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
14
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

15
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?

16
Categories of People Measures
Source John Boudreau and Pete Ramstad,
HumanCapital Bridge
17
Possible Learning Development Indicators
number 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
18
Who is Using Metrics Strategically?
84
While strategic use of metrics is not widespread
today, it will increase
12
anticipating their strategic use of metrics
will increase over next three years
reporting high use of metrics to meet
strategy over past three years
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
  

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Measuring Human Capital Value
Employee Outcomes
Determinant I

Measures

• capabilities
• attitudes
• behaviours

Outcome 1 Outcome 2 Outcome 3

Determinant II
Human Capital Value Driver
Determinant III

Determinant IV

• Determinant V

Organizational Outcomes

Measures
Outcome 1 Outcome 2 Outcome 3

• firm performance
• productivity
• customer sat
• turnover
• innovation
• quality
• safety

Measures
Measure 1 Measure 2 Measure 3
21
Employee Engagement

• Capture a bigger portion of the employee
  mindshare

22
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 incollegial,
  flexible workplace

www.conferenceboard.ca
23
What is Employee Engagement?

• A Working Definition
• Engagement is the state of emotional and
  intellectual commitment to an organization.
  Employees are willing to act personally to carry
  out the organizations 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

www.conferenceboard.ca
24
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.

www.conferenceboard.ca
25
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.

www.conferenceboard.ca
26
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.

www.conferenceboard.ca
27
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 supervisors problems are
  my own.

www.conferenceboard.ca
28
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.

www.conferenceboard.ca
29
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.

www.conferenceboard.ca
30
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 companys
  goals and objectives.
• I talk up this company to my friends as a great
  place to work for.

www.conferenceboard.ca
31
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.

www.conferenceboard.ca
32
Model of Employee Engagement
Rewards
Organization Support
Employee Outcomes
Supervisor Support
Employee Engagement
Job and oOrganization Fit
Organization Effectiveness
Job Characteristics
Justice/Fairness
www.conferenceboard.ca
33
Remember Maslow?
Self Actualization
Growth
Affiliation
Providing for employees natural needs
Self Esteem Worth
Basic Needs
Basic Needs
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The Sum of the Whole is Greater Than the Sum of
its Parts

• Gallups Psychological Mountain
• You cant reach the summit without first getting
  to base camp
• Aons Performance Pyramid
• Productivity, Pride and Retention
• Employers are failing to satisfy basic security
  needs

www.conferenceboard.ca
35
Leadership
The difference maker in a turbulent,
competitive marketplace. John Wetmore, Former
CEO, IBM Canada. Ltd.
36
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

37
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 al
• Building the Leadership Pipeline

38
Building a Leadership Pipeline Implications for
HR

• Develop internallybuying 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

39
A Model of Leadership Effectiveness
Employee Outcomes
Leadership Development
Leadership Capabilities
Leadership Effectiveness
Organization Outcomes
40
Leadership Culture Audit Tool
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

Leadership Development Leadership Capabilities
Leadership Effectiveness
www.conferenceboard.ca
41
Begin with the end in mind...

• LEADERSHIP CAPABILITIES
• For Example
• Communicating and listening
• Planning and decision-making
• Motivating others

• LEADERSHIP DEVELOPMENT
• For Example
• Coaching and mentoring
• Special work assignments
• Assessment
• Development plans

• LEADERSHIP EFFECTIVENESS
• For Example
• High trust levels
• Employees feel valued
• Increased innovation
• Organization successful, more competitive

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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

43
Integrated Talent Management Strategy and
Processes
The single most important driver of
organizational performance and individual
managerial success is talent. Bradford Smart,
Topgrading
44
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

45
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

46
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

47

• TMITalent 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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TMIProcess and Practice Dimensions

• Human Capital Acquisition
• Performance Management
• Incentive Compensation
• Learning and Development
• Career Management
• Employee Support and Wellness

49
TMIProcess 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 ExampleTalent Acquisition

• How 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

51
TMITalent Acquisition

• How 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

52
TMITalent Acquisition

• Sample 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

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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
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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!

55
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
56

Thank You !